Blankingship & Keith appellate attorneys secured a significant appellate victory for client Constellis, LLC, as the Virginia Court of Appeals affirmed a trial court ruling in a complex breach of contract and successor liability case brought by PAE National Security Solutions, LLC (PAE).
PAE sought to hold Constellis, a parent company twice removed, liable for unpaid invoices related to a government contract in Iraq. The Court rejected PAE’s arguments, confirming that successor liability did not apply and reinforcing key principles of Virginia corporate law:
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No Assumption of Liabilities: Constellis did not expressly or impliedly assume its subsidiaries’ obligations.
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Shared Resources Not Enough: A common in-house legal department did not establish successor liability.
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Separate Corporate Identities Matter: Piercing the corporate veil requires extraordinary justification, which PAE failed to show.
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Asset Purchase Requirement: Successor liability arises only from an asset purchase, not from acquiring stock or membership interests.
The decision clarifies the narrow circumstances under which successor liability may be imposed in Virginia and affirms the protections afforded to distinct corporate entities.