United States District Court, S.D. New York
MARLOS CHENAULT and SHAYRIKA L. CHENAULT, Movants,
GENERAL MOTORS LLC, Appellee. IN RE: MOTORS LIQUIDATION CO., Debtors.
OPINION & ORDER
ABRAMS, United States District Judge:
Marios Chenault and Shayrika L. Chenault move for leave to
appeal an order of the United States Bankruptcy Court for the
Southern District of New York, which determined that General
Motors Corporation's Chapter 11 petition stayed their
state-court action. For the reasons set forth below, the
motion is denied.
General Motors Bankruptcy Proceedings
1, 2009, General Motors Corporation ("Old GM")
filed a voluntary Chapter 11 petition in the Bankruptcy
Court. See Voluntary Pet., In re Motors
Liquidation Co., No. 09-BK-50026 (Bankr. S.D.N.Y. June
1, 2009) (ECF No. 1). The same day, Old GM filed a motion
seeking approval of a sale agreement, under which it would
sell substantially all its assets to General Motors, LLC
("New GM"). See Mot. for Sale of Property,
In re Motors Liquidation Co., No. 09- BK-50026
(Bankr. S.D.N.Y. June 1, 2009) (ECF No. 92).
5, 2009, the Bankruptcy Court approved the sale agreement and
authorized the sale. See Obj. by General Motors LLC
to Mot. for Leave to Appeal ("Obj.) Ex. H (ECF No. 4-8).
The sale order provides, in relevant part, that New GM
"shall not have any successor, transferee, derivative,
or vicarious liabilities of any kind or character for any
claims, including, but not limited to, under any theory of
successor or transferee liability . . . whether . . . now
existing or hereafter arising, asserted, or unasserted."
Id. \ 46. The sale order also provides that
"all persons or entities are forever prohibited and
enjoined from . . . commencing or continuing any action or
any other proceeding pending or threatened against [Old GM]
as against [New GM]." Id. ¶47. The sale
order further explains that New GM would consummate the sale
only if the Bankruptcy Court "expressly orders"
that New GM would "not have any liability
whatsoever" with respect to "rights or claims based
on any successor transferee liability." Id.
the Bankruptcy Code, the filing of Old GM's Chapter 11
petition automatically stayed the commencement or
continuation of all proceedings against Old GM. See
11 U.S.C. § 362(a)(1). That stay remained in place when
the Bankruptcy Court confirmed Old GM's Chapter 11 plan
on March 29, 2011. See Order, In re Motors
Liquidation Co., No. 09-BK-50026 (Bankr. S.D.N.Y. Mar.
29, 2011) (ECF No. 9941). Old GM's Chapter 11 case
Movants' State Court Action
October 18, 2012, Movants filed a complaint against
"General Motors Corporation" and other entities in
the state court of Fulton County, Georgia. See Obj.
Ex. C. In their complaint, Movants allege that their 2005 GMC
Envoy Denali crashed into a guardrail on an interstate
highway in Morgan County, Georgia on January 29, 2011.
Id. ¶ 9. Movants further allege that the crash
was caused by a defective tire "originally designed in
part" by Old GM. Id. ¶ 12. According to
the complaint, the crash left Marios Chenault paralyzed from
the waist down. Id. ¶11.
October 22, 2012, Movants attempted to serve New GM with
their complaint. See Obj. Ex. E. Because their
complaint did not name New GM as a defendant, however, New
GM's registered agent rejected service. See Id.
Movants moved for default judgment against New GM and for a
correction of misnomer, claiming that New GM is "the
successor-in-interest to Old GM" and that their
complaint's references to Old GM were mistaken.
See Obj. Ex. G, at 3-4. New GM opposed the motion,
arguing, inter alia, that service was never
perfected, that New GM is not the successor-in-interest to
Old GM, and that Movants' claims violated the bankruptcy
stay See Obj. Ex. A, at 4-5.
State Court Order
September 28, 2015, the state court issued an "Order
Staying Motion for Default Judgment and Directing Parties to
Bankruptcy Court." Obj. Ex. B. The state court concluded
that whether New GM is a successor-in-interest to Old GM, and
whether Movants' claims against Old GM are barred, were
"issues for the Bankruptcy Court to determine, because
resolution would involve an analysis of that Court's own
orders and rulings." Id. at 2. The state court
ordered Movants "to seek a ruling from the Bankruptcy
Court regarding the nature of the relationship between
General Motors Corporation and General Motors, LLC, whether
or not the claims herein survive or are barred for any
reason, and whether or not the bankruptcy stay applies in
this case." Id. The state court stayed its own
proceedings pending a ruling from the Bankruptcy Court.
Bankruptcy Court Order
then filed a motion in the Bankruptcy Court, seeking an order
determining that the bankruptcy stay does not apply to their
claims. Obj. Ex. A, at 2. On April 15, 2016, the Bankruptcy
Court denied their motion. See Id. Drawing from its
prior orders, the Bankruptcy Court first explained that
"the record in this bankruptcy case and the prior
decisions of this Court make it abundantly clear that New GM
is not a successor in interest to Old GM."
Id. at 9 (emphasis in original). The Bankruptcy
Court then determined that Movants' assertion of claims
in state court against Old GM violated the bankruptcy stay,
which "remain[ed] in full force and effect until the
closing of the chapter 11 case." Id. at 10.
Finally, the Bankruptcy Court stated that, contrary to
Movants' allegations, "New GM did not
assume liability for [their] claims." Id.
(emphasis in original). The Bankruptcy Court explained that,
while New GM assumed liability for certain ...