Opinion ID: 196374
Heading Depth: 4
Heading Rank: 1

Heading: Successor Liability Generally

Text: -10- 10 The corporate law doctrine of successor liability comprises a set of exceptions to the general rule that a corporation purchasing the assets of another is not liable for the debts of the seller corporation. The parties' briefs rely on Dayton v. Peck, Stow & Wilcox Co., 739 F.2d 690, 692 (1st Cir. 1984) (applying Massachusetts law) to set forth the general rule and the exceptions: The general rule in the majority of American jurisdictions, including Massachusetts, is that a company which purchases the assets of another company is not liable for the debts and liabilities of the transferor. The general rule is subject to four well-recognized exceptions permitting liability to be imposed on the purchasing corporation: (1) when the purchasing corporation expressly or impliedly agreed to assume the selling corporation's liability; (2) when the transaction amounts to a consolidation or merger of the purchaser and seller corporations; (3) when the purchaser corporation is merely a continuation of the seller corporation; or (4) when the transaction is entered into fraudulently to escape liability for such obligations. (citations omitted). Carreiro argues that Main is the successor corporation to Leach based on the second (de facto merger) and third (mere continuation) exceptions. Main counters persuasively that neither of these exceptions apply because there was no sale or other transfer of assets from Leach to Main. Main asserts that because the de facto merger and mere continuation doctrines are exceptions to the general rule of non-liability following an -11- 11 asset purchase, they necessarily presuppose a sale or other transfer of assets from one corporation to its alleged successor. We agree. As discussed below, the cases and other authority cited by both parties apply the de facto merger or mere continuation exceptions only where there has been a purchase or other transfer of assets; we have neither been directed to nor found any authority supporting the application of these exceptions in the absence of some transfer of assets.