Case Number: BC473765 Hearing Date: May 05, 2014 Dept: 32

CASE NAME: Franklin v. American Airlines, Inc.
CASE NO.: BC473765
HEARING DATE: 05/05/14
DEPARTMENT: 32
SUBJECT: Demurrer to Plaintiff’s Complaint
MOVING PARTY: Defendant, American Airlines, Inc.
RESP. PARTY: Plaintiff, William Franklin

TENTATIVE RULING

Defendant’s Demurrer to Plaintiff’s Complaint is SUSTAINED WITHOUT LEAVE TO AMEND.

ANALYSIS

Defendant’s Request for Judicial Notice – GRANTED.

Demurrer

Defendant American Airlines, Inc. demurs to Plaintiff’s entire Complaint pursuant to CCP § 430.10(e) on the ground that it fails to state facts sufficient to constitute a cause of action, arguing that Plaintiff’s claims are barred by the “Bar Date Order” from Defendant’s bankruptcy case.

“Discharge in bankruptcy of a cause of action asserted in state court litigation is a defense.” Flores v. Kmart Corp. (2012) 202 Cal.App.4th 1316, 1324. “Generally, state and federal courts have concurrent jurisdiction to decide whether a claim within a discharge order is a discharged debt. [citations omitted] Thus, a state court may consider the applicability of a bankruptcy discharge when it is raised as a defense to an action.” Id. at p. 1325.

“Once a reorganization plan is confirmed, all of the debtor’s debts that arose before the confirmation date are discharged.” Id. at p. 1326. “The discharge order releases a debtor from personal liability with respect to any discharged debt by voiding any past or future judgments on the debt and by operating as an injunction to prohibit creditors from attempting to collect or to recover the debt. . . . . [citations omitted] Any actions taken including state judicial decrees in violation of the bankruptcy injunction are void.” Id. at pp. 1326-27.

“In order for the demurrer to be sustained, the first amended complaint and the judicially noticeable reorganization plan must demonstrate plaintiffs’ claims are in fact barred by the bankruptcy court’s discharge order.” Id. at p. 1324. “If it is unclear whether the reorganization plan and discharge order are enforceable against plaintiffs, the demurrer must be overruled.” Id. at pp. 1324-25.

Here, Plaintiff filed his Complaint on November 17, 2011. Defendant then filed a voluntary petition seeking bankruptcy protection under Chapter 11 on November 29, 2011. (Exhibit A.) On December 7, 2011, this Court stayed this civil proceeding, pending Defendant’s Bankruptcy. On May 4, 2012, the bankruptcy court released an Order establishing July 16, 2012 as the deadline to file proof of all claims not covered by one of the order’s exceptions and barring claims whose proof was not timely filed. (Exhibit B.)

Plaintiff does not argue that he filed a Proof of Claim but argues instead that he was not required to. Under the May 4, 2012 order, former employees are not required to file a proof of claim “solely with respect to any prepetition Claim based on the payment of wages, salaries, employee medical benefits, or other benefits to be paid pursuant to the Order. . . .” (Exhibit B, pp. 4-6.) While Plaintiff argues that his “action primarily seeks to recover wages improperly denied Plaintiff due to his discriminatory termination”, his Complaint seeks damages. Plaintiff’s prayer for relief includes general and special compensatory damages, statutory damages, exemplary and punitive damages, injunctive relief, attorney’s fees, costs and such further relief the Court deems just and proper. (Complaint, p. 12.) Further, as Defendant points out, the exception applies to the payment of wages which were authorized to be paid pursuant to the Bankruptcy Court order. Plaintiff does not argue that his claims for damages (even if considered “wages”) were authorized to be paid pursuant to the Bankruptcy Court order.

Plaintiff also argues that, pursuant to 11 U.S.C. § 523(a), his claim is not barred because it alleges willful and malicious injury, an exception to discharge. However, as Defendant points out, this section applies to “individual” debtors, which Defendant is not, and Plaintiff fails to show how § 523 applies to a corporation. Finally, Plaintiff argues that, pursuant to 11 U.S.C. § 101(5), his claim for injunctive relief in the form of reinstatement was not discharged by Defendant’s bankruptcy as this is an equitable remedy. However, “[an] example of a ‘claim’ is a right to an equitable remedy that can be satisfied by an ‘alternative’ right to payment.” In re Continental Airlines (3d Cir. 1997) 125 F.3d 120, 133. For example, bankruptcy courts have “held that money damages are a disfavored, yet nonetheless alternative, remedy to reinstatement in employment discrimination cases, including those under the ADA.” Rederford v. U.S. Airways, Inc. (1st Cir. 2009) 589 F.3d 30, 37. Here, as Defendant argues, Plaintiff’s alternative remedy to reinstatement is economic damages in the form of future wages.

Therefore, Defendant’s demurrer is SUSTAINED WITHOUT LEAVE TO AMEND.