Professional Documents
Culture Documents
JONES DAY
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Telephone: (216) 586-3939
Facsimile: (216) 579-0212
David G. Heiman
JONES DAY
1420 Peachtree Street, N.E.
Suite 800
Atlanta, Georgia 30309
Telephone: (404) 521-3939
Facsimile: (404) 581-8330
Jeffrey B. Ellman
This Stipulation and Agreed Order (the "Stipulation and Agreed Order") is made
by and between (i) Old Carco LLC f/k/a Chrysler LLC ("Old Carco") and its affiliated debtors
and debtors in possession (collectively with Old Carco, the "Debtors"); (ii) Adriana Mraz, the
Estate of Richard Mraz, Addison Mraz, Joe Lopez and Roy Lopez (collectively, the "Plaintiffs");
(iii) Safeco Insurance Company of America ("Safeco"); and (iv) the official committee of
RECITALS
A. On April 30, 2009 (the "Petition Date"), Old Carco and 24 of its affiliated
Debtors commenced their reorganization cases by filing voluntary petitions for relief under
chapter 11 of title 11 of the United States Code (the "Bankruptcy Code"). On May 19, 2009,
Debtor Alpha Holding LP commenced its reorganization case by filing a voluntary petition under
chapter 11 of the Bankruptcy Code. By orders of the Court (Docket Nos. 97 and 2188), the
Debtors' chapter 11 cases have been consolidated for procedural purposes only and are being
administered jointly. The Debtors are authorized to continue to operate their businesses and
manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the
Bankruptcy Code.
B. On June 2, 2009, the Plaintiffs filed the Motion of Adriana Mraz, Estate of
Richard Mraz, Addison Mraz, Joe Lopez, and Roy Lopez for Relief from the Automatic Stay to
Allow Appeal to Continue (Docket No. 3326) (the "Mraz Lift Stay Motion"). As set forth in the
Mraz Lift Stay Motion, following the death of Richard Mraz in an automobile accident, the
to Old Carco) ("DCC") captioned as Adriana Mraz, et al. v. DaimlerChrysler Corp., et al., Case
No. BC-332487 (the "Prepetition Lawsuit") in the Superior Court of California for the County of
Los Angeles (the "Trial Court"), alleging, among other things, that Old Carco was negligent in
the design, engineering, manufacture and distribution of a certain 1992 Dodge Dakota truck,
which negligence allegedly resulted in the death of Richard Mraz. On May 11, 2007, following
a jury trial, the Trial Court entered judgment for the Plaintiffs in the Prepetition Lawsuit in the
the Second District Court of Appeal for the State of California (the "Appellate Court").
The Prepetition Lawsuit and the Appeal are referred to herein collectively as the "Prepetition
Litigation."
July 13, 2007, Safeco Insurance Company of America ("Safeco") posted a supersedeas bond
(Bond No. 6388133) in the amount of $81,587,976.93 (the "Bond"). Safeco is holding
approximately $111 million in collateral provided by the Debtors (the "Safeco Collateral") on
account of the Bond and other bonds issued by Safeco for the Debtors.
E. The Appeal is subject to the automatic stay imposed by section 362 of the
Bankruptcy Code (the "Stay"). On the Petition Date, the Debtors filed a notice of suggestion of
bankruptcy in the Appeal, and the Appellate Court stayed the proceedings therein. As of the
Petition Date, the Appeal was fully briefed. Pursuant to the Mraz Lift Stay Motion, the Plaintiffs
sought relief from the Stay to allow the Appeal (and any subsequent proceedings) to proceed to
conclusion.
F. On July 9, 2009, the Debtors filed their Objection of Debtors and Debtors
in Possession to Request of Adriana Mraz, Estate of Richard Mraz, Addison Mraz, Joe Lopez
and Roy Lopez for Relief from Automatic Stay (Docket No. 4562) (the "Debtors' Objection").
In the Debtors' Objection, the Debtors, among other things, requested that the Court deny the
Mraz Lift Stay Motion, provided that, if the Debtors were unable to reach a consensual
resolution with the Plaintiffs, the Court could reconsider the Mraz Lift Stay Motion at the
omnibus hearing scheduled in these cases on September 24, 2009. The Debtors' Objection
further proposed that, in the event the Court were inclined to grant the Plaintiffs' relief from the
Stay, such relief be limited to the completion of the proceedings currently pending before the
Appellate Court.
Safeco Insurance Company of America to Motion of Adriana Mraz, Estate of Richard Mraz,
Addison Mraz, Joe Lopez, and Roy Lopez for Relief from the Automatic Stay to Allow an
Appeal to Go Forward (Docket No. 4558) (together with the Debtors' Objection,
the "Objections"), seeking to preserve its asserted rights with respect to the Bond.
H. On July 22, 2009, the Court entered an Order Granting Limited Relief
from the Automatic Stay in Connection with Motion of Adriana Mraz, Estate of Richard Mraz,
Addison Mraz, Joe Lopez and Roy Lopez (Docket No. 4839) (the "Original Order"). The
Original Order partially resolved the Mraz Lift Stay Motion by modifying the Stay solely to the
extent necessary to (1) allow the Appellate Court to schedule oral argument on the Appeal and
(2) permit the Plaintiffs and Safeco (in consultation with the Debtors and the Creditors'
Committee) to initiate and participate in settlement discussions with respect to the Prepetition
Litigation. In addition, the Original Order provided that the hearing on the remaining relief
sought by the Mraz Lift Stay Motion and the Objections was adjourned and would be conducted,
schedule oral argument on the Appeal, finding that "[b]ecause the bankruptcy court's order does
not allow this court to completely dispose of the [Appeal], at this time it would be premature to
schedule oral argument." Order of Appellate Court, entered on docket of Appeal on
August 6, 2009, at 1.
J. The Debtors, the Plaintiffs, Safeco and the Creditors' Committee have
agreed to resolve the Mraz Lift Stay Motion, the Objections and the Prepetition Litigation as set
forth below.
STIPULATION
NOW, THEREFORE, it is hereby stipulated and agreed by and between the parties to
1. In resolution of the Mraz Lift Stay Motion and the Objections, and in
resolution and full satisfaction of the Prepetition Litigation, Safeco's obligations under the Bond
and any and all claims or causes of action that the Plaintiffs may have against the Debtors or
Safeco, the Plaintiffs shall have a general unsecured nonpriority claim against Old Carco in the
amount of $24,000,000 (the "General Unsecured Claim"), which shall be fully satisfied by the
payment of $24,000,000, plus any interest accruing under paragraph 4 below (the "Settlement
2. The Plaintiffs agree that the Settlement Payment shall fully resolve and
satisfy any and all prepetition and postpetition claims, demands or liabilities, known or unknown,
arising from or in connection with the Prepetition Litigation. Therefore, upon payment of the
Settlement Payment, the Plaintiffs fully release and discharge the Debtor and Safeco and their
respective subsidiaries and affiliates, and any agents, servants, employees, representatives,
officers, directors and attorneys of any of the foregoing and the Creditors' Committee, from and
against any and all claims, demands or liabilities arising from or in connection with the
Prepetition Litigation and the Bond. Consequently, upon payment of the Settlement Payment,
the Plaintiffs waive all rights under California Civil Code § 1542, which provides: "A general
release does not extend to claims that the creditor does not know or suspect to exist in his or her
favor at the time of executing the release, which if known by him or her must have materially
Payment. Accordingly, upon Safeco's exercise of such right, Safeco shall not have any claim
against the Debtors or the Creditors' Committee on account of the Settlement Payment.
shall make the Settlement Payment by wire transfer to the "Lieff, Cabraser, Heimann &
Bernstein LLP Attorney Client Trust Account" (the "Trust Account"), pursuant to wire transfer
instructions to be provided to Safeco by counsel for Plaintiffs. In the event that the Settlement
Payment is not paid in full by the Settlement Payment Date, simple interest shall accrue at an
5. Prior to the Settlement Payment Date, the Plaintiffs shall furnish Safeco
with all information necessary for it to comply with the requirements of (a) 26 U.S.C. §§ 6041
and 6045 and (b) 26 C.F.R. §§ 1.6041-1 and 1.6041-6, including, but not limited to, a fully
completed IRS Form 1099-MISC in form and content suitable for filing by Safeco with the
Internal Revenue Service ("IRS"), together with such similar reporting forms as shall be required
under the laws or regulations of any state having jurisdiction relating to such payments,
including but not limited to the State of California. The Plaintiffs' undersigned counsel signing
on behalf of Lieff, Cabraser, Heimann & Bernstein LLP warrants and represents that (a) he/she is
duly authorized to receive all monies to be paid by Safeco under the Bond to or for the Plaintiffs
in the Trust Account as provided in this Stipulation and Agreed Order, (b) he/she will promptly
and properly hold and distribute all such monies in the appropriate manner to all Plaintiffs,
attorneys and others (if any) entitled thereto and (c) he/she shall fully comply with all reporting
requirements of the IRS and of the aforesaid states under the statutes and regulations described in
this paragraph, including, but not limited to, 26 C.F.R. § 1.6045-5 (if applicable to such counsel).
6. Within two business days of the later of (a) Plaintiffs' receipt of the
Settlement Payment and (b) the date the Stipulation and Agreed Order becomes a final order, the
Plaintiffs shall, at their own cost and expense, file with the Trial Court and/or the Appellate
Court (as appropriate) (a) an Acknowledgement of Full Satisfaction of Judgment in the form
attached hereto as Exhibit A and (b) an Exoneration of Bond with respect to the Bond in the form
attached hereto as Exhibit B. Within two business days of the filing and service by Plaintiffs of
the Acknowledgement of Full Satisfaction of Judgment and Exoneration of Bond, the Debtors
shall, at their own cost and expense, file with the Appellate Court a Request for Dismissal of
Appeal in the form attached hereto as Exhibit C. The Stay is hereby modified solely for the
limited purpose of allowing Plaintiffs and the Debtors to make the filings required by this
paragraph.
7. Except to the extent expressly set forth herein, this Stipulation and Agreed
Order shall not (a) affect, alter, expand or diminish, and shall not be deemed or construed to
effect a waiver of, any rights of the Debtors, the Plaintiffs, the Creditors' Committee or Safeco
with respect to the Debtors or these bankruptcy cases under applicable federal or state law,
whether arising under statute, common law, the Bond or other bonds posted by Safeco and any
collateral supporting such bonds, indemnity agreements or any other agreements, or otherwise,
and whether by way of equitable subrogation, equitable assignment, equitable lien or otherwise;
or (b) be deemed or construed to create any further rights of the Debtors or Safeco with respect
to any matters related to the Prepetition Litigation, including, but not limited to the Bond.
8. Any modification, alteration or amendment of this Stipulation and Agreed
Order in whole or in part shall be subject to the further approval of the Court. No statement
made or action taken in the negotiation of this Stipulation and Agreed Order may be used by any
party for any purpose whatsoever. In the event this Stipulation and Agreed Order is not
approved and entered by the Court, it shall be null and void in its entirety, and neither its
execution, any provision contained herein (including, without limitation, the provisions of
paragraph 1 relating to the General Unsecured Claim), nor its submission to the Court shall
jurisdiction of the Court for any purpose whatsoever, and the parties to this Stipulation and
Agreed Order shall retain all rights pertaining to the Prepetition Litigation, the Bond, and the
Mraz Lift Stay Motion as if this Stipulation and Agreed Order was never executed by the parties.
10. This Stipulation and Agreed Order shall be effective upon its entry by the
Court.
11. The entry of this Stipulation and Agreed Order by the Court shall
constitute the Court's determination that (a) the terms of this Stipulation and Agreed Order
satisfy the factors set forth in In re Iridium Operating LLC, 487 F. 3d 452 (2d Cir. 2007) and are,
therefore, fair, reasonable and appropriate, are in the best interests of the Debtors' estates and
creditors and constitute a proper exercise of the Debtors' business judgment; (b) the agreements
herein are approved pursuant to Rule 9019(a) of the Federal Rules of Bankruptcy Procedure; and
(c) the Debtors are authorized to take such actions as are necessary or appropriate to implement
parties in respect of the subject matter hereof and may be signed in counterpart originals.
13. Each person signing this Stipulation and Agreed Order represents and
warrants that this Stipulation and Agreed Order is duly authorized by and binding on the party to
14. The Court shall retain jurisdiction to hear and determine all matters arising
IT IS SO ORDERED.