Executive Overview

• The First Department holds that a breach-of-lease claim premised on “mere continuation” successor liability can survive a CPLR 3211 motion even where multiple distinct purchasers acquired the predecessor’s assets in separate transactions.
• Continuity of ownership is not required for “mere continuation”; “effective extinguishment” of the predecessor may be pleaded without formal dissolution, particularly at the motion-to-dismiss stage.
• Documentary evidence did not “utterly refute” the mere-continuation theory because the asset purchase agreements did not disclose consideration; allegations that proceeds went to an overseas parent and that the tenant ceased operations were sufficient to proceed to discovery.
• Fraud-based successor liability and tortious interference with contract were properly dismissed on the pleadings for lack of particularization and “but-for” causation, respectively.

I. Introduction

This appeal arises out of the demise of Hunter Boot USA LLC’s U.S. operations and the fallout with its Manhattan landlord, Avamer 57 Fee LLC, under a commercial showroom/office lease at 57 West 57th Street. Following the British “administration” of Hunter’s parent, two well-known brand operators—Authentic Brands Group LLC (Authentic) and Marc Fisher LLC (Fisher)—bought different slices of Hunter Boot USA’s assets under separate asset purchase agreements (APAs). The landlord sued Authentic and Fisher for breach of the lease on a successor liability theory and also for tortious interference.

The Supreme Court (New York County) dismissed the case against Authentic and Fisher. The First Department modified, reviving the breach-of-contract claim under the “mere continuation” exception to the general no-liability rule for asset purchasers, while affirming dismissal of the tortious interference claim. The panel split, with a partial dissent arguing that the “mere continuation” doctrine cannot apply as a matter of law where multiple entities survive the asset transfer and the predecessor continues to exist.

This decision clarifies successor-liability pleading standards in New York, particularly the scope of the “mere continuation” exception, the import of documentary evidence under CPLR 3211(a)(1), and the limits of fraud and tortious interference theories in asset-sale contexts.

II. Summary of the Judgment

The First Department modified the Supreme Court’s order as follows:

• Reinstated the breach of contract claim against Authentic and Fisher based on the “mere continuation” exception to successor liability. The court held the complaint adequately pleaded that the buyers purchased substantially all of Hunter US’s assets; Hunter US was effectively extinguished; the buyers continued the same business, including at the leased premises; and there was continuity in brand, goodwill, and management features. The APAs and related documents did not conclusively refute these allegations at the pleading stage.
• Affirmed dismissal of breach claims to the extent predicated on express/implied assumption or de facto merger (neither pleaded), and on the fraud exception (insufficiently particularized and lacking allegations of inadequate consideration or judgment-proofing).
• Affirmed dismissal of tortious interference with contract because the complaint failed to allege but-for causation—structuring an asset purchase to avoid assuming liabilities, without more, does not constitute tortious interference with a lease.

III. Analysis

A. The Precedents and Their Influence

• Schumacher v Richards Shear Co., 59 NY2d 239 (1983)

  New York’s foundational case articulating the four exceptions to the rule that asset purchasers are not liable for the seller’s obligations: (1) express/implied assumption; (2) de facto merger; (3) fraudulent transaction to escape liability; and (4) “mere continuation.” Schumacher’s language that the predecessor must be “extinguished” for mere continuation has often been cited to limit the doctrine. The dissent leans heavily on Schumacher to argue a categorical extinguishment requirement and that only one corporation may remain after the transaction.

• Tap Holdings, LLC v Orix Fin. Corp., 109 AD3d 167 (1st Dept 2013)

  At the motion-to-dismiss stage, allegations that the predecessor was “effectively extinguished” sufficed to plead mere continuation. Tap emphasizes the flexible, multi-factor inquiry and the permissibility of proceeding past the pleadings without formal dissolution or complete identity. The majority treats Tap as the closer analogy, given identical procedural posture (CPLR 3211) and the sufficiency of “effective extinguishment” allegations.

• Leon v Martinez, 84 NY2d 83 (1994) and Goshen v Mutual Life, 98 NY2d 314 (2002)

  Reaffirm the liberal construction at the pleading stage and the high bar for CPLR 3211(a)(1) documentary evidence, which must “utterly refute” the allegations and conclusively establish a defense as a matter of law. The APAs here lacked pricing/consideration terms, preventing dismissal based on documentary evidence purporting to show adequate consideration.

• Oorah, Inc. v Covista Communications, Inc., 139 AD3d 444 (1st Dept 2016)

  De facto merger requires continuity of ownership; plaintiff conceded that element was missing here, making that exception inapplicable.

• Burgos v Pulse Combustion, 227 AD2d 295 (1st Dept 1996) and Miot v Miot, 24 Misc 3d 1224(A), aff’d 78 AD3d 464 (1st Dept 2010)

  Identify non-dispositive factors guiding the “mere continuation” analysis: transfer of substantially all assets; extinction of the predecessor; continuity of name; retention of officers/employees; continuation of the business.

• Amsterdam Hospitality Group, LLC v Marshall-Alan Assoc., Inc., 120 AD3d 431 (1st Dept 2014)

  Reinforces that documentary evidence must conclusively negate allegations to warrant dismissal under CPLR 3211(a)(1); otherwise disputes proceed to discovery.

• 47 E. 34th St. [NY] L.P. v BridgeStreet Worldwide, Inc., 219 AD3d 1196 (1st Dept 2023)

  Discussed by both opinions; the dissent reads it to support dismissal when the predecessor continues to operate post-transfer. The majority distinguishes it on procedural posture (summary judgment) and evidentiary record, whereas this case arrives on a motion to dismiss with different allegations.

• Third and Fourth Department authorities cited in the dissent (e.g., Main Bros. Oil, Ivory Dev., Mitchell; Lippens)

  These cases often involved different procedural stances (summary judgment) or clearer records concerning the predecessor’s continued operations, and are read by the dissent to impose a formal or categorical “one-survivor” rule. The majority rejects a categorical reading at the pleading stage and reads Lippens as consistent with Tap’s “effective extinguishment” approach.

B. The Court’s Legal Reasoning

The majority applies the familiar CPLR 3211 standards, generously construing the complaint and declining to credit documentary evidence unless it utterly refutes the claims. Against that backdrop, the court analyzes the four Schumacher exceptions.

• No assumption/de facto merger

  The complaint did not allege express or implied assumption of Hunter US’s liabilities; plaintiff conceded that de facto merger did not apply due to lack of continuity of ownership.

• No fraud exception

  Allegations that the transactions were structured to avoid liabilities were not particularized fraud allegations. The complaint did not allege inadequate consideration, concealment, or that the buyers rendered the seller judgment-proof—elements required to pierce the no-liability rule via fraud.

• “Mere continuation” exception sufficiently pleaded

  Applying the multi-factor inquiry and emphasizing that “no one factor is dispositive,” the court found the following allegations sufficient:

  • Substantially all assets transferred: Authentic bought Hunter US’s non-footwear stock and IP (domain names, social media handles, trademarks); Fisher bought footwear stock, showroom fixtures, and a personalization machine. Authentic guaranteed Fisher’s APA and was named “principal obligor,” plausibly showing coordination and control.
  • Predecessor effectively extinguished: In August 2023, Hunter US told the landlord it would imminently dissolve, wind up affairs, and lacked funds to continue operations, including rent. The court deemed these allegations sufficient at the pleading stage to show effective extinguishment (as Tap Holdings allows) even absent formal dissolution.
  • Continuity of name/brand/goodwill: Authentic acquired the “Hunter Boot” brand, goodwill, and the ability to use the name—classic indicia of continuity of identity to the marketplace.
  • Continuity of management/employees: Public statements suggested no necessary leadership changes as the business moved to a licensing model; the majority credits allegations of continuity at 3211.
  • Continuation of the same business/location: A Fisher employee asked to use the leased premises; the APAs contemplated Fisher’s use of the premises; computer systems at the premises were upgraded; the premises had not been vacated as of mid-August 2023. The lease’s paragraph 48(q)(1)—permitting assignment upon a bona fide sale of substantially all assets and rendering transferees jointly and severally liable—further contextualized these allegations and made the successor-liability claim plausible.

  Crucially, the majority rejects the idea that involvement of more than one successor necessarily bars the mere-continuation exception. Schumacher did not address multiple successors, and nothing in the doctrine precludes liability attaching to either or both where substantially all assets are spread across coordinated buyers. Whether Hunter US “survived as a distinct, albeit meager, entity” is left for discovery and potential summary judgment; the 3211 standard forecloses dismissal on the current record.

  Finally, defendants’ reliance on documentary evidence failed because the APAs do not state the consideration paid; they therefore cannot conclusively establish adequate consideration or negate the complaint’s allegations that proceeds went offshore to the UK parent.

C. The Dissent’s Position

Justice Kennedy’s partial dissent argues that “mere continuation” cannot apply because:

• More than one buyer (Authentic and Fisher) survived the transaction, and Hunter US itself continued to exist, negating Schumacher’s extinguishment requirement.
• The complaint lacks Tap-level allegations of complete operational continuity (same employees, liabilities, funding dissolution, etc.).
• Payments of rent after the APAs and continued occupation show Hunter US had not ceased operations; the permissive APA provision about possibly using the premises does not amount to assuming lease obligations.

The dissent would affirm dismissal of all claims against Authentic and Fisher on the successor-liability issue, citing First, Third, and Fourth Department cases it reads as requiring full extinguishment and single-survivor corporate reorganization to invoke “mere continuation.”

D. Impact and Implications

This decision materially shapes New York’s successor-liability landscape at the pleading stage:

• Multi-buyer acquisitions are not immunized from “mere continuation” claims. Plaintiffs may plead that multiple coordinated purchasers together function as the continuation of the predecessor, especially where brand, goodwill, and operations continue and the seller winds down.
• “Effective extinguishment” is enough at CPLR 3211. Formal dissolution is unnecessary to survive a motion to dismiss; credible allegations of imminent winding up, inability to pay, and operational cessation will suffice.
• Documentary evidence must be fulsome. APAs that omit price/consideration or other core terms will rarely “utterly refute” successor-liability allegations; buyers should expect discovery where records are incomplete.
• Landlord protections in leases can reinforce successor claims. Where leases tie transferee liability to sales of substantially all assets (as here), allegations that the buyer used or sought to use the premises bolster mere-continuation pleading.
• Tortious interference remains hard to plead in asset sales. Structuring a deal to avoid liabilities—without but-for causation of a breach—does not state a claim. Plaintiffs must allege conduct that actually causes the breach.

As a practical matter, this ruling increases litigation risk for brand consolidators and “licensing model” acquirers who buy discrete asset bundles (IP, inventory, fixtures) through coordinated transactions with a distressed seller. The “mere continuation” lens will focus on control, brand continuity, use of premises, public posture on leadership continuity, and the seller’s post-closing viability—issues often present when a licensing house and a distribution partner split assets.

IV. Complex Concepts Simplified

• Successor liability: A doctrine that sometimes treats a buyer of a company’s assets as responsible for the seller’s debts, despite the general rule that asset purchasers are not liable.
• Mere continuation: One of the four exceptions allowing successor liability. It applies when the buyer is essentially the same enterprise—continuing the same business, often with the same name, brand, assets, and personnel—and the seller is effectively extinguished.
• De facto merger: Another exception requiring, among other things, continuity of ownership (sellers’ owners become owners of the buyer). The plaintiff conceded this was absent here.
• Fraud exception: Imposes liability if the asset transfer is a sham designed to escape liabilities (e.g., inadequate consideration, rendering the seller judgment-proof, concealment). Requires particularized pleading.
• CPLR 3211(a)(1) “documentary evidence”: Dismissal requires documents that utterly refute the claim and conclusively establish a defense. Partial or ambiguous documents, or those missing key terms like consideration, usually cannot defeat a complaint.
• “Effective extinguishment” vs. formal dissolution: For pleading purposes, it is enough to allege that the seller has ceased operations or is winding up with no funds, even if it has not been formally dissolved.
• But-for causation in tortious interference: Plaintiff must allege the defendant’s conduct caused the breach that otherwise would not have occurred. Merely structuring a deal to avoid liabilities is not enough.

V. Practice Notes

• For buyers:
  • Be mindful that splitting assets among allied purchasers will not insulate against “mere continuation” claims if brand identity, operations, or premises use continue and the seller winds down.
  • Document consideration clearly; include transaction value or reference definitive pricing schedules if you plan to rely on documentary evidence to defeat claims at the pleading stage.
  • Limit indicia of continuity: avoid public statements suggesting leadership continuity; minimize overlap in officers/management; be cautious about taking over the seller’s premises, phone numbers, domains, and customer pipelines without clear contractual separations and indemnities.
  • Consider express assumptions and indemnities alongside adequate capitalization to preempt allegations of judgment-proofing and to channel claims contractually.
• For landlords and trade creditors:
  • Negotiate lease clauses that trigger transferee liability upon “sale of substantially all assets,” and monitor distressed-asset sales closely.
  • Plead “mere continuation” with granular facts: asset bundles, brand/IP transfers, use of premises, public messaging on continuity, staffing overlaps, and winding-up communications from the seller.
  • Consider parallel remedies (e.g., claims in foreign insolvency proceedings) while preserving New York successor-liability theories.

VI. Unresolved Questions and What to Watch on Remand

• How much continuity is enough? Discovery will test allegations about use of the premises, staffing, management continuity, and operational control by Authentic and Fisher.
• Consideration and solvency will be critical: what was paid, to whom, and whether Hunter US retained meaningful assets or was stripped to insolvency.
• Assignment vs. continuation: Whether there was any de facto assignment of the lease (in light of paragraph 48(q)(1)) or mere use of the premises informally, and the legal consequences of each.
• Interdepartmental tension: The dissent highlights differing emphases among Departments on “extinguishment.” The Court of Appeals may eventually address whether multiple successors categorically preclude “mere continuation,” or whether Tap’s “effective extinguishment” standard governs at the pleading stage.

VII. Conclusion

Avamer 57 Fee LLC v. Hunter Boot USA LLC fortifies the “mere continuation” pathway for creditors and landlords seeking to hold asset purchasers to a seller’s obligations at the early pleading stage. The First Department’s central contributions are threefold: (1) multiple buyers do not automatically defeat mere-continuation liability; (2) “effective extinguishment” of the seller, credibly alleged, suffices at CPLR 3211; and (3) incomplete transactional documents cannot “utterly refute” successor-liability allegations. At the same time, the decision reins in expansive fraud-based successor theories and reaffirms the rigorous “but-for” causation requirement for tortious interference in the context of asset sales.

In the broader legal context, the ruling nudges New York practice toward a more functional, fact-intensive assessment of continuity, brand identity, and operational control, especially in distressed carve-outs and licensing-driven acquisitions. Buyers should plan diligence and documentation with these litigation vectors in mind; landlords and creditors should marshal continuity facts early to survive dismissal and reach discovery. The dissent’s forceful counterpoint underscores that the law in this area remains dynamic, with the potential for further appellate refinement.