Depippo v. Kmart Corp., 04 Civ. 7839(WCC).

• Decision Date: 14 November 2005
• Docket Number: No. 04 Civ. 7839(WCC).,04 Civ. 7839(WCC).
• Citation: 335 B.R. 290
• Parties: In the Matter of the Claim of Bettina DEPIPPO, Plaintiff, v. KMART CORPORATION, Kmart of N.Y. Holdings, Inc. and Michael Morrone, Defendants.
• Court: U.S. District Court — Southern District of New York

335 B.R. 290

In the Matter of the Claim of Bettina DEPIPPO, Plaintiff, v. KMART CORPORATION, Kmart of N.Y. Holdings, Inc. and Michael Morrone, Defendants.

No. 04 Civ. 7839(WCC).

United States District Court, S.D. New York.

November 14, 2005.

COPYRIGHT MATERIAL OMITTED

Marsh & Gaughran LLP, James R. Marsh, Esq., Of Counsel, White Plains, NY, Attorneys for Plaintiff,

Law Office of Stephen Civardi, P.C., Richard C. Obiol, Esq., Of Counsel, Rockville Centre, NY, Attorneys for Defendants.

OPINION AND ORDER

WILLIAM C. CONNER, Senior District Judge.

Plaintiff Bettina DePippo commenced this action against Kmart Corporation and Kmart of NY Holdings, Inc. (collectively, "Kmart"), and Michael Morrone (collectively, the "defendants") alleging that defendants' policies and practices resulted in a violation of plaintiff's constitutional rights by denying her the right to contract to buy goods, services and personal property solely because of her race. Specifically, plaintiff alleges that: (1) defendants' actions deprived her of her right to make and enforce contracts in violation of 42 U.S.C. § 1981; (2) defendants' actions were motivated primarily by intentional racial discrimination in violation of 42 U.S.C. § 1981; (3) defendants' actions constituted malicious prosecution and intentional infliction of emotional distress; and (4) Kmart was negligent in its hiring, recruiting, training, retaining and supervising of Morrone. In the present motion, defendants move for summary judgment arguing that plaintiff's claims are barred by: (1) discharge in bankruptcy; (2) res judicata; (3) collateral estoppel; and (4) lack of subject matter and personal jurisdiction because plaintiff failed to file an administrative expense claim with the United States Bankruptcy Court for the Northern District of Illinois (the "Bankruptcy Court") on or before June 20, 2003, the deadline for filing claims against Kmart (the "Bar Date") as set by Kmart's bankruptcy reorganization plan.¹ For the reasons stated hereinafter, defendants' motion for summary judgment is granted in part and denied in part.

BACKGROUND

On December 22, 2002, plaintiff, an African-American woman, was shopping at the Big Kmart Store (the "Store"),² located at 399 Tarrytown Road, Greenburgh, New York, when she was stopped by Morrone, the loss prevention manager at the Store, who accused her of shoplifting. (Pl. Mem. Opp.Summ.J. at 1.) Morrone told plaintiff that he observed her shoplifting via a video surveillance camera. (Complt. ¶ 54.) Plaintiff denied any wrong-doing, but Morrone brought her to the store's security office and called the police. (Pl. Mem.Opp.Summ. J. at 1.) Plaintiff was confined in a small room for approximately one hour, during which time she alleges Morrone "verbally harassed and berated" her and "accused her of defrauding Kmart" despite her pleas of innocence. (Complt. ¶¶ 10, 11.) Furthermore, plaintiff alleges that defendants refused her request to view the surveillance tape purporting to show her criminal activity. (Id. ¶ 12.) Plaintiff was arrested and charged with petit larceny. (Id. ¶¶ 13, 16.)

Plaintiff's criminal trial was pending for one year. After three adjournments on February 25, 2003, April 4, 2003 and June 17, 2003, plaintiff had a bench trial on September 5, 2003. (Pl. Mem. Opp. Summ. J. at 1.) The presiding judge reserved decision following the trial and, on October 3, 2003, found plaintiff not guilty. (Complt. ¶ 20.) The sole evidence against plaintiff in the criminal trial was the uncorroborated testimony of Morrone, leading to plaintiff's claim that defendants procured her prosecution for petit larceny after her arrest. (Id. ¶ 16.) The surveillance camera videotape was not produced during discovery or trial; defendants represent that the surveillance tape was destroyed. (Id. ¶¶ 21, 22, 23.)

As a result of the above-described incident, on October 1, 2004, plaintiff filed a Complaint in the United States District Court for the Southern District of New York, alleging five distinct causes of action: (1) violation of 42 U.S.C. § 1981; (2) malicious prosecution; (3) intentional infliction of emotional distress; (4) negligence; and (5) violation of 42 U.S.C. § 1982. (Pl.Mem.Opp.Summ. J. at 2.) She alleges that she "was forced to disrupt her education to attend her criminal trial" and was required to disclose the charges and pending trial to her work and school associates." (Id. ¶¶ 17, 18, 19.)

However, two years earlier, on January 22, 2002, Kmart and certain of its subsidiaries and affiliates each had filed a voluntary petition in the Bankruptcy Court for relief under Chapter 11 of Title XI of the United States Code, 11 U.S.C. § 101, et seq., as amended. (Defs. Rule 56.1 Stmt. ¶ 3.) On April 23, 2003, the Bankruptcy Court entered its Findings of Fact, Conclusions of Law and the Confirmation Order under 11 U.S.C. § 1129(a), (b) and FED. R. BANKR. P. 3020, confirming Kmart's Reorganization Plan, which set a June 20, 2003 deadline for creditors to file post-petition administrative claims against Kmart. (Id. ¶¶ 5, 6.) The effective date of the Reorganization Plan was May 6, 2003. (Defs. Mem.Supp.Summ.J. at 2.) Furthermore, pursuant to the Bankruptcy Court's Confirmation Order, "Kmart caused Notice of the Confirmation Order, Effective Date and Bar Date to be published in the May 12, 2003 issues of the New York Times, the Wall Street Journal and USA Today." (Id. ¶ 7.)

The order specifically provides that: "[a]ny Administrative Claim that is not timely filed and served will be disallowed automatically without the need for any objection from the Debtors." (Defs. Mem. Supp. Summ. J. at 2 (quoting Confirmation Order ¶ 25, § 10.4).) The Confirmation Order explicitly discharged "all claims and interests arising from incidents occurring prior to the Confirmation Date of May 6, 2003." (Defs. Mem. Supp. Summ. J. at 3 (citing Confirmation Order ¶ 11; Reorganization Plan § 12.2).) Moreover, pursuant to its Confirmation Order, the Bankruptcy Court issued "a permanent injunction as to any and all claims for incidents occurring prior to May 6, 2003." (Defs. Mem. Supp. Summ. J. at 3 (citing Confirmation Order ¶ 12; Reorganization Plan § 12.11).)

Defendants maintain that plaintiff failed to file an administrative expense claim prior to the June 20, 2003 deadline and that, to date, she has neither filed a claim with the Bankruptcy Court, nor sought leave to do so. (Defs. Rule 56.1 Stmt. ¶ 8.) Consequently, defendants contend that plaintiff's claims are barred and therefore should be dismissed. Specifically, defendants assert dismissal is required because: (1) her claims were discharged by the Bankruptcy Court; (2) plaintiff's action and each individual claim are barred by the doctrine of res judicata and collateral estoppel; (3) this Court lacks subject matter and personal jurisdiction as a result of the permanent injunction provisions of the Bankruptcy Court's Confirmation Order; and (4) plaintiff's claim of intentional infliction of emotional distress is barred by the statute of limitations. (Defs.Mem.Supp.Summ. J. at 5, 7, 8, 9.) Additionally, defendants request that, if this Court declines to dismiss this action on summary judgment, partial summary judgment be granted dismissing any claims as to which there are no material issues of fact.

DISCUSSION

I. Standard of Review

Under FED. R. CIV. P. 56, summary judgment may be granted where there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law. See FED. R. CIV. P. 56(c); Anderson v. Liberty Lobby, 477 U.S. 242, 247-50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is material only if, based on that fact, a reasonable jury could find in favor of the non-moving party. See Anderson, 477 U.S. at 248, 106 S.Ct. 2505. The burden rests on the movant to demonstrate the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L. Ed.2d 265 (1986). In deciding whether summary judgment is appropriate, the court resolves all ambiguities and draws all permissible factual inferences against the movant. See Anderson, 477 U.S. at 255, 106 S.Ct. 2505. However, to defeat summary judgment, the nonmovant must go beyond the pleadings and "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 89 L.Ed.2d 538 (1986). The court's role at this stage of the litigation is not to decide issues of material fact, but to discern whether any exist. See Gallo v. Prudential Residential Servs., L.P., 22 F.3d 1219, 1224 (2d Cir.1994).

II. Defendants' Motion for Summary Judgment

Defendants move for summary judgment on the basis that plaintiff's claims were discharged by the Bankruptcy Court due to plaintiff's failure to file an administrative expense claim request prior to the Bar Date. (Defs. Mem. Supp. Summ. J. at 5.) Plaintiff, however, contends that she did not receive adequate notice of the Confirmation Order and, therefore, is not bound by it. (Pl.Mem.Opp.Summ.J. at 4.)

A. Notice

It is well-established that once confirmed, a debtor's reorganization plan binds the debtor and all creditors, regardless of whether the creditor has accepted the plan, provided that the creditor has "been given notice sufficient to satisfy due process." See Daewoo Int'l (Am.) Corp. Creditor Trust v. SSTS Am. Corp., 2003 U.S. Dist. LEXIS 9802, No. 02 Civ. 9629, 2003 WL 21355214, at *3 (S.D.N.Y. June 11, 2003) (citing 11 U.S.C. § 1141(a)). Where notice satisfies due process, "an order confirming a reorganization plan operates to discharge all unsecured debts and liabilities, even those of tort victims who were unaware of the debtor's bankruptcy." In re U.S.H. Corp., 223 B.R. 654, 657 (Bankr.S.D.N.Y.1998) (citing 11 U.S.C. §§ 1141 and 524; Brown v. Seaman Furniture Co., Inc., 171 B.R. 26, 27 (E.D.Pa.1994)).

Whether a creditor...