Ballard v. General Motors LLC

Filing 54

MEMORANDUM OPINION AND ORDER: it ORDERED: (1) That Defendant General Motors, LLC's motion for summary judgment (Doc. # 45 ) is GRANTED. (2) That Defendant General Motors, LLC's motion for protective order (Doc. # 46 ) is DENIED as moot. A final judgment consistent with this opinion and order will be entered separately. Signed by Honorable Judge William Keith Watkins on 6/7/2023. (cwl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
NORTHERN DIVISION
ARTHUR HENRY BALLARD, as
personal representative of the estate
of Joseph Ryan Ballard, deceased,
Plaintiff,
v.
GENERAL MOTORS, LLC,
Defendant.

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CASE NO. 2:20-CV-260-WKW
[WO]

MEMORANDUM OPINION AND ORDER
In the mid-1990s, General Motors Corporation (Old GM) manufactured and
sold the 1996 Chevrolet Blazer. Over two decades later, Joseph Ryan Ballard died
in a single vehicle rollover accident while driving one of Old GM’s 1996 Chevy
Blazers. But a decade before Ballard passed, Old GM filed for bankruptcy, leading
to the emergence of a different entity: Defendant General Motors, LLC (New GM).
However, when Old GM originally sold the 1996 Blazer, it did so subject to
Alabama’s implied warranties of merchantability under § 7-2-314 of the Alabama
Code.

The pending motion raises a single issue:

Whether New GM, in its

acquisition of Old GM’s assets, assumed the implied warranties of merchantability
from Old GM, and therefore can be held liable for an alleged breach of that
warranty? If New GM did not assume the implied warranty from its predecessor,
then Plaintiff Arthur Henry Ballard, as the personal representative of the estate of

Joseph Ballard, cannot maintain his Alabama law action for a breach of the implied
warranties of merchantability against New GM.
Before the court is Defendant New GM’s motion for summary judgment.
(Doc. # 45.)

Plaintiff responded in opposition (Doc. # 49) to which Defendant

filed a reply (Doc. # 51). For the reasons to follow, New GM did not assume the
implied warranties of merchantability from Old GM. Therefore, Defendant New
GM’s motion for summary judgment will be granted.1
I. JURISDICTION AND VENUE
Subject matter jurisdiction is proper pursuant to 28 U.S.C. § 1332(a). Personal
jurisdiction and venue are uncontested.
II. STANDARD OF REVIEW
To succeed on a motion for summary judgment, the moving party must
demonstrate that “there is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The court views
the evidence, and all reasonable inferences drawn therefrom, in the light most
favorable to the nonmoving party. Jean-Baptiste v. Gutierrez, 627 F.3d 816, 820
(11th Cir. 2010).
The party moving for summary judgment “always bears the initial

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Also pending before the court is Defendant New GM’s motion for protective order. (Doc.
# 46.) Because the court finds that the motion for summary judgment should be granted, the
motion for protective order will be denied as moot.
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responsibility of informing the district court of the basis for the motion.” Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986). This responsibility includes identifying
the portions of the record illustrating the absence of a genuine dispute of material
fact. Id. Alternatively, a movant who does not have a trial burden of production can
assert, without citing the record, that the nonmoving party “cannot produce
admissible evidence to support” a material fact. Fed. R. Civ. P. 56(c)(1)(B); see also
Fed. R. Civ. P. 56 advisory committee’s note (“Subdivision (c)(1)(B) recognizes that
a party need not always point to specific record materials . . . . [A] party who does
not have the trial burden of production may rely on a showing that a party who does
have the trial burden cannot produce admissible evidence to carry its burden as to
the fact.”).
If the movant meets its burden, the burden shifts to the nonmoving party to
establish—with evidence beyond the pleadings—that a genuine dispute material to
each of its claims for relief exists. Celotex Corp., 477 U.S. at 324. A genuine dispute
of material fact exists when the nonmoving party produces evidence allowing a
reasonable fact finder to return a verdict in its favor. Waddell v. Valley Forge Dental
Assocs., 276 F.3d 1275, 1279 (11th Cir. 2001).

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III. BACKGROUND
There is only one disputed fact for the purposes of this opinion.

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But first,

the undisputed facts are as follows: Joseph Ryan Ballard was driving a 1996
Chevrolet Blazer, VIN 1GNCS13W2T2174293, on February 22, 2019, when he was
involved in a fatal, single vehicle accident in Covington County, Alabama. The 1996
Blazer was designed, manufactured, marketed, labeled, sold, and distributed by Old
GM in November 1995, nearly a quarter of a century prior to the accident.
Old GM filed for Chapter 11 bankruptcy on June 1, 2009. Part of the
bankruptcy proceeding led to the sale of Old GM to NGMCO, Inc., New GM’s
predecessor. Under the terms of the Sale Order and the Sale Agreement, New GM
assumed certain specifically identified liabilities of Old GM; all other liabilities were
retained by Old GM. (Doc. # 45-2.) Specifically, the Sale Agreement provides:
“[E]xcept for Assumed Liabilities, [New GM] is not liable for claims based on Old
GM conduct . . . .” (Doc. # 45 at 5.) Rather, the sale of assets to New GM was free
and clear of all liabilities, except those liabilities that were expressly assumed.
Notably, New GM did not assume “successor liability claims” because, as a New
York Bankruptcy Court found, New GM “is not a successor in interests to [Old GM];
it is a completely separate legal entity from Old GM.” (Id. at 5–6.)

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In his response in opposition to New GM’s motion for summary judgment, Ballard
disputes only paragraph 6 of New GM’s purported material of facts, see (Doc. # 45 at 4–6)—the
remainder of New GM’s purported facts are undisputed (Doc. # 50 at 2).
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So, the parties agree that New GM is liable for the warranties it assumed, but
not for the warranties that Old GM retained. The parties also agree that all liabilities
arising from Old GM’s express warranties were included as liabilities assumed by
New GM.
That leads to the single factual dispute at bar: Whether Old GM’s implied
warranties, including the implied warranties of merchantability, and specifically
implied warranties relating to liability for personal injury actions, were assumed by
New GM through operation of the Sale Order and Agreement?
IV. DISCUSSION
In Ballard’s sole count, he alleges that New GM “breached its implied
warranties of merchantability as defined by Ala. Code. § 7-2-314, rendering the []
Blazer unfit for its ordinary purpose to provide adequate, reliable, and safe
transportation.” (Doc. # 22 at 11.) For New GM to have breached this implied
warranty, it must have been subject to the warranty. Bagley v. Mazda Motor Corp.,
864 So. 2d 301, 315 (Ala. 2003) (holding that, under Alabama law, a breach of an
implied warranty requires proof of “the existence of the implied warranty. . . .”). It
is undisputed for the purposes of this opinion that the implied warranties of
merchantability attached to Old GM as the seller of the subject Blazer. See ALA.
CODE § 7-2-314 (“[A] warranty that the goods shall be merchantable is implied in a
contract for their sale if the seller is a merchant with respect to goods of that kind.”).
The only question before the court is whether New GM assumed liability for Old
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GM’s breaches of its implied warranties of merchantability when New GM acquired
Old GM’s assets.
To be clear, in contrast to the theories raised at the motion-to-dismiss stage,
Ballard now, at summary judgment, only pursues an assumed liability theory.
(Doc. # 50 at 1 (Plaintiff’s claim is based “solely on a theory of assumed liability.”).
Ballard no longer asserts a theory of successor liability. Contra Ballard v. Gen.
Motors, LLC, 572 F. Supp. 3d 1154, 1161 (M.D. Ala. 2021) (Watkins, J.) (assuming
as true that, as originally plead by Ballard, New GM was the “successor in interest
to [Old] GM’s warranty liabilities.”). However, even if Ballard were presently
pursuing a successor theory of liability, such an argument appears to be a dead end.
See e.g., In re Motors Liquidation Co., 549 B.R. 607, 613 (Bankr. S.D.N.Y. 2016)
(“[T]he 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.”). In short,
it appears that plaintiffs like Ballard lost the successor battle in bankruptcy court,
forcing Ballard to pursue—as he does here—solely a “theory of assumed liability.”
(Doc. # 50 at 1).
As to that theory, New GM argues that it never assumed the implied warranty
of merchantability when purchasing Old GM, that New GM actually disclaimed any
implied warranties, and therefore that New GM cannot be held liable for any alleged
breach of the implied warranties of merchantability. Ballard contends that New GM
is “liable for Old GM’s . . . implied warranty obligations to the extent they are
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liabilities for personal injury (as is the case here).” (Doc. # 50 at 2.) That is, Ballard
argues that New GM, through the Sale Order and Agreement, assumed liability from
Old GM for breaches of the implied warranty of merchantability in the personal
injury context. New GM, on the other hand, argues that all of Old GM’s implied
warranties, regardless of whether relating to personal injury or not, were expressly
not assumed by New GM. (Doc. 51 at 2.) Accordingly, the court is tasked with
interpreting the Sale Order and Sale Agreement to determine whether New GM
assumed Old GM’s liabilities for personal injury actions deriving from alleged
breaches of Old GM’s implied warranties of merchantability.
While the substance of the breach action is governed by Alabama law, CSX
Transp., Inc. v. Trism Specialized Carriers, Inc., 182 F.3d 788, 790 (11th Cir. 1999)
(citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938)), the Sale Order, and
accompanying Sale Agreement, are governed by New York law (Doc. # 45-2 at 157
(“The construction, interpretation and other matters arising out of or in connection
with this Agreement (whether arising in contract, tort, equity or otherwise) shall in
all respects be governed by and construed . . . to the extent the Bankruptcy Code is
not applicable, in accordance with the Laws of the State of New York, without giving
effect to rules governing the conflict of laws.”)).
“Under the Amended and Restated Master Sale and Purchase Agreement,
New GM assumed certain liabilities of Old GM (‘Assumed Liabilities’).” In re
Motors Liquidation Co., 604 B.R. 138, 140-41 (Bankr. S.D.N.Y. 2019). The Master
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Sale and Purchase Agreement defines “Assumed Liabilities” in Section 2.3. (Doc.
# 45-2 at 33.) Generally, Section 2.3, as amended, provides that New GM assumes
“all liabilities” for personal injuries caused by Old GM’s motor vehicles.
(Doc. # 45-2 at 165.) Ballard contends that “all” means “all” and because he has
brought a claim for personal injury, New GM assumed responsibility for it.
However, Section 2.3(b) states that New GM “shall not assume . . . other than
the Assumed Liabilities . . . all Liabilities arising out of, related to or in connection
with any [] implied warranty or other implied obligation arising under statutory or
common law without the necessity of an express warranty.” (Doc. # 45-2 at 88–90.)
Moreover, a general provision in the Sale Order states that New GM “is not assuming
responsibility for Liabilities contended to arise by virtue of other alleged warranties,
including implied warranties.” (Id. at 45.) And, under Section 6.15, which discusses
Warranty Claims, the Order states, “for avoidance of doubt, [New GM] shall not
assume Liabilities arising under the law of implied warranty or other analogous
provisions of state Law. . . .” (Id. at 127.)
Admittedly, there is some inconsistency and conflict between (1) the general
provision that New GM assumes “all liabilities” for personal injury claims, and (2)
the specific provisions that expressly disclaim any liabilities deriving from implied
warranties (which could include, as it does here, personal injury liabilities brought
under an implied warranty). Nonetheless, where there is conflict between a general
provision and a specific provision, the specific provision typically controls. In re
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AMR Corp., 485 B.R. 279, 301 (Bkrtcy. S.D.N.Y. 2013); see also John Hancock
Mut. Life v. Carolina Power & Light, 717 F.2d 664, 669 n. 8 (2d Cir. 1983) (“New
York law recognizes that definitive, particularized contract language takes
precedence over expressions of intent that are general, summary, or preliminary.”);
In re Lehman Bros. Holdings Inc., 761 F.3d 303, 313 (2d Cir. 2014) (“To the extent
that there appears to be conflict between these provisions, the specific governs the
general.”); Bank of Tokyo-Mitsubishi v. Kvaerner, 671 N.Y.S.2d 905, 910 (N.Y.
App. Div. 1998) (holding that “if there is an inconsistency between a general
provision and a specific provision of a contract, the specific provision controls.”);
Goldberg v. Bear, Stearns & Co., Inc., 912 F.2d 1418, 1421 (11th Cir. 1990) (“When
general propositions in a contract are qualified by the specific provisions, the rule of
construction is that the specific provisions in the agreement control.”); Restatement
(Second) of Contracts § 203 (1981) (“In the interpretation of a promise or agreement
or a term thereof, . . . specific terms and exact terms are given greater weight than
general language.”) So too here does the specific disclaiming language govern, and
Ballard cites no law indicating that a different canon of construction counsels toward
the opposite conclusion.
Accordingly, based on the terms of the Sale Order and Agreement, and New
York construction principles, the court concludes that New GM specifically
disclaimed liabilities deriving from implied warranties, including the implied
warranties of merchantability, and therefore did not assume said warranties, meaning
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that Ballard cannot sue New GM for a breach of those implied warranties under an
assumption theory of liability.
V. CONCLUSION
Accordingly, it ORDERED:
(1) That Defendant General Motors, LLC’s motion for summary judgment
(Doc. # 45) is GRANTED.
(2) That Defendant General Motors, LLC’s motion for protective order
(Doc. # 46) is DENIED as moot.
A final judgment consistent with this opinion and order will be entered
separately.
DONE this 7th day of June, 2023.
/s/ W. Keith Watkins
UNITED STATES DISTRICT JUDGE

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