710 F.2d 1194 (6th Cir. 1983), 83-3124, Lynch v. Johns-Manville Sales Corp.

Docket Nº:83-3124, 83-3125, 83-3126),
Citation:710 F.2d 1194
Party Name:Lincoln LYNCH, et al., Plaintiffs-Appellees, v. JOHNS-MANVILLE SALES CORPORATION, et al., Defendants, Raymark Industries, Inc., et al., Defendants-Appellants (83-3118, 83-3120, 83-3121, 83-3122, 83-3123,
Case Date:July 01, 1983
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
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Page 1194

710 F.2d 1194 (6th Cir. 1983)

Lincoln LYNCH, et al., Plaintiffs-Appellees,

v.

JOHNS-MANVILLE SALES CORPORATION, et al., Defendants,

Raymark Industries, Inc., et al., Defendants-Appellants

(83-3118, 83-3120, 83-3121, 83-3122, 83-3123,

83-3124, 83-3125, 83-3126),

Armstrong World Industries, Defendant-Appellant (83-3119),

National Gypsum Company, Defendant-Appellant (83-3127).

Nos. 83-3118, 83-3119, 83-3120, 83-3121, 83-3122, 83-3123,

83-3124, 83-3125, 83-3126 and 83-3127.

United States Court of Appeals, Sixth Circuit

July 1, 1983

Argued May 24, 1983.

Page 1195

Frederick J. McGavran, Frost & Jacobs, Cincinnati, Ohio, for defendants in No. 3118.

Jack McGowan, Baden, Jones, Scheper & Crehan Co., L.P.A., Hamilton, Ohio, for defendant-appellant in No. 3119.

John P. Harrington, Cincinnati, Ohio, for plaintiffs-appellees in No. 83-3118 and 83-3119.

Neil F. Freund, Young & Alexander Co., L.P.A., Dayton, Ohio, for Keene Bldge. in Nos. 3118, 3120, 3123, 3124 and 3125.

John H. Burtch (argued), Baker & Hostetler, Columbus, Ohio, for GAF Corp. in Nos. 3118, 3120, 3121, 3122, 3124 and 3125.

Michael D. Eagen, Bloom & Greene Co., L.P.A., Cincinnati, Ohio, for Celotex Corp. in Nos. 3118, 3120, 3121, 3122, 3123, 3124 and 3125.

Thomas M. Green (argued), Dayton, Ohio, for defendants-appellants in all cases.

Antonio D. Pyle, Joan P. Feldman, Pittsburgh, Pa., Melvin I. Friedman, Kreindler & Kreindler, New York City, for plaintiffs-appellees in Nos. 3120, 3121, 3123 and 3126.

Richard D. Heiser, Strauss, Troy & Ruehlmann, Co., L.P.A., Cincinnati, Ohio, for defendant-appellant in No. 83-3127.

Thomas W. Henderson, Baskin & Sears, Pittsburgh, Pa., Fredric Tilton, Cincinnati, Ohio, for plaintiffs-appellees in Nos. 3120, 3121, 3122, 3123, 3124, 3125 and 3126.

Thomas H. Terry, III (argued), Robert E. Sweeney Co., L.P.A., Cleveland, Ohio, for plaintiffs-appellees in all cases.

Before ENGEL and KRUPANSKY, Circuit Judges, and BROWN, Senior Circuit Judge.

KRUPANSKY, Circuit Judge.

These consolidated appeals join inquiry into the legal impact upon pending asbestos actions of petitions for reorganization which have been filed pursuant to Chapter 11 of the Bankruptcy Code, 11 U.S.C.

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Sec. 1101 et seq. (Code), by Unarco Industries, Inc. (Unarco) 1 and Johns-Manville Sales Corporation (J-M), 2 both of which are defendants in thousands of asbestos cases pending in the state and federal forums throughout the nation. As Chapter 11 petitioners, all proceedings against Unarco and J-M were automatically stayed by the mandate imposed by 11 U.S.C. Sec. 362. The bankruptcy court presiding over J-M's petition has refused to broaden the automatic stay of proceedings afforded the debtor under Sec. 362 to the co-defendants of J-M in asbestos actions pending throughout the country. It has also refused to permit the suits against J-M to proceed to judgment. See: In re Johns-Manville Corporation, et al., 26 B.R. 420, adversary proceeding No. 82-6221A, Decision No. 1 (Bkrtcy.S.D.N.Y.1983). Similarly, the bankruptcy court presiding over Unarco's petition has refused to lift the stay against Unarco. See: In re UNR Industries, Inc., 23 B.R. 144 (Bkrtcy.N.D.Ill.1982). The removal of Unarco and J-M as defendants in thousands of pending asbestos actions has generated concern by co-defendants who characterize themselves as "minor" defendants.

The two Chapter 11 debtors, Unarco and J-M, were party defendants in Lynch v. Johns-Manville Sales Corporation, et al., 23 B.R. 750, pending before Judge Spiegel, United States District Court for the Southern District of Ohio. Two solvent defendants in Lynch, Raymark Industries and Keene Corporation, moved the court for a stay of the proceedings pending against them under 11 U.S.C. Sec. 362, Rule 19, Fed.R.Civ.P., and the court's inherent powers. The motions were denied by memorandum opinion and order dated October 5, 1982. The order was subsequently adopted by reference in denial of similar motions by other solvent co-defendants of Unarco and/or J-M in other asbestos actions pending before Judge Spiegel. Bender v. Johns-Manville Sales Corp., et al., No. C-1-81-900; Burke v. Johns-Manville Sales Corp., et al., No. C-1-81-289; Carle v. Johns-Manville Sales Corp., et al., No. C-1-82-214; Chaddock v. Johns-Manville Sales Corp., et al., No. C-1-82-501; Goad v. Johns-Manville Sales Corp., et al., No. C-1-82-127; Phillips v. Johns-Manville Sales Corp., et al., No. C-1-82-299; and Milford v. Dana Corp., No. C-1-82-362. The foregoing orders denying motions to stay these asbestos proceedings were certified by the district court for immediate appeal pursuant to 28 U.S.C. Sec. 1292(b) and this Court granted applications for permission to appeal. Lincoln Lynch, et al. v. Johns-Manville Sales Corp., et al., 701 F.2d 42 (6th Cir.1983).

Confronting the initial inquiry of whether the automatic stay provision, 11 U.S.C. Sec. 362(a), may be invoked by the solvent co-defendants of Unarco and J-M to stay proceedings against them, it is noted that said provision facially stays proceedings "against the debtor" and fails to intimate, even tangentially, that the stay could be...

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