In re Johns-Manville Corp.

552 B.R. 221
CourtUnited States Bankruptcy Court, S.D. New York
DecidedJune 30, 2016
DocketCase Nos. 82 B 11656 (CGM) through 82 B 11676 (CGM) inclusive; Case No. 82 B 11659 (CGM)
StatusPublished
Cited by16 cases

This text of 552 B.R. 221 (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., 552 B.R. 221 (N.Y. 2016).

Opinion

MEMORANDUM DECISION GRANTING GRAPHIC PACKAGING INTERNATIONAL’S MOTION FOR AN INJUNCTION

CECELIA G. MORRIS, CHIEF UNITED STATES BANKRUPTCY JUDGE

Before the Court is Graphic Packaging International’s (“Graphic”) emergency motion for enforcement of the confirmation orders of the Johns-Manville Corporation (“Manville”) and the Manville Forest Products Corporation (“MFP”). By its motion, Graphic seeks to enjoin the lawsuit of plaintiff, Lynda Berry (“Ms.Berry”), [225]*225brought in Louisiana state court against Graphic for alleged asbestos liability. See Graphic’s Emergency Mot. 2, Feb. 29, 2016, EOF No. 4204.1 Graphic argues that as it is a successor of MFP, a bankruptcy debtor and a wholly-owned subsidiary of Manville, Ms. Berry must first pursue her asbestos claims against the Manville Personal Injury Trust (the “Trust”). Mem. Law Supp. Emergency Mot. 12, Feb. 29, 2016, EOF No. 4205 (“Graphic’s Mot.”). In response, Ms. Berry argues that her lawsuit should not be enjoined as her claims were not discharged or enjoined by the MFP confirmation order (“MFP Confirmation Order”), MFP is not a beneficiary of the Manville confirmation order (“Manville Confirmation Order”) or channeling injunction, and Graphic has waived its right to enforce the bankruptcy Confirmation Orders and injunction. Resp. and Obj. of Berry 1, Mar. 4, 2016, EOF No. 4212 (“Berry’s Opp’n”). Ms. Berry also argues that she did not receive due process. Id. at 14-17.

After a hearing before this Court, held on March 8, 2016, Ms. Berry requested an evidentiary hearing with regard to due process. Tr. Mar. 8, 2016 Hrg. 20:20-23, Mar. 8, 2016, ECF No. 4225 (“Tr.”). This Court ordered supplemental briefing on the matter. Tr. 26:1-7. For the reasons and to the extent stated below, the Court grants Graphic’s motion for an order enjoining Ms. Berry’s state law claims against Graphic as a successor to MFP.

Jurisdiction

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), matters concerning the administration of the estate, and § 157(b)(2)(I), proceedings to determine the dischargeability of debt.

As provided in both the MFP and Man-ville Confirmation Orders, paragraphs 10 and 28 respectively, this Court retains jurisdiction to clarify its prior confirmation orders, to enforce its injunctions, and to adjudicate matters having to do with the administration of the confirmed chapter 11 plans of MFP and Manville. See Travelers Indem. Co. v. Bailey, 557 U.S. 137, 151, 129 S.Ct. 2195, 174 L.Ed.2d 99 (2009) (citations omitted).

Background

After over thirty years of handling the ongoing Manville bankruptcy case, this Court is keenly aware that “[fundamentally, the story of asbestos health litigation is the story of Johns-Manville.” In re Johns-Manville Corp., 2004 WL 1876046, at *2, 2004 Bankr. LEXIS 2519, at *5 (Bankr.S.D.N.Y. Aug. 17, 2004), aff'd in part, vacated in part, 340 B.R. 49 (S.D.N.Y.2006), vacated sub nom. Johns-Manville Corp. v. Chubb Indem. Ins. Co. (In re Johns-Manville Corp.), 517 F.3d 52 (2d Cir.2008), rev’d and remanded sub nom. Travelers Indem. Co. v. Bailey, 557 U.S. 137, 129 S.Ct. 2195, 174. L.Ed.2d 99 (2009). As documented by this Court, Manville’s story began in 1868, when “Henry Ward Johns had obtained a patent for an asbestos insulation product,” leading to the establishment of his business, the H.W. Johns Company. In re Johns-Manville Corp., 2004 WL 1876046, at *2, 2004 Bankr. LEXIS 2519, at *6 (citations omitted). H.W. Johns sold its asbestos products through the Manville Covering Company. Id. The two companies merged in [226]*2261901, becoming the “H.W. Johns-Manville Company.” Id. at *2, 2004 Bankr. LEXIS 2519 at *6-7.

Manville was “a diversified manufacturing, mining and forest products company,” and by the 1970s was “the world’s largest miner, processor, manufacturer and supplier of asbestos and asbestos-containing products.” 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); see also In re Johns-Manville Corp., 2004 WL 1876046, at *3, 2004 Bankr. LEXIS 2519, at *7 (citations omitted). Manville was not only a leading producer of asbestos products, these products “were used pervasively in a variety of industries for several decades throughout the United States.” Manville Corp. v. Equity Sec. Holders Comm. (In re Johns-Manville Corp.), 66 B.R. 517, 521 (Bankr.S.D.N.Y.1986). Although asbestos products were widespread, the asbestos industry consisted of about thirty manufacturing firms that made asbestos products. John C. Coffee, Jr., Class Wars: The Dilemma of the Mass Tort Class Action, 95 Colum. L.Rev. 1343,1365 (1995).

Manville eventually became “the prime supplier of asbestos fiber products,” In re Johns-Manville Corp., 2004 WL 1876046, at *3, 2004 Bankr. LEXIS 2519, at *7, and a Fortune 500 company. In re Johns-Manville Corp. 97 B.R. 174, 176 (Bankr.S.D.N.Y.1989). Manville was “deemed a paradigm of success in corporate America by the financial community.” In re Johns-Manville Corp., 36 B.R. 727, 729 (Bankr.S.D.N.Y 1984). Such was Man-ville’s success in the asbestos industry that Manville’s bankruptcy filing was surprising. Id. In fact, it was “the spectre of proliferating, overburdening litigation to be commenced in the next 20-30 years, which litigation would be beyond [Man-ville’s] ability to manage, control, and pay for, which ... prompted this filing.” In re Johns-Manville Corp., 36 B.R. 743, 745 (Bankr.S.D.N.Y.1984), aff'd, 52 B.R. 940 (S.D.N.Y.1985).

The term “asbestos” describes “a group of naturally occurring fibrous minerals known for their properties of relative indestructibility and resistance to heat and fire.” John P. Burns et al., Special Project: An Analysis of the Legal, Social, and Political Issues Raised by Asbestos Litigation, 36 Vand. L.Rev. 573, 578 (1983) (footnote omitted), cited in Stonewall Ins. Co. v. Asbestos Claims Mgmt. Corp., 73 F.3d 1178, 1192 n. 6 (2d Cir.1995). The documented use of asbestos dates back to the ancient Greeks and Romans and was used with increasing frequency after the industrial revolution in the 1870s. Id. at 578 (citing James W. Mehaffy, Asbestos-Related Lung Disease, 16 Forum 341, 341-42 (1980)). Despite its prevalent use, the dangers of asbestos were not widely known until the 1960s when latent asbestos injuries began to manifest throughout the nation. In re Asbestos Prods. Liab. Litig., 771 F.Supp. 415, 418 (J.P.M.L.1991) (quoting Judicial Conf. of the U.S., Report of the Judicial Conference Ad Hoc Committee on Asbestos Litigation 1-3 (1991)).

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