Motors Liquidation Company

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
In re:
MOTORS LIQUIDATION COMPANY, et al.,
f/k/a General Motors Corp., et al.,
Debtors.
FOR PUBLICATION
Case No. 09-50026 (MG)
(Jointly Administered)
MEMORANDUM OPINION AND ORDER ENFORCING PROVISIONS OF SALE
ORDER WITH RESPECT TO THE MOORE, ET AL. PLAINTIFFS
A P P E A R A N C E S:
KING & SPALDING LLP
Attorneys for General Motors LLC
1185 Avenue of the Americas
New York, NY 10036
By: 	Arthur Steinberg, Esq.
Scott Davidson, Esq.
THE MEMMEN LAW FIRM, LLC
Attorneys for Moore, et al.
505 North LaSalle Drive, Suite 500
Chicago, IL 60654
By: 	Alexander McH. Memmen, Esq.
MARTIN GLENN
UNITED STATES BANKRUPTCY JUDGE
This dispute involves allegedly contaminated groundwater that migrated from property
previously owned until July 2009 by General Motors Corporation (“Old GM”) and now owned
by General Motors LLC (“New GM”) into the water wells of nearby properties that were used by
homeowners for drinking water and other normal household uses. The alleged contaminant is
sodium chloride (“road salt”), allegedly used in excessive quantities by Old GM and then by
New GM to treat the roads on the Milford Proving Grounds (“MPG”) in Michigan during winter
months. The plaintiffs in an action pending in U.S. District Court for the Eastern District of
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Michigan allege that the contaminated groundwater caused personal injury and property
damages. New GM asks this Court to enforce the Sale Order (explained below) entered by the
bankruptcy court to accomplish the bankruptcy sale of most of Old GM assets, including the
MPG, to New GM, and to enjoin plaintiffs from proceeding with some but not all of the claims
asserted in the pending action.
Groundwater is the water found underground in the cracks and spaces in soil, sand and
rock. Groundwater contamination can be insidious. It can and often does migrate slowly in a
“plume” from the property where the contamination originated to nearby properties. In areas
where the earth and material above groundwater is permeable, pollutants can seep into
groundwater supplies. If contaminated groundwater invades water wells used for drinking,
showering, and other normal household uses, it may no longer be safe to drink or for other uses,
depending on the specific contaminants and concentrations, and it can cause personal injury and
property damage, although proof can be challenging. Even if dumping additional contaminants
stops, it can be years or even decades for contaminated groundwater to stop migrating to nearby
properties. In this matter, the plaintiffs allege Old GM contaminated the groundwater with road
salt and New GM continued contaminating the groundwater by using excessive amounts of road
salt after it acquired the property in 2009.
Plaintiffs in the pending Michigan federal court action assert that New GM is liable for
all personal injury and property damages caused by the road salt contamination, whether traced
to Old GM’s conduct or to New GM’s conduct. New GM acknowledged during argument that it
assumed liability for any required environmental response costs, whether Old GM or New GM
contaminated the groundwater, although, at this stage at least, no government agencies charged
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with enforcing environmental laws has required remediation.1 New GM also agrees that
plaintiffs can assert claims against New GM based solely on New GM’s conduct, but New GM
argues that any liabilities for personal injury or property damages caused by Old GM’s pre-sale
conduct were “Retained Liabilities,” for which New GM bears no liability.
As explained below, this Court exercises its role as a “gatekeeper,” determining whether
claims asserted against New GM are barred by the Sale Order and prior decisions of this Court.
The merits of any claims that pass through the gate are not for this Court to pass upon. The
Court concludes below that many but not all of plaintiffs’ claims may be asserted against New
GM, some because they raise claims for which New GM contractually assumed liability and
others because the claims may be asserted against New GM based on its own conduct. Some of
plaintiffs’ claims and allegations are barred by the Sale Order, and as to those matters, the
plaintiffs are enjoined from proceeding.
The Motion is therefore GRANTED in part, to the extent described herein.
I. 	BACKGROUND
A. 	Motion to Enforce the Sale Order
Pending before the Court is the Motion to Enforce the Bankruptcy Court’s July 5, 2009,
Sale Order and the Rulings in Connection Therewith, With Respect to the Moore, et al. Plaintiffs
(the “Motion,” ECF Doc. # 14241), filed on February 27, 2018, by New GM. New GM seeks to
enjoin the plaintiffs (the “Moore Plaintiffs,” or the “Plaintiffs”) in a lawsuit captioned Terry
Moore, et al. v. General Motors LLC, Case No. 2:17-cv-14226 (the “Moore Litigation”), pending
in the United States District Court for the Eastern District of Michigan (the “Michigan District
1 	See March 29, 2018 Hearing Transcript, at 27–28 (ECF Doc. # 14274).
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Court”), from proceeding with personal injury and property damage claims against New GM
based on alleged groundwater contamination by Old GM. The Moore Plaintiffs filed an
objection to the Motion (the “Objection,” ECF Doc. # 14251), and New GM filed a reply (the
“Reply,” ECF Doc. # 14254). On March 29, 2018, the Court heard argument on the Motion (the
“Hearing”).2
The Moore Litigation is a putative class action filed on behalf of homeowners who live
near the MPG, an automobile testing facility previously owned by Old GM and transferred to
New GM pursuant to the Sale Agreement. 3 The Moore Plaintiffs seek to recover for personal
injury and property damage based on the alleged contamination of groundwater caused by Old
GM’s and New GM’s release of large amounts of road salt into the MPG. (See ECF Doc. #
14242-3, the “Moore Amended Complaint,” or the “MAC.” 4 )
In many respects there is common ground between the parties as to which claims against
New GM can properly be asserted (subject, of course, to any motions challenging the pleadings
before the Michigan District Court). New GM believes some aspects of the Moore Amended
Complaint are barred by the Sale Order and this Court’s previous decisions and judgments, and
seeks an order enforcing the Sale Order and enjoining the litigation to the extent the MAC is
improper. (Mot. ¶¶ 1, 5.) The Sale Order and Sale Agreement provide that certain liabilities
were assumed by New GM (“Assumed Liabilities”) and certain liabilities were retained by Old
GM (“Retained Liabilities”). The Sale Order provides that, with respect to property Old GM
2 	See March 29, 2018 Hearing Transcript (ECF Doc. # 14274).
3 	Capitalized terms not defined herein are defined below.
4 	On December 4, 2017, New GM was served with the Moore Original Complaint (the “MOC”). (Mot. ¶
20.) Upon receiving a January 8, 2018 letter from New GM stating that the MOC violated the Sale Order, on
February 16, 2018, the Moore Plaintiffs filed the Moore Amended Complaint. (Id. at ¶ 22–23.)
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transferred to New GM, New GM assumed certain liabilities under Environmental Laws (as that
term is defined in the Sale Order). New GM argues that the Moore Amended Complaint
improperly asserts claims against New GM that do not arise under Environmental Laws—
specifically, common law claims for negligence, public and private nuisance, trespass and
fraud—that were Retained Liabilities of Old GM. (Id. ¶¶ 1, 2, 23.) New GM also objects to the
Moore Litigation going forward to the extent that the Moore Plaintiffs (1) fail to properly assert
independent claims against New GM because they do not specifically identify New GM conduct
that would support their claims (id. ¶ 24), (2) improperly seek exemplary damages in connection
with their improper fraud claims (id. ¶ 25), and (3) advance successor liability allegations that
impermissibly lump Old GM and New GM conduct together (id. ¶ 26).
Complicating matters, the plain language of the Sale Order and Sale Agreement are not a
model of clarity regarding the contours of New GM’s liability for common law claims for
personal injury and property damage due to environmental contamination. While the Court has
dealt with issues of Michigan environmental law in the past,5 this is the first instance in which
the Court is required to parse the complicated provisions of the Sale Agreement to determine the
scope of New GM’s Assumed Liabilities regarding environmental law. The Court therefore
ordered the parties to submit supplemental briefs on the issue whether Michigan common law
claims for damages for personal injury or property damage from environmental contamination
are among “Assumed Liabilities” that may be alleged against New GM. On April 20, 2018, both
parties submitted supplemental memoranda of law (the “New GM Supplemental Brief,” ECF
Doc. # 14276; the “Moore Plaintiffs’ Supplemental Brief,” ECF Doc. # 14278).
5 	See In re Oldco M Corp., 438 B.R. 775 (Bankr. S.D.N.Y. 2010).
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Finally, the Court is not writing on a blank slate. Judge Gerber previously construed the
provisions of the Sale Order and Sale Agreement concerning environmental law in In re Gen.
Motors Corp., 407 B.R. 463 (Bankr. S.D.N.Y. 2009), aff’d in part, vacated in part, reversed in
part sub nom. Elliott v. General Motors LLC (In re Motors Liquidation Co.), 829 F.3d 135 (2d
Cir.), cert. denied, 137 S. Ct. 1813 (2017) (the “Sale Decision”). To the extent Judge Gerber did
so, the Court considers that construction settled law of the case, and will not second guess such
interpretation nine years after the bankruptcy. In the Sale Decision, Judge Gerber interpreted the
environmental provisions of the Sale Agreement to require New GM to comply with the
Environmental Laws relating to the Transferred Real Property.6 But, Judge Gerber explained,
New GM did not assume liability for claims relating to the property based on Old GM’s conduct.
Accordingly, the Court holds that the Moore Plaintiffs are precluded from proceeding with their
common law claims against New GM related to Old GM’s conduct (Counts III through VII),
because they are not claims arising under Environmental Laws and, therefore, are not Assumed
Liabilities.
As explained below, the Court concludes as follows:
1. 	Plaintiffs may not assert common law claims against New GM for
personal injury or property damage based on 	groundwater contamination that
migrated from the MPG before the sale of the Property to New GM was
completed.
2. 	For personal injury or property damage claims based on groundwater
contamination from Old GM’s dumping of road salt before the Property sale to
New GM, but which migrated from the Property after the Property was owned by
6 	The term “Transferred Real Property” is defined at Section 2.2(a)(vi) of the Sale Agreement.
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New GM, the Sale Order does not bar such claims. 	But whether Michigan law
recognizes claims for personal injury or property damage against a property
owner (and, in this regard, New GM stands in no different position than any other
Michigan property owner) is an issue for the Michigan District Court, not for this
Court.
3. 	New GM does not dispute that Plaintiffs may assert common law
claims against New GM for personal injury or property damage caused by
groundwater contamination resulting from New GM’s dumping of road salt.
4. 	The Court agrees with New GM that many of the allegations in the
MAC purporting to allege independent claims are improper and may not proceed
as pleaded. 	During the Hearing on the Motion, the Court directed the parties’
counsel to meet and confer to try to narrow their disagreements regarding
Plaintiffs’ proposed amended complaint. On April 20, 2018, New GM’s counsel
submitted a letter to the Court (ECF Doc. # 14277-1) explaining that the parties
had resolved some but not all of their disagreements. 	They provided the Court
with a redlined version of the MAC indicating the parties’ remaining disputes
(ECF Doc. # 14277-2, the “Mark-Up”). 	A separate order will be entered ruling
on New GM’s outstanding objections in the Mark-Up, the Court’s basis for which
is described in this Opinion.
5. 	In addition, the Moore Plaintiffs are permitted to proceed with their
common law claims against New GM related to New GM’s conduct (Counts X
through XIV), as they have sufficiently identified New GM conduct that would
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support such claims. However, the Moore Plaintiffs must remove their claim for
exemplary damages based on conduct of Old GM.
6. The Court also rejects the Moore Plaintiffs’ argument that they should
be permitted to assert common law claims against New GM based on Old GM’s
conduct because Plaintiffs were denied due process as they were not provided
with actual notice of Old GM’s bankruptcy. 	(Obj. at 10.) 	As explained below,
the Court holds that the Moore Plaintiffs’ due process rights were not violated.
The 	Plaintiffs 	were 	not 	known 	creditors 	entitled 	to 	actual 	notice 	of 	the
bankruptcy; notice by publication, which they received, sufficed. 	The Moore
Plaintiffs are thus are bound by the Sale Order.
B. 	The Sale Order, Sale Agreement and Sale Decision
On June 1, 2009, Old GM commenced a case under chapter 11 of the Bankruptcy Code,
and on the same day, filed a motion to sell substantially all of its assets to New GM, including
the MPG through a sale agreement (the “Sale Agreement,” ECF Doc. # 14242-2). (See Sale
Decision, 407 B.R. at 473; Obj. at 6.) The Sale Order (ECF Doc. # 2968) was entered on July 5,
2009, and the sale (the “363 Sale”) closed on July 10, 2009.
The Sale Agreement provides that, pursuant to the 363 Sale, New GM assumed certain
categories of liabilities (the “Assumed Liabilities”) related to the real property Old GM
transferred to New GM. (Mot. ¶ 7.) These liabilities include “all Liabilities arising under any
Environmental Law7 (A) relating to the Transferred Real Property, other than those Liabilities
7 	“Environmental Law” is defined in the Sale Agreement as “any Law in existence on the date of the
Original Agreement relating to the management or Release of, or exposure of humans to, any Hazardous Materials;
or pollution; or the protection of human health and welfare and the Environment.” (Sale Agreement at 7.)
(Footnote continued on next page)
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described in Section 2.3(b)(iv), (B) resulting from Purchaser’s ownership or operations of the
Transferred Real Property after the Closing or (C) Relating to Purchaser’s failure to comply with
Environmental Laws after the Closing[.]” (Sale Agreement § 2.3(a)(viii).)
Certain liabilities were expressly carved out of the category of Assumed Liabilities.
Specifically, Section 2.3(b)(iv) of the Sale Agreement provides that the following are liabilities
retained by Old GM (the “Retained Liabilities”):
[A]ll 	Liabilities 	(A) 	associated 	with 	noncompliance 	with
Environmental Laws (including for fines, penalties, damages and
remedies); (B) arising out of, relating to, in respect of or in
connection with the transportation, off-site storage or off-site
disposal of any Hazardous Materials generated or located at any
Transferred Real Property; (C) arising out of, relating to, in
respect of or in connection with third party Claims related to
Hazardous Materials that were or are located at or that were
Released into the Environment from Transferred Real Property
prior 	to 	the 	Closing, 	except 	as 	otherwise 	required 	under
applicable environmental laws8 ; (D) arising under Environmental
Laws related to the Excluded Real Property, except as provided
under Section 18.2(E) of the Master Lease Agreement or as
provided under the “Facility Idling Process” section of Schedule A
of the Transition Services Agreement; or (E) for Environmental
Liabilities with respect to real property formerly owned, operated,
or leased by Sellers (as of the Closing), which, in the case of
clauses (A), (B), or (C), arose prior to or at the Closing, and which,
in the case of clause (D) and (E), arise prior to, at, or after the
Closing[.]
(Footnote continued from prior page)
“Law” is defined in the Sale Agreement as “any and all applicable United States or non-United States
federal, national, provincial, state or local laws, rules, regulations, directives, decrees, treatises, statutes, provisions
of any constitution and principles (including principles of common law) of any Governmental Authority, as well as
any applicable final order.” (Id. at 11.)
“Governmental Authority” is defined in the Sale Agreement as “any United States or non-United States
federal, national, provision, state or local government or other political subdivision thereof, any entity, authority,
agency or body exercising executive, legislative, judicial, regulatory or administrative functions or any such
government or political subdivision, and any supranational organization of sovereign states exercising such
functions for such foreign states.” (Id. at 9.)
8 	Emphasis added.
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Retained Liabilities also include “[l]iabilities to third parties for Claims based on Contract, tort
or any other basis[.]” (Id. § 2.3(b)(xi).) The assets were therefore sold free and clear of all
claims (except Assumed Liabilities), including claims based on successor or transferee liability.
The Sale Order echoes this principle, stating that except for Assumed Liabilities, New GM is not
liable for any claims arising from Old GM’s acts, or failures to act, whether known or unknown,
contingent or otherwise, whether arising before or after Old GM’s bankruptcy, including claims
arising under doctrines of successor or transferee liabilities. (Sale Order ¶ AA.)
In the Sale Decision, Judge Gerber addressed the provisions of the Sale Order regarding
environmental liability, and held that New GM has no successor liability with respect to
environmental claims. In addressing parties’ objections with respect to environmental issues,
Judge Gerber noted:
Certain objectors—most notably, New York’s attorney General
(the “New York AG”), who enforces New York’s environmental
laws, and the St. Regis Mohawk Tribe (the “Tribe”) . . . have
voiced their concerns as to whether any approval order would too
broadly release either Old GM or New GM from their respective
duties to comply with environmental laws and cleanup obligations.
Objections of this character were a matter of concern to this Court
as well, but they were addressed—very well, in the Court’s view—
by amendments to the proposed order that were made 	after
objections were due.
Sale Decision, 407 B.R. at 507.
The additional amended language that was added to the Sale Order to which Judge
Gerber refers appears in paragraphs 61 and 62 of the Sale Order:
Paragraph 61: Nothing in this Order or the MPA releases,
nullifies, 	or 	enjoins 	the 	enforcement 	of 	any 	Liability 	to 	a
governmental unit under Environmental Laws or regulations . . .
that any entity would be subject to as the owner, lessor, or operator
of property after the date of entry of this Order. 	Notwithstanding
the foregoing sentence, nothing in this Order shall be interpreted to
deem the Purchaser as the successor to the Debtors under any state
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law successor liability doctrine with respect to any Liabilities
under Environmental Laws or regulations for penalties for days of
violation prior to the entry of this Order . . .
Paragraph 62: Nothing contained in this Order or in the MPA
shall in any way (i) diminish the obligation of the Purchaser to
comply with Environmental Laws, or (ii) diminish the obligations
of the Debtor to comply with Environmental Laws consistent with
their rights and obligations as debtors in possession under the
Bankruptcy Code . . .
Judge Gerber overruled certain objections to the Sale Agreement, explaining that:
The Environmental Matter Objectors understandably would like
New GM to satisfy cleanup obligations that were the responsibility
of Old GM, on theories of successor liability. 	For the reasons
articulated in the Court’s “Successor Liability Issues” discussion in
Section 2 above, however, the property may be sold free and clear
of such claims.
Indeed, further reinforcing that view . . . is this Court’s decision,
seven years ago, in Mag. Corp. 	There, upon the sale of property
with substantial environmental issues, this Court was faced with
the exact same issue—to what extent could that property be sold
free and clear of environmental claims under section 363(f). 	This
Court ruled that one had to make a distinction. 	Under section
363(f), there could be no successor liability imposed on the
purchaser for the seller MagCorp’s monetary obligations related to
cleanup costs or any other obligations that were obligations of the
seller. 	But 	the 	purchaser 	would 	have 	to 	comply 	with 	its
environmental responsibilities starting with the day it got the
property, and if the property required remediation at that time, any
such remediation would be the buyer’s responsibility: When you
are talking about free and clear of liens, it means you don’t take it
subject to claims which, in essence, carry with the property. It
doesn’t absolve you from compliance with the law going forward.
Those same principles apply here. Any Old GM properties to be
transferred will be transferred free and clear of successor liability,
but New GM will be liable from the day it gets any such properties
for its environmental responsibilities going forward.
Id. at 508 (footnotes and quotation marks omitted).
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C. 	The Court’s Subsequent Judgments and Decisions Interpreting the Sale
Order and Sale Agreement
1. 	The November 2015 Opinion and December 2015 Judgment
On August 19, 2015, the Court entered a Case Management Order directing the parties in
interest to submit their views on how best to address various issues relating to the Sale Order.
(ECF Doc. # 13383.) The Court entered a Scheduling Order on September 3, 2015 (the
“September 3 Scheduling Order,” ECF Doc. # 13416) setting forth a briefing schedule to
address, among other things, whether New GM assumed punitive damages for Old GM’s
conduct, and whether certain causes of action or allegations in complaints filed against New GM
were barred by the Sale Order.
On November 9, 2015, the Court entered its Decision (the “November 2015 Decision”)
with respect to matters identified in the September 3 Scheduling Order. See In re Motors
Liquidation Co., 541 B.R. 104 (Bankr. S.D.N.Y. 2015). On December 4, 2015, the Court
entered a judgment (the “December 2015 Judgment,” ECF Doc. # 13563) memorializing the
rulings set forth in the November 2015 Decision. Specifically, the December 2015 Judgment
described the types of allegations that cannot be asserted by plaintiffs in pleadings against New
GM. (Mot. ¶ 14.) Most pertinent to the current Motion, under the December 2015 Judgment,
plaintiffs are prohibited from making allegations that (i) speak of New GM as the successor of
Old GM (i.e., allegations that refer to New GM as the ‘successor of,’ a ‘mere continuation of,’ or
a ‘de facto successor of’ Old GM)” (December 2015 Judgment ¶ 16), and (ii) “do not distinguish
between Old GM and New GM . . . .” (Id. ¶ 17.) Such pleadings “are and remain stayed, unless
and until they are amended, consistent with the [November 2015] Decision and this Judgment.”
(Id. ¶ 16.)
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2. 	The June 2017 and July 2017 Opinions
On June 7, 2017, the Court issued an opinion deciding whether Non-Ignition Switch
Plaintiffs may assert Independent Claims against New GM. See In re Motors Liquidation Co.,
568 B.R. 217 (Bankr. S.D.N.Y. 2017) (the “June 2017 Opinion”). The Court ruled that claims
based on post-closing wrongful conduct of New GM could go forward as Independent Claims,
but such claims must clearly distinguish between actions of Old GM and New GM. June 2017
Opinion, 568 B.R. at 220 n.1.
Thereafter, on July 12, 2017, this Court entered another Opinion regarding the types of
claims that may be asserted against New GM. See In re Motors Liquidation Co., 571 B.R. 565
(Bankr. S.D.N.Y.) (the “July 2017 Opinion”). In the July 2017 Opinion, the Court affirmed that
“truly Independent Claims” are “claims based solely on wrongful post-closing conduct of New
GM . . . .” Id. at 569 n.2. The Court also held that “Post- Closing Accident Plaintiffs may not
assert claims against New GM for punitive damages based on conduct of Old GM.” Id. at 580;
see also December 2015 Judgment ¶ 6. In addition, the Court ruled that “Judge Gerber’s
[December 2015] ruling . . . remains law of the case and New GM cannot be held liable for
punitive damages on a contractual basis.” July 2017 Opinion, 571 B.R. at 576 (citation omitted).
D. 	The Moore Litigation
On December 4, 2017, New GM was served with a complaint in the Moore Litigation.
(Mot. ¶ 20.) The Moore Litigation is a putative class action pending in the Michigan District
Court, initiated on behalf of owners who live in close proximity to the MPG and who claim
damages from contamination of their groundwater due to New GM and Old GM conduct. (Id. ¶
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21; see also MAC ¶¶ 2, 3.) The Moore Plaintiffs allege a course of conduct by both Old GM and
New GM, that is summarized below. 9
The MPG, an automobile testing facility, has been in operation since 1924. (MAC ¶ 9.)
In 1985, Old GM commissioned engineering firm McNamee, Porter and Seeley to conduct a
water supply study at the MPG. (Obj. at 9.) The study revealed concentrations of sodium
chloride in the MPG wells above USEPA standards and stated that “[r]oad salts appear to be a
major source of chloride at the proving grounds.” (Id.) In 1997, the Michigan Department of
Environmental Quality (the “MDEQ”) learned of the sodium chloride contamination after a
developer found high levels of chloride in the shallow aquifier when it started drilling wells for
homes to be built to the southwest of the MPG. (Id.) The MDEQ conducted its own testing and
found high levels of sodium chloride in the MPG at “The Oaks,” a residential neighborhood to
the southwest of the MPG and the location of the Moore Plaintiffs’ homes. (Id.) In May 1998,
the MDEQ wrote letters to the developer of The Oaks advising of the high levels of sodium
chloride and that the levels were above residential health-based drinking water criteria. (Id.)
Old GM was made aware of the MDEQ’s letters to the developer of The Oaks and during
a meeting with the MDEQ on May 29, 1998, denied liability for the sodium chloride
contamination and demanded that the MDEQ retract the letters. (Id. at 9–10.) Plaintiffs allege
that at the time, Old GM knew or should reasonably have known that (1) the sodium chloride
contamination existed; (2) the MDEQ believed Old GM was responsible; and (3) the
contamination had likely “migrated” into The Oaks development. (Id. at 10.) Old GM did not
9 	To be clear, the following paragraphs of this section are based on the Plaintiffs’ allegations. No findings of
fact are made by the Court.
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provide notice to the residents of The Oaks, including the Moore Plaintiffs, that the MPG was the
likely source of the sodium chloride contamination. (Id.)
Based on these claims, the Moore Plaintiffs seek, inter alia, compensation for personal
injury and property damage for (i) a violation of Part 201 of the Michigan Natural Resources and
Environmental Protection Act, (ii) a violation of the Michigan Environmental Protection Act,
(iii) fraud, (iv) negligence, (v) trespass, (vi) private nuisance, and (vii) public nuisance. (See
generally MAC.) The MAC includes counts against New GM for (1) the independent actions of
New GM after the Sale Order, and (2) the actions of Old GM based on successor liability. (Obj.
at 10.) The Moore Plaintiffs claim that the MAC separates the claims between those relating to
Old GM (counts I through VII) and those independent of Old GM (counts VIII through XIV).
(Id.) The Moore Plaintiffs also argue that the independent claims allege actions by New GM
after the Sale Order, and since these claims are independent of actions by Old GM, they do not
implicate the Sale Order. (Id.)
On January 8, 2018, counsel for New GM sent counsel for the Moore Plaintiffs a letter
(the “January 8 Letter,” ECF Doc. # 14242-3), explaining that the Moore Original Complaint
violated the Sale Order and other Bankruptcy Court rulings, and requesting that the Plaintiffs
amend their complaint to address those issues. (Mot. ¶ 22.) Counsel for New GM and counsel
for the Moore Plaintiffs had a conference call on February 14, 2018, to discuss the bankruptcy
issues with the Moore Litigation, and shortly thereafter, on February 16, 2018, the Plaintiffs filed
the Moore Amended Complaint in the Michigan District Court, attempting to address these
issues. On the same day, the Moore Plaintiffs filed in the Michigan District Court a motion to
sever, requesting that the court “sever all independent claims of damages caused by or relating to
New GM from the present until July 5, 2009 . . . from all claims against New GM for damages
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caused by or relating to Old GM prior to the Sale Date,” reasoning that severing the claims “will
allow claims against New GM, independent of Old GM, to immediately move forward in the
Circuit Court of Michigan while all remaining claims against New GM will remain in this Court
or be transferred to the Bankruptcy Court . . . .” (ECF Doc. # 14242-5 (the “Motion to Sever”) at
2–3.) New GM believes that the MAC and the Motion to Sever do not adequately address the
issues raised in New GM’s January 8 Letter, and thus filed the Motion presently before the
Court.
II. 	LEGAL STANDARD
A. 	Jurisdiction
The Sale Order conferred exclusive jurisdiction on this Court to enforce the provisions of
the Sale Order and the Sale Agreement. Paragraph 71 of the Sale Order provides, in relevant
part:
This Court retains exclusive jurisdiction to enforce and implement
the terms of this Order, the [Sale Agreement], . . . and each of the
agreements executed in connection therewith . . . , in all respects,
including, but not limited to, retaining jurisdiction to . . . (c)
resolve 	any 	disputes 	arising 	under 	or 	related 	to 	the 	[Sale
Agreement], except as otherwise provided therein, (d) interpret,
implement, and enforce the provisions of this Order, (e) protect the
Purchaser against any of the Retained Liabilities or the assertion of
any lien, claim, encumbrance, or other interest, of any kind or
nature whatsoever, against the Purchased Assets . . . .
(Sale Order ¶ 71.) Indeed, the Court very recently upheld this principle in In re Motors
Liquidation Company, 2018 WL 1801234, at *6 (Bankr. S.D.N.Y. Apr. 13, 2018) (stating that
the Sale Order “granted exclusive jurisdiction to this Court to enforce and implement the
provisions of the Sale Order”).
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B. 	The Scope and Effect of the Sale Order Regarding 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, 327 F.3d 537, 545 (7th Cir. 2003) (citing Folger Adam Security,
Inc. v. DeMatteis/MacGregor JV, 209 F.3d 252, 258 (3d Cir. 2000)).
“Interests in property,” as used in section 363(f), include “claims” that arise from the
assets being sold. In re Chrysler LLC, 576 F.3d 108, 126 (2d Cir. 2009) (citing In re Trans
World Airlines, Inc., 322 F.3d 283, 290 (3d Cir. 2003)), granting cert. & vacating judgment sub
nom. Indiana State Police Pension Trust v. Chrysler LLC, 558 U.S. 1087 (2009). Although
section 363(f) is not limited to in rem interests in property, it affords only in rem relief similar
to 11 U.S.C. § 1141(c). See Chrysler, 576 F.3d at 125–26. “By its terms, § 363(f) cleanses the
transferred assets of any attendant liabilities, and allows the buyer to acquire them without fear
that an estate creditor can enforce its claim against those assets.” Morgan Olson Indus., LLC v.
Frederico (In re Grumman Olson Industries, Inc.), 445 B.R. 243, 249 (Bankr. S.D.N.Y. 2011).
In addition, section 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.), 428 B.R. 43, 57–59 (S.D.N.Y. 2010).
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 Sale Order, the
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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 liability . . . .” (Sale Order § 7.) Similarly, the Sale Order provides the following:
[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
unmatured, 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.
(Id. § 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
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known or unknown as of the Closing, now existing or hereafter
arising, asserted, or unasserted, fixed or contingent, liquidated or
unliquidated.
(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.)
As described in greater detail above (see supra at section I.B.), the Sale Agreement
expressly defines the types of environmental liabilities retained by Old GM (the Retained
Liabilities) and those assumed by New GM (the Assumed Liabilities). (Sale Agreement §§
2.3(a)(viii); 2.3(b)(iv).)
C. 	Independent Claims
In light of the Sale Order, in the June 2017 Opinion, the Court specified requirements for
pleading independent claims against New GM, holding that only “truly independent claims based
solely on New GM’s wrongful conduct” may pass through the bankruptcy gate as “Independent
Claims.” June 2017 Opinion, 568 B.R. at 231. The Court noted that its role is as a “gatekeeper,”
not to decide issues of state law. Id. at 222 (stating that the “Court’s role, then, is a ‘gatekeeper’
role. It should be the court to decide what claims and allegations should get through the ‘gate,’
under the Sale Order and this Court’s prior decisions”) (citation omitted).
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Deciding similar questions in the June 2017 Opinion, the Court wrote:
The Court emphasizes that its analysis here applies only to claims
based solely on New GM’s alleged wrongful conduct. It is not
acceptable, as the Pitterman Complaint does in several paragraphs,
to base allegations on generalized knowledge of both Old GM and
New GM. To pass the bankruptcy gate, a complaint must clearly
allege that its causes of action are based solely on New GM’s post-
closing 	wrongful 	conduct. 	The 	Pitterman 	Plaintiffs’ 	counsel
acknowledged during oral argument that the current complaint
crosses the line, basing the purported independent claims on
conduct of both Old GM and New GM. 	Such allegations are not
permissible.
Id. at 231.
D. 	Punitive Damages
The Court’s July 2017 Opinion clearly holds that (i) New GM did not contractually
assume liability for punitive damages arising from Old GM’s conduct in connection with Post-
Closing Accidents; and (ii) such punitive damages are not available against New GM on a
successor liability theory. July 2017 Opinion, 571 B.R. at 579–80. Additionally, the July 2017
Opinion concluded that imposing punitive damages liability on New GM based on Old GM
conduct was inconsistent with the claims priority scheme set forth in the Bankruptcy Code. Id. at
580 (explaining that “[w]hile an insolvent debtor may pay general unsecured claims on a pro
rata basis, the Bankruptcy Code dictates that an insolvent debtor would never pay punitive
damages until higher priority claims are paid in full,” and it is therefore “inconsistent with the
Bankruptcy Code to hold a purchaser in a section 363 sale liable for damages that would be
categorically barred as a matter of priority had the sale never occurred”).
E. 	Adequacy of Notice
The Due Process Clause states that “[n]o person shall . . . be deprived of life, liberty, or
property without due process of law.” U.S. Const. amend. V. “An elementary and fundamental
requirement of due process in any proceeding which is to be accorded finality is notice
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reasonably calculated, under all the circumstances, to apprise interested parties of the pendency
of the action and afford them an opportunity to present their objections.” Mullane v. Central
Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950). The due process requirement applies in
the bankruptcy context, as an essential goal of a bankruptcy is to discharge and restructure claims
against the debtor in an efficient manner. See Elliott v. General Motors LLC (In re Motors
Liquidation Company), 829 F.3d 135, 159 (2d Cir. 2016) (citing Lines v. Frederick, 400 U.S. 18,
19 (1970)). “Inadequate notice is a defect which precludes discharge of a claim in bankruptcy.”
Chemetron Corp. v. Jones, 72 F.3d 341, 346 (3d Cir. 1995); see also Grant v. U.S. Home Corp.
(In re U.S.H. Corp. of N.Y.), 223 B.R. 654, 658 (Bankr. S.D.N.Y. 1998) (stating that “[d]ischarge
under the Bankruptcy Code, however, presumes that all creditors bound by the plan have been
given notice sufficient to satisfy due process”).
The level of notice required as reasonable or adequate to fulfill the due process
requirement depends on whether the creditor is “known” or “unknown.” If a creditor is “known”
to a debtor, actual notice of a debtor’s bankruptcy filing and bar date must be given to the
creditor to achieve a legally effective discharge of the creditor’s claim. See Chemetron, 72 F.3d
at 346 (explaining that “[k]nown creditors must be provided with actual written notice of a
debtor’s bankruptcy filing and bar claims date”) (citation omitted); In re BGI, Inc., 476 B.R. 812,
820 (Bankr. S.D.N.Y. 2012) (“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. Adequate notice entails actual written notice of the bankruptcy filing and the bar date.”).
For unknown creditors, constructive notice, such as notice by publication, will suffice. Id.
(citation omitted); Grant, 223 B.R. at 658. Constructive notice can be satisfied through
publication notice, since “in the case of persons missing or unknown, employment of an indirect
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and even a probably futile means of notification is all that the situation permits and creates no
constitutional bar to a final decree foreclosing their rights.” Mullane, 339 U.S. at 317.
An “unknown” creditor is a creditor whose identity or claim is not “reasonably
ascertainable” or is merely “conceivable, conjectural or speculative.” In re Thomson McKinnon
Sec., Inc., 130 B.R. 717, 720 (Bankr. S.D.N.Y. 1991) (citation omitted); see also Mullane, 339
U.S. at 317 (noting that it was reasonable to dispense with more certain notice to claimants
“whose interests are either conjectural or future or, although they could be discovered upon
investigation, do not in due course of business come to the knowledge [of the debtor in
possession]”). A “known” creditor includes both a claimant whose identity is actually known to
the debtor and a claimant whose identity is “reasonably ascertainable” by the debtor.
Chemetron, 72 F.3d at 346 (explaining that claimants must be reasonably ascertainable, not
“reasonably foreseeable”).
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, 462 U.S.
791, 804 (1983). But reasonable diligence does not require “impracticable and extended
searches . . . in the name of due process.” Mullane, 339 U.S. at 31718. A debtor does not have
a “duty to search out each conceivable or possible creditor and urge that person or entity to make
a claim against it.” Brooks Fashion Stores, Inc. v. Michigan Employment Sec. Comm’n (In re
Brooks Fashion Stores, Inc.), 124 B.R. 436, 445 (Bankr. S.D.N.Y. 1991) (citation omitted).
“[W]hat is required is not a vast, open-ended investigation.” Chemetron, 72 F.3d at 346.
Instead, “[t]he requisite search . . . focuses on the debtor’s own books and records. Efforts
beyond a careful examination of these documents are generally not required. Only those
claimants who are identifiable through a diligent search are ‘reasonably ascertainable’ and hence
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‘known’ creditors.” Id. at 347; see also In re BGI, Inc., 476 B.R at 823 (“In determining its
creditors, a debtor is not obligated to try to find and serve notice on any individual who could
potentially be a creditor. It is generally sufficient for the debtors to scrutinize their own
records.”) (citation omitted); In re Best Prods. Co., 140 B.R. 353, 358 (Bankr. S.D.N.Y. 1992)
(citing In re Waterman Steamship Corp., 59 B.R. 724, 727 (Bankr. S.D.N.Y. 1986)) (stating that
“[w]hereas a debtor must review its own books and records to ascertain the identity of creditors,
a debtor is not required to search elsewhere for those who might have been injured”). This Court
in In re Drexel Burnham Lambert Grp. Inc., 151 B.R. 674, 680–81 (Bankr. S.D.N.Y. 1993),
aff’d, In re Drexel Bernham Lambert Grp. Inc., 157 B.R. 532 (S.D.N.Y. 1993), further explained
as follows:
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.
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F. 	Law of the Case
“[W]hen a court has ruled on an issue, that decision should generally be adhered to by
that court in subsequent stages in the same case.” United States v. Carr, 557 F.3d 93, 102 (2d
Cir. 2009) (quoting United States v. Quintieri, 306 F.3d 1217, 1225 (2d Cir. 2002). Where res
judicata bars parties in subsequent actions from relitigating what has already been decided, law
of the case “holds that a court should adhere to its earlier decisions in subsequent stages of
litigation unless compelling reasons counsel otherwise.” Tomasino v. Estee Lauder Companies,
Inc., 2015 WL 1470177, at *1 (E.D.N.Y. March 31, 2015). Compelling reasons may include an
intervening change in the law, new evidence, or the need to correct a clear error or law or to
prevent manifest injustice. Carr, 557 F.3d at 102. By maintaining consistency in a court’s
rulings, the law of the case doctrine promotes “fairness to the parties, judicial economy, and the
societal interest in finality.” Id.
III. 	DISCUSSION
A. 	Claims Against New GM for New GM’s Post-363 Sale Conduct are
Permitted to go Forward, but the Moore Plaintiffs Must Amend the MAC to
Remove Impermissible Allegations
The issue whether New GM will be liable for claims for personal injury and property
damage based on New GM’s alleged post-363 Sale contamination of the Plaintiffs’ groundwater
should be assessed by the Michigan District Court where the Moore Litigation is pending, but it
is well within this Court’s role to analyze to what extent the allegations in the MAC may pass
through the bankruptcy gate as complying with the Sale Order and as including truly independent
claims. See June 2017 Opinion, 568 B.R. at 222 (explaining that the Bankruptcy Court serves a
“gatekeeper role,” but does not determine whether any particular claim should prevail on its
merits under state law).
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New GM argues that several claims in the MAC should not pass through the bankruptcy
gate because they do not meet the Court’s requirement that a truly independent claim against
New GM clearly allege specific wrongful conduct of New GM upon which it is based. 	New
GM argues that many of the Plaintiffs’ supposedly “independent claims” are either based on both
alleged New GM conduct and Old GM conduct together, or do not identify with particularity
New GM conduct that would have contributed to the alleged contamination of the Plaintiffs’
groundwater. (Mot. ¶¶ 34–35.) The Moore Plaintiffs counter that since they allege a continuing
course of conduct beginning as early as 1985 by Old GM and continuing to the present through
New GM, the Moore Plaintiffs’ claims against New GM for the conduct of New GM should be
permitted to continue as independent claims. (Obj. at 15.) The Moore Plaintiffs argue that the
MAC separates claims against Old GM and those against New GM: Counts I through VII allege
claims against Old GM, while Counts VIII through XIV allege claims against New GM. Since
these independent claims are against New GM for the actions of New GM, and have nothing to
do with Old GM, they do not implicate the Sale Order and should be permitted to proceed. (Id.
15–16.)
As New GM admits in its Reply (see Reply ¶ 1), the Moore Plaintiffs may assert
independent claims against New GM based solely on New GM’s post-closing wrongful conduct.
After all, under the Sale Agreement, New GM assumed liability for its own violations of
environmental laws occurring after the closing. See Sale Decision, 407 B.R. at 508 (explaining
that New GM does not have successor liability for Old GM’s environmental liabilities, but
“[New GM] would have to comply with its environmental responsibilities starting with the day it
got the property, and if the property required remediation as of that time, any such remediation
would be [New GM’s] responsibility”); see also In re OldCo M Corp., 438, B.R. 775,787
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(Bankr. S.D.N.Y. 2010) (discussing alleged violations of Michigan environmental laws and
explaining that the Sale Order provided that New GM assumed post-closing environmental
liabilities). The Court agrees with the Plaintiffs that they have sufficiently supported their
independent claims against New GM with allegations that hinge on New GM conduct. For
example, allegations such as those in Count XI that New GM continued contaminating the
groundwater by causing releases of salt after it acquired the MPG in 2009, are not problematic,
as they are claims independent of Old GM and that could support New GM’s independent
liability, regardless of Old GM’s actions before the 363 Sale. Similarly, as the Court explained
above, for personal injury or property damage claims based on groundwater contamination from
Old GM’s dumping of road salt before the 363 Sale, but which migrated from the Property after
the Property was owned by New GM, the Sale Order does not bar such claims. 	Whether
Michigan law recognizes claims for personal injury or property damage against a property owner
(and, in this regard, New GM stands in no different position than any other Michigan property
owner) is an issue for the Michigan District Court, not for this Court.10
Certain of the allegations in the MAC do not, however, sufficiently distinguish between
the conduct of Old GM and New GM and improperly describe New GM as the successor of Old
GM. For instance, certain paragraphs of the complaint simply add the word “Defendant”
concerning the conduct of Old GM. For example, the Plaintiffs allege: “Despite its knowledge
of the Releases and Contamination, before 2014 Defendant and Old GM made affirmative
misrepresentations that were designed to prevent discovery that their Releases from the MPG
10 	Similarly, whether the Plaintiffs have satisfied Federal Rule of Procedure 9(b) with respect to their fraud
claim in Count X, is an issue properly before the Michigan District Court, and the Court here will not reach beyond
its role as a gatekeeper in deciding whether such allegations are “too generalized” or fail to set forth allegations that
“describe [New GM conduct] with particularity.” (Mot. ¶ 35.)
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were the predominant causes of the Contamination.” (MAC ¶ 49.) While the parties’ proposed
second amended complaint as embodied in the parties’ Mark-Up rectifies many of the improper
allegations originally pleaded, the Mark-Up still includes claims that may not proceed as drafted.
Such impermissible language includes:
 	“Plaintiffs allege that, under Michigan law, New GM is the successor corporation
to Old GM” (Mark-Up ¶ 5);
 	“Defendant has acted as a mere continuation of Old GM, after Old GM’s
bankruptcy . . .” (Id. ¶ 47); and
 	“As a direct and proximate result of Old GM’s Releases and Contamination for
which Defendant is liable through successor theory and lack of notice, Plaintiffs
have suffered irreparable harm . . .” (Id. ¶ 71.)
These allegations flout the December 2015 Judgment’s clear direction that plaintiffs are
prohibited from making allegations that speak of New GM as the “successor of” or a “mere
continuation of” Old GM. See December 2015 Judgment ¶ 16. The Court has reviewed the
Mark-Up, and a separate order will be entered ruling on New GM’s outstanding objections.
Finally, the Plaintiffs must amend the MAC to remove claims for exemplary damages in
their claim for fraud against New GM for claims relating to Old GM. See July 2017 Opinion,
571 B.R. at 579–80 (explaining that plaintiffs may not assert claims against New GM for
punitive damages based on the conduct of Old GM).
B. 	Claims that are Precluded by the Sale Order and Sale Agreement May Not
Proceed
1. 	The Moore Plaintiffs’ Right to Due Process was Not Violated
As an initial matter, the Court rejects the Moore Plaintiffs’ argument that their claims
should be permitted to proceed because their due process right was violated by Old GM’s failure
to provide the Plaintiffs with actual notice of the bankruptcy. The Moore Plaintiffs argue that
they are analogous to the plaintiffs in Elliott v. General Motors LLC (In re Motors Liquidation
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Company), 829 F.3d 135 (2d Cir. 2016) (“Elliott”), who were victims of faulty ignition switches
produced by Old GM, and whose injuries occurred before and after the 363 Sale was completed.
(Obj. at 11.) In Elliott, the Second Circuit concluded that Old GM knew who had purchased its
cars and knew about the ignition switch defect, but never gave actual notice to potential
claimants. (Id. at 12.) Because Old GM knew or with reasonable diligence should have known
about the ignition switch claims, the Court held that the plaintiffs were entitled to actual or direct
mail notice, and received only publication notice in violation of their right to due process. (Id. at
11–12.)
The Moore Plaintiffs reason that here, “Old GM knew or should have known about the
sodium chloride contamination and migration prior to the 2009 bankruptcy” so, as in Elliott, due
process required that they receive actual notice of the bankruptcy. (Id. at 13.) The Moore
Plaintiffs claim they first learned about their possible claim against New GM in October 2014
when New GM abandoned previous denials and notified the MDEQ and local residents that the
sodium chloride contamination had been coming from the MPG. The Plaintiffs explain that
meanwhile, Old GM knew about the sodium contaminations since at least 1985 and knew it had
migrated to the neighboring properties since at least 1997 when the MDEQ informed them of the
contamination. (Id.) In addition, the Plaintiffs contend that the knowledge of Old GM can be
imputed to New GM based on Old GM’s files. (Id.) The Moore Plaintiffs further argue that they
were prejudiced by their lack of notice because they “missed a chance to sit at the negotiating
table with other potential creditors,” and it “cannot be known whether New GM would have
made concessions for the Moore Plaintiffs in the same way concessions were made for other
claimants, including claimants who lacked legal grounds to avoid the protections of the § 363
sale.” (Id. at 14.)
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The Moore Plaintiffs’ reliance on Elliott is misplaced. It is well-settled that to be a
“known” creditor, a claimant must be known or reasonably ascertainable from the debtor’s own
books and records (see, e.g., In re BGI, Inc., 476 B.R. at 823), and in stark contrast to the
circumstances in Elliott, where Old GM both knew about the defect and could have ascertained
the identities of the plaintiffs by determining the purchasers of GM cars, here (as Counsel for the
Moore Plaintiffs acknowledged at the Hearing (Hearing Tr. at 70:19–23)), Old GM could not
have looked at its books and records to ascertain who owned the properties nearby the MPG.
Indeed, this case is far more similar to Chemetron where, in the context of tort claims for
damages arising out of exposure to toxic substances, the court found that the plaintiffs were
unknown creditors because their identities were not reasonably ascertainable to the debtor based
on an examination of the debtor’s own books and records. There, during the period of 1965 and
1972, Chemetron Corporation (“Chemetron”) used depleted uranium at its manufacturing facility
and then sold the facility before filing for bankruptcy. Chemetron, 72 F.3d at 344. Before the
bankruptcy, Chemetron conducted clean-up efforts at the facility because increased radiation
levels were detected at the site. Id. The plaintiffs, including those who had visited or who had
lived in the vicinity of the facility, sued claiming injuries for exposure to toxic chemicals, and
claimed they did not receive actual notice of the claim-bar date in Chemetron’s bankruptcy. Id.
at 345. The Third Circuit affirmed the district court’s finding that publication notice to the
plaintiffs was sufficient because the plaintiffs were not known creditors and emphasized,
“[w]here a debtor has sought the protection of bankruptcy law . . . procedural protections such as
the bar claims date apply” and these provisions “cannot be circumvented by forcing debtors to
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anticipate speculative suits based on lengthy chains of causation.” Id. at 348.11 The court flatly
rejected the argument that “Chemetron could have conducted a title search on all the properties
surrounding the sites to determine all persons who might have lived in the area during the twenty
years between Chemetron’s operation of the sites and the Chapter 11 proceeding” (id. at 347),
instead holding that “Debtors cannot be required to provide actual notice to anyone who
potentially could have been affected by their actions; such a requirement would completely
vitiate the important goal of prompt and effectual administration and settlement of debtors’
estates.” Id.
The same principles apply here. At the time it filed for bankruptcy, Old GM was merely
required to conduct a search “reasonable under the circumstances” of its own books and files for
known creditors, and was not required to be “omnipotent or clairvoyant” and conduct a title
search of the land surrounding the MPG to determine the Moore Plaintiffs’ identities. See In re
Drexel Burnham Lambert Grp. Inc., 151 B.R. at 680–81 (explaining that reasonably-diligent
searches for known creditors depends on the circumstances of a case, and while a debtor must
undertake “more than a cursory review of its records and files,” a debtor “need not be
omnipotent or clairvoyant”). Since the Moore Plaintiffs have not advanced any evidence that a
review of Old GM’s own books and records would have revealed the identities of the Moore
Plaintiffs, the Court holds that the Moore Plaintiffs are not known creditors who were entitled to
actual notice, but unknown creditors entitled to publication notice, which they received.
While the Court need not determine the issue whether the Moore Plaintiffs were
prejudiced by the notice they received, the Court finds unconvincing the Moore Plaintiffs’
11 	Similarly, applying the “reasonably ascertainable” test, the Eighth Circuit recently held that a commercial
truck driver, whose widow allegedly died due to the driver’s benzene exposure from a petrochemical facility where
he loaded his truck with benzene-containing pyrolysis gasoline, was an unknown creditor. Dahlin v. Lyondell
Chem. Co. et al., 881 F.3d 599, 602, 607 (8th Cir. 2018).
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argument that their interests were not represented during the 363 Sale because they “missed a
chance to sit at the negotiating table with other potential creditors,” and it “cannot be known
whether New GM would have made concessions for the Moore Plaintiffs in the same way
concessions were made for other claimants, including claimants who lacked legal grounds to
avoid the protections of the § 363 sale.” (Obj. at 14.) At the Hearing, counsel for the Moore
Plaintiffs asserted that “the question is how did the plaintiffs in this case have an opportunity to
make an objection to the sale at the time of the Sale Order.” (Hearing Tr. at 65:15–17.) In fact,
unlike in the context of the ignition switch defect where there was no party specifically tasked
with advocating on behalf of ignition switch plaintiffs, here, the Moore Plaintiffs’ interests were
represented during the 363 Sale. The MDEQ was provided mail notice of the 363 Sale and
actively participated in the all phases of the sale. See Certificate of Service, dated June 15, 2009
(ECF Doc. # 073-49), at 540. The MDEQ filed a limited objection (the “MDEQ Objection,”
ECF Doc. # 1847) raising issues of environmental liability and successor liability provisions of
the Sale Agreement in order to “protect its interests in seeing that the environmental laws are
complied with, environmental contamination is addressed, and any restrictions protective of
public health, safety or welfare, or the environment at the Transferred Real Property are
maintained.” (MDEQ Objection ¶ 14.) Moreover, counsel for the MDEQ, Assistant Attorney
General in Michigan, appeared before Judge Gerber at the hearings concerning the 363 Sale, and
ultimately supported the approval of the 363 Sale. See July 2, 2009 Hearing Tr. at 198:14–
199:15. The facts here are thus fundamentally different from the facts in Elliott. The law
regarding who is entitled to actual notice of a bankruptcy strikes a reasonable compromise in
both affording interested parties an opportunity to protect their interests by presenting objections,
and providing finality and a fresh start to honest debtors. Thus, while the Court is sympathetic to
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the Plaintiffs’ claims in the MAC, under these circumstances the Court will not disturb this
careful balance by permitting the Moore Plaintiffs to attempt to evade the Sale Order nine years
after the bankruptcy, based on what “could have been” had they individually participated in the
363 Sale.
2. 	Counts III through VII of the MAC are Retained Liabilities Barred by the
Sale Agreement and Sale Order
The Court turns now to the parties’ dispute over the Sale Order and the Sale Agreement’s
provisions related to environmental liabilities. The parties agree that claims arising under
Environmental Laws (Counts I, II VIII and IX of the MAC) may proceed against New GM as
Assumed Liabilities, but disagree whether Counts III through VII are Retained Liabilities barred
by the Sale Agreement. (Reply ¶ 1; Hearing Tr. at 59:10–17, 62:23–25.) The plain language of
the Sale Agreement is unclear regarding the scope of New GM’s Assumed Liabilities, and at the
Hearing the Court asked the parties several questions to better parse the relevant provisions.
Specifically, it is unclear on the face of the Sale Agreement whether New GM could be liable
under Michigan common law for damages for personal injury or property damage arising out of
environmental contamination. The parties’ supplemental briefs clarify the relevant provisions of
the Sale Agreement and Sale Order. The Court concludes that, when read in the context of the
Sale Decision and contract construction principles, New GM did not assume liability for third-
party common law claims relating to the Transferred Real Property based on Old GM conduct.
The Sale Agreement provides that New GM’s Assumed Liabilities exclude Old GM
liabilities for non-compliance of environmental laws “except as required under applicable
environmental laws.” (Sale Agreement 2.3(b)(iv) (emphasis added).) Since the term “Law” is
defined in Section 1.1 of the Sale Agreement broadly to include “principles of common law, of
any Governmental Authority” (Sale Agreement at 11), and “Governmental Authority” is defined
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to include “any entity, agency, or body exercising executive, legislative, judicial regulatory or
administrative functions” (id. at 9), which would include a court, the Sale Agreement could
arguably be construed as permitting common law claims against New GM based on Old GM’s
conduct if such common law claims were recognized under Michigan law. This interpretation
would greatly expand the scope of New GM’s liabilities, and would in essence cause the
exception to swallow the rule in Sale Agreement section 2.3(b)(xi) that Old GM retains liabilities
“to third parties for Claims based upon Contract, tort or any other basis.”
Adopting this expansive interpretation of the Sale Agreement, the Moore Plaintiffs argue
in their supplemental brief that the Sale Agreement’s unambiguous language states that New GM
assumed liability for the tort of negligently failing to comply with environmental laws. (Moore
Plaintiffs’ Supp. Br. at 7–8.) The Moore Plaintiffs emphasize that the “definitions contained in
the plain wording of the Sale Agreement state that New GM assumed liability for Michigan
common law with respect to claims under Environmental Law” because “New GM assumes
liability for violations of Environmental Law under principles of common law as set by the
judiciary of the state of Michigan (a ‘Governmental Authority’ under the Sale Agreement)” and
“New GM’s assumption of liability for Michigan common law claims under Environmental Law
includes claims like the Moore Plaintiffs’ allegations of negligence.” (Id. at 8.)
The Court concludes that the more reasonable interpretation of the Sale Agreement,
considering contract principles and reading the agreement in the context of the Sale Order and
Sale Decision, is that (i) Old GM retained liabilities for third-party common law damages claims
based on its own conduct, and (ii) New GM assumed liability for compliance with statutory-
based Environmental Laws after the 363 Sale, including for remediation or clean-up for
contamination caused by Old GM.
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This interpretation is supported by basic tents of contract interpretation. “The objective
of contract interpretation is to give effect to the expressed intentions of the parties,” see In re
Lehman Brothers Holdings, Inc., 530 B.R. 601, 608 (Bankr. S.D.N.Y. 2016) (citation omitted),
and Section 2.3(b)(xi) of the Sale Agreement unambiguously includes as a Retained Liability “all
Liabilities to third parties for Claims based upon Contract, tort or any other basis.” The Moore
Plaintiffs argue that “this more general definition should not be favored over the specific
language relating to claims stemming from Environmental Law,” (Moore Plaintiffs’ Supp. Br. at
9), but such construction would contravene the parties’ expressed intent in Section 2.3(b)(xi) and
throughout the Sale Agreement and Sale Order. It clear from the structure of the Sale Agreement
that liabilities are “Retained Liabilities” unless specifically carved out as New GM’s assumed
liabilities, underscoring that a fundamental basis for New GM’s agreement to purchase Old
GM’s assets was that New GM would agree to assume only specifically-identified liabilities of
Old GM, and the 363 Sale was “free and clear” of all liens and claims against Old GM, including
successor liability claims, except for the contractually-defined Assumed Liabilities. The
principle applicable here is the doctrine of expressio unius est exclusio alterius, or, the
expression of one thing is the exclusion of another. See IBM Poughkeepsie Emps. Fed. Credit
Union v. Cumis Ins. Soc’y, Inc., 590 F. Supp. 769, 773 n.19 (S.D.N.Y. 1984) (explaining that
“[u]nder the doctrine of expressio unius est exclusion alterius, when certain persons or categories
are specified in a contract an intention to exclude all others may be inferred”). “[U]nder this
drafting structure, unless a liability was covered as an Assumed Liability under Section [2.3(a)],
New GM did not assume it” (emphasis in original). November 2015 Decision, 541 B.R. at 108.
New GM also rightly notes that while the term “Law” appears to be broadly defined to
include common law principles, which would seem to sweep into “Assumed Liabilities” third-
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party claims against New GM for Old GM conduct under applicable Michigan common law, the
relevant term in section 2.3(b)(iv) is the more precise phrase, “Environmental Law,” which is
defined as any Law “relating to the management or Release of, or exposure of humans to, any
Hazardous Materials; or pollution; or the protection of human health and welfare and the
environment.” (Sale Agreement at 7.) Accordingly, “Law” as used in the definition of
“Environmental Law” must relate to the Release of Hazardous Materials, and common law
claims such as the Moore Plaintiffs’ may be contrasted with statutory-based Environmental
Laws. (New GM Supp. Br. at 13.)
Most importantly, the Court need not revisit Judge Gerber’s interpretation of the Sale
Agreement and Sale Order, which remains the law of this case and which supports New GM’s
construction of the relevant provisions. See July 2017 Opinion, 571 B.R. at 576. In the Sale
Decision, Judge Gerber addressed the provisions of the Sale Order regarding environmental
liability, and held that New GM has no successor liability with respect to environmental claims.
In addressing parties’ objections with respect to environmental issues, Judge Gerber noted:
Certain objectors—most notably, New York’s attorney General
(the “New York AG”), who enforces New York’s environmental
laws, and the St. Regis Mohawk Tribe (the “Tribe”) . . . have
voiced their concerns as to whether any approval order would too
broadly release either Old GM or New GM from their respective
duties to comply with environmental laws and cleanup obligations.
Objections of this character were a matter of concern to this Court
as well, but they were addressed—very well, in the Court’s view—
by amendments to the proposed order that were made 	after
objections were due.
Sale Decision, 407 B.R. at 507.
The additional amended language that was added to the Sale Order to which Judge
Gerber refers appears in paragraphs 61 and 62 of the Sale Order:
Paragraph 61: Nothing in this Order or the MPA releases,
nullifies, 	or 	enjoins 	the 	enforcement 	of 	any 	Liability 	to 	a
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governmental unit under Environmental Laws or regulations . . .
that any entity would be subject to as the owner, lessor, or operator
of property after the date of entry of this Order. 	Notwithstanding
the foregoing sentence, nothing in this Order shall be interpreted to
deem the Purchaser as the successor to the Debtors under any state
law successor liability doctrine with respect to any Liabilities
under Environmental Laws or regulations for penalties for days of
violation prior to the entry of this Order . . .
Paragraph 62: Nothing contained in this Order or the MPA shall
in any way (i) diminish the obligation of the Purchaser to comply
with Environmental Laws, or (ii) diminish the obligations of the
Debtor to comply with Environmental Laws consistent with their
rights 	and 	obligations 	as 	debtors 	in 	possession 	under 	the
Bankruptcy Code . . .
Judge Gerber overruled certain objections to the Sale Agreement, explaining that:
The Environmental Matter Objectors understandably would like
New GM to satisfy cleanup obligations that were the responsibility
of Old GM, on theories of successor liability. 	For the reasons
articulated in the Court’s “Successor Liability Issues” discussion in
Section 2 above, however, the property may be sold free and clear
of such claims.
Indeed, further reinforcing that view . . . is this Court’s decision,
seven years ago, in Mag. Corp. 	There, upon the sale of property
with substantial environmental issues, this Court was faced with
the exact same issue—to what extent could that property be sold
free and clear of environmental claims under section 363(f). 	This
Court ruled that one had to make a distinction. 	Under section
363(f), there could be no successor liability imposed on the
purchaser for the seller MagCorp’s monetary obligations related to
cleanup costs or any other obligations that were obligations of the
seller. 	But 	the 	purchase 	would 	have 	to 	comply 	with 	its
environmental responsibilities starting with the day it got the
property, and if the property required remediation at that time, any
such remediation would be the buyer’s responsibility: When you
are talking about free and clear of liens, it means you don’t take it
subject to claims which, in essence, carry with the property. It
doesn’t absolve you from compliance with the law going forward.
Those same principles apply here. Any Old GM properties to be
transferred will be transferred free and clear of successor liability,
but New GM will be liable from the day it gets any such properties
for its environmental responsibilities going forward.
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Id. at 508 (footnotes and quotation marks omitted).
Reading the provisions of the Sale Agreement in conjunction with the principles
articulated in Judge Gerber’s Sale Decision, the Court interprets Section 2.3(b)(iv)(C) to mean
that third-party common law claims for personal injury or property damage based on pre-363
Sale releases or migration of hazardous materials from the Transferred Real Property (and not
based on New GM’s post-363 Sale conduct) are Retained Liabilities, and therefore Counts III
through VII are precluded by the Sale Agreement.12 Such claims are essentially successor
liability claims which this Court has repeatedly held were not assumed by New GM. See, e.g., In
re Motors Liquidation Co., 549 B.R. 607, 613 (Bankr. S.D.N.Y. 2016) (explaining 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”).
IV. 	CONCLUSION
For the reasons explained above, New GM’s Motion is GRANTED to the extent
provided herein. The decision whether any proposed amended complaint ultimately approved by
this Court states causes of action and otherwise meets pleading standards under applicable
nonbankruptcy law is for the Michigan District Court to decide.
IT IS SO ORDERED.
Dated: 	May 4, 2018
New York, New York
_____Martin Glenn____________
MARTIN GLENN
United States Bankruptcy Judge
12 	As explained earlier, the issue whether Michigan law recognizes common law liability of a property owner
for post-sale migration of contaminated groundwater based on pre-sale contamination is left to the Michigan District
Court to determine. The Sale Agreement and the Sale Order do not bar such claims, if such claims exist under state
law.
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