Bennett v. FCA US LLC (In re Old Carco LLC)

587 B.R. 809
CourtUnited States Bankruptcy Court, S.D. New York
DecidedJune 26, 2018
DocketCase No. 09–50002 (SMB); Adv. Pro. No. 18–01035 (SMB)
StatusPublished
Cited by4 cases

This text of 587 B.R. 809 (Bennett v. FCA US LLC (In re Old Carco LLC)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bennett v. FCA US LLC (In re Old Carco LLC), 587 B.R. 809 (N.Y. 2018).

Opinion

STUART M. BERNSTEIN, United States Bankruptcy Judge:

Plaintiff Makenna Bennett ("Plaintiff") filed an action seeking, inter alia , to recover compensatory damages from FCA US LLC f/k/a Chrysler Group, LLC ("New Chrysler") arising from a 2015 accident involving a 2004 Dodge Durango (the "Vehicle") in which she was a passenger.1 New Chrysler has moved to dismiss the claims based on negligence and failure to warn as alleged in her second cause of action, arguing that they are barred by this Court's order (the "Sale Order")2 approving the sale of substantially all of the assets of Old Carco LLC f/k/a Chrysler, LLC and its debtor affiliates (collectively "Old Chrysler") free and clear of all liens, claims and interests to New Chrysler. (See Motion of FCA US LLC to Dismiss Complaint's Second Cause of Action , dated Apr. 13, 2018 ("Motion ") (ECF Doc. # 11); see also FCA US LLC's Reply in Support of Its Motion to Dismiss Complaint's Second Cause of Action , dated May 11, 2018 ("Reply ") (ECF Doc. # 16).)3 The Plaintiff opposes the Motion , contending that the Second Cause of Action asserts claims that are not barred by the Sale Order. (See Memorandum in Opposition to Motion of FCA US LLC to Dismiss Complaint's Second Cause of Action , dated Apr. 24, 2018 ("Plaintiff's Opposition ") (ECF Doc. # 15).)

For the reasons that follow, the Motion is denied.

BACKGROUND

According to the Complaint,4 the Plaintiff was a passenger in the front seat of the Vehicle when, on July 9, 2015, the tread/belt *812separated from the rear tire, the driver lost control and the Vehicle went off the road and rolled. (¶¶ 6, 9-10.)5 The Plaintiff was wearing a seat belt, (¶ 17), but nonetheless sustained serious injuries as the result of the accident, including a broken neck and a spinal cord injury that left her paralyzed. (¶ 15.)

The Plaintiff commenced this action against New Chrysler on or about June 22, 2017 in the United States District Court for the District of Utah.6 The Complaint alleges, in substance, that the Vehicle was not reasonably crashworthy due to defects in the design, manufacture, marketing, warning, assembly and/or testing. (¶¶ 51, 53, 57, 69.) It includes five causes of action: strict liability (First Cause of Action, ¶¶ 37-55), negligence (Second Cause of Action, ¶¶ 56-70), breach of express warranty (Third Cause of Action, ¶¶ 71-73), breach of implied warranty of merchantability (Fourth Cause of Action, ¶¶ 74, 72-73)7 and breach of the implied warranty of fitness for a particular purpose (Fifth Cause of Action, ¶¶ 74-77).

New Chrysler filed a motion for partial summary judgment in the Utah District Court to dismiss, inter alia , the Plaintiff's conduct-based negligence and failure to warn claims, and subsequently filed a motion to transfer venue to allow this Court to interpret and enforce the Sale Order and the Master Transaction Agreement ("MTA") pursuant to which Old Chrysler sold substantially all of its assets to New Chrysler. On February 7, 2018, the Utah District Court issued a decision and order (the "Utah Decision")8 granting New Chrysler's motion to transfer venue, and transferred the entire civil action to this Court. Because the Sale Order and MTA, as amended, only affected the legal viability of the Plaintiff's Second Cause of Action, the Court subsequently severed the Second Cause of Action, retained that claim pending the adjudication of the issues relating to the Sale Order, and transferred the balance of the action back to the Utah District Court. (Order Severing Second Cause of Action and Transferring Remainder of Case , dated Mar. 23, 2018 (ECF Doc. # 9).)

New Chrysler has moved to dismiss only the Second Cause of Action arguing that the Plaintiff's negligence claim, including the failure to warn claim, is barred by the Sale Order. To answer the question, it is necessary to consider the terms of the Sale Order and the MTA, as amended.

A. The Bankruptcy Sale

On April 30, 2009, Old Chrysler filed these chapter 11 cases. That same day, Old Chrysler and New Chrysler entered into the MTA9 by which New Chrysler agreed to purchase substantially all of the assets of Old Chrysler. The Bankruptcy Court approved the transaction set forth in the MTA with certain immaterial amendments, and the sale closed on June 10, 2009 ("Closing Date").

*813The Sale Order authorized the transfer of the purchased assets "free and clear of all Claims except for Assumed Liabilities" (as defined in the MTA) and free of successor liability. (Sale Order ¶ 9.) It stated, in pertinent part:

Except for the Assumed Liabilities expressly set forth in the Purchase Agreement or described therein or Claims against any Purchased Company, none of the Purchaser, its successors or assigns or any of their respective affiliates shall have any liability for any Claim that (a) arose prior to the Closing Date, (b) relates to the production of vehicles prior to the Closing Date or (c) otherwise is assertable against the Debtors or is related to the Purchased Assets prior to the Closing Date.... Without limiting the foregoing, the Purchaser shall not have any successor, derivative or vicarious liabilities of any kind or character for any Claims ... now existing or hereafter arising, asserted or unasserted, fixed or contingent, liquidated or unliquidated.

(Sale Order ¶ 35 (emphasis added); see also ¶¶ 39, 42.) The MTA reinforced this limitation on assumed liabilities, and in particular, the exclusion of any liabilities relating to vehicles produced and sold by Old Chrysler prior to the Closing Date:

Assumption of Liabilities . On the terms and subject to the conditions and limitations set forth in this Agreement, at the Closing, Purchaser shall assume, effective as of the Closing, and shall timely perform and discharge in accordance with their respective terms, the Assumed Liabilities and no others. For purposes of this Agreement, "Assumed Liabilities" means (without duplication) each of the following Liabilities of Sellers existing as of immediately prior to the Closing: ...
(h) all Product Liability Claims arising from the sale after the Closing of Products or Inventory manufactured by Sellers or their Subsidiaries in whole or in part prior to the Closing....

(MTA § 2.08(h) (emphasis added).) The MTA broadly defined a Product Liability Claim as:

any Action arising out of, or otherwise relating to in any way in respect of claims for personal injury, wrongful death or property damage resulting from exposure to, or any other warranty claims, refunds, rebates, property damage, product recalls, defective material claims, merchandise returns and/or any similar claims, or any other claim or cause of action with respect to, Products or items purchased, sold, consigned, marketed, stored, delivered, distributed or transported by [Old Chrysler].

(MTA Definitions Addendum, at p. 90, as amended by Amendment No. 1 to MTA, at ¶ 36.)

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Related

Overton v. FCA U.S. LLC. (In re Old Carco LLC)
603 B.R. 877 (S.D. Illinois, 2019)
In Re: Old Carco LLC
S.D. New York, 2019
In re Old Carco LLC
593 B.R. 182 (S.D. New York, 2018)

Cite This Page — Counsel Stack

Bluebook (online)
587 B.R. 809, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bennett-v-fca-us-llc-in-re-old-carco-llc-nysb-2018.