Amatex Corp., In re
| Decision Date | 02 April 1985 |
| Docket Number | Nos. 83-1843,83-1868,s. 83-1843 |
| Citation | 755 F.2d 1034 |
| Parties | , 12 Collier Bankr.Cas.2d 147, 12 Bankr.Ct.Dec. 1373, Bankr. L. Rep. P 70,279 In re AMATEX CORPORATION, Formerly Known As American Asbestos Textile Corporation. Appeal of AMATEX CORPORATION, Debtor-in-Possession, in 83-1843. In re AMATEX CORPORATION, Formerly Known As American Asbestos Textile Corporation. Appeal of Peter John ROBINSON, proposed intervenor, in 83-1868. |
| Court | U.S. Court of Appeals — Third Circuit |
J. Gregg Miller, Jan Z. Krasnowiecki (argued), Barbara H. Sagar, Pepper, Hamilton & Scheetz, Philadelphia, Pa., for Amatex Corporation appellant in 83-1843.
Michael L. Goldberg, Philadelphia, Pa. (argued), George M. Rosenberg, Charles B. O'Reilly, Greene, O'Reilly, Agnew & Broillet, Los Angeles, Cal., for Peter John Robinson appellant in 83-1868.
Pace Reich (argued), Pincus, Verlin, Hahn, Reich & Goldstein, Philadelphia, Pa., for Creditors' Committee of Asbestos Litigants appellee in 83-1843.
Peter A. Dunn (argued), Nathan B. Feinstein, Philadelphia, Pa., for American Universal Insurance Company appellee in 83-1843.
Mitchell S. Pinsly, Margolis, Edelstein, Scherlis, Sarowitz & Kraemer, Philadelphia, Pa., for Interstate Fire & Casualty Company appellee in 83-1843.
Before SEITZ and ADAMS, Circuit Judges, and LACEY, District Judge *
Asbestos related cases have reached almost epidemic proportions in our nation's legal system. In this appeal, we must decide, after first determining that we have jurisdiction, whether future asbestos claimants--individuals who have been exposed to asbestos but have not yet manifested symptoms of asbestos-related diseases--are entitled to have a voice in the reorganization of an asbestos manufacturer that has filed for protection under the bankruptcy laws. Because we believe it is important that such individuals have a representative to protect their interests in any discharge of Amatex' debts, we will reverse the decision of the district court and direct that the motion for the appointment of a representative for future claimants be granted.
Amatex, formerly American Asbestos Textile Corp., is a company engaged in the manufacture and sale of fire resistant industrial textiles, many of which contain asbestos. On November 1, 1982, the company filed a voluntary petition for relief under chapter 11 of the Bankruptcy Reform Act of 1978 (1978 Act), 11 U.S.C. Secs. 1101 et seq. (1982). As of that date more than 16,000 suits claiming damage from exposure to asbestos had been filed nationwide against asbestos miners, manufacturers, and installers. Amatex is named as a co-defendant in 9,843 of these cases in which the plaintiffs are seeking in the aggregate well over a billion dollars in damages. Amatex' total liability insurance is approximately 9 million dollars. 1 The potential liability of Amatex from the lawsuits and the associated defense costs formed the basis of the company's "insolvency" for purposes of its chapter 11 petition.
On December 15, 1982, the bankruptcy court ordered the appointment of a Creditors' Committee of Asbestos Litigants (Creditors' Committee) to represent plaintiffs having asbestos related claims currently pending against Amatex. The order made no provision for potential future claimants. Accordingly, on December 23, 1982, Amatex filed an application in bankruptcy court requesting the appointment of a guardian ad litem to represent future asbestos claimants on all issues before the court, including the question whether such latent claims could be provided for in the debtor's plan of reorganization.
The Creditors' Committee, on January 12, 1983, filed an objection to Amatex' request in the bankruptcy court. On the same date, based on the Supreme Court's decision in Northern Pipeline Construction Co. v. Marathon Pipeline Co., 458 U.S. 50, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982), the Creditors' Committee also filed a motion in the district court to withdraw the reference of the guardian ad litem matter and to have the petition assigned to the district court. Thereafter, Judge Giles of the District Court for the Eastern District of Pennsylvania assumed jurisdiction over the application to appoint a guardian ad litem, and re-referred the matter to the bankruptcy judge for findings, recommendations, and a proposed order. At the same time Peter John Robinson, who professes to be a future claimant, sought to intervene in the proceedings to oppose the appointment of a legal representative to protect individuals similarly situated to himself.
In March of 1983, Amatex filed with the bankruptcy court a tentative plan of reorganization that included participation by future claimants. The Creditors' Committee opposed the plan and requested in the alternative the liquidation of Amatex under chapter 7 of the Code, 11 U.S.C. Secs. 701 et seq. (1982). On May 26, 1983, the bankruptcy judge filed an opinion and report, holding (1) that future claimants have no right to participate in any distribution of the debtor's estate because they are not "creditors" and do not hold "claims" as defined by the Code, and (2) that therefore no need to appoint a representative for future claimants exists because their "claims" are not dischargeable. In re Amatex, 30 B.R. 309 (Bankr.E.D.Pa.1983). After argument, the district court, by memorandum opinion and order, adopted the proposed findings and conclusions of the bankruptcy court. 37 B.R. 613 (E.D.Pa.1983). The district judge also denied Robinson's motion to intervene. Amatex and Robinson have appealed these rulings to this Court.
On July 25, 1984, after the passage of the Bankruptcy Amendments and Federal Judgeship Act of 1984 (1984 Act), Pub.L. 98-353, 98 Stat. 333 (1984), which sought to revest bankruptcy courts with power to adjudicate "core" bankruptcy matters, Chief Judge Luongo of the District Court for the Eastern District of Pennsylvania entered an order referring all bankruptcy cases back to the bankruptcy court. As a result, Bankruptcy Judge King currently has jurisdiction over Amatex' chapter 11 proceedings, except for this appeal.
We must first address the question of our appellate jurisdiction. Because of the enactment of the 1984 Act, appellate jurisdiction in this case must derive from 28 U.S.C. Sec. 1291 (1982). The Bankruptcy Reform Act of 1978 contained a separate provision for appellate review in bankruptcy cases. Section 1293(b) of the 1978 Act declared that
a court of appeals shall have jurisdiction of an appeal from a final judgment, order, or decree of an appellate panel created under section 160 or a District court of the United States or from a final judgment, order, or decree of a bankruptcy court of the United States if the parties to such appeal agree to a direct appeal to the court of appeals.
28 U.S.C. Sec. 1293(b) (omitted by Pub.L. 98-353, title I, Sec. 113, 98 Stat. 343 (1984)).
The 1984 Act, which became effective on July 10, 1984, appears to have deleted Sec. 1293 and substituted a new provision governing appellate review which is codified at 28 U.S.C. Sec. 158 (1984). 2 Accordingly, it is necessary to ascertain whether the procedures set forth in the 1978 Act or the 1984 Act govern this appeal. In this regard, section 122(a) of the 1984 Act makes clear that portions of the 1984 Act regarding appellate jurisdiction became effective on July 10, 1984, the day of enactment. 3 Thus all cases and appeals filed after the effective date are to be governed by the procedural provisions of the 1984 Act.
It is essential to determine, however, whether title I of the 1984 Act also applies to matters pending before the effective date of the Act but not decided until after that date--the situation presented by this appeal. In this respect, section 122(b) of the 1984 Act specifically provides that certain designated sections of title I of the new Act "shall not apply with respect to cases under title 11 ... that are pending" on July 10, 1984. Since none of these statutory exceptions are applicable here, we conclude that the 1984 Act controls the present appeal. This result follows the general rule that "a court is to apply the law in effect at the time it renders its decisions, unless doing so would result in manifest injustice or there is statutory direction or legislative history to the contrary." Bradley v. School Board of Richmond, 416 U.S. 696, 711, 94 S.Ct. 2006, 2016, 40 L.Ed.2d 476 (1974); see In re Osborne, 42 B.R. 988, 992-93 (W.D.Wis.1984) (); see also In re Riggsby, 745 F.2d 1153 (7th Cir.1984) ().
Under the 1984 Act, the new provision governing appellate procedure is 28 U.S.C. Sec. 158 which provides that
(a) The district courts of the United States shall have jurisdiction to hear appeals from final judgments, orders, and decrees, and, with leave of the court, from interlocutory orders and decrees, of bankruptcy judges entered in cases and proceedings referred to the bankruptcy judges under section 157 of this title. An appeal under this subsection shall be taken only to the district court for the judicial district in which the bankruptcy judge is serving.
(b)(1) The judicial council of a circuit may establish a bankruptcy appellate panel, comprised of bankruptcy judges from districts within the circuit, to hear and determine, upon the consent of all the parties, appeals under subsection (a) of this section.
(2) No appeal may be referred to a panel under this subsection unless the district judges for the district, by majority vote, authorize such referral of appeals originating within the district.
(3) A panel established under this section shall consist of three bankruptcy judges, provided a bankruptcy judge may not hear an appeal originating within a district for which the...
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