462 B.R. 494
Bankr. S.D.N.Y.2012Background
- Morgenstein Plaintiffs, three Impala owners, seek to file a class claim post bar date for defects in 2007-2008 Impalas.
- Debtors, Old GM and GUC Trust, confirmed a plan in March 2011 and distributed assets under that plan.
- Plaintiffs request limited revocation of the Confirmation Order under 11 U.S.C. § 1144 on grounds of fraud in procurement.
- Plaintiffs allege two 2008 notices (Technical Service Bulletin 09082 and a Program Bulletin) about rear-wheel spindle rod defect, allegedly affecting Police Package Impalas and others.
- Defendants move to dismiss under Rule 12(b)(6) and 9, arguing no partial revocation is allowed, fraud pleading is deficient, and equitable mootness may apply.
- Court dismisses, holding no partial revocation is authorized, fraud claims fail with particularity, and equitable mootness is not resolved on this motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether partial revocation of a confirmation order is allowed | Morgenstein Plaintiffs seek limited revocation under 1144. | GUC Trust argues 1144 only permits full revocation. | Partial revocation not permissible; order cannot be revoked in part. |
| Whether the complaint pleads fraud on the court with requisite particularity | Fraud alleged in schedules and disclosure to mislead court. | Fraud claims lack Rule 9(b) particularity and evidentiary support. | Dismissed for failure to plead fraud on the court with particularity. |
| Whether the claim is subject to equitable mootness so as to bar relief | Plan has distributed assets; relief possible for late claim. | Post-confirmation distributions and trading render relief moot. | Equitable mootness denied without prejudice pending further developments. |
Key Cases Cited
- In re Spiegel, Inc., 354 B.R. 51 (Bankr.S.D.N.Y.2006) (fraud-on-the-court standards; pleading requirements)
- Delta Air Lines, Inc. v. Delta Air Lines, Inc., 386 B.R. 518 (Bankr.S.D.N.Y.2008) (equitable mootness and broad discretion on revocation)
- Victory Markets, Inc. (Charter Asset Corp. v. Victory Markets, Inc.), 221 B.R. 298 (B.A.P.2d Cir. 1998) (selective or partial revocation considerations)
- Nyack Holding Co., 98 B.R. 659 (Bankr.S.D.N.Y.1989) (dismissing revocation for lack of fraudulent intent; pleading standards)
- Shields v. Citytrust Bancorp, Inc., 25 F.3d 1124 (2d Cir.1994) (fraud pleading standards and Rule 9(b))
- In re Adelphia Communications Corp., 441 B.R. 6 (Bankr.S.D.N.Y.2010) (section 1129/1144 context; court considerations)
- In re Longardner & Assoc., Inc., 855 F.2d 455 (7th Cir.1988) (fraud on the court; motivation/opportunity analysis)
- In re Circle K Corp., 171 B.R. 666 (Bankr.D.Ariz.1994) (fraud and plan procedures; context for revocation)