In re Motors Liquidation Co.

538 B.R. 656, 2015 U.S. Dist. LEXIS 114043, 2015 WL 5076703
CourtDistrict Court, S.D. New York
DecidedAugust 27, 2015
DocketNos. 15-CV-4685 (JMF), 15-CV-5056 (JMF)
StatusPublished
Cited by10 cases

This text of 538 B.R. 656 (In re Motors Liquidation Co.) is published on Counsel Stack Legal Research, covering District 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., 538 B.R. 656, 2015 U.S. Dist. LEXIS 114043, 2015 WL 5076703 (S.D.N.Y. 2015).

Opinion

OPINION AND ORDER

JESSE M. FURMAN, District Judge.

These eases arise out of the Chapter 11 bankruptcy of the Motors Liquidation Company (the “Bankruptcy Proceedings”), formerly known as General Motors (“Old GM”). In addition, they relate (in part) to multi-district litigation proceedings (the “MDL”) now pending before this Court against General Motors LLC (“New GM”), which purchased the majority of Old GM’s assets pursuant to Section 363 of the [659]*659Bankruptcy Code.1 In 2014, New GM filed several motions to enforce the Bankruptcy Court’s July 5, 2009 sale order and injunction (the “Sale Order”) seeking to enjoin many of the cases and claims in the MDL and elsewhere. Earlier this year, the Honorable Robert E. Gerber, United States Bankruptcy Judge for the Southern District of New York, ruled that certain claims and allegations were barred by the Sale Order, and established a procedure by which parties could file pleadings to determine whether and how their claims were subject to that ruling. Plaintiffs in the MDL (the “MDL Plaintiffs”), the State of Arizona, and the People of the State of California (together with the State of Arizona, the “State Plaintiffs,” and, collectively, “Plaintiffs”) filed such pleadings. Thereafter, they moved to withdraw the reference, thereby asking this Court— rather than the Bankruptcy Court — to resolve whether their claims are subject to the Bankruptcy Court’s ruling. By Order entered August 17, 2015, the Court denied Plaintiffs’ motions to withdraw the reference for reasons to be stated in an opinion to be filed in due course. (15-CV-4685, Docket No. 8; 15-CV-5056, Docket No. 23). This is that opinion.

BACKGROUND

There are several types of proceedings currently involving New GM that are implicated by the instant motions to withdraw the reference. First, Old GM filed for bankruptcy in June 2009, and the resulting Bankruptcy Proceedings before the Bankruptcy Court for the Southern District of New York are still ongoing. Second, there are many civil proceedings brought against New GM relating to defects in certain GM-brand motor vehicles and associated recalls. The Judicial Panel on Multidistrict Litigation (the “JPML”) has consolidated many of those actions before-this Court, and others have been directly filed and consolidated with the MDL. (See MDL Docket No. 1). Initially, the MDL included only economic-loss claims against New GM based on defects in the ignition switches of certain vehicles (id.), but it has since expanded to include personal and wrongful death claims, as well as economic-loss claims based on other alleged defects. (See, e.g., MDL Docket No. 505 at 1 n. 1; MDL Docket No. 519 at 1). Despite the MDL’s scope, however, not all civil actions against New GM relating to the alleged defects are included; there are other, similar civil actions pending in state court, including the actions brought by the State Plaintiffs.' (Mem. Law Supp. Mot. To Withdraw Reference Regard No Strike Pleadings (15-CV04685, Docket No. 4) (“States’ Mem.”), Ex. A; id., Ex. B).

The Court need not spell out the lengthy and convoluted history of all the foregoing proceedings, but can state the relevant facts briefly. After Old GM filed for bankruptcy, it moved to sell the majority of its assets pursuant to Section 363 of the Bankruptcy Code to the entity that became New GM. See In re Motors Liquidation Co., 500 B.R. 333, 336 (S.D.N.Y.2013); In re General Motors Corp., 407 B.R. 463 (Bankr.S.D.N.Y.2009). (See also Bankr. Docket No. 1). On July 5, 2009, Judge Gerber approved the sale, and entered the Sale Order, which provided that New GM assumed the majority of Old GM’s assets “free and clear” of many of Old GM’s liabilities. See In re General Motors LLC Ignition Switch Litigation, No. 14-MD-2543 (JMF), 2015 WL [660]*6603619584, at- *2 (S.D.N.Y. June 10, 2015). Between April and August 2014, after the ignition-switch defect came to light and many of the cases that are now part of the MDL were filed, New GM filed three motions in the Bankruptcy Proceedings seeking to enforce the Sale Order. (See Bankr. Docket Nos. 12620, 12807, 12808). New GM argued that the Sale Order barred claims seeking to hold New GM liable for Old GM’s conduct. More specifically, New GM contended the Sale Order barred many cases or claims alleging economic loss and all personal injury and wrongful death eases arising out of incidents or accidents prior to the sale.

On April 15, 2015, Judge Gerber issued an opinion granting in large part two of New GM’s motions — namely, those addressing claims brought by the “Ignition Switch Plaintiffs,” MDL Plaintiffs whose claims pertain to ignition-switch defects with respect to GM-branded vehicles involved in specific recalls (see Mem. Law Supp. Mot. To Withdraw Reference Ignition Switch Pis.’ No Strike Pleading Regard Second Amended Consol. Compl.; & Non-Ignition Switch Pis.’ (I) Objection Pleading Regard To Second Amended Consol. Compl. & (II) GUC. Trust Asset Pleading (15-CV-5056, Docket No. 4) (“MDL Pis. ’ Mem. ”) v. n. 2), and State Plaintiffs, among others; the opinion did not address claims brought by the “Non-Ignition Switch Plaintiffs,” MDL Plaintiffs whose claims relate primarily to defects other than ignition switches. See In re Motors Liquidation Co., 529 B.R. 510, 526-27 (Bankr.S.D.N.Y.2015) (“April 15th Bankr. Op.”). To the extent relevant here, Judge Gerber held that, pursuant to the equitable mootness doctrine, the Ignition Switch Plaintiffs and the State Plaintiffs may not recover on any of their claims from the trust established by the bankruptcy plan (the “General Motors Liquidation Trust” or “GUC Trust”). See April 15th Bankr. Op., 529 B.R. at 585-92. He also held that parties could not pursue claims arising out of Old GM’s conduct, but could pursue claims against New GM arising out of New GM’s own, post-closing acts — identified as “Independent Claims.” See April 15th Bankr. Op., 529 B.R. at 526-27, 598; see also In re Motors Liquidation Co., 581 B.R. 354, 359 (Bankr.S.D.N.Y.2015) (“May 27 Bankr. Op.”). (Judgment (Bankr. Docket No. 13177) ¶¶ 4, 9). Judge Gerber did not definitively resolve which complaints or 'allegations were barred. Instead, he established procedures (the “No Strike” and “No Stay” procedures) — the details of which are irrelevant here — for parties to seek a determination of what impact, if any, the ruling had on their complaints and allegations. (Judgment ¶¶ 8(c), 11(c), 12(c)). Pursuant to those procedures, both the State Plaintiffs and the Ignition Switch Plaintiffs filed pleadings seeking declarations that their claims could proceed. (People State Calif.’s “No Strike” Pleading (Bankr. Docket No. 13210); State Ariz.’s “No Strike Pleading” (Bankr. Docket No. 13211); Ignition Switch Pis.’ No Strike Pleading Regard Second Am. Consol. Compl.; & Non-Ignition Switch Pis.’ (I) Objection Pleading Regard Second Am. Consol. Compl & (II) GUC Trust Asset Pleading (Bankr. Docket No. 13247) (“MDL Pis.’ Bankr. Pleading”) 21-28).

The Non-Ignition Switch Plaintiffs, however, are in a slightly different position than the State Plaintiffs and the Ignition Switch Plaintiffs. As noted, although Judge Gerber’s April 15th Opinion resolved the motions to enforce relating to claims brought by the Ignition Switch Plaintiffs and the State Plaintiffs, he deferred consideration of New GM’s motion with respect to claims brought by the Non-Ignition Switch Plaintiffs. See April 15th Bankr. Op., 529 B.R. at 522, 539;

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Bluebook (online)
538 B.R. 656, 2015 U.S. Dist. LEXIS 114043, 2015 WL 5076703, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-motors-liquidation-co-nysd-2015.