In re Motors Liquidation Co., 576 B.R. 313

Background

Old GM sold substantially all assets to New GM in a Section 363 sale (Sale Order July 5, 2009); New GM assumed certain "Product Liabilities" (post-closing accidents) but did not assume all Old GM liabilities.
Kaitlyn Reichwaldt was severely burned in a January 27, 2015 crash involving a 1984 Old GM pickup; she sued New GM (May 2016) alleging negligence/strict liability, reckless conduct, failure to warn, and seeking punitive damages.
The bankruptcy court previously limited claims against New GM: Independent Claims may proceed only if they are based solely on New GM post-closing conduct; punitive damages based on Old GM conduct are barred and New GM did not assume punitive-damage liability.
Reichwaldt’s complaint and proposed amended complaint (Proposed FAC) frequently conflate Old GM and New GM conduct and rely on general public statements and allegations not tied specifically to New GM post-closing wrongful acts.
New GM moved to enforce the Sale Order and injunction; the bankruptcy court held (1) Reichwaldt’s pleadings fail the gatekeeper test for Independent Claims as drafted, and (2) punitive damages against New GM based on Old GM conduct are barred. The court stayed the Georgia action and ordered counsel to meet-and-confer to produce a marked FAC that eliminates impermissible allegations.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Reichwaldt’s claims, as pleaded, can pass through the bankruptcy gate as Independent Claims against New GM	Reichwaldt contends her failure-to-warn claim can proceed and that Proposed FAC cures defects	New GM asserts the pleadings blur Old vs New GM, lack specific New GM post-closing wrongful acts, and thus cannot pass the gate	Complaint/Proposed FAC fail: allegations conflate Old/New GM and do not identify specific New GM conduct; cannot pass without amendment
Availability of punitive damages against New GM based on Old GM conduct	Reichwaldt argues she is not bound by earlier rulings because her injury occurred later and she lacked privity	New GM cites prior rulings and bankruptcy policy to bar punitive damages based on Old GM conduct	Punitive damages against New GM based on Old GM conduct are barred (contract interpretation, res judicata, law-of-the-case)
Whether res judicata or law of the case preclude Reichwaldt from relitigating punitive-damages issue	Reichwaldt says she was not a party/claimant when earlier rulings issued and therefore not bound	New GM notes Reichwaldt’s counsel received notice of threshold proceedings and Goodwin Proctor appeared for related clients; prior rulings decided the issues	Court: July 2017 Opinion (and earlier rulings) are binding on Reichwaldt by res judicata / law of the case; no compelling reason to revisit
Proper scope/form of pleading to state Independent Claims	Reichwaldt argues proposed amendments suffice (except punitive damages)	New GM says mere addition of "GM LLC" or general statements (CEO comments, corporate succession boilerplate) is insufficient	To pass, complaint must clearly allege specific New GM post-closing wrongful conduct tied to plaintiff’s injury; generalities and conflation impermissible

Key Cases Cited

In re Motors Liquidation Co., 571 B.R. 565 (Bankr. S.D.N.Y. 2017) (court’s July 2017 Opinion on Independent Claims and punitive damages)
In re Motors Liquidation Co., 568 B.R. 217 (Bankr. S.D.N.Y. 2017) (June 2017 Opinion defining Independent Claims gatekeeper standard)
In re Motors Liquidation Co., 829 F.3d 135 (2d Cir. 2016) (Second Circuit decision on notice/due process and scope of claims post-sale)
In re Grumman Olson Indus., Inc., 445 B.R. 243 (Bankr. S.D.N.Y. 2011) (post-petition injury plaintiff not a prepetition claimant for sale-order purposes)
Burton v. Chrysler Group LLC (In re Old Carco LLC), 492 B.R. 392 (Bankr. S.D.N.Y. 2013) (analysis of post-closing purchaser claims and duties to warn)
Huron Holding Corp. v. Lincoln Mine Operating Co., 312 U.S. 183 (U.S. 1941) (appeal does not defeat finality for res judicata purposes)
United States v. Corr, 557 F.3d 93 (2d Cir. 2009) (law-of-the-case doctrine and adherence to prior rulings)