Nelson v. A-C Product Liability Trust

549 B.R. 87, 2016 WL 410498
CourtDistrict Court, E.D. Pennsylvania
DecidedFebruary 3, 2016
DocketCONSOLIDATED UNDER MDL 875 E.D. PA CIVIL ACTION NO. 2:11-31119-ER
StatusPublished

This text of 549 B.R. 87 (Nelson v. A-C Product Liability Trust) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Nelson v. A-C Product Liability Trust, 549 B.R. 87, 2016 WL 410498 (E.D. Pa. 2016).

Opinion

MEMORANDUM

EDUARDO C. ROBRENO, J.

This ■ case was transferred in January 2011 from the United State District Court [90]*90for the Northern District of Ohio to the United States District Court for the Eastern District of Pennsylvania, where it became part of the consolidated asbestos products liability multidistrict litigation (MDL 875). The case was assigned to the Court’s maritime docket (“MARDOC”), Plaintiff Eugene Nelson (“Plaintiff” or “Mr. Nelson”), alleges that he was exposed to asbestos while working aboard various ships. Plaintiff asserts that he developed two asbestos-related illnesses as a result of his exposure to asbestos aboard those ships.

For the reasons that follow, the Court will deny Defendants’ motion.

1. BACKGROUND

In 1994, Plaintiff brought claims for nonmalignant asbestos-related disease against various defendants, including shipowners represented by Thompson Hiñe LLP (“Defendants” or the “Thompson Hine Shipowners”). By way of Order dated May 2, 1996, Judge Charles Weiner1 dismissed those claims administratively, leaving open the possibility for the action to be pursued at a later, unspecified date.2 Approximately eight years after he filed his asbestos action (and approximately six years after it was dismissed), in May of 2002, Plaintiff filed for bankruptcy pursuant to Chapter 7 of the bankruptcy code, without listing his asbestos claims as an asset in the bankruptcy filing. Approximately three months later, in August of 2002, the bankruptcy case was closed. Thereafter, in January of 2003, Plaintiff was diagnosed with asbestos-related cancer, giving rise to a claim for a malignant asbestos-related disease. On January 27, 2011 (approximately eight years after he was discharged from bankruptcy, and approximately seventeen years after Plaintiff first filed his asbestos action), the MDL Court reinstated Plaintiffs asbestos action, which had been dismissed by Judge Weiner in 1996. A summary of this timeline of events is as follows:

• 1994 — Asbestos action filed (non-malignancy claims)
• May 1996 — Asbestos action administratively dismissed
• May 2002 — Bankruptcy action filed
• August 2002 — Bankruptcy action closed
[91]*91• January 2003 — Cancer diagnosis (malignancy claims)
• January 2011 — Asbestos action reinstated by MDL Court

The Thompson Hine Shipowners have moved for summary judgment, arguing that (1) Plaintiffs non-malignancy claims are barred by way of judicial estoppel because he failed to disclose the asbestos action as an asset in his bankruptcy filing, and (2) Plaintiff cannot pursue any of the asbestos claims in the asbestos action (neither the initial non-malignancy claims nor his post-petition malignancy claims) because the entire asbestos action is now owned by the bankruptcy estate.

II. LEGAL STANDARD

A. Summary Judgment Standard

Summary judgment is appropriate if there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). “A motion for summary judgment will not be defeated by ’the mere existence’ of some disputed facts, but will be denied when there is a genuine issue of material fact.” Am. Eagle Outfitters v. Lyle & Scott Ltd., 584 F.3d 575, 581 (3d Cir.2009) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). A fact is “material” if proof of its existence or non-existence might affect the outcome of the litigation, and a dispute is “genuine” if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248, 106 S.Ct. 2505.

In undertaking this analysis, the court views the facts in the light most favorable to the non-moving party. “After making all reasonable inferences in the nonmoving party’s favor, there is a genuine issue of material fact if a reasonable jury could find for the nonmoving party.” Pignataro v. Port Auth. of N.Y. & N.J., 593 F.3d 265, 268 (3d Cir.2010) (citing Reliance Ins. Co. v. Moessner, 121 F.3d 895, 900 (3d Cir.1997)). While the moving party bears the initial burden of showing the absence of a genuine issue of material fact, meeting this obligation shifts the burden to the non-moving party who must “set forth specific facts showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 250, 106 S.Ct. 2505.

B. The Applicable Law

The parties appear to assume that Defendants’ legal arguments regarding “judicial estoppel” and the “real party in interest” are matters of federal law that should be decided in the first instance by the Court. The Court agrees with this approach. See Ryan Operations G.P. v. Santiam-Midwest Lumber Co., 81 F.3d 355, 358 (3d Cir.1996),3 In matters of federal law, the MDL transferee court applies the law of the circuit where it sits, which in this case is the law of the U.S. Court of Appeals for the Third Circuit. Various Plaintiffs v. Various Defendants (“Oil Field Cases”), 673 F.Supp.2d 358, 362-63 (E.D.Pa.2009) (Robreno, J.). Therefore, the Court will apply Third Circuit law in deciding the issues raised by Defendants’ motion.

III. THE PARTIES’ ARGUMENTS

A. Judicial Estoppel (Non-Malignancy Claims)

Defendants contend that Plaintiffs non-malignancy claims are barred on grounds of judicial estoppel. Specifically, they con[92]*92tend that he took irreconcilably inconsistent positions in his bankruptcy proceeding and the instant proceeding. Defendants state that Plaintiff concealed the existence of his non-malignancy asbestos claims when filing for bankruptcy by not reporting them as pending or likely claims on Schedule B (“Personal Property”), while simultaneously asserting such claims in the current (and then-already-pending) asbestos action. They further assert that a finding of bad faith is warranted because Plaintiff had knowledge of the non-malignancy asbestos claims at the time that he filed for bankruptcy and had a motive to conceal the claims from the Bankruptcy Court (i.e., to keep any proceeds of the claims while reducing the amount of assets available for distribution amongst the creditors — a motive Defendants assert is common to nearly all debtors in bankruptcy).

Finally, Defendants contend that no lesser remedy is warranted because the sanction of barring the non-malignancy asbestos claims is necessary to (1) keep Plaintiff from profiting from the omission and (2) preserve the integrity of the bankruptcy proceedings.

Plaintiff contends that the non-malignancy asbestos claims are not barred on grounds of judicial estoppel.

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In Re Martin
91 F.3d 389 (Third Circuit, 1996)
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American Eagle Outfitters v. Lyle & Scott Ltd.
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Horton v. Moore
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Cite This Page — Counsel Stack

Bluebook (online)
549 B.R. 87, 2016 WL 410498, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nelson-v-a-c-product-liability-trust-paed-2016.