Fizzano Bros. Concrete, Aplt v. XLN, Inc., et al (dissenting)

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[J-91-2010][M.O. McCaffery, J.] IN THE SUPREME COURT OF PENNSYLVANIA MIDDLE DISTRICT FIZZANO BROTHERS CONCRETE PRODUCTS, INC. : : : v. : : XLN, INC. SUCCESSOR IN INTEREST TO : SYSTEM DEVELOPMENT GROUP, INC. : : v. : : SHORE CONSULTANTS, LTD., GREGG A. : MONTGOMERY, DAVID BINDER AND : XLNT SOFTWARE SOLUTIONS, INC. : : APPEAL OF: FIZZANO BROTHERS : CONCRETE PRODUCTS, INC. : No. 29 MAP 2010 Appeal from the Order of the Superior Court at No. 1896 EDA 2007, dated 5/15/09, reversing the order of the Delaware County Court of Common Pleas, Civil Division, entered on 9/14/07 at No. 01-11752 ARGUED: November 30, 2010 DISSENTING OPINION MR. JUSTICE SAYLOR DECIDED: March 26, 2012 I have difficulty with the looseness of the test the majority devises to govern de facto mergers, as I believe it diminishes the degree of certainty attaching to corporate transactions. On the merits, were this entirely a paper transaction, I might support the result obtained (albeit such a paper scenario would seem more similar to mere continuation rather than de facto merger, assuming absolute continuity of ownership should not be required under either theory). Here, however, the purchaser -- a corporation with shareholders independent of the seller -- paid more than $250,000 as part of the consideration in the relevant asset purchase transaction. Cf. 19 C.J.S. CORPORATIONS §911 (2011) (opining that [t]he crucial factor in determining whether there has been a de facto merger or continuation of business, resulting in successor liability, is whether adequate cash consideration was paid for the predecessor corporation s assets ). To the extent the Court dilutes the continuity of ownership inquiry, I believe it should include an element focusing on the cash consideration to guard against unfairness to stockholders in a purchasing company. Notably, there is no discussion in the briefs of any claim that the consideration provided by XLNT was inadequate in this regard. On this record, to me, Appellant s claim against XLNT should rise or fall on the merits of its theory that the asset purchase transaction entailed a fraudulent transfer. Notably, such theory was rejected by the trial court and is outside the scope of the present appeal. [J-91-2010][McCaffery, J.] - 2

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