57 Md. L. Rev. 642 (1998)
Recent Decisions - The Maryland Court of Appeals

handle is hein.journals/mllr57 and id is 654 raw text is: 




                     Recent Decisions

        The Maryland Court of Appeals


                        1. COMMERCIAL LAW
  A. Successor Liability and Contract: Maryland Narrowly Construes the
               Mere Continuation of the Entity Exception
     In Academy of IRM v. LVI Environmental Services, Inc.,' the Court of
Appeals held that a claim based on the mere continuation of the
entity exception to the general rule against successor liability in cor-
porate asset acquisitions requires a showing of either a continuation
of ownership and management or insufficient consideration.2 A
unanimous court reached its holding after reviewing both Maryland
and out-of-state case law as well as the specific factual and procedural
circumstances of the case.' In so holding, the Court of Appeals
reached the logical dictate of its prior decisions and clarified its for-
mer interpretation of the exception. The result will produce greater
certainty in judicial decisionmaking.

     1.  The Case.-In 1987, the petitioner, Academy of IRM        (IRM),
brought suit in the Circuit Court for Anne Arundel County against
Diversified Environmental Group, Inc. (Diversified) for moneys due
and owing from work performed at a number of project sites through-
out the mid-Atlantic region.4 IRM provided bulk sampling and air
monitoring services to contractors, including Diversified, involved in
asbestos removal, but failed to receive payments on the balance of its
outstanding account with Diversified.5 In May 1988, the circuit court
entered a limited order of default against Diversified's trade name,
Desco.6 The case came before the circuit court again in August 1988

    1. 344 Md. 434, 687 A.2d 669 (1997).
    2. Id. at 451, 687 A.2d at 677. For the general rule against successor liability, see infra
text accompanying note 28. The general rule is subject to four principal exceptions, which
are recognized by a majority of jurisdictions, including Maryland. See infra note 30 and
accompanying text.
    3. See Academy ofIRM, 344 Md. at 451-57, 687 A.2d at 677-80.
    4. Id. at 437-38, 687 A.2d at 671. IRM sought to secure payment for work performed
pursuant to a contract for Fort Belvoir, a United States Army installation. Id. at 441, 687
A.2d at 672.
    5. Id. at 437-38, 687 A.2d at 671.
    6. Id. at 438 & n.2, 439, 687 A.2d at 671 & n.2. Although IRM had named both Diver-
sified and its trade name, Desco, in the complaint, the circuit court specifically limited the

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