ZMOS Networks v. Momentum Investment Partners

NEW YORK COUNTY
Business Law

New York Law Journal

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Justice Cynthia Kern

ZMOS Network sued defendants to recover payments of amounts originally owed to it by TC Asset Management f/k/a OAM Avatar. ZMOS asserted claims against Momentum Investment Partners, d/b/a Avatar Associates, arguing Momentum was a successor to the liabilities of OAM resulting from its continuation of OAM's business or its de facto consolidation with OAM. OAM entered into a letter of intent with Momentum providing that a new entity would be formed to receive the assets from the sale, but not the liabilities. OAM changed its name to TC, and OAM was dissolved. Momentum retained personnel from OAM after the sale, including Theodore and Siebert, OAM's principals, who now had an ownership interest in Momentum. Momentum also retained and continued to serve some of OAM's clients, and retained the same offices and workspace as OAM. The court found Momentum was not entitled to summary judgment, or dismissal as there were disputed factual issues of whether there was a de facto merger between OAM and Momentum, or if Momentum was a mere continuation of OAM. Also, the court stated ZMOS was entitled to discovery regarding its allegation that Momentum was a mere continuation of OAM.

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