In re G–I Holdings, Inc.
Decision Date | 13 August 2012 |
Docket Number | Nos. 01–30135 (RG), 01–38790 (RG).,s. 01–30135 (RG), 01–38790 (RG). |
Citation | 477 B.R. 542 |
Parties | In re G–I HOLDINGS, INC., et al. (f/k/a GAF Corporation), Debtors. |
Court | U.S. Bankruptcy Court — District of New Jersey |
OPINION TEXT STARTS HERE
Riker, Danzig, Scherer, Hyland & Perretti, LLP, By: Dennis J. O'Grady, Esq., Mark E. Hall, Esq., Morristown, NJ, Co-counsel for the Reorganized Debtors.
Quinn Emanuel Urquhart & Sullivan, LLP, By: Andrew J. Rossman, Esq., Scott C. Shelley, Esq., New York, NY, Co-counsel for the Reorganized Debtors.
Sandak, Hennesey & Greco, LLP, By: Marc J. Kurzman, Esq., Stamford, CT, Co-counsel for the Reorganized Debtors.
Greenberg Traurig, LLP, By: Alan J. Brody, Esq., Alexander J. Anglim, Esq., Florham Park, NJ, for Pfizer, Inc.
Jones Day, By: Dan B. Prieto, Esq., Dallas, TX, for United States Gypsum Company.
Wilk Auslander, LLP, By: Stephen D. Hoffman, Esq., New York, NY, for Quigley Company, Inc.
This matter comes before the Court on the Motion of G–I Holdings, Inc. for Summary Judgment Respecting Claims of Three Former Members of the Center for Claims Resolution, Inc.: (1) Quigley Co., Inc.; (2) United States Gypsum Co.; and (3) Pfizer, Inc., pursuant to Rule 56 of the Federal Rules of Civil Procedure, made applicable in bankruptcy cases by Rule 7056 of the Federal Rules of Bankruptcy Procedure. On February 9, 2011, this Court held a hearing and reserved decision. The following constitutes the Court's findings of fact and conclusions of law.
The Court need not recite the entire procedural history of this case, but some background is necessary to adjudicate the instant claims objection. 1 On January 5, 2001, G–I Holdings, Inc. (“G–I”) filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) and continued to operate its business as a debtor-in-possession. On August 3, 2001, ACI, Inc. (“ACI”), a subsidiary of G–I, also filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code. Pursuant to this Court's Order on October 10, 2001, the two cases have been jointly administered.2
On January 25, 2001, the Office of the U.S. Trustee appointed the Official Committee of Unsecured Creditors pursuant to 11 U.S.C. § 1102(a), ECF No. 87, and on October 10, 2001, the Court appointed C. Judson Hamlin as Legal Representative—a fiduciary representative of the interests of persons holding present and future asbestos-related claims against G–I, ECF No. 603. Chief Judge Garrett Brown of the U.S. District Court for the District of New Jersey and this Court, by Order dated November 12, 2009, jointly approved the Debtors' Eighth Amended Joint Plan of Reorganization. ECF No. 9787.
G–I is the successor-in-interest to GAF Corporation (“GAF”), an entity named in approximately 500,000 asbestos-related lawsuits. See G–I Holdings, Inc. v. Parties Listed On Ex. A (In re G–I Holdings, Inc.), 313 B.R. 612, 621 (Bankr.D.N.J.2004). The Committee submitted that, as successor-in-interest to GAF, G–I remained liable for approximately 150,000 asbestos-related lawsuits filed but unresolved as of the Petition Date and for unknown numbers of asbestos-related claims that would be filed in the future. Id.
In early 1994, GAF Building Materials Corporation, an indirect subsidiary of GAF, formed Building Materials Corporation of America (“BMCA”), a wholly-owned subsidiary corporation.3 BMCA received substantially all of the assets of GAF's roofing products business and expressly assumed $204 million of asbestos-related liability. G–I indemnified BMCA against any additional asbestos-related liability; BMCA is G–I's primary operating subsidiary and principal asset.4Id.
The Center for Claims Resolution, Inc. (CCR) is a non-profit, non-stock corporation organized under the General Corporation Law of Delaware, Del.Code Ann. tit. 8, § 101 et seq. The CCR was incorporated in September 1988 to “administer and arrange for the evaluation, settlement, payment, and defense of asbestos-related bodily injury claims.” CCR Certif. of Incorp. art. III, Rossman Decl. ex. 1, at 2, July 15, 2010, ECF No. 10275–3.
The Producer Agreement Concerning Center for Claims Resolution (“Producer Agreement”) established the CCR as a claims handling facility for its members, all “producers” 5 of asbestos or asbestos-containing products. See By–Laws of Center for Claims Resolution art. III § 1, Rossman Decl. ex. 2, July 15, 2010, ECF No. 10275–4 (“CCR By–Laws”). The “Participating Producers” 6 were named in a “substantial number” of asbestos-related personal injury claims and “deem[ed] it beneficial to have an organization that [would] administer and handle asbestos-related claims on behalf of more than one Producer,” in order to, “on behalf of all Participating Producers, resolve meritorious asbestos-related claims in a fair and expeditious manner and, where necessary, defend asbestos-related claims efficiently and economically.” Producer Agreement, Rossman Decl. ex. 3, at 1–2, July 15, 2010, ECF No. 10275–5.7 The Participating Producers also based the Producer Agreement on a “desire to enter into a constructive relationship with one another and to resolve any cross or counter claims that [the Producers] may have against each other.” Id. at 2.
Pursuant to its Certificate of Incorporation and By–Laws, the CCR issued no capital stock, but had members, who initially included all Producer Agreement signatories. A five-person Board of Directors, made up of the CCR's Chief Executive Officer and four directors who are employed by different members, manage its affairs. CCR By–Laws art. III § 1–4, art. V; CCR Certif. of Incorp. arts. III–V; see also Mot. Summ. J. Against Certain Former Members of the Cen. for Cls. Resolution 4–5, ECF No. 10275 (“Summ. J. Mot.”); G–I Holdings Omnibus Mem. in Supp. of Mot. for Summ. J., July 15, 2010, ECF No. 10275–1 (“Summ. J. Mem.”); Joint Mem. of L. of U.S. Gypsum Co., Pfizer, Inc. & Quigley Co. in Resp. to Mot. for Summ. J. 1, Sept. 9, 2010, ECF No. 10302 (“Joint Opp'n Mem.”).
The Producer Agreement sets forth the CCR's roles and responsibilities as the agent for its members:
The Center shall administer, evaluate, settle, pay or defend all asbestos-related claims in a fair, cost-effective and expeditious manner. The Center shall handle each asbestos-related claim on behalf of all Participating Producer members, and shall not settle an asbestos-related claim on behalf of fewer than all Participating Producer Members.
Producer Agreement § VIII, ¶ 1, at 10–11 (“Claims Center Handling”). 8 The CCR is authorized to “make payments and settle claims on behalf of Participating Producer members....” Id. § VIII, ¶ 6, at 12. “As sole agent, the Center shall have exclusive authority and discretion to administer, evaluate, settle, pay or defend all asbestos-related claims....” Id. § IV, ¶ 1, at 8.
The CCR also billed and collected from the members and/or their insurers each member's allocated shares of certain liability payments and expenses. The CCR Decl. of Joseph Jordan, CCR Chief Financial Officer, Prieto Decl. ex. 1 ¶¶ 10, 12, Sept. 9, 2010, ECF No. 10302–1 ( ).
Members also have several roles and responsibilities with respect to in the CCR. First, by becoming a member, a Producer
designates the Center as its sole agent to administer and arrange on its behalf for the evaluation, settlement, payment or defense of all asbestos-related claims against such Participating Producer. As sole agent, the Center shall have exclusive authority and discretion to administer, evaluate, settle, pay or defend all asbestos-related claims, including the right to delegate to any person, upon consent of the Participating Producer in question, such authority and discretion with respect to designated asbestos-related claims against such Participating Producers.
Producer Agreement § IV, ¶ 1, at 7–8.
Members are responsible for paying their apportioned share of liability payments and “a percentage share of allocated expenses attributable to each claim handledby the Center.” Id. § VI, at 9–10. The CCR determined shares as provided in Attachment A to the Producer Agreement, and the apportionment established “the responsibility of each Participating Producer for a percentage share of liability payments and a percentage share of allocated expenses attributable to each claim handled by the Center as sole agent for such Participating Producer under [Producer Agreement] Section IV.” Id. § VI, at 9. The Agreement further provides: “To the extent that a Participating Producer's percentage shares of liability payments and allocated expenses attributable to a particular asbestos-related claim are not paid in a timely-manner by one or more of its Insurers ... such Participating Producer shall pay in a timely manner the percentages of liability payments and allocated expenses in question.” Id. at 10.
Under the Producer Agreement, “[i]n the event that any Participating Producer's percentage shares of liability payments or allocated expenses are not paid in a timely manner, the Center's Board of Directors may direct the Center to institute an [alternative dispute...
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