Nelson v. Dalkon Shield Trust

216 B.R. 175, 1997 Bankr. LEXIS 2073
CourtDistrict Court, E.D. Virginia
DecidedDecember 18, 1997
DocketNo. 85-01307-R
StatusPublished
Cited by6 cases

This text of 216 B.R. 175 (Nelson v. Dalkon Shield Trust) is published on Counsel Stack Legal Research, covering District Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Nelson v. Dalkon Shield Trust, 216 B.R. 175, 1997 Bankr. LEXIS 2073 (E.D. Va. 1997).

Opinion

MEMORANDUM

MERHIGE, District Judge.

This matter is before the Court on the Motion to Interpret (Docket No. 29907) filed by Daikon Shield Claimant Claire R. Nelson (“Ms.Nelson”), seeking an Order from this Court allowing her to recover prejudgment interest under New Hampshire law on her Daikon Shield personal injury claim. She is supported in that effort by Daikon Shield Claimant Roberta Wiltshire (“Ms. Wilt-shire”), who asked the Court in her Memorandum (Docket No. 30068) to permit her to recover prejudgment interest under Massachusetts law on her Daikon Shield personal [177]*177injury claim. The Daikon Shield Claimants Trust (the “Trust”) filed a Response opposing the requests for prejudgment interest (Docket No. 29943). The matter was argued before this Court on September 15, 1997. Though the record reflects that counsel for the Trust served a Notice of Hearing (Docket No. 30035) on counsel for Ms. Nelson, Ms. Wiltshire, and the lawyers for four other Daikon Shield claimants, only counsel for Ms. Nelson appeared at the September 15 hearing.

After consideration of the briefs and arguments of the parties, the Court will grant the Motion to Interpret and take this opportunity to interpret and implement the Robins Plan of Reorganization (the “Plan”) on this issue. Accordingly, for the reasons which follow, the Court holds that claimants are not entitled to prejudgment interest on their Daikon Shield personal injury claims under the Plan.

I. BACKGROUND

Ms. Nelson chose to resolve her claim under Option 3 of the Claims Resolution Facility (“CRF”).1 Rejecting the Trust’s offers of compensation, she elected to adjudicate her claim through litigation under § E.5(b) of the CRF. In September 1994, a jury in the United States District Court for the District of New Hampshire returned a verdict in Ms. Nelson’s favor for $35,000 in compensatory damages. The judgment entered on that October 3, 1994 verdict awarded Ms. Nelson that sum “plus prejudgment interest pursuant to N.H.R.S.A. 524:1-B, if appropriate ...,” at an annual rate of 5.69%. In her Motion to Interpret, Ms. Nelson seeks prejudgment interest of $21,082.

Ms. Wiltshire similarly chose Option 3 to pursue her Daikon Shield claim and litigation under CRF § E.5(b) to liquidate it. After trial in the United States District Court for the District of Massachusetts, the jury-awarded Ms. Wiltshire $75,000 in actual damages. On July 11, 1997, judgment was entered for Ms. Wiltshire in that amount plus prejudgment interest under Massachusetts law for $156,427.32 “if allowable.”

The Trust reports in its Response to Ms. Nelson’s Motion to Interpret that before any cases reached arbitration or trial under the CRF, the Trustees determined that prejudgment interest was not allowable under the Plan on Daikon Shield claims, based upon language in various parts of the Plan and the Disclosure Statement accompanying the Plan, the CRF, general bankruptcy law concepts and the Plan’s goal of treating all claimants uniformly. The Trust further states that it has not paid prejudgment interest to any claimant, whether they resolved their claims through the voluntary settlement steps of Option 1, Option 2 and Option 3 of the CRF, the Alternative Dispute Resolution Program erected by the Trust pursuant to CRF § E.4, arbitration, or trial.

The Trust’s refusal to pay prejudgment interest led to the filing of Ms. Nelson’s Motion to Interpret and prompted Ms. Wilt-shire to file her supporting Memorandum. Both Ms. Nelson and Ms. Wiltshire present the specific question of whether prejudgment interest must be paid to plaintiffs who prevail in litigation under CRF § E.5(b) when their applicable state law would allow prejudgment interest on personal injury damages.

In its Response, the Trust has broadened the question by asking the Court to rule that claimants cannot recover prejudgment interest on Daikon Shield claims liquidated in either arbitration or trial. Apparently, prejudgment interest has never been an issue in the ADR program, where damages were limited to a maximum of $20,000 per claim and no one state’s law provided the rule of decision. Nonetheless, the ruling by this Court announced today that claimants whose Daikon Shield claims were unliquidated when Robins commenced its bankruptcy ease are not entitled to prejudgment interest, regardless of what their state law might provide, applies equally to claims adjudicated in ADR, arbitration, or trial. The Court thus intends to put this issue to rest for all claims.

[178]*178II. ANALYSIS

A. The Court’s Jurisdiction

The allowability of prejudgment interest on Daikon Shield personal injury claims under the Plan presents a matter requiring interpretation of the Plan and its related documents.' The Trust also submits that the prejudgment interest issue should be resolved in a manner that best serves the Plan’s goal of uniformity of treatment of claimants. These tasks are within the exclusive jurisdiction of this Court to interpret the Plan and facilitate its implementation, retained in § 8.05(c) and § 8.05(d) of the Plan and paragraph 45 of the July 26, 1988 Order of this Court confirming the Plan. In re A.H. Robins Co., 88 B.R. 742 (E.D.Va.1988), aff'd, 880 F.2d 694 (4th Cir.), cert. denied, 493 U.S. 959, 110 S.Ct. 376, 107 L.Ed.2d 362 (1989); see also In re A.H. Robins Co. (Order Limiting Attorneys Fees), 182 B.R. 128 (Bankr.E.D.Va.1995), aff'd, In re A.H. Robins Co. (Bergstrom v. Daikon Shield Claimants Trust), 86 F.3d 364 (4th Cir.), cert. denied,—U.S.-, 117 S.Ct. 483, 136 L.Ed.2d 377 (1996); In re A.H. Robins Co. (Amended Administrative Order No. 1), Case No. 85-01307-R, Docket No. 11500 (E.D.Va. nunc pro tunc June 26, 1991), aff'd, 42 F.3d 870 (4th Cir.1994); In re A.H. Robins Co. (Daikon Shield Claimants Trust v. Reiser), 972 F.2d 77 (4th Cir.1992). No party has questioned the Court’s jurisdiction to resolve this issue.

B. The Robins Plan Does Not Allow Prejudgment Interest on Daikon Shield Personal Injury Claims

1. The Appropriate Analytical Framework for this Issue

Ms. Nelson and Ms. Wiltshire seek payment of prejudgment interest accruing on their personal injury damages before they were liquidated in the judgments entered in their lawsuits, contending that the Plan and CRF should be interpreted as reserving to them all remedies or rights to payment normally available to them under their state’s tort law. A ruling granting them that entitlement would benefit those two claimants, those other claimants who have prevailed or will prevail at trial in cases governed by the law of a state that allows recovery of prejudgment interest on personal injury damages, and those who secured or will in the future receive awards in arbitration under CRF § E.5(a), where the applicable Virginia law recognizes a claim for such interest. See Va.Code Ann. 8.01-382; Arbitration Rule 33. As to claims in ADR, if the Plan question were answered in the affirmative, the Court would also have to assess whether such a state law remedy could exist in that specialized, streamlined procedure — an outcome that strikes the Court as unlikely. According to the Trust’s Response, some thirty-one states permit recovery of prejudgment interest on personal injury damages.

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Bluebook (online)
216 B.R. 175, 1997 Bankr. LEXIS 2073, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nelson-v-dalkon-shield-trust-vaed-1997.