Successor Liability Claim – De Facto Merger

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WI Supreme Court

Case Name: Veritas Steel, LLC

Case No.: 2020 WI 3

Focus: Successor Liability Claim – De Facto Merger

Lunda Construction Company (Lunda) alleges that Veritas Steel, LLC (Veritas), and third-party defendants Atlas Holdings, LLC (Atlas), and Bridge Fabrication Holdings, LLC, took unfair advantage of PDM Bridge, LLC’s (PDM) loan defaults, “with the intent to gain ownership of PDM’s lucrative steel fabrication business for grossly inadequate consideration through a secretive, unlawful and fraudulent process designed to render PDM an empty shell with no assets remaining to satisfy PDM’s eight-figure liability to Lunda.”

The circuit court granted summary judgment to Veritas on Lunda’s successor liability claim because there was no genuine issue of material fact as to the de facto merger, mere continuation, and fraudulent transaction exceptions to the general rule against successor liability. The court of appeals affirmed as to the de facto merger and mere continuation exceptions, the only exceptions Lunda raised on appeal.

The question before us is whether the de facto merger, mere continuation, and fraudulent transaction exceptions to the rule against successor liability apply in this case to impose successor liability on Veritas. Lunda asks this court to read Fish v. Amsted Indus., Inc., 126 Wis. 2d 293, 376 N.W.2d 820 (1985), as having expanded the de facto merger and mere continuation exceptions. Lunda further asserts that the court of appeals erroneously dismissed its successor liability claim in light of the fraudulent transaction exception.

We reject Lunda’s expanded reading of Fish, 126 Wis. 2d 293, and conclude that Lunda has not raised a genuine issue of material fact as to an “identity of ownership” between Veritas and PDM, the key component necessary to satisfy the de facto merger and mere continuation exceptions. We further conclude that by not raising the fraudulent transaction exception before the court of appeals, Lunda forfeited that argument. We therefore affirm the court of appeals.

Affirmed

Concur: ROGGENSACK, C.J., filed a concurring opinion.

Dissent:

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Derek A Hawkins is trademark corporate counsel for Harley-Davidson. Hawkins oversees the prosecution and maintenance of the Harley-Davidson’s international trademark portfolio in emerging markets.