Opinion
183 CA 18–01655
03-22-2019
ENERGY COOPERATIVE OF AMERICA, INC., Plaintiff–Appellant, v. LUIGI'S FAMILY BAKERY, INC., and Luigi's Bakery Corp., Defendants–Respondents.
RUPP BAASE PFALZGRAF CUNNINGHAM LLC, BUFFALO (ADAM M. BRASKY OF COUNSEL), FOR PLAINTIFF–APPELLANT. RICHARD J. KUBINIEC, BUFFALO, FOR DEFENDANTS–RESPONDENTS.
RUPP BAASE PFALZGRAF CUNNINGHAM LLC, BUFFALO (ADAM M. BRASKY OF COUNSEL), FOR PLAINTIFF–APPELLANT.
RICHARD J. KUBINIEC, BUFFALO, FOR DEFENDANTS–RESPONDENTS.
PRESENT: WHALEN, P.J., SMITH, CARNI, DEJOSEPH, AND CURRAN, JJ.
MEMORANDUM AND ORDER
It is hereby ORDERED that the order so appealed from is unanimously reversed on the law without costs and the motion is granted. Memorandum: Plaintiff commenced this action asserting a cause of action of de facto merger based on allegations that defendant Luigi's Bakery Corp. (Bakery Corp.) is liable for a judgment entered in plaintiff's favor against its predecessor, defendant Luigi's Family Bakery, Inc. (Family Bakery). Supreme Court denied plaintiff's motion for summary judgment on the complaint, and we now reverse. Factors courts consider in determining whether a de facto merger has occurred include "continuity of ownership; ... a cessation of ordinary business and dissolution of the predecessor as soon as practically and legally possible; ... assumption by the successor of the liabilities ordinarily necessary for the uninterrupted continuation of the business of the predecessor; and ... a continuity of management, personnel, physical location, assets, and general business operation" ( Sweatland v. Park Corp., 181 A.D.2d 243, 245–246, 587 N.Y.S.2d 54 [4th Dept. 1992] ; see R & D Elecs., Inc. v. NYP Mgt., Co., Inc., 162 A.D.3d 1513, 1515, 78 N.Y.S.3d 834 [4th Dept. 2018] ). Not all of these factors are required to demonstrate a merger; " ‘rather, these factors are only indicators that tend to show a de facto merger’ " ( Sweatland, 181 A.D.2d at 246, 587 N.Y.S.2d 54 ).
Here, defendants admitted to continuity of ownership between Family Bakery and Bakery Corp., and to two of the other factors of a de facto merger: cessation of ordinary business operations, and continuity of management, personnel, physical location, and general business operation. In both their answer and their bill of particulars, defendants admitted that the successor corporation, Bakery Corp., was formed in the same month that the predecessor corporation, Family Bakery, ceased operations. They also admitted that the successor corporation used the same address and phone number as the predecessor corporation. We therefore conclude that the court erred in determining that there are issues of fact with respect to the date of incorporation of the successor corporation or the date of dissolution of the predecessor corporation. A case for de facto merger can be made without a legal dissolution where, as here, the predecessor company "has become, in essence, a shell" ( Matter of AT & S Transp., LLC v. Odyssey Logistics & Tech. Corp., 22 A.D.3d 750, 753, 803 N.Y.S.2d 118 [2d Dept. 2005] ). We also conclude that, because this was not a default judgment, the court erred in determining that plaintiff was required to submit affidavits of nonmilitary service (see Matter of Roslyn B. v. Alfred G., 222 A.D.2d 581, 581, 635 N.Y.S.2d 283 [2d Dept. 1995] ; Matter of Title Guar. & Trust Co. v. Duffy, 267 App.Div. 444, 446, 46 N.Y.S.2d 441 [1st Dept. 1944] ).