CALLAN CAMPBELL, JAMES H. CHADWICK, JUDITH STRODE CHADWICK, KEVIN C. CHADWICK, INDIVIDUALLY AND THROUGH HIS COURT-APPOINTED ADMINISTRATORS, JAMES H. CHADWICK AND JUDITH STRODE CHADWICK, KEVIN JUNSO, NIKI JUNSO, TYLER JUNSO ESTATE, THROUGH KEVIN JUNSO, ITS PERSONAL REPRESENTATIVE, Plaintiffs-Appellants
UNITED STATES, Defendant-Appellee
from the United States Court of Federal Claims in No.
1:15-cv-00717-PEC, Judge Patricia E. Campbell-Smith.
R. Jakubowski, Robbins Salomon & Patt, Ltd., Chicago, IL,
argued for plaintiffs-appellants.
Jacob Todor, Commercial Litigation Branch, Civil Division,
United States Department of Justice, Washington, DC, argued
for defendant-appellee. Also represented by Joseph H. Hunt,
Robert Edward Kirschman, Jr., Franklin E. White, Jr.
Newman, Lourie, and Dyk, Circuit Judges.
case arises out of the 2009 bankruptcy of General Motors
Corporation ("Old GM"). The plaintiffs compose a
putative class of individuals who had asserted personal
injury claims against Old GM, and whose successor liability
claims were extinguished during bankruptcy. Relying on our
decision in A & D Auto Sales, Inc. v. United
States, 748 F.3d 1142 (Fed. Cir. 2014), the plaintiffs
sued the United States on behalf of themselves and others
similarly situated in the Court of Federal Claims
("Claims Court"), alleging that the extinguishment
of their claims without just compensation violated the
Takings Clause of the Fifth Amendment. The Claims Court
dismissed the plaintiffs' claims, concluding that they
were barred by the statute of limitations and that the
plaintiffs had, in any event, failed to state a claim.
Because we hold, as to the claims alleging coercion of Old
GM, that the statute of limitations had run when the
plaintiffs filed their complaint and, with respect to the
plaintiffs' other claims, that the Claims Court also
lacks jurisdiction, we affirm.
A & D, a group of former automobile dealerships
sued the United States, raising Fifth Amendment takings
claims based on the extinguishment of the plaintiffs'
franchise agreements with Old GM in a bankruptcy sale
pursuant to 11 U.S.C. § 363. 748 F.3d at 1147. That
section gives a bankruptcy trustee the power to use, sell, or
lease the property of a debtor in bankruptcy. In particular,
§ 363(f) (the provision at issue here) provides that
"[t]he trustee may sell property . . . free and
clear of any interest in such property of an entity
other than the estate" under certain conditions. 11
U.S.C. § 363(f) (emphasis added).
A & D, the plaintiffs alleged that the
government had conditioned its continued financial assistance
to Old GM on the company's submission for approval of a
proposed sale order that terminated the plaintiffs'
franchise agreements. 748 F.3d at 1148. The plaintiffs
contended that this purported coercion effected a regulatory
taking under the Fifth Amendment. Id. at 1149. The
Claims Court denied the government's motion to dismiss
for failure to state a claim but certified the case for
interlocutory appeal pursuant to 28 U.S.C. § 1292(d)(2).
Id. at 1150.
appeal, we held that the government may, in some
circumstances, be liable for a regulatory taking of property
where the government pressures a third party (there,
allegedly Old GM) to take an "action that affects or
eliminates the property rights of the plaintiff."
Id. at 1153. We determined that such conduct may
give rise to a taking where the government's action was
"direct and intended" and where the "the third
party is acting as the government's agent or the
government's influence over the third party was coercive
rather than merely persuasive." Id. at 1154. We
did not decide whether the government's actions with
respect to Old GM were coercive or otherwise satisfied the
conditions for takings liability. Id. at 1155-56. We
explained that to state a claim, the plaintiffs needed to
have pled that their "property suffered a diminution in
value or a deprivation of economically beneficial use"
as a result of the government's action. Id. at
1157. We determined that the plaintiffs' allegations were
insufficient to show that their franchise agreements had
value absent the government action and remanded to the Claims
Court to permit the plaintiffs to amend their complaint
"to include specific allegations establishing loss of
value" and thereafter to determine whether a compensable
taking had occurred. Id. at 1158-59.
on A & D, on July 9, 2015, the plaintiffs here
sued the government in the Claims Court alleging that the
government had coerced Old GM to include in its proposed
bankruptcy sale order provisions extinguishing the
plaintiffs' property interests pursuant to § 363 of
the Bankruptcy Code.
plaintiffs are a group of individuals who alleged that they
are victims of accidents involving GM vehicles (or are the
family members or estates of such individuals), and had
personal injury claims against Old GM. The plaintiffs alleged
that under Michigan law they possessed successor liability
claims at the time the § 363 sale closed. Michigan law
provides that where there is a sale of assets from one entity
to another such that there exists "a continuity of
enterprise between a successor and its predecessor[, ] . . .
a successor [may be forced] to 'accept the liability with
the benefits' of such continuity." Foster v.
Cone-Blanchard Mach. Co., 597 N.W.2d 506, 510 (Mich.
1999) (quoting Turner v. Bituminous Cas. Co., 244
N.W.2d 873, 883 (Mich. 1976)).
a prima facie case of continuity of enterprise exists where
the plaintiff establishes the following facts: (1) there is
continuation of the seller corporation, so that there is a
continuity of management, personnel, physical location,
assets, and general business operations of the predecessor
corporation; (2) the predecessor corporation ceases its
ordinary business operations, liquidates, and dissolves as
soon as legally and practically possible; and (3) the
purchasing corporation assumes those liabilities and
obligations of the seller ordinarily necessary for the
uninterrupted continuation of normal business operations of
the selling corporation.
Id. The plaintiffs' complaint here sets out
facts supporting each of these factors. Though the government
disputes whether the plaintiffs' successor liability
claims constitute a cognizable property interest for the
purposes of a Fifth Amendment taking, we assume, without
deciding, that they do.
Old GM filed for bankruptcy on June 1, 2009, and filed a
motion seeking court approval to sell substantially all its
assets to a new corporation, referred to as "New
GM," pursuant to 11 U.S.C. § 363. In re Gen.
Motors Corp., 407 B.R. 463, 479-80, 483 (Bankr. S.D.N.Y.
2009). To facilitate the sale, the government provided
financing to Old GM for the bankruptcy and the company's
ongoing operations. See id. at 473, 479. In return,
the government received $8.8 billion in debt and preferred
stock of New GM and approximately 60 percent of its equity.
Id. at 482. According to the bankruptcy court,
without the government's financing, Old GM would have
"face[d] immediate liquidation." Id. at
484. According to the plaintiffs' complaint, "on the
eve of Old GM's bankruptcy filing, the [g]overnment . . .
condition[ed] the closing of the [s]ale on the . . .
inclusion of . . . provision[s]" concerning successor
liability. J.A. 1037; see also Appellant Br.
of the government's insistence, according to the
complaint, the proposed sale order thus included "a
number of provisions making explicit findings that New GM is
not subject to [the plaintiffs'] successor liability
[claims]." Gen. Motors ...