Sufficient evidence for successor liability claim

On remand from a prior appeal, the trial court erred by finding that appellant failed to prove a successor liability claim by a preponderance of the evidence.

Overview

In a previous phase of this case, the circuit court awarded appellant La Bella Dona a judgment against three former employees and their competing business, Bon Air Med Spa, for misappropriating trade secrets. When La Bella Dona levied against Bon Air’s property, it discovered that “Bon Air had transferred its assets to the law firm Ayers & Stolte, P.C., which then sold those assets to a new entity, Belle Femme Enterprises,” the appellee.

La Bella Dona sued Belle Femme and the law firm on theories of successor liability and fraudulent transfer. The trial court granted Bella Femme summary judgment on both claims. We reversed and remanded after ruling that the trial court erred by requiring La Bella Dona to prove its successor liability claim with clear and convincing evidence. On remand, the trial court dismissed the successor liability claim under the preponderance of the evidence standard.

La Bella Femme nonsuited its fraudulent conveyance claim and appealed. We reverse.

Sufficient evidence

We conclude that Belle Femme was a mere continuation of Bon Air. Belle Femme was established two days before La Bella Dona could execute its judgment.

Belle Femme is owned by three former Bon Air employees who were liable for La Bella Dona’s judgment. Further, there was no consideration for the transfer of assets from Bon Air to Belle Femme and Belle Femme emptied Bon Air’s bank accounts shortly before La Bella Dona could execute the judgment.

The law firm “foreclosed on a lien on the remaining assets of Bon Air and scheduled a public auction, publishing a list of items for sale that did not include Bon Air’s most valuable assets … [and] purchased the remaining assets at the auction. … [T]he auction assets shifted through the law firm and were sold back to Belle Femme. … [T]he law firm backdated transaction documents to alter the apparent dates of parts of the overall transaction.”

In addition, “the individual judgment debtors worked for Belle Femme as minimum wage employees while their earnings were paid out through their relatives, who had formed Belle Femme[.]”

We reverse and remand for a determination of appellant’s damages.

La Bella Dona Skin Care v. Belle Femme Enterprises, et al. Record No. 181017 (Order) Aug. 26, 2019 (Appeal from Chesterfield Circuit Court). James Steward Kurz for Appellant. Benjamin Scott Tyree, William D. Bayliss, Joseph Earl Blackburn III for Appellees. VLW 019-6-066, 3 pp.