Austin v. Unarco Industries, Inc., 82-1168

Decision Date30 March 1983
Docket NumberNo. 82-1168,82-1168
Citation705 F.2d 1
PartiesMargaret AUSTIN, etc., Plaintiff, Appellant, v. UNARCO INDUSTRIES, INC., et al., Defendants, Appellees.
CourtU.S. Court of Appeals — First Circuit

Patrick N. McTeague, Brunswick, Me., with whom G. William Higbee, Maurice A. Libner, Thomas R. Watson, McTeague, Higbee, Libner, Reitman & Priest, Brunswick, Me., Thomas W. Henderson, and Baskin & Sears, Pittsburgh, Pa., were on brief, for plaintiff, appellant.

Thomas R. McNaboe, Portland, Me., with whom Mark G. Furey, and Thompson, Willard & McNaboe, Portland, Me., were on brief, for Raybestos-Manhattan, Inc.

Peter W. Culley, Stephen C. Whiting, and Hewes, Culley, Feehan & Beals, Portland, Me., on brief, for Unarco Industries, Inc.

Before COFFIN, Chief Judge, CAMPBELL and BOWNES, Circuit Judges.

COFFIN, Chief Judge.

Factual and Procedural Background

This is an appeal of one segment of a complex collection of complaints by victims of asbestos-related cancer and their survivors against producers and suppliers of asbestos products used at Bath Iron Works from the mid 1950's until the early 1970's. Plaintiff's decedent, Blaine Austin, was employed at Bath Iron Works (BIW) from 1952 through the fall of 1976 as a painter and cleaner. He worked on board ships berthed in the Kennebec River at BIW, both on new ships berthed in the river after launching and on older ships brought into BIW for repair. His primary job was to follow behind the pipecoverers, who applied asbestos insulation products to the ships' pipes, boilers and other machinery, and paint over the asbestos insulation. He was also responsible for sweeping up asbestos scraps left by the pipecoverers. During both tasks, he breathed in asbestos fibers and dust created by the pipecoverers' cutting and shaping of the asbestos insulation. In November, 1976, plaintiff's decedent was diagnosed as having pleural mesothelioma, an asbestos-induced cancer of the lining of the lung. He died on October 13, 1977.

On June 14, 1978, plaintiff brought suit in the United States District Court for the District of Maine against a number of suppliers of asbestos to Bath Iron Works. Her complaint alleged jurisdiction based on diversity of citizenship and causes of action under Maine law in negligence, strict products liability and breach of warranty. Approximately 140 other complaints by present and former employees of either Bath Iron Works or Portsmouth Naval Shipyard, or their widows, were filed in the same court near the time plaintiff filed her complaint.

A number of the pretrial proceedings relating to the complaints of four of the plaintiffs, all based on injuries incurred at BIW, were consolidated. In May of 1981, five defendants moved for summary judgment against those four plaintiffs, based on the statute of limitations, lack of the privity of contract required under Maine law as a prerequisite to recovery for pre-1979 negligence or breach of warranty, and the inapplicability of Maine's strict liability statute to claims based on products supplied before the effective date of the statute, October 3, 1973. On August 7, 1981, the court granted the motions with a few minor exceptions. Plaintiff's claims against three of the manufacturer defendants, Johns-Manville Sales Corp., Unarco Industries, Inc. (Unarco) and Raybestos-Manhattan (Raybestos), were not disposed of on summary judgment and were tried together, beginning on November 2, 1981. Plaintiff and defendant Johns-Manville settled during the course of the trial.

At the close of plaintiff's evidence, defendant Unarco moved for a directed verdict on plaintiff's strict liability and breach of warranty claims. Defendant Raybestos made a similar motion at the close of all of the evidence. As to the breach of warranty claim, plaintiff indicated that she no longer intended to press the claim. She requested the strict liability count not be dismissed, but acknowledged that under Maine law, it appeared that a claim in strict liability could not be made based on products supplied before October 3, 1973. The court granted both motions, finding insufficient evidence that either defendant had supplied asbestos products to BIW subsequent to October 3, 1973 to warrant submitting the strict liability issue to the jury.

At the close of all of the evidence, plaintiff moved to strike defendants' comparative negligence defense. Defendants had introduced evidence that the decedent could have worn a respirator that would have reduced his risk of cancer, but that he had failed to do so. Plaintiff argued, in support of her motion, that there was insufficient evidence that plaintiff's decedent was aware that exposure to asbestos could cause serious disease; thus, he could not have been negligent in failing to wear a respirator. The court denied the motion.

After five weeks of trial, the jury returned a verdict in favor of defendants. The jury found that both Unarco and Raybestos were guilty of negligence that proximately caused Blaine Austin's mesothelioma and death, but that Austin was contributorily negligent and that his negligence was equal to or greater than that of the defendants. Under Maine's comparative negligence statute, therefore, recovery was barred. Judgment was entered for the defendants on December 8, 1981.

On December 11, 1981, plaintiff filed a motion for a new trial, alleging that the jury verdict was against the weight of the evidence. On December 17, 1981, plaintiff filed a motion for judgment n.o.v., alleging that there was no evidence that the decedent was contributorily negligent or, in the alternative, that the verdict was against the weight of evidence. The court denied both motions.

Plaintiff appealed to this court from the judgment against her and from a number of alleged errors in the proceedings below. After the filing of that appeal, but before argument, defendant Unarco filed a voluntary petition for reorganization under chapter 11 of the Bankruptcy Reform Act, 11 U.S.C. Sec. 101 et seq., in the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division. Upon notification of that petition, on August 5, 1982, this court stayed further proceedings in this appeal pending a final determination by the Bankruptcy Court. On October 1, 1982, the Bankruptcy Court issued an order authorizing plaintiff to pursue her appeal in this case against parties other than Unarco. The court noted that plaintiff had not sought to have the stay lifted against defendant Unarco, but determined that the automatic stay provisions of 11 U.S.C. Sec. 362 do not apply to the bankrupt defendant's solvent co-defendants. Plaintiff now seeks to pursue her appeal against Raybestos alone. Before proceeding to the merits of this appeal, we address defendant's contention that plaintiff should not be allowed to proceed against it alone.

I. Lifting of the Stay

The first issue before us is whether we should decide the merits of this appeal. On August 5, 1982, we stayed all proceedings in this case, pending a final determination by the Illinois Bankruptcy Court of the Chapter 11 bankruptcy proceeding voluntarily initiated by Unarco, one of the original co-defendants in this case. Since that time, the Bankruptcy Court has made clear its position that the automatic stay of all proceedings against bankrupt debtors provided by Sec. 362(a) of the Bankruptcy Code, 11 U.S.C. Sec. 362(a), applies only to the debtor and not to the debtor's solvent co-defendants. On the basis of that ruling, the plaintiff requested and received from the Bankruptcy Court on October 1, 1982, an order authorizing her to pursue her appeal in this court as to parties other than Unarco. On October 20, 1982, plaintiff requested this court to lift its stay of August 5, 1982 and to allow the appeal to proceed against Raybestos alone.

Raybestos does not urge that the Bankruptcy Court was wrong in deciding that the automatic stay provisions of 11 U.S.C. Sec. 362(a) apply only to the bankrupt debtor and not its solvent co-defendants. It argues, instead, that Unarco is a necessary party and that particularly because plaintiff made no effort to have the stay of proceedings against Unarco lifted, she should not be allowed to proceed against Raybestos alone.

As an initial matter and because we expect that the issue will arise again in this circuit, we express our judgment that the Bankruptcy Court was correct in deciding that the automatic stay provisions of 11 U.S.C. Sec. 362(a) apply only to the bankrupt debtor. We are persuaded by the reasoning of the Illinois Bankruptcy Court in Royal Truck and Trailer, Inc. v. Armadora Maritima Salvadorena, S.A. de C.V., 10 B.R. 488 (N.D.Ill.1981), and by a comparison of the stay provisions provided by Congress for a chapter 13 bankruptcy proceeding, which expressly include co-defendant debtors, with those provided for a chapter 11 bankruptcy proceeding, which make no mention of co-defendant debtors, that had Congress intended Sec. 362(a) to apply to solvent co-defendants, it would have said so. See also In re: Related Asbestos Cases, 23 B.R. 523 (N.D.Cal.1982); Aboussie Bros. Construction Co. v. United Missouri Bank of Kirkwood (In re Aboussie Bros. Construction Co.), 8 B.R. 302 (E.D.Mo.1981). Courts that have come to a different conclusion do not appear to have done so on the basis that Sec. 362 requires such a result, but rather that additional considerations warrant a stay as to all defendants. See, e.g., Federal Life Ins. Co. (Mutual) v. First Financial Group of Texas, Inc., 3 B.R. 375 (S.D.Tex.1980) (claims too interwoven to sever, although the bankruptcy court has authority to lift the stay as to less than all of the defendants); Rupp v. Cloud Nine Ltd. (In Re Cloud Nine, Ltd.), 3 B.R. 202 (Bkrtcy.D.N.M.1980) (relief from stay "will result in at best only a partial resolution of the issues and at worst will further complicate the issues and result in...

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