In re Johns-Manville Corp.

534 B.R. 553, 74 Collier Bankr. Cas. 2d 63, 2015 Bankr. LEXIS 2455, 61 Bankr. Ct. Dec. (CRR) 118, 2015 WL 4510659
CourtUnited States Bankruptcy Court, S.D. New York
DecidedJuly 27, 2015
DocketCase No. 82-11656 (CGM)
StatusPublished
Cited by4 cases

This text of 534 B.R. 553 (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
In re Johns-Manville Corp., 534 B.R. 553, 74 Collier Bankr. Cas. 2d 63, 2015 Bankr. LEXIS 2455, 61 Bankr. Ct. Dec. (CRR) 118, 2015 WL 4510659 (N.Y. 2015).

Opinion

MEMORANDUM DECISION GRANTING THE MOTION OF MARSH USA TO ENFORCE THE CONFIRMATION ORDER

The Honorable Cecelia G. Morris,1 Chief United States Bankruptcy Judge

Before the Court is the motion (the “Motion”) of Marsh USA, Inc. (“Marsh”)2 te enforce orders entered in connection with the chapter 11 cases of Johns-Man-ville Corporation and its related entities (collectively, “Manville”). Marsh is one of several defendants in a lawsuit brought by Salvador Parra, Jr. (“Parra”), who developed asbestosis and other conditions after he was exposed to asbestos while working as an insulator during the 1960s and ’70s. Parra filed suit in 2009, claiming that Marsh had conspired with other asbestos producers, distributors, and insurers to withhold information from the public regarding the dangers of asbestos inhalation. In response, Marsh filed the Motion, arguing that it was relieved of any liability for such claims by the release and channeling injunction contained in the order approving Manville’s chapter 11 plan and an accompanying order approving settlement agreements between Manville and certain of its insurers.

For the reasons set forth below, the Court agrees with Marsh that Parra’s claims are barred by the plain language of the applicable release and injunction. Accordingly, the Motion is GRANTED.

Jurisdiction

The United States District Court for the Southern District of New York has subject-matter jurisdiction over this proceeding pursuant to 28 U.S.C. § 1334. This Court exercises authority over the proceeding pursuant to 28 U.S.C. § 157 and the Amended Standing Order of Reference signed by Chief District Judge Loretta Preska on January 31, 2012. This matter [556]*556is a core proceeding. See In re Portrait Corp. of America, Inc., 406 B.R. 637, 641 (Bankr.S.D.N.Y.2009) (postconfirmation dispute between nondebtors is a core proceeding where it involves a request to “interpret and enforce” a bankruptcy court-order).

Background

A. The Manville Reorganization

Prior to its bankruptcy filing, Manville was a Fortune 500 company that operated a large and diversified mining, manufacturing, and forest products business. Among other things, it was the world’s largest miner of raw asbestos and a major manufacturer of finished asbestos products. In the 1960s and ’70s, as scientific studies began to link exposure to asbestos fibers with various respiratory conditions including certain lung cancers, Manville became the target of a number of products liability lawsuits alleging personal injuries due to asbestos exposure. By the early 1980s, Manville had been named as a defendant in more than 12,000 such suits brought by more than 16,000 claimants, with new suits being filed at a rate of more than 400 every month. At the same time, Manville was engaged in contentious coverage disputes with its insurance carriers, which were disputing their obligation to defend and indemnify Manville against asbestos claims.

Under the weight of its potential asbestos liabilities, Manville filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code on August 26, 1982. “From the outset of the reorganization, all concerned recognized that the impetus for Manville’s action was not a present inability to meet debts but rather the anticipation of massive personal injury liability in the future.” Kane v. Johns-Manville Corp. (In re Johns-Manville Corp.), 843 F.2d 636, 639 (2d Cir.1988) (“Kane ”); see also id. (describing future asbestos liabilities as “the raison d’etre of the Manville reorganization”).

Recognizing that Manville’s insurance policies were some of the estate’s most valuable assets, the Bankruptcy Court entered an order extending the automatic stay under §§ 105 and 362 of the Bankruptcy Code to “any proceeding against Manville’s insurers based on the alleged liability of Manville, its affiliates, officers, directors, or employees.” In re Johns-Manville Corp., 26 B.R. 420, 436 (Bankr. S.D.N.Y.1983), rev’d in part on other grounds sub nom., Occidental Chem. Corp. v. Johns-Manville Corp. (In re Johns-Manville Corp.), 41 B.R. 926 (S.D.N.Y. 1984). In doing so, the Court noted that prohibiting actions against the insurers from proceeding while Manville’s reorganization was ongoing was necessary to “insure uniform treatment of all asbestos-related health claimants.” Id.

Due to the long latency period associated with asbestos-related diseases, the Bankruptcy Court also appointed a legal representative for the interests of so-called “future asbestos claimants.” In re Johns-Manville Corp., 36 B.R. 743, 744 (Bankr. S.D.N.Y.1984), aff'd sub nom., Robinson v. Johns-Manville Corp. (In re Johns-Manville Corp.), 52 B.R. 940 (S.D.N.Y.1985); see also Kane, 843 F.2d at 644 (“The Bankruptcy Court appointed the Legal Representative specifically for the purpose of ensuring that the rights of the future claimants would be asserted where necessary.”). In appointing the representative, the Bankruptcy Court stated:

It is abundantly clear that the Manville reorganization will have to be accountable for future asbestos claimants whose competing interest must be safeguarded in order to leave a residue of assets sufficient to accommodate a meaningful resolution of the Manville asbestos-related health problem. The term “future [557]*557asbestos claimants” is defined for these purposes to include all persons and entities who, on or before August 26, 1982, came into contact with asbestos or asbestos-containing products mined, fabricated, manufactured, supplied or sold by Manville and who have not yet filed claims against Manville for personal injuries or property damage.

Johns-Manville, 36 B.R. at 744-45.

In 1986, after years of negotiations among parties including Manville, its insurers, and the future claimants’ representative, the parties reached a global resolution that culminated in the filing of Manville’s Second Amended and Restated Plan of Reorganization (the “Plan”). The Plan was predicated on a series of settlement agreements between Manville and certain of its insurers, which had agreed to contribute $770 million in cash to a trust for the benefit of asbestos personal injury claimants. In exchange for those payments, “the insurers would be relieved of all obligations related to [their insurance of Manville] and the insurers would be protected from claims based on such obligations by injunctive orders of the Bankruptcy Court.” MacArthur Co. v. Johns-Manville (In re Johns-Manville Corp.), 837 F.2d 89, 90 (2d Cir.1988) (“MacArthur ”). Marsh, which was one of the settling insurers, contributed a total of $29.75 million to the trust in exchange for its injunction.

On December 18, 1986, the Bankruptcy Court entered an order approving the settlement agreements between Manville and the settling insurers (the “Insurance Settlement Order”). Four days later, on December 22, 1986, the Court entered an order confirming the Plan (the “Confirmation Order,” together with the Insurance Settlement Order, the “1986 Orders”). In re Johns-Manville Corp., 68 B.R.

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534 B.R. 553, 74 Collier Bankr. Cas. 2d 63, 2015 Bankr. LEXIS 2455, 61 Bankr. Ct. Dec. (CRR) 118, 2015 WL 4510659, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-johns-manville-corp-nysb-2015.