Summary
In Hayden Capital USA, for example, the factor was satisfied where shareholders of the predecessor corporation "indirectly own[ed]" only "a 12% interest" in the successor corporation.
Summary of this case from In re Gen. Motors LLC Ignition Switch Litig.Opinion
No. 11 Civ. 594 (DAB)
04-23-2012
HAYDEN CAPITAL USA, LLC, Plaintiff, v. NORTHSTAR AGRI INDUSTRIES, LLC, PICO NORTHSTAR, LLC, and PICO NORTHSTAR HALLOCK, LLC, d/b/a NORTHSTAR AGRI INDUSTRIES, Defendants. NORTHSTAR FOUNDERS, LLC, f/k/a NORTHSTAR AGRI INDUSTRIES, LLC, Defendant and Third-Party Plaintiff, v. PETER WILLIAMS, STEPHEN HAYDEN, and HAYDEN CAPITAL CORP., Third-Party Defendants
MEMORANDUM & ORDER
Defendants PICO Northstar, LLC ("PICO Northstar") and PICO Northstar Hallock, LLC ("PNS Hallock") (together, the "PICO Defendants") move pursuant to Fed. R. Civ. P. 12(b)(6) to dismiss Count Four of the Amended Complaint of Plaintiff Hayden Capital USA, LLC ("Hayden Capital"), which alleges that PICO Northstar and PNS Hallock should be held liable as successors for the alleged breach of contract by Defendant Northstar Agri Industries, LLC ("Northstar") under the doctrines of "mere continuation" or "de facto merger." For the reasons set forth herein, the Motion to Dismiss is GRANTED.
I. BACKGROUND
The facts of the underlying breach of contract claim are discussed in detail in this Court's Order denying Defendant Northstar's Motion to Dismiss (Docket #17; Hayden Capital USA, LLC v. Northstar Agri Indus., LLC, No. 11 Civ. 594, 2011 WL 5024193 (S.D.N.Y. Oct. 20, 2011)), and will not be repeated here. The following facts from the Amended Complaint are assumed to be true for purposes of this Motion to Dismiss.
PICO Northstar is a Limited Liability Company formed under the laws of Delaware. (Am. Compl. at ¶ 6.) PNS Hallock is a Limited Liability Company formed under the laws of Delaware. (Id. at ¶ 7.) PNS Hallock is wholly owned by PICO Northstar. (Id.)
As of April 27, 2008, Northstar and Hayden Capital entered into a written agreement (the "Agreement") pursuant to which Hayden Capital would assist Northstar in its efforts to raise capital through equity and/or debt financing for a Minnesota canola processing and refining facility. (Am. Compl. Ex. A.) The Agreement specifically provides that it is binding upon each party's successors: "This Agreement, Annex A and all rights, liabilities and obligations hereunder and thereunder shall be binding upon and inure to the benefit of each party's successors but may not be assigned without the prior written approval of the other party." (Id. at ¶ 18.)
On December 30, 2010, Northstar publicly announced that it had closed with PICO on PICO'S $60,000,000.00 equity financing and that Northstar had secured a $100,000,000.00 loan facility through ING Capital LLC ("ING"). (Am. Compl. at ¶ 22.) Northstar, in a press release dated December 30, 2010, described these agreements as constituting "financing" for the Minnesota canola processing plant. (Id.) PICO, which had been introduced to Northstar by Hayden Capital, was instrumental in securing the debt financing from ING. (Id. at ¶ 23.) The $60,000,000.00 equity financing from PICO and the $100,000,000.00 debt financing from ING were considered to be part of a package of financing that was necessary for the construction of the Minnesota plant. (Id.)
In order to effectuate the financing, Northstar contributed substantially all of its assets and liabilities to PICO Northstar, and PICO—through its wholly-owned subsidiary PICO Northstar Management, LLC ("PICO NSM")—contributed $60,000,000.00 in equity capital to PICO Northstar. (Id. at ¶ 45.) PICO Northstar is the sole member and owner of Defendant PNS Hallock, which continues to do business as Northstar Agri Industries and is the operating company of the Minnesota facility. (Id.) Neil Juhnke, who was President of Northstar, is now the President and Chief Operating Officer of PNS Hallock. (Id.)
In its Form 8-K dated December 23, 2010, which it filed with the United States Securities and Exchange Commission, PICO explicitly stated that Northstar contributed all of its assets to PICO Northstar and that PICO Northstar assumed all of Northstar's liabilities:
Under the Agreements, PICO-NSM and Northstar LLC, respectively, became holders of 88% and 12% of the membership interests in an intermediate holding company, PICO Northstar, LLC ("PICO Northstar"), in exchange for (i) PICO-NSM contributing $60,000,000 in cash to PICO Northstar, (ii) Northstar contributing to PICO Northstar all of Northstar's assets (including construction, engineering, and technology contracts with Karges-Faulconbridge Inc., McGough Industrial Construction LLC, and Crown Iron Works and certain real property) and (iii) PICO Northstar assuming all of Northstar's liabilities. Immediately after and simultaneously with such contributions and assumption, PICO Northstar transferred the aforementioned cash, assets and liabilities to PICO Northstar Hallock LLC ("PNS Hallock"); as a result of this transfer, PICO Northstar became the sole member and owner in PNS Hallock. PNS Hallock will do business as Northstar Agri Industries and will serve as the operating company for the Project.(Id. at ¶ 48.)
Similarly, an agreement memorializing the transaction, entitled "Contribution Agreement By and Among PICO Northstar Management, LLC[,] Northstar Agri Industries, LLC and PICO-Northstar, LLC," dated September 21, 2010 (the "Contribution Agreement") stated that "Northstar conducts a business in the oilseed industry that plans, finances, builds and operates processing plants and refineries (the "Business"), the first project of which is a canola processing plant with an integrated refinery in Hallock, Minnesota." (Id. at ¶ 49) (emphasis in original). The Contribution Agreement also states "Northstar wishes to contribute the Business to [PICO Northstar] in exchange for which Original Capital Contribution Northstar shall become a Member (as defined in the Operating Agreement) in [PICO Northstar] and shall receive the Percentage Interest in [PICO Northstar] specified on the signature pages of the Operating Agreement." (Id.)
The assets acquired by the PICO Defendants encompassed the entire value of Northstar as a going concern, and included substantially all assets of Northstar, including construction, engineering, and technology contracts, certain real property, the business name of Northstar, the Northstar website, and the Northstar domain name (www.northstaragri.com). (Id. at ¶ 50.) In addition, the PICO Defendants assumed all liabilities of Northstar necessary for the uninterrupted continuation of the business of Northstar. (Id.) Additionally, the PICO Defendants acquired all of Northstar's intellectual property and goodwill. (Id. at ¶ 52.) While Northstar has approximately a 12% interest in PICO Northstar, it is no longer a going business concern and has no office. (Id. at ¶ 53.)
II. DISCUSSION
A. Legal Standard on a Motion to Dismiss
For a complaint to survive dismissal under Rule 12(b)(6), the plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "A claim has facial plausibility," the Supreme Court has explained,
"when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, it 'stops short of the line between possibility and plausibility of 'entitlement to relief.'"Aahcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 556-57). "[A] plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (internal quotation marks omitted). "In keeping with these principles," the Supreme Court has stated,
"a court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations. When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief."Iqbal, 129 S.Ct. at 1950.
In ruling on a 12(b)(6) motion, a court may consider the complaint as well as "any written instrument attached to the complaint as an exhibit or any statements or documents incorporated in it by reference." Zdenek Marek v. Old Navy (Apparel) Inc., 348 F.Supp.2d 275, 279 (S.D.N.Y. 2004) (citing Yak v. Bank Brussels Lambert, 252 F.3d 127, 130 (2d Cir. 2001) (internal quotations omitted)).
B. Successor Liability Claim
The PICO Defendants argue that Hayden Capital's claim for successor liability must be governed by Delaware law, and that Plaintiff has failed to state a claim for successor liability under either the de facto merger doctrine or the mere continuation doctrine. Hayden Capital argues that New York Law governs the successor liability claim, and that the claim is sufficiently pled.
1. Choice of Law
In this federal action based on diversity jurisdiction, the Court must look to the choice of law rules of New York to determine which state's substantive law governs with regard to successor liability. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941); Beth Israel Med. Ctr. v. Horizon Blue Cross & Blue Shield of NJ, Inc., 448 F.3d 573, 582 (2d Cir. 2006). As the issue before this Court is whether the PICO Defendants are liable as successors for Northstar's alleged breach of contract, and not whether Northstar in fact breached the contract, the Court considers the question of what law applies to Hayden Capital's claim that a de facto merger or mere continuation occurred, and not to the underlying breach of contract claim. See, e.g., Planet Payment, Inc. v. Nova Information Systems, Inc., No. 07 Civ. 2520 (CBA)(RML), 2011 WL 1636921, at *5, n.3 (E.D.N.Y. Mar. 31, 2011) (noting that forum selection clause in underlying contract did not control successor liability claim); Soviet Pan Am Travel Effort v. Travel Comm., Inc., 756 F.Supp. 126, 131 (S.D.N.Y. 1991) (applying New York law to underlying breach of contract claim and Maryland law to veil-piercing and successor liability claims).
Under New York's choice of law rules, a court first determines whether there is an actual conflict between the laws of the relevant jurisdictions. See Beth Israel, 448 F.3d at 582-83. An actual conflict exists where the applicable law from each jurisdiction provides differing rules that have the potential to affect the outcome of the case significantly. Finance One Public Co. v. Lehman Bros. Special Fin., Inc., 414 F.3d 325, 331 (2d Cir. 2005).
As the PICO Defendants concede, both New York and Delaware recognize that when one company sells or transfers all of its assets to another company, the acquiring company generally does not become liable for the debts or liabilities of the seller/transferor. See, e.g., Cargo Partner AG v. Albatrans, Inc., 352 F.3d 41, 45, (2d Cir. 2003). This is because "[t]he amount paid for the assets would ordinarily be available to satisfy those debts, at least in part. So long as the buyer pays a bone fide, arms-length price for the assets, there is no unfairness to creditors in thus limiting recovery to the proceeds of the sale . . . ." Id. Both Delaware and New York also recognize that there are exceptions to this rule: (1) where the buyer expressly assumed the debt at issue; (2) where the transaction amounted to a fraud; (3) where the transaction constitutes a de facto merger; or (4) where the successor is a mere continuation of the predecessor. Id.; Ross v. Desa Holdings Corp., No. 05C-05-013, 2008 WL 4899226, at *4 (Del. Super. Ct. Sept. 30, 2008). Only the de facto merger and mere continuation exceptions are applicable in this case. (Am. Compl. at ¶ 55.)
2. De Facto Merger
Under Delaware law, "[i]n general, no liability has been found under a de facto merger theory so long as the transfer was in the ordinary course of business and the seller received and held consideration." Fehl v. S.W.C. Corp., 433 F.Supp. 939, 947 (D. Del. 1977). "Only in a few cases, where the consideration passed directly to the transferor's stockholders without coming into possession of the transferor corporation, has a de facto merger been found." Id.; see also Magnolia's at Bethany, LLC v. Artesian Consulting Engineers Inc., No. S11 C-04-013, 2011 WL 4826106, at *3 (Del. Super. Ct. Sept. 19, 2011) ("The elements necessary to create a de facto merger under Delaware law are the following: (1) one corporation transfers all of its assets to another corporation; (2) payment is made in stock, issued by the transferee directly to the shareholders of the transferring corporation; and (3) in exchange for their stock in that corporation, the transferee agreeing to assume all the debts and liabilities of the transferor."); Maine State Retirement System v. Countrywide Fin. Corp., No. 10 Civ. 302 (MRP), 2011 WL 1765509, at *5-*7 (C.D. Cal. Apr. 20, 2011) (collecting the scant authority on the de facto merger exception under Delaware law, and listing other factors that would support a finding of de facto merger, including: (1) whether the asset transfer complied with the statute governing an asset sale like the one at issue; (2) whether creditors or stockholders were injured by the company's failure to comply with those statutes; and (3) fraud or bad faith).
Under New York law, "[t]he hallmarks of a de facto merger include: continuity of ownership; cessation of ordinary business and dissolution of the acquired corporation as soon as possible; assumption by the successor of the liabilities ordinarily necessary for the uninterrupted continuation of the business of the acquired corporation; and continuity of management, personnel, physical location, assets and general business operation." Fitzgerald v. Fahnestock & Co., 286 A.D.2d 573, 574 (N.Y. 1st Dep't 2001). In contract cases such as this one, however, the Second Circuit has made clear that a plaintiff must allege continuity of ownership to establish a claim for successor liability based on the de facto merger doctrine. See New York v. Nat'l Service Indus., Inc., 460 F.3d 201, 211 (2d Cir. 2006) (citing Cargo Partner, 352 F.3d at 46).
Accordingly, to state a claim for successor liability based on a de facto merger theory in a breach of contract case under either New York or Delaware law, a plaintiff must allege continuity of ownership between the selling and acquiring corporations. Courts in New York and in Delaware, however, interpret this element differently. In New York, courts have found the continuity of ownership requirement satisfied where the shareholders of the selling corporation retain only an indirect interest in the assets that were sold. See In re New York City Asbestos Litig., 15 A.D.3d 254, 256 (N.Y. 1st Dep't 2005) ("The first criterion, continuity of ownership, exists where the shareholders of the predecessor corporation become direct or indirect shareholders of the successor corporation as the result of the successor's purchase of the predecessor's assets, as occurs in a stock-for-assets transaction."); Cargo Partner AG v. Albatrans Inc., 207 F.Supp.2d 86, 104-105 (S.D.N.Y. 2002) ("The fact that the seller's owners retain their interest in the supposedly sold assets (through their ownership interest in the purchaser) is the 'substance' which makes the transaction inequitable."), aff'd 352 F.3d 41 (2d Cir. 2003).
In contrast, Delaware courts do not consider the "continuity of ownership" element satisfied unless the shareholders of the predecessor corporation acquire a direct ownership interest in the successor corporation. See, e.g., Magnolia's, 2011 WL 4826106, at *3 (noting that to find a de facto merger, shares in the transferee corporation must be issued directly to shareholders of the transferring corporation); Drug, Inc. v. Hunt, 168 A. 87, 95 (Del. 1933) (holding that defendant was not entitled to judgment as a matter of law on de facto merger claim where stock in the successor company was issued directly to the shareholders of the predecessor company); Orzan Lumber Co. v. Davis Sewing Mach. Co., 284 F. 161 (D. Del. 1922) (finding no liability on the part of the successor corporation where predecessor corporation received common stock of successor corporation with a par value equal to the assets transferred).
Plaintiff here alleges that in exchange for contributing all of its assets to PICO Northstar, Northstar received a 12% ownership interest in PICO Northstar. (Am. Compl. at ¶ 48.) The shareholders of Northstar now indirectly own a 12% interest in PICO Northstar. This interest would be sufficient to satisfy the "continuity of ownership" requirement under New York law, but would be fatal to Plaintiff's de facto merger claim under Delaware law. Accordingly, the Court finds that an actual conflict exists between New York and Delaware law on the issue of de facto merger.
"As the application of the de facto merger exception to the general rule of successor liability 'sounds more in public law than in private law . . . New York courts would resolve this choice of law issue through interest analysis."' Planet Payment, Inc., 2011 WL 1636921, at *6 (quoting Finance One, 414 F.3d at 336). "Interest analysis is a 'flexible approach intended to give controlling effect to the law of the jurisdiction which, because of its relationship or contact with the occurrence or the parties, has the greatest concern with the specific issue raised in the litigation.'" Finance One, 414 F.3d at 337 (quoting Cooney v. Osgood Mach., Inc., 81 N.Y.2d 66, 72 (N.Y. 1993)). "The contacts of the parties and occurrences with each jurisdiction are thus factors to be considered in applying interest analysis, together with the policies underlying each jurisdiction's rules, the strength of the governmental interests embodied in these policies, and the extent to which these interests are implicated by the contacts." Id.
When plaintiffs seek to pierce the corporate veil, New York courts generally apply the law of the state of the defendant's incorporation. See, e.g., Fletcher v. Atex, Inc., 68 F.3d 1451, 1456 (2d Cir. 1995); Time, Inc. v. Simpson, No. 02 Civ. 4917 (MBM), 2003 WL 23018890, at *2 (S.D.N.Y. Dec. 22, 2003); United Feature Syndicate, Inc. v. Miller, 216 F.Supp.2d 198, 215 (S.D.N.Y. 2002); Soviet Pan Am, 756 F.Supp. at 131 ("Because a corporation is a creature of state law whose primary purpose is to insulate shareholders from legal liability, the state of incorporation has the greater interest in determining when and if that insulation is to be stripped away."). New York courts will disregard the state of incorporation only when the Defendant's contacts and the events at issue in the case substantially implicate New York. See, e.g., Serio v. Ardra Ins. Co., 304 A.D.2d 362, 362 (N.Y. 1st Dep't 2003) (applying New York law to veil-piercing claim where defendant was incorporated in Bermuda but was controlled from New York and all transactions giving rise to the complaint occurred in New York); UBS Sec. LLC v. Highland Capital Mgmt., L.P., 924 N.Y.S.2d 312, at *3 (N.Y. Sup. Ct. 2011) (applying New York law where defendant, incorporated in the Cayman Islands, had no contact with that jurisdiction but conducted business in New York and had contacts with plaintiff in New York).
Courts in this District have extended the general rule applicable in veil-piercing cases to claims for successor liability like the one at issue here. See Planet Payment, 2011 WL 1636921, at *7 (finding defendant's place of incorporation dispositive for successor liability choice of law analysis); Soviet Pan Am, 756 F.Supp. at 131 (finding that a successor liability claim, like a veil-piercing claim, implicates questions of corporate liability for the acts of others, and that the state of incorporation has the greater interest in such claims); see also United States Fidelity & Guaranty Co. v. Petroleo Brasileiro S.A.-Petrobras, No. 98 Civ. 3099 (THK), 2005 WL 289575, at *5 (S.D.N.Y. Feb. 4, 2005).
This Court agrees with the PICO Defendants that Delaware, as the state of incorporation, has a greater interest in the successor liability claim than New York. Although Plaintiff is correct that the PICO Defendants' contacts with Delaware are minimal, their contacts with New York are non-existent. They were not parties to the contract at issue in this case and are not bound by its forum selection clause. Plaintiff has not alleged that they do business in New York or that they had contacts with New York regarding the events giving rise to this litigation. Although Plaintiff is correct that New York has an interest in the abilities of its citizens to enforce their contract rights, see Stillman v. Nickel Odeaon, S.A., 608 F.Supp. 1050, 1057 (S.D.N.Y. 1985), the contract at issue in this case was with Northstar, and not with the PICO Defendants. Plaintiff's only claim against the PICO Defendants is for successor liability, and this Court agrees with the other courts to have considered the issue that the state of incorporation has a strong interest in such claims.
As Delaware has a strong interest in the successor liability of the PICO Defendants and New York has virtually no interest, Delaware law will govern. Because consideration for the asset sale must be paid directly to the predecessor company's shareholders to sustain a claim for successor liability under the de facto merger exception under Delaware law, and Plaintiff here can allege only indirect ownership, Plaintiff has failed to state a claim for successor liability under the de facto merger doctrine.
3. Mere Continuation
The PICO Defendants also claim that there is a conflict between Delaware and New York law as it relates to the "mere continuation" exception. Relying on Magnolia's, 2011 WL 4826106, Defendants contend that Delaware courts will not find that the mere continuation exception applies unless the predecessor no longer continues as a corporate entity, see Id. at *3. This, Defendants claim, conflicts with courts in New York. This Court disagrees.
Although Magnolia's states that the test for mere continuation is "the continuation of the corporate entity," Id., the next sentence of the opinion demonstrates that formal dissolution of the predecessor company may not be necessary to sustain a claim for mere continuation under Delaware law. The court states, "[i]mposition of successor liability is appropriate only where the new entity is so dominated and controlled by the old company that separate existence must be disregarded." Similarly, New York courts emphasize the importance of the continuation of the corporate entity to the mere continuation analysis. See, e.g., Cargo Partner, 207 F.Supp.2d at 95.
Although courts applying New York law have on occasion applied the mere continuation doctrine where the predecessor corporate entity continued as a mere shell corporation, those courts have required rigorous showings that the successor entity is essentially the same as the predecessor entity. See, e.g., Kaur v. American Transit Ins. Co., 926 N.Y.S.2d 517, at *3 (N.Y. 1st Dep't 2011) (finding that defendant law firm was not entitled to summary judgment on plaintiff's mere continuation claim where partners in successor law firm were all partners in predecessor law firm, change in corporate entity was apparently due only to the retirement of one partner, and the predecessor's active registration as a corporation in New York was the only evidence of its continued existence); Societe Anonyme Dauphitex v. Schoenfelder Corp., 2007 WL 3253592, at *5 (S.D.N.Y. Nov. 2, 2007) (finding that plaintiff sufficiently alleged mere continuation where predecessor and successor company had continuity of ownership, shared office space, shared an address, shared employees and management, and where it was logical to infer that the successor company was created to avoid contractual liability).
These New York cases do not on their face conflict with the decision in Magnolia's, which seems to contemplate application of the mere continuation exception even where the predecessor entity survived in certain rare cases where the predecessor's control and domination over the successor warrants it. Accordingly, there is no actual conflict between Delaware and New York law on the mere continuation exception, and New York law applies.
"The mere continuation exception is 'designed to prevent a situation whereby the specific purpose of acquiring assets is to place those assets out of reach of the predecessor's creditors. . . . Thus, the underlying theory of the exception is that[ ] if [a] corporation goes through a mere change in form without a significant change in substance, it should not be allowed to escape liability.'" Societe Anonyme Dauphitex, 2007 WL 3253592, at *6 (quoting 15 W. Fletcher, Cylopedia of the Law of Private Corporations § 7124.10 (perm ed., rev. vol. 1999)). "A continuation envisions a common identity of directors [and] stockholders and the existence of only one corporation at the completion of the transfer." Id. (internal quotation marks omitted).
Nevertheless, as discussed above, New York courts have occasionally denied motions to dismiss mere continuation claims where the predecessor company was still in existence. In Kidz Cloz, Inc. v. Officially for Kids, Inc., No. 00 Civ. 6270 (DC), 2002 WL 1586877 (S.D.N.Y. July 17, 2002), the court found that plaintiffs were entitled to discovery on their mere continuation claim even though the predecessor company was not extinguished. Id., at *5. There, the predecessor company was liquidated and the successor company assumed its assets and business operations in exchange for an agreement to fund ongoing operations so that outstanding orders could be filled. Id., at *1. Creditors of the predecessor company were forced to take significant discounts on the company's debt repayment. Id. Although the predecessor survived the transaction and retained an asset, plaintiffs alleged that the only asset retained was a litigation claim that was non-transferable. Id., at *5. Furthermore, in Societe Anonyme Dauphitex, 2007 WL 3253592, plaintiffs alleged not only that the successor corporation acquired the predecessor's assets, business location, address, employees, good will and management, but also that there was continuity of ownership between the predecessor and successor and plausible allegations that the successor was formed for the express purpose of avoiding contractual liability. Id., at *6-*7.
Here, Plaintiff fails to plead adequately a claim for successor liability based on the mere continuation exception. Plaintiff's allegation that Northstar exists only as a "shell" is belied by their allegation that Northstar retains an asset, namely a 12% interest in PICO Northstar. See Marenyi v. Packard Press Corp., No. 90 Civ. 4439, 1994 WL 16000129, at *4, *9 (S.D.N.Y. June 9, 1994) (finding that successor was not a "mere continuation" where predecessor retained some assets and the right to a percentage of accounts receivable). Nor is the indirect, minority ownership in PICO-Northstar by Northstar's shareholders comparable to the total continuity present in cases where courts have found that a successor was a mere continuation. See Societe Anonyme Dauphitex, 2007 WL 3253592, at *1 (noting that the same individual owned both the predecessor and successor corporations). Finally, Plaintiff makes no allegation that the PICO Defendants were created for the purpose of avoiding liability. See Id., at *6-*7. What Plaintiff here has alleged is a continuation of Northstar's business. It is clear under New York law that such allegations are insufficient as a matter of law to state a claim under the "mere continuation" exception, which requires "a continuation of the selling corporation in a different form." Cargo Partner AG, 207 F.Supp.2d at 95 (emphasis in original). Such allegations are absent here.
C. Leave to Replead
When a complaint has been dismissed, permission to amend it "shall be freely given when justice so requires." Fed. R. Civ. P. 15(a). Nevertheless, a court may dismiss without leave to replead when amendment would be "futile," or would not survived a motion to dismiss. Oneida Indian Nation of New York v. City of Sherrill, 337 F.3d 139, 168 (2d Cir. 2003) (internal citations omitted), rev'd on other grounds sub nom. City of Sherrill v. Oneida Indian Nation of New York, 544 U.S. 197 (2005). On the record before the Court, including, most significantly, Northstar's retention of a significant asset in the form of a 12% interest in PICO Northstar, it appears beyond doubt that Plaintiff can prove no set of facts in support of its claims that would entitle it to relief against the PICO Defendants. Because an additional amended complaint would not be able to survive a motion to dismiss, Plaintiff's claim for Successor liability against the PICO Defendants is hereby dismissed without leave to replead.
III. CONCLUSION
For the reasons set forth above, the Motion to Dismiss filed by PICO Northstar, LLC and PICO Northstar Hallock (Docket # 35) is GRANTED. Plaintiff's Fourth Claim for Relief is hereby DISMISSED with prejudice and without leave to replead.
SO ORDERED.
Dated: New York, New York
April 23, 2012
/s/_________
Deborah A. Batts
United States District Judge