In a November 1, 2011 decision by Justice Driscoll, the court denied defendant TeamPositions Inc.’s motion for summary judgment dismissing the plaintiff’s complaint and to dismiss the second cause of action sounding in gross negligence. TeamPositions argued that it was neither a party to, nor an intended beneficiary of the contract (“Contract”), which lays at the heart of the action, because it was between the plaintiffs and Magill Associates, Inc. (“Magill”), the former identity of named-defendant Lligam Associates, Inc., so TeamPositions could not be held liable under it. At issue was a transaction that was labeled as an asset purchase agreement, through which the plaintiffs asserted TeamPositions acquired Magill’s business, including the Contract. While the purchaser of a corporation’s assets ordinarily does not become liable for the debts of its predecessor, an exception exists for de facto mergers, including where a transaction structured as a purchase of assets is deemed an attempt to fraudulently escape debt obligations. The court denied TeamPositions’ motion for summary judgment, finding that issues of fact existed regarding the application of the de facto merger doctrine, and therefore whether TeamPositions should be held liable under the Contract. On the gross negligence cause of action, TeamPositions argued that a breach of contract cannot be considered a tort unless a legal duty, existing independent of the contract, has been violated. TeamPositions asserted the plaintiffs failed to allege such a duty, but the court held that allegations in the complaint sufficiently supported such a conclusion. Therefore, the court denied the motion to dismiss this cause of action.
Long Is. Med. v. Lligam Assoc., Inc., Sup Ct, Nassau County, November 1, 2011, Driscoll, J, Index No. 005500 /10.