In re Motors Liquidation Co.

568 B.R. 217, 77 Collier Bankr. Cas. 2d 1757, 2017 Bankr. LEXIS 1515
CourtUnited States Bankruptcy Court, S.D. New York
DecidedJune 7, 2017
DocketCase No. 09-50026 (MG) (Jointly Administered)
StatusPublished
Cited by14 cases

This text of 568 B.R. 217 (In re Motors Liquidation Co.) 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
In re Motors Liquidation Co., 568 B.R. 217, 77 Collier Bankr. Cas. 2d 1757, 2017 Bankr. LEXIS 1515 (N.Y. 2017).

Opinion

MEMORANDUM OPINION AND ORDER GRANTING IN PART NEW GM’S MOTION TO ENFORCE SALE ORDER AGAINST THE PITTERMAN PLAINTIFFS AND RESOLVING 2016 THRESHOLD ISSUE TWO: WHETHER NON-IGNITION SWITCH PLAINTIFFS ARE BARRED FROM ASSERTING INDEPENDENT CLAIMS AGAINST NEW GM

MARTIN GLENN, UNITED STATES BANKRUPTCY JUDGE

Pending before the Court is the motion filed on June 24, 2016 (the “Motion,” ECF [220]*220Doc. #13655) of General Motors LLC (“New GM”) to enforce the Court’s July 5, 2009, sale order (the “Sale Order,” ECF Doc. #2968). The Sale Order authorized the sale of the bulk of assets from Motors Liquidation Company (f/k/a General Motors Corp.) (“Old GM”) to New GM, “free and clear of liens, claims, encumbrances, and interests,” with certain exceptions that are the subject of this Motion and others. (Sale Order at 2.) The Motion seeks to enforce the Sale Order to bar certain claims in nonbankruptcy courts against New GM by plaintiffs alleging personal injuries. On December 13, 2016, this Court entered an order to show cause (the “Order to Show Cause,” ECF Doc. # 13802) setting forth the five “2016 Threshold Issues” to be resolved regarding claims asserted against New GM involving vehicles manufactured by Old GM, and the procedures for doing so.

Bernard Pitterman is a plaintiff (together with the other plaintiffs in that action, the “Pitterman Plaintiffs”) in an action pending against New GM in the United States District Court for the District of Connecticut: Pitterman v. General Motors LLC, Case No. 3:14-cv-00967 (JCH) (D. Conn.) (the “Pitterman Action”). The Pit-terman Action is just one of many non-bankruptcy court actions that are the subject of the Motion, and it is currently scheduled for trial on July 5, 2017. (See ECF Doc. # 13938 at 2.) Mindful of the quickly approaching trial date, this Court requested that the parties address the Pit-terman Action separately at oral argument on May 17, 2017.

This Opinion and Order addresses only those aspects of the 2016 Threshold Issues that apply to the Pitterman Action. Likewise, the Court provides background information only to the extent applicable to the Pitterman Action. A fuller background of Old GM’s bankruptcy, the various non-bankruptcy court claims against Old GM and New GM, and the circumstances surrounding the Order to Show Cause can be found in this Court’s prior Opinions. The remainder of the 2016 Threshold Issues will be addressed in a forthcoming Opinion.

For the following reasons, New GM’s Motion is GRANTED IN PART AND DENIED IN PART. Assuming that Connecticut state law recognizes such claims and that such claims are properly pleaded (issues to be decided by the Connecticut District Court), the Pitterman Plaintiffs may proceed with only the following claims against New GM in the Pitterman Action: (i) failure to warn, based on conduct of Old GM and New GM; and (ii) failure to recall and retrofit, based solely on New GM’s alleged post-closing wrongful conduct.1 The Pitterman Plaintiffs may not proceed with their claims of failure to recall and retrofit based on conduct of Old GM.2

In resolving the motion to enforce with respect to the Pitterman Plaintiffs, the Court also resolves 2016 Threshold Issue Two and concludes that the Sale Order [221]*221does not bar Non-Ignition Switch Plaintiffs3 from asserting independent claims against New GM based solely on New GM’s post-closing wrongful conduct.

I. BACKGROUND

A. The Sale Order

On June 5, 2009, Judge Gerber overruled numerous objections to the sale of Old GM’s assets under section 363 and entered the Sale Order. The Sale Order attached as Exhibit A the “Amended and Restated Master Sale and Purchase Agreement,” dated June 26, 2009 (the “Sale Agreement”). The Sale Agreement provides that New GM would purchase the bulk of Old GM’s assets “free and clear of all Encumbrances (other than Permitted Encumbrances), Claims and other interests.” (Sale Agreement § 2.1.) The Sale Agreement lists in section 2.3 certain liabilities that New GM would assume (the “Assumed Liabilities”) and certain liabilities that Old GM would retain (the “Retained Liabilities”).

The list of Assumed Liabilities, among other liabilities not relevant to the Pitter-man Claims, includes claims for “Product Liabilities,” regarding which New GM would assume only those claims arising out of accidents or incidents occurring on or after the closing date of the 363 Sale (which turned out to be July 10, 2009). Section 6.16(a) of the Sale Agreement provides that New GM shall comply with “certification, reporting, and . recall requirements” under the National Traffic and Motor Vehicle Safety Act and certain other federal and state laws.

B. The Pitterman Action

Bernard Pitterman is the administrator of the estate of the minor child decedent, M.R.O. (“Pitterman Complaint,” ECF Doc. # 13665-12 ¶ 1.) The Pitterman Complaint states that on July 13, 2011, M.R.O. was killed in a rollaway accident involving a 2004 Chevrolet Suburban. (Id. ¶¶ 6-12,20.) According to the Pitterman Complaint, the 2004 Chevrolet Suburban involved in the crash was defective in that “the automatic transmission could be moved from Park to Neutral when the ignition switch was in the ACC position, without depressing the brake, thereby allowing the vehicle to roll from a parked position” and the “brake transmission shift interlock device installed on the Suburban did not function when the ignition was in the ACC position.” (Id. ¶ 20.)

The Pitterman Complaint alleges various causes of action under the Connecticut Product Liability Law, section 62-572 of the Connecticut General Statutes. Pitter-man’s claims were broken down into the following four categories by his counsel at oral argument:

• Failure to recall or retrofit, based on conduct of Old GM;
• Failure to recall or retrofit, based on conduct of New GM;
• Failure to warn, based on conduct of Old GM; and •
• Failure to warn, based on conduct of New GM.

After receiving a letter from counsel for New GM after this Court’s April 2015 Decision and June 2015 Judgment regarding punitive damages, the Pitterman Plaintiffs amended their complaint to remove all requests for punitive damages.

Notably, the Pitterman Complaint frequently refers to both Old GM’s and New GM’s conduct in the same numbered para[222]*222graph, making it difficult to determine exactly which claims are based solely on New GM’s alleged wrongful conduct and which are based on Old GM’s conduct that the Pitterman Plaintiffs argue are Assumed Liabilities. For example, the complaint alleges that “[t]he crash, and the resulting damages as alleged herein, were caused by GMC [Old GM] and the Defendant’s [New GM’s] reckless disregard for the safety of product users, consumers or others, in that GMC and the defendant knew or reasonably should have known that the Suburban was unreasonably dangerous, had caused and would cause numerous catastrophic injuries and deaths and failed to recall and/or retrofit the subject vehicle.!’ (Pitterman Complaint ¶ 28 (emphasis added).)

C. The Bankruptcy Court’s Role

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Bluebook (online)
568 B.R. 217, 77 Collier Bankr. Cas. 2d 1757, 2017 Bankr. LEXIS 1515, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-motors-liquidation-co-nysb-2017.