In re Mr. Goodbuys of New York Corp., Inc.

Decision Date18 February 1994
Docket NumberBankruptcy No. 191-13193-352. Adv. No. 192-1049-352.
Citation164 BR 24
PartiesIn re MR. GOODBUYS OF NEW YORK CORP., INC., et al., Debtors. Howard P. GOODMAN, Plaintiff, v. MR. GOODBUYS OF NEW YORK CORP., INC., et al., Defendants.
CourtU.S. Bankruptcy Court — Eastern District of New York

Togut, Segal & Segal by Albert Togut, New York City, for debtors-defendants.

Teitelbaum, Braverman & Borges, New Hyde Park, NY, for Creditors Committee.

Howard P. Goodman, pro se.

DECISION ON MOTION TO DISMISS SECOND AND SOLE REMAINING CLAIM FOR RELIEF AND TO EXPUNGE PLAINTIFF'S PROOF OF CLAIM (CLAIM NO. 833)

MARVIN A. HOLLAND, Bankruptcy Judge:

PARTIES

The Plaintiff, Howard P. Goodman hereinafter "Goodman" or "Plaintiff", seeks severance pay and damages from the Debtors-Defendants under the Worker Adjustment and Retraining Notification Act hereinafter "WARN". (29 U.S.C. §§ 2101-2109.) Goodman also seeks to recover under his Proof of Claim No. 833 filed March 4, 1992, in the matter of Mr. Goodbuys of New York Corp., Inc., et al. hereinafter "Claim". Goodman is acting pro se.

The Defendants are the Debtors, Mr. Goodbuys of New York Corp., Inc., et al., and the other post-confirmation Debtors-Defendants collectively hereinafter "Debtors-Defendants".

At a hearing on September 16, 1992 and pursuant to Fed.R.Civ.P. 12(b) made applicable to this proceeding by Fed.R.Bankr.P. 7012, the Debtors-Defendants moved for an order dismissing the second and sole remaining claim for relief asserted in the Plaintiff's Complaint hereinafter "Complaint" and to expunge the Claim filed by the Plaintiff against the Debtors-Defendants.

ISSUES

The sole issue is whether Goodman falls within any of the protected classes established by WARN.

DECISION

For reasons that follow, we hold that Goodman has not stated a claim for severance pay and damages under WARN. The motion to dismiss the Complaint pursuant to Fed.R.Civ.P. 12(b) and the motion to expunge Claim No. 833 will be granted.

PROCEDURAL HISTORY

On May 17, 1991, the Debtors-Defendants filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code with the United States Bankruptcy Court. (Docket No. XXX-XXXXX-XXX at 1-2.) Thereafter, the Debtors-Defendants continued in operation of their businesses and management of their assets as debtors-in-possession pursuant to §§ 1107 and 1108 of the Bankruptcy Code. (Defendants' Brief to the United States District Court, E.D.N.Y., dated January 25, 1993, at 5.) By Order, dated February 21, 1992, the Debtors-Defendants' Second Amended Consolidated Chapter 11 Plan was confirmed. (Docket No. 191-13193-352 at 64.) The Debtors-Defendants' Plan provides for the liquidation of all of the Debtors-Defendants' tangible and intangible assets. (Defendant's Application for Dismissal of the Adversary Complaint, dated August 31, 1992, at 3, hereinafter "Motion to Dismiss".) The proceeds thereof, less the liquidation expenses and other costs associated with the "winding down" of the Debtors-Defendants' businesses, are to be distributed to creditors. Id.

On February 13, 1992, Goodman commenced an adversary proceeding against Debtors-Defendants asserting four claims for relief.1 On June 17, 1992 after a hearing, the Court, pursuant to Fed.R.Civ.P. 12(b) made applicable here by Fed.R.Bankr.P. 7012, dismissed the Complaint in its entirety. (Adversary Docket No. 192-1049-352 at 3.) The order dismissing the Complaint was signed by Judge Holland on June 30, 1992 hereinafter "Dismissal Order". Id. at 4. Prior to actual entry of the Dismissal Order, Goodman moved, dated June 25, 1992, for reconsideration of the Court's ruling on the Motion to Dismiss. Id. at 3. After a hearing on July 29, 1992, the Court denied the motion, except as to the second claim, respecting Goodman's alleged entitlement to damages for failure of adequate notice under WARN. Id. at 4. The Court set a return date of September 8, 1992 for any motions with respect to this remaining issue. Id. The Debtors-Defendants filed a Motion to Dismiss the second and sole remaining claim for relief on September 3, 1992. Id. This Court reserved decision on this issue and signed the Reconsideration Order on September 16, 1992. Id. at 5.

Concurrent with the Complaint, Goodman filed the Claim for an administrative expense. The basis for the Claim is identical to that set forth in the Complaint.2 (Debtors-Defendants' Memorandum of Law, filed September 3, 1992, at 6.) The Claim requested damages of $183,667, the same amount sought by the Complaint. (Motion to Dismiss at 3; Plaintiff Admits: Plaintiff's Answer to Motion to Dismiss, dated September 8, 1992, Para. 9, hereinafter "Answer".) At a hearing on April 10, 1992, the Debtors-Defendants moved to expunge certain claims, including the Claim, on the grounds that no monies were owed to Goodman. (Notice of Motion No. 19 to Expunge Certain Claims, filed April 10, 1992, Sch. A-19 at 5.) At the hearing held on June 17, 1992, the Court considered the Debtors-Defendants' Claim Motion. (Docket No. 191-13193-352 at 152.) The Court gave Goodman permission to file an amended Proof of Claim by June 29, 1992. Id. The Court did not extend this deadline. Goodman failed to file an amended Proof of Claim on or before June 29, 1992. (Motion to Dismiss at 7.) At the hearing on July 29, 1992, this Court noted that it would clarify the status of the Claim when a decision was reached on the Complaint. (Tr. 7/29/92 at 8-9.)

FACTS

Shortly before the commencement of this Chapter 11 proceeding, Goodman was hired by the Debtors-Defendants to be their Chief Financial Officer. (Motion to Dismiss at 3; Plaintiff admits: Answer Para. 7.) The terms of Goodman's employment were generally set forth in a letter, dated May 9, 1991, from Stephen W. Underwood, the Debtors-Defendants' then President and Chief Executive Officer. (Motion to Dismiss, Ex. 1; Plaintiff admits: Answer Para. 7.) Goodman's employment with Debtors-Defendants was terminated on or about September 28, 1991. (Plaintiff's Complaint Para. 6.) The parties disagree as to whether Goodman's termination was for cause or due to the bankruptcy. (Motion to Dismiss at 3; Answer Para. 7.)

At the time the Chapter 11 cases commenced, the Debtors-Defendants employed in total about 1200 persons. (Debtors-Defendants' Memorandum at 5, the Plaintiff did not address this fact.) Mass layoffs associated with the bankruptcy occurred when stores were closed in late January/early February 1992. (Motion to Dismiss at 8; Plaintiff states that this fact is not relevant: Answer Para. 21.)

STANDARD FOR DISMISSAL OF A COMPLAINT

Fed.R.Civ.P. 12(b)(6) made applicable to bankruptcy proceedings by Fed. R.Bankr.P. 7012(b), provides for dismissal of a complaint for "failure to state a claim upon which relief can be granted." Since this motion occurs at an early stage in the litigation and forecloses factual discovery and presentation, it should be carefully scrutinized. In re Natale, 136 B.R. 344, 348 (Bankr. E.D.N.Y.1992). Fed.R.Civ.P. 12(b)(6) motions are valuable procedural tools, however, to eliminate fruitless litigation, saving litigants and the judiciary much time, effort, and expense. Id.

A motion to dismiss under Fed. R.Civ.P. 12(b)(6) examines only the legal sufficiency of the complaint and does not make any factual determination. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974); Geisler v. Petrocelli, 616 F.2d 636, 639 (2d Cir.1980); Wiener v. Napoli, 760 F.Supp. 278, 282 (E.D.N.Y. 1991). The standards, which courts use, to determine the legal sufficiency of a complaint under a Fed.R.Civ.P. 12(b)(6) motion are well-known. First, the court's inquiry is limited to the four corners of the complaint and any statements or documents, which are attached as exhibits or clearly incorporated by reference in the pleadings. LaBounty v. Adler, 933 F.2d 121, 123 (2d Cir.1991); Kopec v. Coughlin, 922 F.2d 152, 155 (2d Cir.1991); Goldman v. Belden, 754 F.2d 1059, 1065-66 (2d Cir.1985).

Second, the level of specificity required in pleading a cause of action is regulated by Fed.R.Civ.P. 8(a), made applicable to this proceeding by Fed.R.Bankr.P. 7008. This Rule requires that complaints need only provide "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2); Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 103, 2 L.Ed.2d 80 (1957). While the plaintiff need not set out in detail the facts upon which a claim is based, he must still allege sufficient facts to outline the cause of action. Doe v. St. Joseph's Hosp., 788 F.2d 411, 414 (7th Cir.1986); Albert v. Dun & Bradstreet, Inc., 91 F.Supp. 283, 284 (S.D.N.Y.1950). The pleader must disclose adequate information to support his claim for relief, not just a bare averment that he wants relief and is entitled to it. Nagler v. Admiral Corp., 248 F.2d 319, 324 (2d Cir.1957); In re Kelton Motors Inc., 121 B.R. 166, 188 (Bankr.D.Vt.1990).

Third, courts must also view the complaint in the light most favorable to the non-moving party. Scheuer, 416 U.S. at 236, 94 S.Ct. at 1686; Dahlberg v. Becker, 748 F.2d 85, 88 (2d Cir.1984), cert. denied, 470 U.S. 1084, 105 S.Ct. 1845, 85 L.Ed.2d 144 (1985). Essentially, courts will accept as true the pleader's description of events, as well as any reasonable inferences that may be drawn therefrom. Doe, 788 F.2d at 414; Wiener, 760 F.Supp. at 282; In re Nemko, Inc., 136 B.R. 334, 339 (Bankr.E.D.N.Y.1992).

Courts do not view motions to dismiss favorably and, therefore they are rarely granted. Nagler, 248 F.2d at 322; Kaiser Alum. & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982), cert. denied, 459 U.S. 1105, 103 S.Ct. 729, 74 L.Ed.2d 953 (1983). A court will only dismiss a complaint if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley, 355 U.S. at 45-46, 78 S.Ct....

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