Judge: William A. Crowfoot, Case: 23AHCV01009, Date: 2025-02-05 Tentative Ruling

Case Number: 23AHCV01009    Hearing Date: February 5, 2025    Dept: 3

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - NORTHEAST DISTRICT

On October 27, 2023, defendant Thrifty Payless, Inc. dba Rite Aid Pharmacy (“Defendant”) filed a notice informing the Court and plaintiff Paul Chew (“Plaintiff”) that Rite Aid Corporation and certain of its affiliates filed voluntary petitions for bankruptcy under Chapter 11. The bankruptcy petition caused this action to be automatically stayed because Defendant was one of Rite Aid Corporation’s affiliates who filed a voluntary petition.

On September 20, 2024, Defendant filed this Notice of Permanent Injunction and Discharge informing this Court and Plaintiff that the Bankruptcy Court issued an order confirming (“Confirmation Order”) a plan of reorganization (“Plan”) on June 28, 2024. The Plan went into effect on August 30, 2024.

On December 27, 2024, Defendant filed this motion to dismiss on the grounds that the Confirmation Order’s approval of the Plan extinguished Plaintiff’s claim and permanently enjoins Plaintiff from pursuing this action. Defendant relies on 11 U.S.C. § 542(a)(2) which describes a bankruptcy discharge as “operat[ing] as an injunction against the continuation of an action [against the debtor].”

The Court notes, however, that 11 U.S.C. § 1141(d)(1)(A) also provides, in relevant part, that the confirmation of a plan “discharges the debtor from any debt that arose before the date of such confirmation” except as otherwise provided in the plan or the confirmation order. Here, Paragraph 187 of the Confirmation Order states:

Notwithstanding anything to the contrary in the Plan or in this Confirmation Order, and for the avoidance of doubt, the Debtors [including Defendant] shall not be released from liability for any Tort Claims; provided, however, that any recovery for any such Tort Claim against the Debtors (or their Affiliates), including by way of settlement or judgment, shall be limited to the Litigation Trust Assets and shall in no circumstances extend to the Reorganized Debtors or the Wind Down Debtors, and no Person, Entity, or other party shall execute, garnish, or otherwise attempt to collect any recovery on account of a Tort Claim from any assets other than the Litigation Trust Assets and the GUC Equity Pool, except to the extent and only as necessary to trigger any insurance carrier’s obligation to pay such liability.

For the avoidance of doubt, and notwithstanding the foregoing, no Holder of a General Unsecured Claim, including a Tort Claim, that does not opt in to the Third-Party Release shall be a Releasing Party or shall otherwise be deemed to grant the Third-Party Release.

          Based on this language in the Confirmation Order, the Court cannot agree with Defendant’s conclusion that Plaintiff’s action must be dismissed due to the Confirmation Order and bankruptcy proceedings. Instead, Plaintiff appears to be a holder of a tort claim that was not released by the Plan; though his recovery may be limited to certain assets, he is not prohibited from maintaining his action.

Lastly, the Court notes that Plaintiff attempted to file an amended complaint on December 3, 2024, even though the amount of time granted for him to file an amended pleading had expired. Plaintiff also did not serve a copy of the amended pleading on Defendant. Therefore, on its own motion, the Court STRIKES the amended pleading. (Code Civ. Proc., § 436.)

In light of the foregoing, Defendant’s motion to dismiss is DENIED, without prejudice to bringing a motion to strike/dismiss on other grounds.

Dated this 5th day of February 2025

Parties who intend to submit on this tentative must send an email to the Court at ALHDEPT3@lacourt.org indicating intention to submit on the tentative as directed by the instructions provided on the court website at www.lacourt.org. Please be advised that if you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear at the hearing and argue the matter. Unless you receive a submission from all other parties in the matter, you should assume that others might appear at the hearing to argue. If the Court does not receive emails from the parties indicating submission on this tentative ruling and there are no appearances at the hearing, the Court may, at its discretion, adopt the tentative as the final order or place the motion off calendar.