Vorel

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

In re: Chapter 7

CHRISTMAS TREE SHOPS, LLC, et Case No. 23-10576 (TMH)

al.,1

Debtors. (Jointly Administered)

AINSLIE H. VOREL, Individually and

on behalf of all others similarly Adv. Proc. No. 25-52122 (TMH)

situated,

Plaintiff,

v.

MARC SALKOVITZ and PAMELA

SALKOVITZ,

Defendants.

MARC SALKOVITZ and PAMELA

SALKOVITZ,

Third-Party Plaintiffs,

v.

HILCO TRADING COMPANY D/B/A

HILCO GLOBAL; HILCO

MERCHANT RESOURCES, LLC;

RESTORE CAPITAL, LLC; and IAN

FREDERICKS,

Third-Party Defendants.

1 The Debtors in these chapter 7 cases, along with the last four digits of each

Debtor’s federal tax identification number are as follows: Christmas Tree Shops,

LLC (1207), Handil, LLC (1150), Handil Holdings, LLC (2891), Salkovitz Family

Trust 2, LLC (8773), and Nantucket Distributing Co., LLC (1640). The notice

address for the Debtors is 64 Leona Drive, Middleboro, Massachusetts 02346.

MEMORANDUM OPINION REGARDING THIRD-PARTY DEFENDANTS’

MOTION TO DISMISS THIRD-PARTY COMPLAINT

The third-party defendants have moved to dismiss the third-party complaint

brought by defendants/third-party plaintiffs.2 For the reasons that follow, the court

grants the motion and dismisses the third-party complaint without prejudice.

I. Background

Christmas Tree Shops (“CTS”) and certain of its affiliates filed for bankruptcy

in 2023. As part of their efforts to reorganize, the debtors entered into a court-

approved agreement with Hilco Merchant Resources, LLC (“HMR”) under which

HMR would act as a consultant and assist with the closing of several of the debtors’

stores.3 The debtors also entered into a credit agreement with ReStore Capital, LLC

(“ReStore”), an affiliate of HMR, under which ReStore received a senior secured,

super-priority lien on debtors’ assets.4

The debtors defaulted on this loan agreement and CTS sent notices advising

the plaintiff and other employees that, unless the debtors were able to complete a

2 Mot. Dismiss Adversary Proc. [Adv. D.I. 4].

3 Final Order (I) Authorizing, on a Final Basis, the Debtors to Assume the Store

Closing Agreement, (II) Authorizing and Approving Closing Sales Free and Clear of

All Liens, Claims, and Encumbrances, and (III) Granting Related Relief [Bankr.

D.I. 201] (Store Closing Order).

4 Final Order Pursuant to 11 U.S.C. §§ 105, 361, 362, 363, 364, 503 and 507 (I)

Authorizing the Debtors to Obtain Senior Secured Superpriority Postpetition

Financing; (II) Granting (A) Liens and Superpriority Administrative Expense

Claims and (B) Adequate Protection to Certain Prepetition Lenders; (III)

Authorizing Use of Cash Collateral; (IV) Modifying the Automatic Stay; and (V)

Granting Related Relief [Bankr. D.I. 229].

sale, the stores would liquidate and employees would begin to be discharged one

week later.5 The debtors were unable to complete a sale, and all employees were

terminated shortly thereafter.6

The plaintiff then brought this action on behalf of herself and similarly

situated employees who were employed by CTS in New Jersey and terminated in

the above-described circumstances against Marc and Pamela Salkovitz, who served

as the executive chairman and CEO of CTS, respectively.7 The complaint alleges

violations of the Millville Dallas Airmotive Plant Job Loss Notification (WARN) Act

for failing to provide severance pay and to provide the mandatory amount of notice

prior to beginning mass layoffs.8

The Salkovitzes answered the complaint and brought a third-party complaint

impleading HMR; ReStore; Hilco Global, the parent company of HMR and ReStore;

and Fredericks, the COO and president of HMR. The third-party complaint alleges

that the third-party defendants had the sole authority to control employment

decisions.9 For each third-party defendant, the Salkovitzes bring a claim for

contribution to the extent that the Salkovitzes are found liable.10

The third-party defendants have filed a motion to dismiss the third-party

complaint because no claim for contribution exists for WARN violations under New

5 Am. Complaint 7 [Adv. D.I. 1].

6 Id. at 8.

7 Id.

8 Id. at 11–13.

9 Am. Answer, Vorel v. Salkovitz, 25-cv-00984-MN (No. 35).

10 Id. at 18–20.

Jersey law, the third-party complaint is procedurally impermissible under Federal

Rule of Procedure 14, the Store Closing Order precludes liability against HMR,11

and the Salkovitzes failed to allege facts sufficient to state a claim against Hilco

Global and Fredericks. Briefing is complete and the court heard oral argument on

March 9, 2026.

II. Standard of Review

Under Federal Rule of Civil Procedure 12b(6), a party may move for the

dismissal of a claim against them for the failure to state a claim. To survive such a

motion, the complaint “must contain sufficient factual matter, accepted as true, to

‘state a claim to relief that is plausible on its face.’”12 In evaluating the sufficiency

the complaint, the court must accept all factual allegations as true and draw every

favorable inference for the plaintiff.13 However, “threadbare recitals of the elements

of a cause of action, supported by mere conclusory statements,” or facts that only

allow the inference of “the mere possibility of misconduct” are insufficient.14

11 In their memorandum of law in support of the motion, the third-party defendants

argue that the order precludes these claims against all third-party defendants, see

Mem. Supp. Mot. Dismiss Third-Party Compl. 15 [Adv. D.I. 5], but in their reply to

the Salkovitzes’ response, it is unclear whether they maintain this position for all

third-party defendants or for HMR alone, see Third-Party Defs.’ Reply in Supp. Mot.

Dismiss Third-Party Compl. 10 [Adv. D.I. 14]. While the court does not reach an

analysis of this issue, it is not convinced that, if any party is shielded from liability

from these claims by the Store Closing Order, this shield would extend to parties

other than HMR.

12 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly,

550 U.S. 544, 570 (2007)).

13 Malleus v. George, 641 F.3d 560, 563 (3d Cir. 2011), as amended (June 6, 2011).

14 Iqbal, 556 U.S. at 678–79.

III. Analysis

Under Federal Rule of Civil Procedure 14, a third-party complaint may only

be brought by a defendant against a third-party defendant where the third-party

defendant may be liable to the defendant/third-party plaintiff.15 This includes

instances where the third-party defendant may owe the defendant indemnification

or contribution.16 Where no such liability exists, the claim must be dismissed.17

Here, the complaint only alleges that the third-party defendants are liable to

the Salkovitzes for claims for contribution relating to the WARN claims against the

Salkovitzes.18 Claims for contribution, such as these, must be brought under the

Joint Tortfeasors Contribution Law (the “JTCL”)19 because the state does not

recognize a common law right to contribution.20

The JTCL allows for a right of contribution among joint tortfeasors, which it

defines as “two or more persons jointly or severally liable in tort for the same injury

to person or property.”21 The Salkovitzes argued for the first time at oral argument

that the definition is more expansive than the JCTL, read alone, suggests because it

15 Apple Am. Grp., LLC v. GBC Design, Inc., 294 F. Supp. 3d 414, 420 (W.D. Pa.

2018).

16 United Nat. Ins. Co. v. Indian Harbor Ins. Co., 306 F.R.D. 153, 154–55 (E.D. Pa.

2015).

17 See Cnty. of Hudson v. Janiszewski, 351 F. App'x 662, 666 (3d Cir. 2009).

18 See Am. Answer 18–20, Vorel v. Salkovitz, 25-cv-00984-MN (No. 35). The

Salkovitzes argue that they also have a claim for indemnification, but this claim

was not brought in the complaint and is not squarely for before the court, so the

court offers no opinion as to whether it is allowed under New Jersey law. See Hr’g

Tr. 28:9–11 [Adv. D.I. 22].

19 N.J.S.A. 2A:53A-1, et seq.

20 Rockaway v. Klockner & Klockner, 811 F. Supp. 1039, 1061 (D.N.J. 1993).

21 N.J.S.A. 2A:53A-1.

must be “read in connection with the New Jersey contributory negligence act or the

contribution for fault act.”22 The court was unable to find reference to acts under

these names, but the JCTL is read in tandem with the Comparative Negligence

Act,23 which determines the percentage that must be paid by each tortfeasor.24

However, this act does not apply where the parties are not joint tortfeasors under

the JCTL.25 The definition, then, presents two elements for joint tortfeasors under

the JTCL: (1) they must be jointly or severally liable in tort, and (2) the liability

must be for the same injury to person or property.

The parties here have both presented well-supported arguments addressing

the first element but have spent considerably less energy addressing the second. At

oral arguments, the Salkovitzes explained that “[i]n terms of a damage suffered by

person or property, the injury here is the alleged failure to pay what’s required

under the WARN statute . . . .”26 If such alleged failure to pay cannot be classified

as an “injury to person or property” under New Jersey law, then a claim for

contribution is unavailable to the third-party plaintiffs.27 In tort contexts, injuries

to person or property are distinguished from economic injuries for which liability

22 Hr’g Tr. 16:13–14.

23 N.J.S.A. § 2A:15-5.1, et seq.

24 See Glassman v. Friedel, 265 A.3d 84, 95–96 (N.J. 2021).

25 Ramos v. Browning Ferris Indus. of S. Jersey, Inc., 510 A.2d 1152, 1160–61 (N.J.

1986).

26 Hr’g Tr. 18:6–8 [Adv. D.I. 22].

27 See N.J.S.A. 2A:53A-1; see also Walsh Sec., Inc. v. Cristo Prop. Mgmt., Ltd., No.

97-CV-3496 DRD, 2009 WL 5064757, at *5 (D.N.J. Dec. 16, 2009) (“[F]or

contribution purposes, the crux of the analysis of whether a claim is grounded in

tort or contract must focus on the nature of the injury inflicted and the remedy

sought.”).

can be more limited.28 Unlike injuries to personal or property, economic injuries do

not involve physical damage.29

Where, as here, there is no state case law addressing a question under the

WARN Act, “we look to federal WARN Act regulations and case law for guidance in

interpreting the New Jersey WARN Act.”30 Courts have repeatedly found that

injuries under the federal WARN statute are economic injuries.31 In a case

discussing a similar type of injury, a New Jersey district court ruled that a claim

under the New Jersey Wage Payment Act32 seeking unpaid commissions was not

the type of claim under which contribution could be sought under the NJTL because

“[t]here [was] no allegation of personal injury by any party.”33 Here, the damage is

likewise economic only, with no physical damage to person or property alleged. A

claim for contribution is not available under New Jersey law for the claims in this

28 See Trs. of Princeton Univ. v. Tod Williams Billie Tsien Architects, LLP, No.

CV1921248ZNQLHG, 2021 WL 9667968, at *5 (D.N.J. Sept. 29, 2021); see generally

Dean v. Barrett Homes, Inc., 8 A.3d 766, 771–72 (N.J. 2010) (describing the court’s

adoption of the “economic loss rule” for strict liability actions, which was

subsequently adopted by the legislator in the Products Liability Act).

29 E. River S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 870 (1986)

(“[S]ince by definition no person or other property is damaged, the resulting loss is

purely economic.”); see also Restatement (Third) of Torts: Liab. for Econ. Harm § 2

cmt. a (A.L.I. 2020).

30 DeRosa v. Accredited Home Lenders, Inc., 22 A.3d 27, 36 (N.J. Super. Ct. App.

Div. 2011).

31 See, e.g., Luczkovich v. Melville Corp., 911 F. Supp. 208, 210 (E.D. Va. 1996) (“A

WARN Act injury is an economic injury.”); Staudt v. Glastron, Inc., 92 F.3d 312, 315

(5th Cir. 1996).

32 N.J.S.A. 34:11-4.1, et seq.

33 Meyers v. Heffernan, No. CIV.A. 12-2434 MLC, 2014 WL 3343803, at *12 (D.N.J.

July 8, 2014).

complaint. Because this finding is sufficient grounds to dismiss the third-party

complaint, the court’s inquiry is complete here.

IV. Conclusion

The Salkovitzes have not stated a claim against the third-party defendants.

The third-party complaint is therefore dismissed without prejudice to the

Salkovitzes’ ability to seek to amend the third-party complaint under Federal Rule

of Bankruptcy Procedure 7015 and Federal Rule of Civil Procedure 15(a)(2).

______________________________________

Dated: March 17, 2026

Thomas M. Horan

Wilmington, Delaware

United States Bankruptcy Judge