UNR Industries, Inc. v. Paterson Factory Workers

176 B.R. 472, 1994 U.S. Dist. LEXIS 18548, 1994 WL 722041
CourtDistrict Court, N.D. Illinois
DecidedDecember 29, 1994
Docket82 B 4841-9845, 82 B 9847, 82 B 9849, 82 B 9851 and 94 C 4199
StatusPublished
Cited by3 cases

This text of 176 B.R. 472 (UNR Industries, Inc. v. Paterson Factory Workers) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
UNR Industries, Inc. v. Paterson Factory Workers, 176 B.R. 472, 1994 U.S. Dist. LEXIS 18548, 1994 WL 722041 (N.D. Ill. 1994).

Opinion

MEMORANDUM OPINION

KOCORAS, District Judge:

This matter is before the Court on an appeal filed by the debtors in a Chapter 11 bankruptcy proceeding. Jurisdiction for this proceeding is proper pursuant to 28 U.S.C. § 151(a). For the reasons set forth below, we reverse and remand for further proceedings consistent with this opinion.

DISCUSSION

The background of the Chapter 11 case is fully recounted in Bankruptcy Judge David H. Coar’s Memorandum Opinion dated June 14, 1994. As such, our recitation of the facts will be brief. The debtor/appellant, UNR Industries, Inc., and several of its subsidiaries and affiliates (collectively “UNR”), is the successor to a corporation which manufactured asbestos for many years. In the 1970s UNR became the defendant in several thousand asbestos-related personal injury lawsuits. Consequently, UNR filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code on July 29, 1982 to protect itself from asset drain in defending the asbestos-related lawsuits. The appellees consist of former employees and survivors of former employees who worked at UNR’s asbestos manufacturing facility in Paterson, New Jersey (“the Paterson Workers”).

UNR appeals a June 14, 1994 Order entered by Judge Coar (“the Paterson Classification Order”) which classified the claims of the Paterson Workers under the Confirmed Plan of Reorganization (“the Plan”) in this case. In re UNR Indus., Slip Op. No. 82B9848-9845, 82B9847, 82B9849 & 82B9851 (Bankr.N.D.Ill. June 14, 1994). The Paterson Classification Order classified the Paterson Workers’ pre-petition asbestos disease claims under the Plan as both Class 2 claims entitled to full payment from reorganized *474 UNR and Class 5 1 claims, entitled to pro rata payment through a trust created pursuant to the Plan for the benefit of all holders of asbestos-disease claims. Under the Plan, Class 2 claims are defined as “Workmens’ Compensation claims subject to the [Bankruptcy] Court’s July 29, 1982 Order granting Application to Authorize the Payment of Pre-Petition Workmens’ Compensation Claims.” The 1982 Order was entered by Judge Merrick.

Judge Coar’s Paterson Classification Order was almost exclusively based upon his prior ruling on a similar classification question regarding UNR workers who were employed at UNR’s Bloomington, Illinois plant (the “Bloomington Workers”). In the prior Bloomington proceeding the Bloomington Workers asked Judge Coar to interpret the same Plan presently in issue and argued, as do the Paterson Workers, that their asbestos-disease claims were entitled to both Class 5 and Class 2 classification. In his July 28, 1992 Memorandum Opinion (“the Blooming-ton Classification Order”), Judge Coar noted that the Plan’s definition of Class 2 claimants was dependent upon an interpretation of the July 29,1982 Order (“the 1982 Order”) which was incorporated into the Plan. In re UNR Indus., 143 B.R. 506 (Bankr.N.D.Ill.1992), rev’d and remanded, UNR Indus. v. Bloomington Factory Workers, 173 B.R. 149 (N.D.Ill.1994). Judge Coar found the 1982 Order to be ambiguous, and interpreted the language of the 1982 Order based on Judge Merrick’s intent in 1982 at the time the Order was entered. The Court concluded that Judge Merrick intended the Order to apply to all workers’ compensation claims in general, without distinguishing among types of worker’s compensation claims or their statutory bases. Accordingly, Judge Coar held that the Bloomington Workers’ asbestos-disease claims were entitled to Class 2 classification.

Likewise, in his Paterson Classification Order, Judge Coai’ held that the Paterson Workers’ asbestos-disease claims were entitled to Class 2 classification because it was Judge Merrick’s intent that the 1982 Order apply to all workers’ compensation claims in general.

UNR appeals the Bankruptcy Court’s classification of the Paterson Workers’ claims as Class 2 claims on numerous grounds. UNR’s primary argument is that Judge Coar used an improper analysis in interpreting the Plan. According to UNR, instead of construing the Plan based on Judge Merrick’s intent in 1982, Judge Coar should have looked to the intent of the parties to the Plan in 1989 at the time the Plan was proposed and accepted.

UNR’s arguments are not new for they have recently been addressed and accepted by Judge Aspen in his recent decision reversing and remanding Judge Coar’s Bloomington Classification Order. In re UNR Indus. v. Bloomington Factory Workers, 173 B.R. 149 (N.D.Ill.1994). Judge Aspen held that the bankruptcy court used an improper analysis in determining whether the Bloomington Workers’ asbestos-disease claims were entitled to Class 2 classification. According to Judge Aspen, the intent of the parties to the Plan, rather than Judge Merrick’s intent, controls the construction of the 1982 Order which was incorporated into the Plan. We agree with Judge Aspen’s analysis. A plan of reorganization is analogous to contract or consent decree, and as such state law contract principles should be used to construe its terms. In re Doty, 129 B.R. 571, 591 (Bankr.N.D.Ind.1991). See also In re UNR Indus., 173 B.R. at 157, (and cases *475 cited therein). The proper inquiry, therefore, is what the parties to the Plan intended Class 2 claims to include. On remand the bankruptcy court must determine what the parties’ common understanding of the parameters of Class 2 was in 1989, at the time the 1982 Order was incorporated and confirmed into the Plan. Alternatively, if the court finds that the parties did not have an independent understanding on the issue, and that the parties intended Class 2 to be defined exclusively on what the 1982 Order dictated, then the intent of the parties that were present at the approval of the 1982 Order should be controlling, since the 1982 Order “bears a closer resemblance to an agreed order than a disputed one.” See Id. at 158.

The Paterson Workers argue that we are not bound by Judge Aspen’s decision and further suggest that them claims differ from the Bloomington Workers’ situation such that Judge Aspen’s ruling is of little or no significance to this case. In support they cite to Judge Aspen’s Minute Order denying UNR’s motion for reassignment and consolidation of the two appeals based on relatedness. Notwithstanding Judge Aspen’s relatedness ruling, the Paterson Workers cannot deny the similarity of their claims to the Bloomington Workers. 2 In fact, Judge Coar expressly rejected such arguments in his Paterson Classification Order in refusing to distinguish between the Paterson and Bloomington Workers’ claims for workers’ compensation. See In re UNR, June 14, 1994 Slip.Op. at 10. Moreover, it is clear that the pivotal basis of Judge Coar’s Paterson Classification Order was the Bloomington Classification Order. Judge Coai’ repeatedly and primarily relied upon his findings and conclusions in his Bloomington Classification Order.

The Paterson Workers further argue that Judge Aspen erred in his decision.

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Related

In Re UNR Industries, Inc.
212 B.R. 295 (N.D. Illinois, 1997)
In Re Carr Mill Mall Ltd. Partnership
201 B.R. 415 (M.D. North Carolina, 1996)

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Bluebook (online)
176 B.R. 472, 1994 U.S. Dist. LEXIS 18548, 1994 WL 722041, Counsel Stack Legal Research, https://law.counselstack.com/opinion/unr-industries-inc-v-paterson-factory-workers-ilnd-1994.