Opinion ID: 196374
Heading Depth: 4
Heading Rank: 2

Heading: Rhode Island Precedent

Text: Several Rhode Island decisions have applied the mere continuation exception, but each case involved an asset transfer. In H.J. Baker & Bro., Inc. v. Orgonics, Inc., 554 A.2d 196, 204 (R.I. 1989), the Supreme Court of Rhode Island stated that [g]enerally, a company that purchases the assets of another is not liable for the debts of the transferor company. The Baker court, however, imposed successor liability because the corporation's assets were acquired for nominal consideration by its president in a manner calculated to defraud creditors. The president used the acquired assets to continue the same business with the same employees. Id. at 7, 9. See also Casey v. San-Lee Realty, Inc., 623 A.2d 16, 19 (R.I. 1993) (finding mere continuation exception inapplicable to intra-family asset transfer for no consideration in the absence of fraud); Cranston Dressed Meat -12- 12 Co. v. Packers Outlet Co., 190 A. 29, 31 (R.I. 1937) (finding one corporation a mere continuation of predecessor where successor corporation used supplies, inventory, and cash-onhand of predecessor and where court found intent to defraud creditors). These Rhode Island cases apply the mere continuation doctrine to impose successor liability in certain asset transfers, an exception to the general rule set forth in Baker that an asset transfer does not create successor liability. Although these cases do not specifically limit the mere continuation doctrine to inter- corporate asset transfers, there is no hint, and it is not logical, that the mere continuation exception should have a broader scope than the rule to which it relates. We are aware of no opinion of the Supreme Court of Rhode Island discussing generally the de facto merger exception or specifically whether that exception applies in the absence of an asset transfer.