General Motors LLC v. Manville Personal Injury Settlement Trust (In re Johns-Manville Corp.)

571 B.R. 69, 2017 Bankr. LEXIS 2063, 64 Bankr. Ct. Dec. (CRR) 116
CourtUnited States Bankruptcy Court, S.D. New York
DecidedJuly 24, 2017
DocketCase No. 82-11656 (CGM); Adv. No. 17-01032 (CGM)
StatusPublished

This text of 571 B.R. 69 (General Motors LLC v. Manville Personal Injury Settlement Trust (In re Johns-Manville Corp.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
General Motors LLC v. Manville Personal Injury Settlement Trust (In re Johns-Manville Corp.), 571 B.R. 69, 2017 Bankr. LEXIS 2063, 64 Bankr. Ct. Dec. (CRR) 116 (N.Y. 2017).

Opinion

MEMORANDUM DECISION ISSUING DECLARATORY RELIEF AND ENJOINING PLAINTIFF’S CLAIMS AGAINST DEFENDANTS

CECELIA G. MORRIS, CHIEF UNITED STATES BANKRUPTCY JUDGE

Plaintiff General Motors LLC (“Plaintiff’ or “GM”) filed this adversary proceeding against the Manville Personal Injury Settlement Trust, Edward D. Robertson, Jr., Kirk P. Watson, and Mark A. Peterson, in their capacities as trustees (the “Manville Trust” or collectively “Defendants”). Am. Compl., ECF No. 5.1 The complaint seeks a declaratory order that GM’s state court action against the Man-ville Trust pending before the Henry County Court of Common Pleas in Ohio, General Motors LLC v. Anna R. Bolen, et al., Case No. 16CV0089 (the “Ohio Action”), is not enjoined by the channeling injunction contained in the Johns-Manville Corporation’s chapter 11 plan of reorganization (“Manville Plan”) and this Court’s accompanying orders and corresponding confirmation order (“Confirmation Order”). Am. Compl. ¶26. The Defendants filed a motion to dismiss the complaint, arguing this Court should abstain from issuing a declaratory judgment on prudential grounds. Mot. Dismiss 13-14, ECF No. 12 (hereinafter “MTD”). In the alternatives Defendants argue that the Manville Plan’s channeling injunction and the 1995 Trust Distribution Procedures (“TDP”) bar GM’s Ohio Action against the Manville Trust. Id. at 15-21. In conformity with the ruling this Court issued from the bench at the July 20, 2017 hearing, and for the reasons stated below, this Court finds that GM’s Ohio Action against the Defendants is enjoined.

[72]*72Jurisdiction

This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1334(a), 28 U.S.C. § 157(a) and the Standing Order of Reference signed by Chief Judge Loretta A. Preska dated January 31, 2012. This is a “core proceeding” under 28 U.S.C. § 157(b)(2)(A), where matters concerning the administration of the estate are involved. Additionally, this Court retains jurisdiction under the Manville Confirmation Order to clarify its prior orders and to enforce the injunctions issued in the Man-ville bankruptcy case. Decl. Jason C. Rubinstein Ex. A ¶28, ECF No. 14-1 (hereinafter “Confirmation Order”); Travelers Indem. Co. v. Bailey, 557 U.S. 137, 151, 129 S.Ct. 2195, 174 L.Ed.2d 99 (2009) (citations omitted).

Background

Johns-Manville Bankruptcy

The history of the Johns-Manville case could easily be the subject of a multi-volume treatise. Without delving into the minutiae, the bankruptcy case can be boiled down to the following: Johns-Man-ville, once the largest producer and supplier of asbestos, filed for bankruptcy in 1982 along with many affiliated and subsidiary entities. GAF Corp. v. Johns-Manville Corp. (In re Johns-Manville Corp.), 26 B.R. 405, 407 (Bankr. S.D.N.Y 1983), aff'd sub nom. Johns-Manville Corp. v. Asbestos Litig. Grp. (In re Johns-Manville Corp.), 40 B.R. 219 (S.D.N.Y. 1984); In re Johns-Manville Corp., 97 B.R. 174, 176 (Bankr. S.D.N.Y. 1989). The filing was due to the overwhelming threat of asbestos-injury related litigation and the refusal of Manville’s insurance carriers to payout on Manville’s insurance coverage. In re Johns-Manville Corp., 36 B.R. 743, 750 (Bankr. S.D.N.Y. 1984).

One of the largest concerns of the bankruptcy case was how to treat the claims of future asbestos victims who had not yet manifested symptoms of asbestos-related disease. In re Johns-Manville Corp., 36 B.R. 743, 745-46 (Bankr. S.D.N.Y. 1984), aff'd, 52 B.R. 940 (S.D.N.Y. 1985). Instead of simply discharging their claims, the Johns-Manville bankruptcy created two separate asbestos trusts that existed solely to provide a recovery to asbestos claimants. Kane v. Johns-Manville Corp., 843 F.2d 636, 640 (2d Cir. 1988); In re Johns-Manville Corp., 68 B.R. 618, 621 (Bankr. S.D.N.Y. 1986); In re Johns-Manville Corp., 97 B.R. 174, 176-77 (Bankr. S.D.N.Y. 1989). In an attempt to provide a recovery for all asbestos victims, and not merely the first ones to show up, the Man-ville Confirmation Order specifically finds that the “permanent injunction provided in Article IX, paragraph 9.2.A(3) of the Plan and which is set forth in paragraph 29 [of the Confirmation Order], is essential to the viability of the business operations of the Debtors and to the successful implementation of the Plan.” Confirmation Order ¶ (aa).

The Confirmation Order also finds that “[t]he Court has the equitable and inherent power and authority to channel claims to a specific res and may limit the direct or indirect prosecution of such claims against the Debtors and prohibit parties in interest from attempting to circumvent the Plan and the orders of this Court.” Confirmation Order ¶ (d). The Court further retains the right to “enjoin or otherwise limit future litigation associated with the Cases which could undermine and frustrate the Plan or the Debtors’ reorganization,” Confirmation Order ¶ (e).

The Confirmation Order confirms the Manville Plan, and also approves all of the agreements and documents that are attached as exhibits to the Plan, specifically authorizing the terms of each and every one of them. Among the agreements and [73]*73documents approved by the Confirmation Order are the Manville Personal Injury Settlement Trust (“Manville Trust”) and the Property Damage Settlement Trust (“PD Trust”). Confirmation Order ¶ (2)(a). The Manville Debtors were authorized to take any steps necessary to implement all of the terms of the Plan and the approved agreements and documents. Confirmation Order ¶ (3).

The Confirmation Order and Manville Plan create a channeling injunction that channels and preserves all future asbestos claims to the Manville Trust and PD Trust. The Confirmation Order enjoins all “Persons” from taking any of the specifically enumerated actions, “for the purpose of, directly or indirectly, collecting, recovering or receiving payment of, on or with respect to any Claim, Interest or Other Asbestos Obligation .... ” Confirmation Order ¶ (29). “Person” is defined in the Manville Plan to include “any individual, corporation, partnership, joint venture, association, trust, unincorporated organization or government or any agency or political subdivision thereof.” Decl. Jason C. Ruben-stein Ex. B at 38, ECF No. 14-2 (hereinafter cited as the “Manville Plan”). The channeling injunction prevents all “Persons” from

Commencing, conducting, or continuing in manner, directly or indirectly, any suit, action or other proceeding ... against or affecting the Debtors, any of the Debtors’ Subsidiaries, the Canadian Companies or any of the Settling Insurance Companies or any property of any of the foregoing or any direct or indirect transferee of any property of, or direct or indirect successor in interest to, any of the foregoing, or any property of any such transferee or successor ....

Confirmation Order ¶ (29)(a).

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Related

Travelers Indemnity Co. v. Bailey
557 U.S. 137 (Supreme Court, 2009)
In Re Joint Eastern and Southern District Asbestos Litigation (Two Cases). In Re Johns-Manville Corporation, Debtor (Two Cases). Bernadine K. Findley, as of the Estate of Hilliard Findley, Uma Lail Caldwell, as of the Estate of Odell Caldwell, Joseph C. Jones, James William Barnette, Jr., on Behalf of Themselves, and All Others Similarly Situated as Beneficiaries of the Manville Personal Injury Settlement Trust, Edward Lindley, Class, Future Leslie Gordon Fagen, as Legal Representative of Future on Behalf of Future of the Manville Personal Injury Settlement Trust and the Subclass of Present Maryland Plaintiffs-Intervenors-Appellees, United States Fidelity and Guaranty Company, Plaintiff-Intervenor-Appellant, Porter-Hayden Co., a Member of the Distributor Subclass, Intervenor-Appellant, Owens-Corning Fiberglass Corporation and Subclass 3, Consisting of All Beneficiaries of the Manville Trust Who, as Former Producers, Manufacturers, Distributors, And/or Installers of Asbestos and Asbestos-Containing Products, Have or May Have in the Future Contribution And/or Indemnification Claims Against the Manville Trust (Except for Those Distributors Whose Claims for Contribution And/or Indemnification Are Based on Their Distribution of Asbestos-Containing Products of Manville Corp. (The Manville Distributors Subclass), Shall Be Referred to as "The Co-Defendant Manufacturers Subclass", and Manville Distributor Subclass Representatives E.J. Bartells Co. And J.T. Thorpe Co., on Behalf of Themselves and the Manville Distributor Subclass, Claimants-Appellants, MacArthur Subclass, Claimant-Appellee v. Robert Falise, Louis Klein, Jr., Christian E. Markey, Jr., and Frank MacChiarola Not Individually but Solely in Their Capacities as Trustees of the Manville Personal Injury Settlement Trust, Donald M. Blinken, Daniel Fogel, Francis H. Hare, Jr., John C. Sawhill, Not Individually but Solely in Their Capacities as Trustees of the Manville Personal Injury Settlement Trust, Subclass 1, Consisting of the Distributors of Johns-Manville Products, Excluding MacArthur Co. And Its Affiliated Companies, Which Shall Be Referred to as "The Manville Distributors Subclass", Subclass 2, Consisting of MacArthur Company and Its Affiliated Companies, Which Shall Be Referred to as "The MacArthur Subclass", Subclass 3, Consisting of All Beneficiaries of the Manville Trust Who, as Former Producers, Manufacturers, Distributors, And/or Installers of Asbestos and Asbestos-Containing Products, Have or May Have in the Future Contribution And/or Indemnification Claims Against the Manville Trust (Except for Those Distributors Whose Claims for Contribution And/or Indemnification Are Based on Their Distribution of Asbestos-Containing Products of Manville Corp.) (The Manville Distributors Subclass), Shall Be Referred to as "The Co-Defendant Manufacturers Subclass", Subclass 4, Consisting of All Future Beneficiaries of the Manville Trust Who May File or Bring Asbestos Claims Against the Trust in the Future, Which Shall Be Referred to as "The Future Subclass." When a Claim is Filed or Brought the Person Bringing That Claim Will Shift From This Subclass to the Applicable Subclass Encompassing Present Against the Trust, Subclass 5, "Present Subclass", Subclass 6, "Pre-November, 1990 Judgments and Settlements Subclass", Claimants-Appellees, Subclass of Future Plaintiff-Intervenor-Appellee. Joseph F. Amato, Jr., Frank E. Beavers, Alvin J. Bowles, Jr., Leonard D. Brown, Raymond Butler, Grover Claytor, Ray H. Cook, Dorothy M. Cooper, Personal Representative of the Estate of Edmond Cooper, Julia Cornwell, Personal Representative of the Estate of George Allen Cornwell, Leonard S. Crawford, Frank Pierce Crosby, Jr., Helen M. Davis, Personal Representative of the Estate of Francis Davis, Frank Eberhardt, Jr., Douglas E. Ellinger, Elizabeth Finelli, Personal Representative of the Estate of Nicholas Finelli, Russell J. Garner, William L. Goulart, Sr., Clifton F. Hess, Rex E. Hollis, Reuben Hurst, Frank A. Keelan, Priscilla P. Killeen, Personal Representative of the Estate of James Killeen, Roger Liller, Tommy Junior Linkous, Harrison O. McLeod Ray Merrill, John W. Myers, Myrtle v. Pessagno and Barbara Wrenn, Personal Representatives of the Estate of Elwood T. Pessagno, Carl Poore, Bob A. Reed, Samuel Saylor, Richard P. Stepp, Richard H. Stuart, Anna Sugrue, Personal Representative of the Estate of John N. Sugrue, Harold E. Tewell, David A. Thomas, Donald Thompson, Stanley Lee Ward, James M. Whittles, James E. Wilson and Whitney L. Winegard, Claimants-Appellants v. Subclass 1, Consisting of the Distributors of Johns-Manville Products, Excluding MacArthur Co. And Its Affiliated Companies, Which Shall Be Referred to as "The Manville Distributors Subclass", Owens-Corning Fiberglass Corporation and Subclass 3, Consisting of All Beneficiaries of the Manville Trust Who, as Former Producers, Manufacturers, Distributors, And/or Installers of Asbestos and Asbestos-Containing Products, Have or May Have in the Future Contribution And/or Indemnification Claims Against the Manville Trust (Except for Those Distributors Whose Claims for Contribution And/or Indemnification Are Based on Their Distribution of Asbestos-Containing Products of Manville Corp.) (The Manville Distributors Subclass), Shall Be Referred to as "The Co-Defendant Manufacturers Subclass", and Manville Distributor Subclass Representatives E.J. Bartells Co. And J.T. Thorpe Co., on Behalf of Themselves and the Manville Distributor Subclass, Claimants-Appellees
78 F.3d 764 (Second Circuit, 1996)
In Re Joint E. & S. Dist. Asbestos Litigation
878 F. Supp. 473 (S.D. New York, 1995)
In Re Johns-Manville Corp.
97 B.R. 174 (S.D. New York, 1989)
Matter of Johns-Manville Corp.
68 B.R. 618 (S.D. New York, 1986)
In Re Johns-Manville Corp.
36 B.R. 743 (S.D. New York, 1984)
Ohio Bureau of Workers' Compensation v. McKinley
2011 Ohio 4432 (Ohio Supreme Court, 2011)
In re Johns-Manville Corp.
552 B.R. 221 (S.D. New York, 2016)

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Bluebook (online)
571 B.R. 69, 2017 Bankr. LEXIS 2063, 64 Bankr. Ct. Dec. (CRR) 116, Counsel Stack Legal Research, https://law.counselstack.com/opinion/general-motors-llc-v-manville-personal-injury-settlement-trust-in-re-nysb-2017.