Opinion ID: 675245
Heading Depth: 3
Heading Rank: 1

Heading: Transfer of Interest

Text: 25 Rule 25(c) authorizes a substitution of parties after a transfer of interest has occurred. The complaint named Hardaway and Imperial Associates as defendants in their capacity as general partners in Riviera Beach Associates. According to Hardaway's deposition testimony, Main Street Properties purchased all of the assets of Imperial Associates during the pendency of this litigation. Hardaway owns the majority of shares in Hardaway Group, Inc., which in turn owns Main Street, and Hardaway currently is the president and chairman of Main Street. Clearly these closely held corporations are intimately related to one another. Sworn testimony from the president of the company is a sufficient basis for substituting Main Street for Imperial Associates. 26 Transferring assets of a corporation that is engaged in litigation and its effect on the lawsuit is governed by state law. In Defense Supplies Corp. v. Lawrence Warehouse Co., 336 U.S. 631, 69 S.Ct. 762, 93 L.Ed. 931 (1949), the Supreme Court stated: 27 [A] time-honored feature of the corporate device is that a corporate entity may be utterly dead for most purposes, yet have enough life remaining to litigate its actions. All that is necessary is a statute so providing. Unless the statutory terms are observed, however, the consequences of total dissolution attach, and ... the actions abate. 28 Id. at 634-35, 69 S.Ct. at 763-64 (citations omitted). Neither the district court nor the parties examined the effect of state law. Imperial Associates was a Tennessee corporation, but the state of incorporation for Main Street does not appear in the record. If Main Street is a corporation of another state, this might present a choice of law question. On the surface this appears to be a problem and in other circumstances we might reverse only as to Main Street's liability to allow the district court to address these issues. However, under these facts a reversal would not impact on the outcome of this case. 29 If we were to reverse the judgment as to Main Street as an individual defendant, it would still be jointly and severally liable as a general partner of Riviera Beach. Riviera Beach received proper notice and appeared at trial. The fact that the composition of the partnership changed during the course of litigation does not affect the liability of the partnership itself.