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Mart v. Chrysler Group, LLC

United States District Court, Fourth Circuit

November 24, 2013

Mark Mart in, et al, Plaintiffs,
v.
Chrysler Group, LLC, Defendant.

MEMORANDUMOPINION

Norman K. Moon, United States District Judge

Plaintiffs filed suit in the General District Court for the City of Lynchburg, Virginia alleging the breach of a service contract issued in connection with Plaintiff’s May 2007 purchase of a 2007 Chrysler 300. Defendant removed the matter to this court on the ground that it “is a civil proceeding arising under or arising in Title 11 of the United States Code, the United States Bankruptcy Code.”[1] Plaintiffs filed a “motion to remand action to Lynchburg General District Court and abstain from these proceedings.” Defendant filed a response in opposition to Plaintiffs’ motion, and Defendant contemporaneously filed a motion to transfer the matter to the United States Bankruptcy Court for the Southern District of New York. Plaintiffs have not filed a response to Defendant’s motion or a reply to Defendant’s opposition, and neither party has requested a hearing on the pending motions.[2] For the reasons stated herein, I will deny Plaintiffs’ motion, and I will grant Defendant’s motion.

I. Factual and Proc edur a l Background

Plaintiffs’ motion states the following background information (citations to exhibits omitted):

Chrysler Financial Services Americas LLC filed a warrant in debt in the Lynchburg General District Court against the Plaintiffs on May 9, 2012, alleging an “Auto Deficiency” . . . . Chrysler Financial Services Americas LLC sued Mark and David Martin for $10, 959.26 with interest, costs and attorney’s fees. The Plaintiffs filed a warrant in debt against the Defendant on July 25, 2012, in the Lynchburg General District Court . . . alleging a breach of warranty . . . . The Plaintiffs sued Chrysler Group LLC for $14, 993.07, which represents the principal sum sued for in the first case, plus attorney’s fees, costs, and interest as requested therein. The Deputy Clerk of the Lynchburg General District Court . . . issued a summons to the Defendant to appear before the Lynchburg General District Court on August 29, 2012, at 1:30 PM.

On the 1st day of August, 2012, the Defendant was personally served through its registered agent . . . . On July 27, 20[12], the Plaintiff filed a motion to consolidate the two actions . . . and to order a bills of particulars and grounds of defense for each respective party. . . . [C]ounsel for Chrysler Group LLC[] was served with the motion. On August 23, 2012, the Plaintiff filed a notice of hearing referencing the motion for pleadings, the motion to consolidate, and a motion for a continuance. . . . [C]ounsel for Chrysler Group LLC[] was served with the motion. On August 29, 2012, counsel for the Defendant consented to the Plaintiff’s motion, appeared in Lynchburg General District Court, and endorsed an order to that effect and continuing the case until November 7, 2012 . . . .

On September 19, 2012, Chrysler Financial Services Americas LLC filed a Bill of Particulars and served it upon the Plaintiffs and the Defendant, Chrysler Group LLC, as ordered by the Consent Order signed by all counsel of record. On September 19, 2012, the Plaintiffs filed a Bill of Particulars and served it upon the Defendant, Chrysler Group LLC, and Plaintiff, Chrysler Financial Services Americas LLC. On September 24, 2012, new counsel . . . appeared on behalf of Chrysler Group LLC . . . .

On October 4, 2012, the Plaintiffs filed a Grounds of Defense responsive to Chrysler Financial Services Americas LLC Bill of Particulars. On October 9, 2012, the Defendant, Chrysler Group LLC, filed Grounds of Defense in the present matter asserting a federal defense as an affirmative defense to the breach of contract/warranty claim filed in Lynchburg General District Court.

Then, on October 18, 2012, the Defendant, Chrysler Group LLC, filed a Notice of Filing of Removal in Lynchburg General District Court and, in the District Court for the Western District of Virginia – Lynchburg Division, a Notice of Removal along with corresponding documentation.

Defendant emphasizes other facts. As set forth in Defendant’s notice of removal, the manufacturer of the vehicle that is the subject of Plaintiffs’ state court action, Chrysler LLC (subsequently referred to as “Old Carco LLC”), and 24 of its affiliated entities (collectively, the “Debtors”) filed for bankruptcy protection on April 30, 2009, in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). See In re Old Carco LLC, 492 B.R. 392, 396 (Bkrtcy. S.D. N.Y. 2013) (reviewing the “well-publicized” history and transactions of Case No. 09-50002). Pursuant to the June 1, 2009, “Sale Order” entered by the Bankruptcy Court, Chrysler Group purchased substantially all of the assets of the Debtors and assumed certain limited liabilities of the Debtors. Id. at 394. Furthermore, in the final paragraph of the Sale Order, the Bankruptcy Court expressly retained jurisdiction “to interpret, implement and enforce the terms and provisions” of the Sale Order “including to . . . protect the Purchaser [i.e., Chrysler Group, LLC, the Defendant in this case] against any Claims . . . .” Plaintiffs’ claim for breach of service contract against Chrysler Group was first asserted in the Bill of Particulars they served on Defendant on September 19, 2012. Plaintiffs’ claim is based upon a service contract issued by the Debtors in connection with Plaintiffs’ May 26, 2007, purchase of a 2007 Chrysler 300. However, as Defendant points out, Chrysler Group is not the manufacturer, warrantor or seller of the subject vehicle and is not a party to the service contract upon which Plaintiffs’ claims are based, as Chrysler Group did not exist at the time Plaintiffs purchased the vehicle and service contract.[3] Indeed, Plaintiffs’ Bill of Particulars states that their claim is based upon a theory that Chrysler Group assumed liability from the Debtors for Plaintiffs’ claim. Chrysler Group, however, disputes that it assumed liability under the Sale Order (and an underlying Master Transaction Agreement) for the claims asserted by Plaintiffs. Therefore, Chrysler Group removed the matter to this court and has now moved to transfer the matter to the Bankruptcy Court so that the Bankruptcy Court may exercise its exclusive jurisdiction to interpret and enforce the terms of the Sale Order and to determine whether Chrysler Group assumed liability for the claims asserted by Plaintiff herein.

II. Plaintiffs’ Motion

A. Timeliness of Removal

Plaintiffs argue that, pursuant to 28 U.S.C. § 1446, Defendant was required to remove this matter within 30 days from receipt of the “initial pleading.” However, the removal of this action is governed by 28 U.S.C. § 1452 and Rule 9027 of the Federal Rules of Bankruptcy Procedure, not 28 U.S.C. § 1446, and pursuant to 28 U.S.C. § 1452, removal here was timely.

Section 1452(a) of title 28 of the United States Code governs the removal of matters that are based upon jurisdiction under 28 U.S.C. § 1334. Creasy v. Coleman Furniture Corp., 763 F.2d 656, 658, n. 1 (4th Cir. 1985) (“The statutory requirements for the removal of state court actions related to bankruptcy cases are now contained in 28 U.S.C. § 1452 . . . .”); see ...


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