Opinion ID: 62813
Heading Depth: 2
Heading Rank: 2

Heading: Successor liability of A to Z Florida

Text: Defendants argue that even if A to Z Georgia is liable to Centimark, the court erred in finding A to Z Florida liable to Centimark as A to Z Georgia’s successor. We disagree. Under Florida law, a predecessor corporation’s liability may be imposed on its successor corporation if: (1) the successor assumes the obligations of the predecessor; (2) the transaction is a de facto merger; (3) the successor is a mere continuation of the predecessor; or (4) the transaction is a fraudulent effort to avoid the liabilities of the predecessor. See Bernard v. Kee Mfg. Co., 409 So. 2d 1047, 1049 (Fla. 1983); Lab. Corp. of Am. v. Prof’l Recovery Network, 813 So. 2d 266, 269 (Fla. Dist. Ct. App. 2002). On appeal, Centimark argues only for the third type of successor liability and asserts that A to Z Florida is a mere continuation of A to Z Georgia.5 4 The court applied Florida law, and the parties agree that Florida law governs this dispute. Accordingly, we apply Florida law. To prove unjust enrichment, a plaintiff must establish facts that demonstrate: (1) that a benefit was conferred upon and flowed to the defendant; (2) that the defendant either requested the benefit or knowingly and voluntarily accepted it; and (3) that under the circumstances, it would be inequitable for the defendant to retain the benefit without paying the value thereof. W.R. Townsend, 728 So. 2d at 303. Because Centimark’s unjust enrichment claim supports the judgment, we need not examine whether, under Florida law, Centimark also proved a breach of implied warranty claim arising from the oral promises. 5 The court found the alter ego theory of successor liability inapplicable to A to Z Florida and instead found A to Z Florida liable under the mere continuation theory. In its appeal brief, 8 “The concept of continuation of business arises where the successor corporation is merely a continuation or reincarnation of the predecessor corporation under a different name.” Amjad Munim, M.D., P.A. v. Azar, 648 So. 2d 145, 154 (Fla. Dist. Ct. App. 1994). “The key element of a continuation is a common identity of the officers, directors and stockholders . . . .” Id. Mere continuation occurs when one corporation is absorbed by another, i.e., there is a continuity of the [first] corporation evidenced by such things as the same management, personnel, assets, location and stockholders. The bottom-line question is whether each entity has run its own race, or whether[] there has been a relay-style passing of the baton from one to the other. Id. (quotation marks, ellipses, and citations omitted); see also Lab Corp., 813 So. 2d at 270 (“While having common attributes does not automatically impose liability on a successor corporation, merely repainting the sign on the door and using new letterhead certainly gives the appearance that the new corporation is simply a continuation of the predecessor corporation.”). At trial, Centimark established that A to Z Georgia and A to Z Florida were both “family businesses” and essentially “nobody else” worked for the companies besides the Robb family. As to A to Z Georgia, Teresita owned 51% of the stock and was the Secretary/Treasurer. Her stepson, Junior, owned 49% of the stock and Centimark focuses only on mere continuation. Accordingly, we address only mere continuation. 9 was the CEO. Teresita’s husband and Junior’s father, Senior, previously owned a 49% share, but transferred his share to Junior prior to the events in this case. However, Senior remained employed by A to Z Georgia as its Vice President, and he personally worked on the Taylor Wharton and Talla-Com jobs at issue in this case. At some point, Teresita and Senior moved, leaving Georgia for Florida, and A to Z Georgia was registered to do business in Florida for a short time. As to A to Z Florida, in late March 2005—approximately two months after this lawsuit was filed—the Robbs formed A to Z Florida.6 At the time of A to Z Florida’s incorporation, Teresita owned 49% of its stock, and Senior owned 51%.7 Teresita is A to Z Florida’s Secretary/Treasurer, while Senior is its President.8 In summary, Centimark’s evidence showed that: (1) the Robbs owned A to Z Georgia and A to Z Florida in similar capacities; (2) Teresita, Junior, and Senior were the officers and directors of A to Z Georgia; (3) Teresita and Senior were the officers and directors of A to Z Florida; (4) purchase orders from A to Z Georgia were sometimes issued in A to Z Florida’s name; (5) Senior and Junior still worked 6 Centimark’s original complaint named only A to Z Georgia as a defendant. Thereafter, Centimark discovered that A to Z Georgia had ceased doing business and that the Robbs had incorporated A to Z Florida in March 2005, and in May 2005, Centimark filed its amended complaint naming both A to Z Georgia and A to Z Florida as defendants. 7 Teresita is now the sole shareholder of A to Z Florida. 8 Junior is neither a shareholder nor an officer of A to Z Florida. 10 jointly on jobs even after A to Z Georgia ceased doing business, with Junior going to Florida frequently in the winter and Senior going to Pennsylvania frequently in the summer;9 (6) the Robbs personally owned a lot of the A to Z companies’ fixed assets and leased the equipment to the companies; (7) A to Z Florida and A to Z Georgia performed the same type of work and provided the same type of services; (8) from the perspective of the former A to Z Georgia Director of Operations (who moved to Florida with Senior and Teresita), “there were no changes” in day-to-day operations even after A to Z Georgia ceased doing business in December 2004 and A to Z Florida was incorporated in March 2005;10 and (9) A to Z Florida did not even bother to use “new letterhead” upon its formation, cf. Lab Corp., 813 So. 2d at 270, and instead, in October 2005, several months after A to Z Georgia discontinued its operations and A to Z Florida was incorporated, the Robbs were still using A to Z Georgia’s stationery. This wealth of evidence establishes that A to Z Georgia and A to Z Florida had great overlap in their officers, directors, personnel, assets, and stockholders, 9 Junior moved to Pennsylvania in approximately 1999-2000, and A to Z Georgia was registered to do business in Pennsylvania for a short time prior to its December 2004 dissolution. In January 2005, Junior formed A to Z Coatings, Inc., a Pennsylvania corporation (“A to Z Pennsylvania”). A to Z Pennsylvania is not a party to this lawsuit. 10 Richard Schwenk was A to Z Georgia’s Director of Operations and one of the few nonRobbs who worked for the A to Z companies. He left the Robbs’ employ in October 2005 (seven months after A to Z Florida’s incorporation) and testified that as far as he knew, even after A to Z Florida’s incorporation, he was still an employee of A to Z Georgia. 11 and accordingly, defendants have not shown that the court erred in finding A to Z Florida liable to Centimark as a mere continuation of A to Z Georgia. See Lab Corp., 813 So. 2d at 270 (stating that to avoid successor liability, the successor “corporation must not merely be a ‘new hat’ for the [predecessor] corporation, with the same or similar entity or ownership”) (quotation marks and citation omitted); Amjad Munim, 648 So. 2d at 154 (stating that mere continuation is shown “by such things as the same management, personnel, assets, location and stockholders”) (quotation marks and citations omitted).11