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Tuesday, April 13, 2021

Sucessor liability examined 160 WEST BROADWAY ASSOCIATES, LP VS. 1 MEMORIAL DRIVE, LLC, ET AL. (L-4142-15, PASSAIC COUNTY AND STATEWIDE) (A-2454-18)

Sucessor liability examined 160 WEST BROADWAY ASSOCIATES, LP VS. 1 MEMORIAL DRIVE, LLC, ET AL. (L-4142-15, PASSAIC COUNTY AND STATEWIDE) (A-2454-18)

Following a bench trial, the judge concluded defendant 1 Memorial Drive, LLC, was the successor of defendant Amma, Corp., and entered judgment in favor of plaintiff, Amma's landlord, for unpaid rent for the balance of the lease extension. The judge concluded exceptions to the general rule that a transferee is generally not liable for the debts of the transferor, see Woodrick v. Jack J. Burke Real Estate, Inc., 306 N.J. Super. 61, 72–73 (App. Div. 1997), applied, even though he found that the only asset Amma transferred was a trademarked name, Super Supermarket. The judge made no finding as to the actual value of the trademark, which 1 Memorial had been using for nearly one year and which several other supermarkets in New Jersey used. Nevertheless, using his personal knowledge of other businesses in the city, and their recognizable business names, the judge found successor liability.

Citing several cases from other jurisdictions and treatises, the court concluded that the transfer of all or substantially all of the predecessor entity's assets is a predicate to any finding of successor liability as to the successor entity. In this case, the substantial credible evidence supported a finding that the transfer of a generic trademark was of limited value, and plaintiff failed to prove that Amma transferred any, much less all or substantially all, of its assets to 1 Memorial. The court reversed and vacated the judgment.