Xerox Financial Services, LLC v. JP1 Enterprises, Inc.
1:23-cv-03493
| D. Maryland | Jul 8, 2025Background
- Plaintiff, Xerox Financial Services (XFS), sued JP1 Enterprises and related parties for breach of a lease agreement after JP1 defaulted on payments for leased equipment.
- XFS also named Select Printing LLC as a defendant, alleging it was the successor in interest to JP1 and thus liable for JP1’s debt under a “mere continuation” theory.
- At the time of the lawsuit, JP1’s business license had been revoked, but was later reinstated retroactively, restoring its status.
- Judge Rubin dismissed Select Printing as a defendant, holding that reinstatement of JP1’s license cured the basis for successor liability.
- XFS moved for reconsideration based on new discovery evidence allegedly supporting successor liability or, alternatively, fraudulent conveyance.
- The court (Magistrate Judge Miller) denied the motion for reconsideration, finding the new theories and evidence were not properly before the court at this stage.
Issues
| Issue | Plaintiff’s Argument | Defendant’s Argument | Held |
|---|---|---|---|
| Successor liability via “mere continuation” | Select Printing is liable as a successor for JP1’s debts | Basis was eliminated by JP1’s reinstated business license | No successor liability, given reinstatement |
| Consideration of new evidence on reconsideration | Discovery shows new facts supporting liability | New evidence not in complaint; not properly raised | Not proper at motion to dismiss stage |
| Alternative fraudulent conveyance theory | JP1/Select Printing colluded to defraud creditors | Not pled in amended complaint, no factual basis | Not properly before the court |
| Standard for reconsideration | Court should revisit prior order, grant leave to amend | Discretionary; mere disagreement not enough | Motion denied; dismissal without prejudice |
Key Cases Cited
- Fayetteville Inv. v. Com. Builders, Inc., 936 F.2d 1462 (4th Cir. 1991) (Governs Rule 54(b) motions for reconsideration)
- Carlson v. Boston Scientific Corp., 856 F.3d 320 (4th Cir. 2017) (Caution in overruling another judge’s prior decision)
- Fairfax v. CBS Corp., 2 F.4th 286 (4th Cir. 2021) (Rule for using material outside a complaint on a 12(b)(6) motion)
- Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250 (4th Cir. 2009) (Rule 12(b)(6) motion standards)
- Martin v. TWP Enterprises Inc., 227 Md. App. 33 (2016) (Successor liability standards under Maryland law)
- Baltimore Luggage Co. v. Holtzman, 80 Md. App. 282 (1989) (Fraudulent conveyance exception to the general rule of successor non-liability)