## Facts

- Ed Peters Jewelry Co., Inc. (Peters), a commissioned sales agent, contracted with Anson, Inc. (Anson) in 1988 for a four-year term and serviced Anson’s Tiffany account, which generated about one-third of Anson’s sales.
- Anson fell behind on commission payments; Peters claimed $859,068 in unpaid commissions.
- Fleet National Bank and Fleet Credit Corporation (Fleet) extended revolving credit to Anson secured by blanket liens on Anson’s real property and operating assets; Fleet later restructured Anson’s debt and charged an $800,000 deferral fee.
- Fleet foreclosed on Anson’s assets and sold them to C & J Jewelry Co., Inc. (C & J), a new entity formed to acquire those operating assets.
- Peters alleged C & J continued Anson’s business (same facility, products, major customer, and employees) and that the foreclosure/transfer was structured to leave Anson’s liabilities (including commissions) behind.
- Peters sued Anson, C & J, Fleet, and Anson’s CEO William Considine, Sr., asserting successor liability and fraudulent-transfer/lender-liability theories.
- At trial, the district court excluded certain expert valuation testimony offered by Peters and granted judgment as a matter of law (Rule 50(a)) for all defendants.

## Issues

1. Whether C & J, as purchaser of Anson’s assets at a secured-creditor foreclosure sale, could be liable for Anson’s debts under Rhode Island successor-liability exceptions (e.g., de facto merger, mere continuation, assumption, or fraudulent transaction).
2. Whether Fleet (and related defendants) could be liable on theories that the foreclosure and asset sale were fraudulent, collusive, or otherwise designed to avoid payment to unsecured creditors such as Peters.
3. Whether exclusion of Peters’s valuation expert and entry of Rule 50(a) judgment improperly removed fact disputes (e.g., value, commercial reasonableness, intent/collusion) from the jury.

## Decision

- The First Circuit affirmed the Rule 50(a) judgment in part and vacated it in part.
- The court applied the general rule that an asset purchaser is not liable for the seller’s debts absent a recognized successor-liability exception under state law.
- The court declined to treat the foreclosure context as an automatic bar to successor-type or equitable theories, but emphasized that legitimate secured-creditor foreclosure sales are generally not treated like voluntary asset acquisitions.
- The court held that some claims were properly resolved as a matter of law, but other claims involving disputed factual questions—particularly those tied to alleged fraudulent or collusive foreclosure and valuation/commercial reasonableness—should not have been taken from the jury.
- The case was remanded for further proceedings on the surviving theories.

## Legal Principles

- In Rhode Island, a corporation purchasing another’s assets is generally not liable for the seller’s obligations unless an exception applies (e.g., express or implied assumption, de facto merger, mere continuation, or a transaction structured to escape liability).
- A purchaser at a secured-creditor foreclosure sale is not automatically subject to successor liability; however, foreclosure does not insulate a transaction that is proven to be sham, collusive, or fraudulent.
- Fraudulent-transfer and related equitable theories may apply when a foreclosure and subsequent sale are used to strip a business of assets while leaving creditors unpaid.
- Under Rule 50(a), judgment as a matter of law is improper where, viewing the evidence in the nonmovant’s favor, a reasonable jury could find for the plaintiff on materially disputed facts.

## Conclusion

The First Circuit held that ordinary successor-liability rules generally protect purchasers at bona fide foreclosure sales, but claims premised on a collusive or fraudulent foreclosure intended to shed liabilities may require jury resolution; it therefore affirmed some dismissals while vacating and remanding others for trial-level factfinding.


Ed Peters Jewelry Co. v. C & J Jewelry Co., 124 F.3d 252 (1st Cir. 1997)