In re Motors Liquidation Co.
Pending before the Court is the Motion for Leave to Pursue Claims Against General Motors LLC, and, Alternatively, to File a Post-Bar-Date Proof of Claim in the Motors Liquidation Company Bankruptcy (the “Motion,” ECF Doc. # 12727), on behalf of Roger Dean Gillispie (the “Movant,” or “Gillispie”). The Motion is supported by several exhibits (ECF Doc. ## 12727-1-6), including the Order (I) Authorizing Sale of Assets Pursuant to Amended and Restated Master Sale and Purchase Agreement with NGMCO, Inc., A U.S. Treasury-Sponsored Purchaser; (II) Authorizing Assumption and Assignment of Certain Executory Contracts and Unexpired Leases in Connection with the Sale; and (III) Granting Related Relief, dated July 5, 2009 (the “Sale Order,” ECF Doc. # 2968), approving the 363 sale (the “Sale”) of substantially all of General Motors Corporation’s (“Old GM”) assets. An objection to the Motion (the “New GM Objection,” ECF Doc. # 12863) was filed on behalf of General Motors LLC (“New GM”). A response to the Motion (the “GUC Trust Response,” ECF Doc. # 12864) was filed on behalf of Wilmington Trust Company (“Wilmington Trust”), as trustee for and administrator of the
On August 7, 2017, this Court entered an Order Requesting Status Letters (ECF Doc. # 14028), ordering that the parties each file written status reports to “address whether any intervening changes in the law or factual circumstances regarding [the Motion] have occurred since November 2014, such that supplemental briefing would be helpful to this Court in deciding the Motion.” Status reports were filed on behalf of Gillispie (ECF Doc. # 14052), Wilmington Trust (ECF Doc. # 14049), and New GM (ECF Doc. # 14050).
For the reasons explained below, the Motion is DENIED. Gillispie may not pursue any claims against New GM, and he may not file a late claim in the Old GM bankruptcy case.
I. BACKGROUND
A. Case Background
In February 1991, Gillispie was convicted on nine counts of rape, three counts of kidnapping, one count of aggravated robbery, and three counts of gross sexual imposition. See State v. Gillispie,
On June 1, 2009 (the “Petition Date”), Old GM and certain of its affiliates (collectively, the “Debtors”) filed Chapter 11 petitions in this Court (the “Chapter 11 Cases”). On the same day, the Debtors sought approval to sell substantially all of their assets, pursuant to 11 U.S.C. § 363 of the Bankruptcy Code, to an entity that eventually became New GM. In re GM Corp.,
On September 16,2009, the Court issued an order (the “Bar Date Order,” ECF Doc. # 4079) setting November 30, 2009 at 5:00 p.m. (Eastern Time) as the deadline (the “Bar Date”) for proofs of claim relating to prepetition claims against Old GM or any of its affiliated debtors. The Bar Date Order stated:
[A]ny holder of a Claim against the Debtors that is required but fails to file a Proof of Claim in accordance with this Bar Date Order ,.. shall be forever barred, estopped and enjoined from asserting such Claim against each of the Debtors and their respective estates (or filing a Proof of Claim with respect thereto), and each of the Debtors and their respective chapter 11 estates, successors, and property shall be forever discharged from any and all indebtedness or liability with respect to such Claim ....
(Bar Date Order at 5.) The Bar Date Order also required Old GM to publish notice of the Bar Date in a number of
Following a petition for a writ of habeas corpus filed by Gillispie on December 15, 2009, the U.S. District Court for the Southern District of Ohio conditionally granted Gillispie’s petition and ordered the State of Ohio to either release him or retry him. Gillispie v. Timmerman-Cooper,
In December 2013, Gillispie filed a civil suit (the “Civil Action”) for violations of 42 U.S.C, § 1983 and Ohio common law, namely, malicious prosecution, infliction of emotional distress, and spoliation of evidence, by General Motors personnel, among others, in the U.S. District Court for the Southern District of Ohio (the “First Amended Complaint,” ECF Doc. # 12727-1), alleging that his conviction was “the result of violations of his constitutional rights and the result of a conspiracy among police officers and individuals working at GM to maliciously prosecute him.” (Mot. at 2.) The First Amended Complaint names both New GM and Old GM as defendants (“GM”), and alleges that New GM is “the successor in interest and owner of substantially all of [Old GM’s] assets and bears liability for any judgement entered against [Old GM] as a result of this lawsuit.” (First Am. Compl. at 4.) The First Amended Complaint alleges that GM itself is possibly liable for the actions of its employees under the doctrine of responde-at superior, and that GM acted under col- or of law and is liable under section 1983 because the violation of Gillispie’s rights was caused by GM’s “policies, practices, customs, and/or decisions of the policymakers.”
In the Motion, Gillispie claims he should be granted leave to pursue his Civil Action against New GM. (Mot. at 5-7.) Gillispie argues that his Civil Action could not have been brought as a matter of state law before Gillispie’s conviction was called into question in 2011 and 2012, so his civil causes of action are post-petition claims, or “future claims.” (Id. at 8.) According to Gillispie, due process would demand that this Court’s Sale Order does not bar Gillis-pie from asserting his claim against New GM, which allegedly admitted to being the same entity as Old GM and which should thus bear Old GM’s liabilities. (Id. at 14.)
Alternatively, Gillispie claims that “should the Court ... hold that New GM cannot be a defendant” in Gillispie’s Civil Action, Gillispie “must, at a minimum, be entitled to pursue relief from Old GM’s estate.” (Id. at 16.) Gillispie argues that he never had a prior opportunity to assert his claims, and that should he be barred from asserting them against New GM, due process requires he be provided with the opportunity to do so against Old GM. (Id.) The Motion further contends that, in addition to due process, the Court should grant leave to Gillispie based on Rule 9006(b)(1) of the Federal Rules of Bankruptcy Procedure. (Id. at 17.) Gillispie’s incarceration during the sale and confirmation of the Debtors’ Chapter 11 Cases allegedly demonstrates Gillispie’s “excusable neglect” in failing to comply with the Bar Date and entitling him to fíle a post-bar-date proof of claim against Old GM. (Id. at 17-19.)
C. The Oppositions
1. New GM Objection
New GM objects to Gillispie’s Motion with regards to its liability for Gillispie’s civil claims. New GM first argues that the scope and limitations of New GM’s responsibilities and liabilities defined in the Sale Order bar Gillispie’s Civil Action against New GM. (New GM Objection at 14.) The New GM Objection contends that New GM never admitted that it was the same company as Old GM, regardless of Old GM’s having retained some liabilities and not compensating others. (Id. at 22-29.) New GM claims that “[ejvery cause of action Movant asserts in his civil action is based on the conduct of Old GM employees that occurred almost two decades before New GM came into existence.” (Id. at 14.) Since the Sale Order provided that New GM ought not to be liable for Old GM’s conduct, except with respect to the Retained Liabilities expressly retained by New GM, which do not comprise Gillispie’s civil claims, Gillispie’s successor liability allegations violate the Sale Order and his Motion should be rejected as' against New GM. (Id. at 14-16.) New GM further argues that Gillispie’s Civil Action relates to pre-petition claims, regardless of when they accrued for nonbankruptcy law purposes. (Id. at 16.) As holder of a contingent claim against Old GM, Gillispie was an “unknown creditor” only entitled to constructive notice of the Sale. (Id. at 21-22.) Since Gillis-pie did not file a timely proof of claim despite receiving adequate constructive notice, he is bound by the Sale Order and is barred from asserting his claims against either Old GM or New GM. (Id.)
2. GUC Trust Response
The GUC Trust argues that Gillispie did not have a cognizable “claim” under the Bankruptcy Code until years after entry of the Sale Order. (GUC Trust Response at 15.) The GUC Trust contends that . Gillis-pie’s civil causes of action did not arise before his criminal conviction was vacated in 2012, and that accordingly, Gillispie’s Civil Action against New GM could not be
II. LEGAL STANDARD
A. The Scope and Effect of the Sale Order with Regards to Successor Liability
Section 363(f) of the Bankruptcy Code authorizes the debtor in certain circumstances to sell the estate’s interest in property “free and clear of any interest in such property of an entity other than the estate.” 11 U.S.C. § 363(f). “The Bankruptcy Code does not define ‘any interest,’ and in the course of applying section 363(f) to a wide variety of rights and obligations related to estate property, courts have been unable to formulate a precise definition.” Precision Indus., Inc. v. Qualitech Steel SBQ, LLC,
“Interests in property,” as used in section 363(f), include “claims” that arise from the assets being sold. In re Chrysler LLC,
In addition, § 363(f) has been interpreted to authorize the bankruptcy court to grant in personam relief, similar to the discharge under Bankruptcy Code § 1141(d), that exonerates the buyer from successor liability, including liability for tort claims. Campbell v. Motors Liquidation Co. (In re Motors Liquidation Co.),
The Sale Order in this case expressly provides that, with the exception of certain limited liabilities expressly assumed by New GM (the “Assumed Liabilities”) under the Amended and Restated Master Sale and Purchase Agreement (the “Sale Agreement,” ECF Doc. # 2968-2), the assets acquired by New GM were .transferred “free and clear of all liens, claims, encumbrances, and other interests of any kind or nature whatsoever ... including rights or claims based on any successor
[A]ll persons and entities ... holding liens, claims and encumbrances, and other interests of any kind or nature whatsoever, including rights or claims based on any successor or transferee liability, against or in [Old GM] or the Purchased Assets (whether legal or equitable, secured or unsecured, matured or unma-tured, contingent or noncontingent, senior or subordinated), arising under or out of, in connection with, or in any way relating to [Old GM], the Purchased Assets, the operation of the Purchased Assets prior to the Closing ... are forever barred, estopped, and permanently enjoined ... from asserting against [New GM] ... such persons’ or entities’ liens, claims, encumbrances, and other interests, including rights or claims based on any successor or transferee liability.
CId. § 8.)
Further, the Sale Order states that “[t]his Order (a) shall be effective as a determination that, as of the Closing, (i) no claims other than Assumed Liabilities, will be assertable against [New GM] ... (ii) the Purchased Assets shall have been transferred to [New GM] free and clear of all claims (other than Permitted Encumbrances) .... ” (Id, § 9.) The Sale Order also provides:
Except for the Assumed Liabilities expressly set forth in the [Sale Agreement] .,. [New GM] .,. shall have [no] liability for any claim that arose prior to the Closing Date ... or otherwise is assertable against the Debtors or is related to the Purchased Assets prior to the Closing Date. [New GM] shall not be deemed ... to: (i) be a legal successor, or otherwise be deemed a successor to the Debtors (other than with respect to any obligations arising under the Purchased Assets from and after the Closing); (ii) have, de facto or otherwise, merged with or into the Debtors; or (iii) be a mere continuation or substantial continuation of the Debtors or the enterprise of the Debtors. Without limiting the foregoing, [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, de facto merger or continuity ... whether known or unknown as of the Closing, now existing or hereafter arising, asserted, or unassert-ed, fixed or contingent, liquidated or un-liquidated.
(Id, § 46.)
“Effective upon the Closing ... all persons and entities are forever prohibited and enjoined from commencing or continuing in any manner any action ... against [New GM] ... with respect to any (i) claim against [Old GM] other than the Assumed Liabilities.” (Id, § 47.) The Sale Order further provides that New GM did not assume any liabilities “arising in any way in connection with any agreements, acts, or failure to act, of any of [Old GM] or any of [Old GM’s] predecessors or affiliates, whether known or unknown, contingent or otherwise, whether arising prior to or subsequent to the commencement of these chapter 11 cases ... including but not limited to, claims otherwise arising under doctrines of successor or transferee liability.” (Id. § AA.)
The Sale Agreement expressly defines the liabilities retained by Old GM (the “Retained Liabilities”) and those assumed by New GM. Assumed Liabilities of New GM do not include any category of liabilities applicable to this case. (Sale Agreement § 2.3(a).) On the other hand, Retained Liabilities expressly include “all Liabilities of third parties for Claims
B. Contingent and Future Claims Within the Meaning of the Bankruptcy Code
Under section 101(5)(A) of the Bankruptcy Code, a claim is defined as a “right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.” 11 U.S.C. § 101(6)(A). Congress selected the broadest possible definition to ensure that “all legal obligations of the debtor, no matter how remote or contingent, will be able to be dealt with in the bankruptcy case.” United States v. LTV Corp. (In re Chateaugay Corp.),
The Second Circuit has adopted the “fair contemplation” test to- determine whether a potential future claim is a claim within the meaning of section 101(5). Grumman Olson,
[A]n individual has a § 101(5) claim against a debtor manufacturer if (i) events occurring before confirmation create a relationship, such as contact, exposure, impact, or privity, between the claimant and the debtor’s product; and (ii) the basis for liability is the debtor’s prepetition conduct in designing, manufacturing and selling the allegedly defective or dangerous product. The debtor’s prepetition conduct gives rise to a claim to be administered in a case only if there is a relationship established before confirmation between an identifiable claimant or group of claimants and that pre-petition conduct.
Piper Aircraft,
In this case, although Gillispie’s claims are not product liability claims as was true in Piper Aircraft or Grumman, his claims squarely fall within Chateaugay’s “fair contemplation” test or PipePs prepetition “relationship” test. Gillispie was employed by Old GM when the conduct giving rise to his claims occurred in 1991; and he seeks to blame Old GM for the conduct of its other employees based on respondeat superior.
In the Motion, Gillispie asserts that his causes of action did not accrue until after the Sale, and that accordingly, such action was not a “claim” within the meaning of the Bankruptcy Code, (Mot. at 10-14.) The Motion implicitly relies on the “accrued state law claim theory,” as notably adopted by the Third Circuit in Frenville, which states that there is no claim for bankruptcy purposes until a claim has accrued under state law. Avellino & Bienes v. M.
• The New GM Objection points to the Stone case, in which factual background is comparable to the facts in this case. (New GM Objection at 18.) There, the plaintiff was arrested and charged with theft from Kmart prior to the commencement of Kmart’s chapter 11 case. Stone v. Kmart Corp.,
The accrual time for Plaintiffs malicious prosecution claim under Alabama law does not control this action. The relevant inquiry is whether a claim has accrued under bankruptcy law based upon the statutory definition of a claim. The court finds that Plaintiffs claim accrued for purposes of bankruptcy law prior to the Bar Date. Applying the broad definition of claim to the facts of this case, Plaintiff, at the time of her arrest, had an arguably remote claim for malicious prosecution against Kmart. The scope of the term claim, as determined through the legislative history of the Bankruptcy Code, is more than broad enough to accommodate a malicious prosecution action, although the action has not accrued for purposes of state law.... The claim is contingent upon termination of the criminal case in favor of Plaintiff, which at least arguably would happen at some point during her criminal investigation or trial. That makes the claim at least “contingent” or “unmatured” in the context of the Code.
Id. at *3.
C. Adequacy of Notice
It is long-held that known creditors must be afforded notice “reasonably calculated, under all the circumstances to apprise” them of the pendency of the Bar Date. Mullane v. Cent. Hanover Bank & Trust Co.,
What type of notice is reasonable or adequate, however, depends on whether the creditor is “known” or “unknown” to the debtor. U.S.H. Corp. of N.Y.,
The Supreme Court has explained that a “known” creditor includes both a claimant whose identity is actually known to the debtor or a claimant whose identity is “reasonably ascertainable” by the debtor. Chemetron,
A creditor is “reasonably ascertainable” if the debtor can uncover the identity of that creditor through “reasonably diligent efforts.” Mennonite Bd. of Missions v. Adams,
Reasonable diligence in ferreting out known creditors will, of course, vary in different contexts and may depend on the nature of the property interest held by the debtor. Applying Mullane’s “reasonable under the circumstances” standard, due process requires a reasonable search for contingent or unmatured claims so that ascertainable creditors can receive adequate notice of the bar date. What is reasonable depends on the particular facts of each case. A debtor need not be omnipotent or clairvoyant. A debtor is obligated, however, to undertake more than a cursory review of its records and files to ascertain its known creditors.
Known creditors are defined as creditors that a debtor knew of, or should have known of, when serving notice of the bar date. Among known creditors may be parties who have made a demand for payment against a debtor in one form or another before the compilation of a debtor’s schedules. Typically, a known creditor may have engaged in some communication with a debtor concerning the existence of the creditor’s claim. This communication by itself does not necessarily make the creditor known. Direct knowledge based on a demand for payment is not, however, required for a claim to be considered “known.” A known claim arises from facts that would alert the reasonable debtor to the possibility that a claim might reasonably be filed against it.
Drexel,
Similarly, in In re XO Commc’n, Inc.,
D. Failure to File Proof of Claim and Excusable Neglect
In cases where creditors have failed to file claims before the bar date despite having adequate notice, “Bankruptcy Rule 9006(b)(1) gives the court the discretion to enlarge the time to file claims ‘where the failure to act was the result of excusable neglect.’ ” In re Lehman Bros. Holdings Inc.,
Courts have held that a claimant’s neglect was not excusable where its failure to comply with the rule was the result of a mistake of law. Canfield v. Van Atta Buick/GMC Tmck Inc.,
Ill, DISCUSSION
Gillispie may not assert his claims against New GM as his claims were not assumed liabilities and successor liability is barred by the Sale Order. Leave to file late claims against Old GM is denied, as Gillispie has not established excusable neglect.
A. Gillispie Does Not Have Claims Against New GM
Gillispie’s Motion with respect to his request to be granted leave to pursue
Gillispie argues that due process should not bar him from asserting his claim against New GM. However, there is nothing in the record to support a contention that Gillispie was a known creditor of Old GM (or that Old GM concealed a known or reasonably expected liability). In June 2009, when Old GM filed for bankruptcy protection, Old GM had no basis to suspect that Gillispie had any claim against Old GM relating to his February. 1991 Ohio criminal conviction, Gillispie filed his civil action asserting claims against Old GM and New GM based on wrongful conviction in December 2013. As an unknown creditor, notice by publication was constitutionally sufficient, and Old GM did publish notice of the hearing of the Sale and of the Claim Bar Date in a number of global, national, and local newspapers. Gillispie thus has no basis to argue that as a result of a due process violation because of inadequate notice, he is not bound by the free and clear provisions of the Sale Order.
B. Gillispie Does Not Show Sufficient Cause to be Granted Leave to File a Post-Bar-Date, Late Proof of Claim in the Old GM Bankruptcy
Gillispie’s Motion with respect to his request to be granted leave to file a post-bar-date proof of claim in the Old GM bankruptcy is also denied.
1, Gillispie’s Civil Claims Are Contingent Claims Within the Meaning of § 101(5) (A) of the . Bankruptcy Code
Gillispie’s Civil Action is based on violations of 42 U.S.C. § 1983 and of Ohio common law arising out of the alleged misconduct of Old GM employees. All of the events that formed the basis for his Civil Action occurred during or before calendar year 1991, and were related to testimony given by Old GM employees in connection with Gillispie’s arrest and conviction.
As previously mentioned, the court’s reasoning in Stone v. Kmart Corp.,
It follows that Gillispie’s civil claims are contingent claims within the meaning of section 101(5)(A) of the Bankruptcy Code. To preserve the claims in this bankruptcy case, Gillispie had to file a proof of claim before the Bar Date.
2. Gillispie was an Unknown Creditor of Old GM and He Received Adequate Notice of the Bankruptcy Filing and the Claim Bar Date
Gillispie’s Civil Action relies on facts that occurred at the earliest eighteen years before the start of Old GM’s bankruptcy proceeding. Gillispie’s first effort to
The Court concludes that Gillispie was an unknown creditor. It follows that Old GM was only required to provide Gillispie with constructive notice of the bankruptcy filing and Claim Bar Date though publication. See Mullane, 339 at 317,
It follows that Gillispie’s relief against Old GM can only be achieved through a showing that his “excusable neglect” justified his failure to file a timely proof of claim.
3. Gillispie’s Failure to File a Proof of Claim is Not Due to Excusable Neglect
Gillispie’s failure to file a timely proof of claim despite having received adequate notice can only be excused under Bankruptcy Rule 9006(b)(1) if Gillispie’s failure to act is the result of “excusable neglect,” as interpreted by the Pioneer Court. The Motion argues that “[f]irst, and most paramount is the fact that Mr. Gillis-pie ... could not have brought his civil rights case” before the Claim Bar Date because his state law claims had not accrued. (Mot. at 17). Gillispie argues that he did not file a proof of claim in the bankruptcy court because he could not file a lawsuit as' a matter of nanbankmptcy Urn before his conviction was called into question in 2011 and 2012. In arguing that his failure to file a proof of claim was the
IV. CONCLUSION
For the reasons discussed above, the Motion is DENIED.
IT IS SO ORDERED.
Notes
. See State v. Gillispie,
. The order provided that "[o]n the Mailing Deadline, or as soon as practicable thereafter, the Debtors shall cause the Publication Notice to be published (i) once in (a) the global edition of The Wall Street Journal, (b) the national edition of The New York Times, (c) the global edition of The Financial Times, (d) the national edition of USA Today, (e) Detroit Free Press/Detroit News, (f) Le Journal de Montreal, (g) Montreal Gazette, (h) The Globe and Mail, and (i) The National Post, and (ii) on the website of the Debtors’ proposed claims and noticing agent, The Garden City Group, Inc., at http:/www,gmcourtdocs,com.” (ECF Doc. # 274 § 9(e).)
. The Bar Date Order provided that “the Debtors shall publish the Bar Date Notice, with any necessary modifications for ease of publication, once in each of Financial Times, The Wall Street Journal (Global Edition— North America, Europe, and Asia), The New York Times (National), USA Today (Monday through Thursday, National), Detroit Free Press/Detroit News, Le Journal de Montreal (French), Montreal Gazette (English), The Globe and Mail (National), and The National Post at least thirty days prior to the General Bar Date, which publication is hereby approved and shall be deemed good, adequate, and sufficient publication notice of the Bar Date and the procedures for filing Proofs of Claim in these cases .,., ”
. This decision, preventing Gillispie from pursuing claims against Old GM or New GM, has no effect on Gillispie’s causes of action against the remaining defendants in his lawsuit pending in the Ohio District Court.
. To bring a 42 U.S.C. § 1983 action alleging that the plaintiffs conviction is unconstitutional or otherwise invalid, the plaintiffs conviction must have been called into question or otherwise undermined. See Heck v. Humphrey,