470 B.R. 688
S.D.N.Y.2012Background
- Debtor Old Carco entities and affiliates filed Chapter 11; New Chrysler acquired assets with Fiat; sale approved by Bankruptcy Court and appeals thereof.
- Assumed and rejected dealer agreements identified; Rejection Order terminated existing dealer rights and directed rejection of certain contracts.
- Colorado and Kentucky enacted post-sale dealer amendments protecting preexisting dealers; plaintiffs allege preemption and Contract Clause violations.
- Bankruptcy Court held state dealer laws preempted to the extent they conflicted with the Sale Order, Rejection Order, and 365(a) process.
- Plaintiffs seek declaratory and injunctive relief; Colorado’s aid is challenged but arguments focus on preemption by Kentucky statute.
- District Court granted summary judgment for Kentucky preemption, dismissed Colorado claim without prejudice, and retained jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Kentucky’s amendments are preempted by federal law | Cottrell | Cottrell | Preemption established; Kentucky amendments precluded |
| Whether Colorado’s amendments are preempted or ripe for adjudication | Old Carco | Colorado | Not ripe; dismiss without prejudice |
| Whether the action can be maintained under the Declaratory Judgment Act against state officials | New Chrysler/Old Carco | States | Declaratory relief available; proceeding proper under MedImmune principles |
| Whether Kentucky is proper venue and jurisdiction healthily supports the case given core bankruptcy matters | Plaintiffs assert core bankruptcy nexus | Kentucky argues otherwise | Venue proper; core bankruptcy jurisdiction supports filing |
Key Cases Cited
- In re Old Carco LLC, 406 B.R. 180 (Bankr. S.D.N.Y. 2009) (bankruptcy court rejection of dealer agreements preempts state laws)
- Freightliner Corp. v. Myrick, 514 U.S. 280 (U.S. 1995) (conflict preemption where state law undermines bankruptcy objectives)
- Eastern Equipment & Services Corp. v. Factory Point Nat'l Bank, 236 F.3d 117 (2d Cir. 2001) (bankruptcy preemption of state tort claims involving automatic stay)
- Astor Holdings, Inc. v. Roski, 325 F. Supp. 2d 251 (S.D.N.Y. 2003) (broad bankruptcy preemption; collateral attack on bankruptcy orders)
- MSR Exploration, Ltd. v. Meridian Oil, Inc., 74 F.3d 910 (9th Cir. 1996) (preemption described as protecting the bankruptcy process)
- In re Dan Hixson Chevrolet Co., 12 B.R. 917 (Bankr. N.D. Tex. 1981) (section 365 preempts state dealership laws absent harmony with bankruptcy)
- In re Tom Stimus Chrysler-Plymouth, Inc., 134 B.R. 676 (Bankr. M.D. Fla. 1991) (rejection of dealer contracts governed by bankruptcy, not state statutes)
- New York SMSA Ltd. Partnership v. Town of Clarkstown, 612 F.3d 97 (2d Cir. 2010) (preemption framework; express/field/conflict interplay)