In re Celotex Corp., 8:90-bk-10016-PMG.

• Decision Date: 30 March 2007
• Docket Number: No. 8:90-bk-10016-PMG.,8:90-bk-10016-PMG.
• Citation: 380 B.R. 623
• Parties: In re The CELOTEX CORPORATION, Debtor.
• Court: U.S. Bankruptcy Court — Middle District of Florida

380 B.R. 623

In re The CELOTEX CORPORATION, Debtor.

No. 8:90-bk-10016-PMG.

United States Bankruptcy Court, M.D. Florida, Tampa Division.

March 30, 2007.

Andrew T. Jenkins, Jeffrey W Warren, Karen Cox, Shane G. Ramsey, Bush Ross, P.A., Michael G. Mardis, Sivyer Barlow & Watson, PA, Tampa, FL, Kevin E. Irwin, Cincinnati, OH, for Debtor.

ORDER ON MOTION OF TRAVELERS CASUALTY AND SURETY COMPANY TO CLARIFY APPLICATION OF THE CONFIRMATION INJUNCTIONS

GLENN, Chief Judge.

THIS CASE came before the Court for hearing to consider the Motion of Travelers Casualty and Surety Company to Clarify Application of the Confirmation Injunctions.

In the Motion, Travelers Casualty and Surety Company (Travelers) requests that the Court "enter an order clarifying that the Ontario Plaintiffs are barred from pursuing any claims in the Ontario Actions against the Attachment B-1 Released Policies." (Doc. 13782, p. 16).

Background

Prior to 1986, Carey Canada, Inc. (Carey Canada) engaged in asbestos mining and milling operations. In re The Celotex Corporation, 204 B.R. 586, 590 (Bankr. M.D.Fla.1996).

From November 8, 1976, through June 7, 1984, Carey Canada owned certain property located in the City of Barrie, Ontario, Canada, and used the property in connection with its operations. The property was sold to Canplas Industries Ltd. (Canplas) on June 7, 1984. (Doc. 13782, ¶¶ 21-22).

The Debtor, The Celotex Corporation (Celotex), and Carey Canada filed petitions under chapter 11 of the Bankruptcy. Code on October 12, 1990. Celotex owned all of the stock of Carey Canada as of that date.

On December 6, 1996, the Bankruptcy Court entered an Order Confirming the Plan of Reorganization for The Celotex Corporation and Carey Canada, Inc. In re The Celotex Corporation, 204 B.R. 586 (Bankr.M.D.Fla.1996). Section C.2 of the Order Confirming Plan is entitled "The Supplemental Injunction." Generally, the Supplemental" Injunction enjoins all Entities from recovering any judgment or award from any Released Party to the extent that the judgment or award relates to any Claim. Celotex, 204 B.R. at 621. The terms "Entities," "Released Party," and "Claim" are defined in the Order Confirming Plan and the Plan.

Seven years after the entry of the Order Confirming Plan, in December of 2003, Travelers entered into a Settlement Agreement with the Celotex Asbestos Settlement Trust. (Doc. 13373). Travelers, formerly known as The Aetna Casualty and Surety Company, had provided primary comprehensive general liability insurance policies to Celotex from approximately 1965 to approximately 1984. (Doc. 13373, ¶ 2). According to Travelers, the policies covered both "products claims" and "non-products claims." (Transcript, p. 10).

Pursuant to the Settlement Agreement between Travelers and the' Celotex Asbestos Settlement Trust:

Travelers settled all of the non-products issues between itself and the Trust as the — at that point, the representative of the Debtors. And it settled it for a payment to the Trust of a substantial amount in return for a full policy release and buyback of its operations policies. And those are the policies . . . that we refer to as the Attachment B-1 release policies.

(Transcript, p. 10). Generally, therefore, Travelers received a release of its liabilities under certain insurance policies described as the Attachment B-1 Released Policies in exchange for a significant payment to the Trust.

The Settlement Agreement was filed in camera on March 10, 2004. (Doc. 13390).

On March 18, 2004, the Court entered an Order Granting Amended Motion of the Celotex Asbestos Settlement Trust to Approve Confidential Settlement Agreement with Travelers Casualty and Surety Company and the Travelers Indemnity Company. (Doc. 13393).

In March of 2004, ITW Canada Management, Inc. (ITW) initiated the litigation that is the subject of the Motion currently before the Court. Apparently, ITW owns property that is adjacent to the property in Barrie, Ontario, that was previously owned by Carey Canada. ITW asserts that Carey Canada used a certain solvent in connection with its operations at the site, and that the chemical ultimately contaminated the groundwater and surrounding property.

As a result of various third-party claims and cross-claims that have been filed in the litigation, ITW, Canplas, and the Minister of Transportation (MTO) are collectively referred to as the "Ontario Plaintiffs."

Travelers contends that the Ontario Plaintiffs are seeking to proceed to trial and judgment against Carey Canada, and then to attempt to collect the judgment from the Attachment B-1 Released Policies.

According to Travelers, the Ontario Plaintiffs' pursuit of their claims against the Attachment B-1 Released Policies is a violation of the Supplemental Injunction contained in the Order Confirming Plan. (Doc. 13782, p. 10).

Discussion

The specific relief requested by Travelers is limited in its scope. Travelers seeks an order determining that "the Ontario Plaintiffs are barred from pursuing any claims in the Ontario Actions against the Attachment B-1 Released Policies." (Doc. 13782, p. 16).

The Court finds that the relief requested by Travelers should be granted.

A. The Supplemental Injunction

First, the Court has reviewed the Order Confirming Plan that was entered on December 6, 1996. 204 B.R. 586.

Section C.2 of the Order Confirming Plan is entitled "The Supplemental Injunction." The Supplemental Injunction provides in part:

26. In order to preserve and promote the settlements contemplated by and provided for in the Plan and to supplement the injunctive effect of the discharge provided by the Bankruptcy Code and the Plan, and pursuant to the exercise of the equitable jurisdiction and power of the Court under Sections 524(g) and 105(a) of the Bankruptcy Code, all Entities which have held or asserted, which hold or assert or which may in the future hold or assert any claim, demand or cause of action (including, but not limited to, any Asbestos Claim, or any claim or demand for or respecting any Trust Expense) against the Released Parties (or any of them) based upon, relating to, arising out of, or in any way connected with any Claim, whenever and wherever arising or asserted (including, but not limited to, all thereof in the, nature of or sounding in tort, contract, warranty or any other theory of law, equity or admiralty) or Interest shall be permanently stayed, restrained and enjoined from taking any action for the purpose of directly or indirectly collecting, recovering or receiving payments, satisfaction or recovery with respect to any such claim, demand, cause of action or Interest, including, but not limited to:

(b) enforcing, attaching, collecting or recovering, by any manner or means, any judgment, award, decree or order against any of the Released Parties or against the property of any Released Party with respect to any such claim, demand, cause of action or Interest.

204 B.R. at 621.

As used in the Order Confirming Plan, the term "Entity" means "any Person, estate, trust, Governmental Unit, or the United States Trustee." (Doc. 9644, Modified Joint Plan of Reorganization under Chapter 11 of the United States Bankruptcy Code for the Celotex Corporation and Carey Canada, Inc., ¶ 1, 70).

The term "Claim" means a "right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured." (Doc. 9644, Modified Joint Plan, ¶ 1.45; 11 U.S.C. § 101(5)).

The term "Released Parties" means the Debtors, the Official Committees, and other designated parties that expressly include "the Settling Asbestos Insurance Companies named in this Order but only to the extent such Settling Asbestos Insurance Companies specifically contracted (i) to obtain the benefits of the Supplemental Injunction or (ii) to be a Released Party." 204 B.R. at 622.

Finally, pursuant to the Order Confirming Plan, the Supplemental Injunction in favor of a Settling Asbestos Insurance Company is "strictly limited in scope to those matters expressly resolved by the settlement agreement involving the Debtors and such insurer." 204 B.R. at 624.

B. The Settlement Agreement

Second, the Court reviewed the Settlement Agreement that was entered by the Celotex Asbestos Settlement Trust and Travelers in December of 2003. The Settlement Agreement was filed in camera. (Doc. 13390).

The specific terms of the Settlement Agreement are confidential. Essentially, however, it appears that Travelers paid a Settlement Amount to the Celotex Asbestos Settlement Trust in consideration of the Trust's release of Travelers from all Claims arising under or related to the Celotex Policies. (Settlement Agreement, ¶ 4).

The "Celotex Policies," as a defined term in the Settlement Agreement, expressly includes the policies listed in Attachment B-1 to the Settlement Agreement. (Settlement. Agreement, ¶ l.h).

Additionally, the term "Claim" as defined in the Settlement Agreement specifically includes all "past, present or future" claims against Travelers under the Celotex Policies. (Settlement Agreement, ¶ 1.i; Doc. 13782, p. 14).

The Court entered an Order Granting Amended Motion of the Celotex Asbestos Settlement Trust to Approve Confidential Settlement Agreement with Travelers Casualty and Surety Company and the Travelers Indemnity Company on March 18, 2004. (Doc. 13393). In the Order, the Court approved the Settlement Agreement, and further provided that the:

Settlement Agreement is deemed to be an "Asbestos Insurance Settlement Agreement" (as defined in"the Plan) and that Travelers (as defined in the Settlement Agreement) is deemed to be a "Settling Asbestos Insurance Company" (as defined in the Plan) as to (1) the Settlement Agreement and (2) the 1996 Settlement Agreement (as defined in the Settlement Agreement).

(Doc. 13393, p. 2)(Emphasis supplied). Accordingly, in accordance with the Order,...