In Re: Dravo LLC

• Court: Superior Court of Pennsylvania
• Decided: November 8, 2021
• Docket: 893 WDA 2020
• Status: Unpublished

Opinion

J-A20035-21

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

IN RE: DRAVO LLC SUBCHAPTER G : IN THE SUPERIOR COURT OF DISSOLUTION : PENNSYLVANIA : : APPEAL OF: ALL CLAIMANTS : REPRESENTED BY SAVINIS, KANE, & : GALLUCCI, LLC AND GOLDBERG, : PERSKY, & WHITE, P.C. : No. 893 WDA 2020

Appeal from the Order Entered July 17, 2020 In the Court of Common Pleas of Allegheny County Civil Division at No(s): G.D. 18-010151

BEFORE: PANELLA, P.J., BENDER, P.J.E., and McCAFFERY, J.

MEMORANDUM BY McCAFFERY, J.: FILED: NOVEMBER 8, 2021

This matter concerns the dissolution of Dravo LLC (Dravo), under

Subchapter G of the Pennsylvania Uniform Limited Liability Company Act of

20161 (the Act), in the Allegheny County Court of Common Pleas. Appellants

are asbestos claimants, represented by Savinis, Kane, & Gallucci, LLC and

Goldberg, Persky, & White, P.C., who have claims against Dravo. Appellants

appeal from three orders entered July 17, 2020, which: (1) adopted the May

26, 2020, supplemental record of the special master (Supplemental Master

Record Order); (2) approved a case management order (CMO); and (3)

approved a settlement agreement between Dravo and its insurer, and

assumed in rem jurisdiction over Dravo’s insurance and financial assets

1 15 Pa.C.S. §§ 8811-8898 (Act). See also 15 Pa.C.S. §§ 8871-8878 (Subchapter G, Dissolution & Winding Up). J-A20035-21

(Settlement Order).2 Appellants have presented no argument concerning the

Supplemental Master Record Order, and therefore have waived any challenge

thereto. We quash the appeal from the CMO, which we determine to be an

unappealable interlocutory order. We remand the appeal from the Settlement

Order for the trial court to prepare a supplemental opinion. Finally, we grant

the application to withdraw from representation, regarding one of the

attorneys for Dravo’s insurer.

I. Procedural History

On May 30, 2018, Dravo Corporation was converted to a limited

liability company (LLC) pursuant to filings under Subchapter E of the

Pennsylvania Entity Transactions Law.3 Trial Ct. Op., 1/19/21, at 1; N.T.,

1/17/19, at 60. Approximately five weeks later, on July 5, 2018, Dravo, LLC

was formally dissolved upon the filing of a certificate of dissolution with the

Department of State, pursuant to Subchapter G of the Act. “Dravo is a

defendant in numerous lawsuits alleging injuries from exposure to asbestos.”

2 The certified electronic record does not include a trial docket that lists the

dates of entry and service of each filing. See Pa.R.A.P. 1921 (“The original papers and exhibits filed in the lower court, [transcripts], and a certified copy of the docket entries prepared by the clerk of the lower court shall constitute the record on appeal in all cases.”). Instead, the first document in the record is an “index,” which lists the filings with a “Filed Date.” We note the listed “Filed Date” for the three July 17, 2020, orders is “7/20/2020.” Index at 4.

3 15 Pa. C.S. §§ 351-356.

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Dravo’s Petition for Approval of Settlement Agreement & Entry of Approval

Order, 11/19/18, at 1.

The trial court summarized the following procedural history:

. . . Dravo provided notice of the dissolution to all known claimants.[ ] As to unknown claimants, Dravo published notice of its dissolution in various media, including the Wall Street Journal and the Pittsburgh Legal Journal[.] This Court found that the notice of dissolution met the requirements under Section 8875 of the Act, and that Dravo’s official publication of its notice of dissolution on July 13, 2018 established a bar date under the Act of July 13, 2020. Some hundreds of claimants thereafter came forward to pursue recovery as a result of Dravo’s notice[.]

Trial Ct. Op. at 2.

This matter was initiated on August 7, 2018, by Dravo’s filing a “Section

8876” petition, pursuant to Subchapter G of the Act, to commence

proceedings for a determination of the amount and form of security for

payment of claims. See 15 Pa.C.S. § 8876(a) (“A dissolved [LLC] that has

officially published a notice under section 8875 . . . may file an application

with the court for a determination of the amount and form of security to be

provided for payment of claims that are reasonably expected to arise after the

date of dissolution based on facts known to the company . . . .”).

Next, on November 19, 2018, Dravo filed a petition for court approval

of a settlement agreement between Dravo and one of its excess insurance

carriers, Resolute Administered London Market Insurers (Resolute). Under

this agreement, “Resolute would pay Dravo $7,000,000[ ] to satisfy the costs

of any liability actions or suits[.]” Trial Ct. Op. at 2. The November 19th

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petition also requested the trial court to “assume in rem jurisdiction over the

funds that will be generated by the settlement agreement[.]” Dravo’s Petition

for Approval of Settlement Agreement & Entry of Approval Order at 1.

Appellants filed objections, arguing: (1) Resolute was attempting to avoid its

obligations under its insurance policies; and (2) “[t]he circumstances

surrounding the Settlement Agreement and the dissolution proceeding . . .

strongly suggest a lack of good faith.”4 Appellants’ Objection to Petition of

Dravo for Approval of Settlement Agreement, 1/10/19, at 1-2.

The trial court conducted evidentiary hearings on January 17 and

February 26, 2019, “on the adequacy of the settlement.[ ]” Trial Ct. Op. at 3.

Notably, Appellants claimed Dravo had available insurance of more than $100

million, and requested time to conduct discovery “targeted at whether Dravo

got the best settlement possible under the circumstances.” See N.T.,

2/26/19, at 44, 58 (Appellants’ counsel arguing, “[W]e’re talking about

hundreds of millions of dollars being turned — essentially going poof, a $7

million cash figure[.]”). Thereafter, the parties engaged in “active litigation,

with various oral arguments, significant motions practice, and time devoted

to discovery.” Trial Ct. Op. at 3.

4 Appellants further averred, “The deal is either a conspiracy between [Resolute] and Dravo or a one-sided attempt by [Resolute] to override the interests of its insured and misuse Pennsylvania’s dissolution laws to release [Resolute] from its clear obligation under its insurance policies[.]” Appellants’ Objection to Petition of Dravo for Approval of Settlement Agreement at 1-2.

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On July 17, 2020, the trial court entered the underlying three orders.

First, a one-page order adopted the May 26, 2020, supplemental report of the

special master and denied Appellant’s motion to compel an estimation report.

Next, the 12-page Settlement Order approved, in its entirety, the $7 million

settlement agreement between Dravo and Resolute; the court found this

agreement was entered in good faith, without fraud or collusion. Settlement

Order, 7/17/20, at 9. In this order, the court also assumed exclusive in rem

jurisdiction over the settlement proceeds. Id. at 10. Finally, the court

determined that an immediate appeal from this order would facilitate

resolution of the entire case, and thus declared the order a final, appealable

order under Pa.R.A.P. 341(c).5 Id. at 12. The third order entered on July 17,

2020, was the seven-page case management order, which set forth

procedures and timelines for the parties with regard to Appellants’ asbestos

claims.

On August 18, 2020, Appellants filed a timely notice of appeal,

purporting to appeal from all of the July 17th orders.6 They also timely filed,

5 See Pa.R.A.P. 341(a) (generally, “an appeal may be taken as of right from

any final order”), (c) (“[T]he trial court . . . may enter a final order as to one or more but fewer than all of the claims and parties only upon an express determination that an immediate appeal would facilitate resolution of the entire case.”).

6 See Appellants’ Notice of Appeal, 8/18/20 (appealing “from the Orders entered in this matter on the 17th day of July, 2020 in favor of [Dravo], as well as prior orders subsumed within these rulings, such as those docketed on August 2, 2019”).

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following an extension of time, a court-ordered Pa.R.A.P. 1925(b) statement

of errors complained of on appeal.7 Dravo filed a motion with this Court to

quash Appellants’ appeal. On June 21, 2021, this Court issued a per curiam

order denying the motion without prejudice to Dravo to raise this issue again

in its brief or in a new application.8

II. Statement of Questions Involved

Appellants raise the following questions on appeal:

A. Whether the Trial Court exceeded the authority granted to it under Subchapter G by taking jurisdiction over Known claims and Other claims for which a valid lawsuit was already filed against Dravo prior to July 9, 2020.

B. Whether the Trial Court exceeded the authority granted to it under Subchapter G by taking jurisdiction over lawsuits validly filed in foreign jurisdictions.

C. Whether the Trial Court exceeded the authority granted to it under Subchapter G, by entering a CMO that violates [Appellants’] Due Process rights through the abridgment of the Pennsylvania Rules of Civil Procedure as well as the Pennsylvania Constitution.

7 We note that even after the notice of appeal, the parties continued litigation.

Dravo filed: a “First Status Report . . . and Request for Status Conference;” a “Motion to Bar Claims for Failure to Comply with [CMO];” and a “Motion to Bar Post Bar Date Asbestos Claim.” Appellants filed a response to the motion to bar claims for failure to comply with the CMO, to which Dravo then filed a reply brief. Finally, on December 10, 2020, Dravo filed a second status report. On January 20, 2021, the trial court issued an order, referring to a status conference held on January 7th and directing all asbestos claimants’ counsel to comply with the CMO, “even as to cases originally filed in another jurisdiction.” Order, 1/20/21.

8 We further note Resolute has filed a letter with this Court, stating it joins

sections I, II, and III of Dravo’s Brief, and it will not file a separate brief.

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D. Whether the Trial Court exceeded the authority granted to it under Subchapter G in approving the settlement by failing to provide compensation for all claims, including future unmanifested asbestos claims, by violating Public Policy and the Pennsylvania Constitution for those asbestos victims with creeping diseases.

Appellants’ Brief at 6.

III. Supplemental Master Record Order

With respect to the order adopting the special master’s supplemental

report and denying their motion to compel discovery, Appellants state in their

brief:

[A]lthough [Appellants] filed an appeal of the July 17, 2020 Order of Court regarding discovery issues, counsel believes that if [Appellants] would not be successful on the appeal of the overarching issues from the other two July 17, 2020 orders, then [Appellants] will not be successful on the discovery issue. Therefore, [Appellants] offer no argument on the discovery issue.

Appellants’ Brief at 18.

Given the lack of any argument challenging this order, we deem any

issue relating thereto waived. See Pa. R.A.P. 2119(a) (the argument shall

include “discussion and citation of authorities as are deemed pertinent”);

Krishnan v. Cutler Grp., Inc., 171 A.3d 856, 896 (Pa. Super. 2017)

(“[A]rguments which are not appropriately developed are waived[.]”).

IV. Case Management Order

As stated above, the trial court’s case management order set forth time

frames and procedures “for establishing the amount and form of security to

be provided under Section 8876 for the Asbestos Claims pending against

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Dravo as of December 31, 2019.”9 CMO, 7/17/20, at 4. By way of example,

the order directed: (1) “[i]n order to protect [the] Court’s statutory jurisdiction

under Subchapter G . . . no settlement, judgment or verdict obtained in any

Asbestos Claim may be paid from, impair, or be a lien against the Insurance

Assets of Dravo without the express approval of this Court[;]” (2) within 45

days of the CMO, any asbestos claimant “shall submit in writing to Dravo a list

of such claims[;]” (3) the claimants’ counsel “shall meet and confer with

Dravo’s counsel[,] to determine whether the parties can agree on an amount

of security[;]” (4) a status conference will be held on November 13, 2020;

and (5) the court will hold, date unspecified, an evidentiary hearing “to permit

Dravo or any other interested party to present evidence and argument on the

appropriate amount and form of the security that Dravo will need to post under

Section 8879[.]” Id.at 4-6.

On appeal, Appellants argue that in issuing the CMO, the trial court

exceeded its authority under Subchapter G, and violated their due process

rights by abridging the Pennsylvania Rules of Civil Procedure. Appellants

contend “the CMO places [them] in a weakened position, all at the design and

schedule proposed by Dravo,” while “favoring Dravo.” Appellant’s Brief at 48.

For example, Appellants argue, the CMO sets a deadline for them to “establish

9 The trial court explained that “[a] supplemental order will extend the procedure to Asbestos Claims served on Dravo after January 1, 2020 and filed before July 13, 2020.” CMO at 4.

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whether sufficient evidence of product identification exists in each of the

hundreds of lawsuits,” but provides “[n]o discovery period . . . for gathering

of evidence.” Id. Furthermore, Appellants claim, “the CMO permits Dravo to

file a motion to bar [Appellants] from recovery” “[i]f Dravo disagreed with the

evidence offered by” Appellants. Id. at 48-49. However, Appellants maintain,

the Rules of Civil Procedure do not have a ‘motion to bar recovery.’” Id. at

49. Finally, we note, Appellants assert the CMO is appealable because the

order also assumes in rem jurisdiction over Dravo’s insurance assets, and

“[a]ny order taking in rem jurisdiction is . . . appealable as of right pursuant

to Pa.R.A.P. 311(b).” Id. at 45.

Dravo, meanwhile, argues the appeal from the CMO is interlocutory and

improper. Dravo’s Brief at 6, 49. Dravo disagrees that Rule 311 is satisfied.

We agree with Dravo.

This Court has explained:

As a jurisdictional issue, before considering the merits of this appeal, we must first determine whether the [trial court’s] order is an appealable order under the Pennsylvania Rules of Appellate Procedure. Generally, as an appellate court, we only have jurisdiction to review final orders. See Pa.R.A.P. 341 (providing that “an appeal may be taken as of right from any final order”). Nevertheless, in appropriate circumstances, the rules allow an appeal to be taken from an interlocutory order. See Pa.R.A.P. 311 . . . .

Kronstain v. Miller, 19 A.3d 1119, 1123 (Pa. Super. 2011).

Pennsylvania Rule of Appellate Procedure 311 governs interlocutory

appeals as of right. Appellants rely on Rule 311(b), which provides:

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(b) Order sustaining venue or personal or in rem jurisdiction. —An appeal may be taken as of right from an order in a civil action or proceeding sustaining . . . jurisdiction over the person or over real or personal property if:

(1) the plaintiff, petitioner, or other party benefiting from the order files of record within ten days after the entry of the order an election that the order shall be deemed final; or

(2) the court states in the order that a substantial issue of venue or jurisdiction is presented.

See Pa.R.A.P. 311(b)(1)-(2).

Here, as Dravo points out: (1) no party, including Appellants, filed an

election that the CMO be deemed final; and (2) the trial court made no

suggestion “that a substantial issue of venue or jurisdiction is presented.” See

Dravo’s Brief at 49-50, citing Pa.R.A.P. 311(b)(1)-(2). Appellants raise no

argument to the contrary. We thus conclude the CMO is not, as Appellants

claim, an appealable interlocutory order as of right under Rule 311(b). See

Pa.R.A.P. 311(b)(1)-(2). Accordingly, we quash the appeal from the CMO,

without prejudice to any properly-presented appeal from a final order

sounding in application of the CMO.

V. Settlement Order

Appellants contend “this matter [spans] hundreds of lawsuits over

multiple jurisdictions[.]” Appellants’ Brief at 18. Both before the trial court

and on appeal, Appellants object to the $7 million settlement agreement

between Dravo and Resolute, claiming, in part, that Dravo had available to it

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more than $100 million in excess insurance coverage.10 See id. at 31.

Appellants maintain that Dravo and Resolute, however, “agreed to ‘settle’ a

dispute over the amount of available insurance at $7 million[,]” in order “to

shield the bulk of Dravo’s assets from creditors through the misuse of § 8876.”

Id. at 31-32. Appellants assert, “The trial court erred in permitting a

dissolving company and its insurer to intentionally deplete an asset that would

otherwise be available to all creditors of the dissolving company through

§ 8876, [which] does not authorize such action.”11 Id. at 36.

In its opinion, the trial court reasoned:

Without citing evidence, Appellants . . . imply that the Settlement Agreement between Dravo and Resolute will leave Dravo with insufficient funds to pay legally valid claims. Both of these allegations are false, and there is no evidence to suggest that Dravo’s assets and insurance monies will be insufficient. Despite the ongoing winding-up proceedings, Dravo is not insolvent and its settlement and insurance assets remain available to appropriate claimants.[FN] Indeed, one of the many justifications for this Court assuming in rem jurisdiction over the insurance assets of Dravo was to make certain that claimants may attain their necessary recovery. In so doing, this Court is also abiding by its statutory obligations under the Act. ___________________________ [FN] At the settlement hearing, Bruce Inglis, a manager of Dravo,

testified that “Dravo isn’t insolvent” and the evidence is that on July 5, 2018[,] the day Dravo filed for dissolution, it had approximately $2.5 million in cash (some of which was restricted)

10 Appellants claim that “[t]hrough discovery, [they] learned that . . . Dravo

had already bought out the primary insurance coverage policy some years earlier.” Appellants’ Brief at 33.

11As stated above, the trial court deemed the Settlement Order a final, appealable order under Pa.R.A.P. Rule 341(c). Settlement Order at 12.

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as well as the unliquidated but valuable rights under the excess insurance policies that further negotiation established had a value of $7 million, plus the value of the unsettled rights against the non-Resolute insurers. [N.T., 1/17/19, at 97.]

Trial Ct. Op. at 9 n.12 (some record citations omitted).

While the trial court set forth its reasons for assuming in rem jurisdiction

of Dravo’s insurance proceeds or assets, neither its opinion nor the record

indicate the court’s rationale for approving the amount of insurance proceeds

to be made available. The court did not address why it approved a $7 million

settlement figure, notwithstanding Appellants’ claim that Dravo had available

to it potentially $100 million in insurance coverage. The court also did not

provide any estimate of the number of claimants or total value of claims

against Dravo, nor address how it came to conclude $7 million in insurance

proceeds, together with Dravo’s $2.5 million in cash and other assets, would

be sufficient to pay all of the valid claims made against Dravo.

To facilitate our review of this appeal, we remand this matter to the trial

court to file, within 40 days of the date of this memorandum, a supplemental

opinion addressing these matters. We direct that the court explain in greater

depth the procedures in place in this matter to facilitate payment of judgments

and settlements, whether entered prior to or subsequent to Dravo’s notice of

dissolution and how those procedures are consistent with full-faith and credit

and comity principles. We direct that the trial court give some summary of

the asbestos litigation it is currently monitoring as part of its exercise of in

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rem jurisdiction, and inform this Court of settlements and judgments that have

been approved and paid through that exercise of jurisdiction to date.

We also direct the trial court to detail the reasons for accepting the

insurance settlement and concluding that its negotiation was adequate and

was reached by negotiation between truly interested parties, and for more

details as to its impact on pending claims, both those the court is monitoring

and any others that may arise but that are unknown to the trial court at this

time. We also direct the court to address the argument that the Settlement

Order unfairly limits and caps settlements and judgments as to damages,

including ones from other jurisdictions such as West Virginia, as well as the

argument as to comity and the authority of other courts to administer cases

within their jurisdictions. Finally, the court may also discuss any other

relevant issue that would inform our consideration of the issues properly

presented.

VI. Application to Withdraw

Finally, we address an application, filed by Resolute’s counsel, Ralph

Luongo, Esquire, to withdraw the appearance of another Resolute attorney,

Victoria Allen, Esquire. We grant this application.

VII. Conclusion

In sum, we conclude Appellants have waived any challenge to the

Supplemental Master Record Order, for failure to present any argument. We

quash the appeal from the CMO, as that order is interlocutory and not

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appealable under Pa.R.A.P. 311(b). With respect to the appeal from the

Settlement Order, we remand for the trial court to file a supplemental opinion

within 40 days of this memorandum. We also grant the application to

withdraw Attorney Allen’s appearance from this matter.

Appeal from Supplemental Master Record Order affirmed, on the basis

of waiver. Appeal from CMO quashed. Appeal from Settlement Order

remanded for a supplemental trial court opinion. Application to withdraw

entry of appearance granted. Panel jurisdiction retained.

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