In re Johns-Manville Corp.
| Decision Date | 26 January 1983 |
| Docket Number | Adv. No. 82-6377A 82-6451A and 82-6450A.,Bankruptcy No. 82 B 11656 |
| Citation | 26 BR 420 |
| Parties | In re JOHNS-MANVILLE CORPORATION, et al., Debtors. JOHNS-MANVILLE CORPORATION, et al., Plaintiffs, v. The ASBESTOS LITIGATION GROUP, John Doe and Each Other Member Thereof, For and on Behalf of Itself, its Attorneys, Agents and all other Persons Acting For or on its Behalf or on Behalf of the other Defendants Herein, and for and on Behalf of all Asbestos Health Claimants of and all Parties (other than the Debtors) to Asbestos-Related Litigation Brought against the Debtors and/or Former or Present Officers, Directors, Employees, Contractors, Consultants, Insurers, Sureties, Agents, and like Persons and Entities of the Debtors, GAF Corporation, For and on Behalf of itself and all Defendants (other than the Debtors) in any Asbestos-Related Litigation Against the Debtors and/or Former or Present Officers, Directors, Employees, Contractors, Consultants, Insurers, Sureties, Agents and Like Persons and Entities of the Debtors in any Asbestos-Related Litigation Against the Debtors and/or Present Officers, Directors, and Jeffrey Herrmann and Linda J. Herrmann, Defendants. OCCIDENTAL CHEMICAL CORPORATION, Plaintiff, v. JOHNS-MANVILLE CORPORATION, Debtor. Beatrice Mae HANSEN, individually and as an independent executrix of the estate of Andrew T. Hansen, deceased, Plaintiff, v. JOHNS-MANVILLE SALES CORPORATION, Debtor, Defendant. JOHNS-MANVILLE SALES CORPORATION, et al. v. Edward J. JANSSENS, Patsy J. Janssens, Wayne Hogan, Brown, Terrell & Hogan, P.A. and Ronald Motley, Respondents. |
| Court | U.S. Bankruptcy Court — Southern District of New York |
Levin & Weintraub & Crames, New York City, for debtors; Mitchell Perkiel and Herbert Edelman, New York City, of counsel.
Milbank, Tweed, Hadley & McCloy, New York City, for Creditors Committee; John Gellene, New York City, of counsel.
Jerome Feller, New York City, for SEC.
Moses & Singer, New York City, for Asbestos plaintiffs; Irving Picard and Robert J. Rosenberg, New York City, of counsel.
Anderson, Russell, Kill & Olick, New York City, for Keene Corp.; Arthur Olick, New York City, of counsel.
Weil, Gotshal & Manges, New York City, for Owens-Illinois; Ellen Werther and Richard Krasnow, New York City, of counsel.
Stroock & Stroock & Lavan, New York City, for Bank Creditors; Andrew DeNatale, New York City, of counsel.
Hannoch, Weisman, Stern, Besser, Berkowitz & Kinney, P.C., Newark, N.J., for GAF; Anthony J. Marchetta, Newark, N.J., of counsel.
Breed, Abbott & Morgan, New York City, for Lake Asbestos of Quebec; C. MacNeil Mitchell, New York City, of counsel.
Arvey, Hodes, Costello & Burman, Chicago, Ill., for Pittsburgh-Corning; Robert B. Chatz, Chicago, Ill., of counsel.
Wilentz, Goldman & Spitzer, Woodbridge, N.J., for Asbestos Litigation Group; Alan Darnell, Woodbridge, N.J., of counsel.
Gene Mesh, Co., L.P.A., Cincinnati, Ohio, for Jeffrey & Linda Herrmann; Richard S. Wayne, Cincinnati, Ohio, of counsel.
Conboy, Hewitt, O'Brien & Boardman, New York City, Carpenter, Bennett & Morrissey, Newark, N.J., for Occidental Chemical Corp.; Timothy M. Broas, New York City, James G. Gardner, Newark, N.J., of counsel.
David Berger, and Berger & Montague, P.C., Philadelphia, Pa., Wolf, Popper, Ross, Wolf & Jones, New York City, for Schools of 1109B Committee; Richard L. Eppinger, Philadelphia, Pa., Stanley Nemser, New York City, of counsel.
Arnold & Porter, Washington, D.C., for Inside Directors of Johns-Manville; Irvin B. Nathan, Washington, D.C., of counsel.
Chester B. Salomon, New York City, for Hansen; Chester B. Salomon and David Green, New York City, of counsel.
Zalkin, Rodin & Goodman, New York City, for American Mut. Liability Co.; Richard Toder, New York City, of counsel.
DeBevoise & Liberman, New York City, for Public Service Elec. & Gas, Pacific Gas & Elec. Southern Gas & Cal Edison; Rosalind Fuchsberg Kaufman, New York City, of counsel.
OMNIBUS DECISION ON THE VARIOUS PROCEEDINGS MOTIONS AND CROSS-MOTIONS BROUGHT REGARDING WHETHER THE AUTOMATIC STAY APPLIED TO MANVILLE'S EMPLOYEES, AGENTS, AND OTHER RELATED ENTITIES
This matter is before the court in the context of various adversary proceedings and motions. The principal proceeding concerns whether the automatic stay extends to the debtors, employees, agents and other related entities and is brought by the debtor, Johns-Manville Corporation ("Manville"). Manville requests declaratory relief to extend the automatic stay under Section 362 of title 11, United States Code ("the Code") to encompass various direct actions and discovery proceedings brought against present, former and future Manville officers, directors, employees, insurers, sureties and other agents. Manville urges this court by its amended complaint filed on November 22, 1982 to use its equitable powers to grant such an extension of the stay pursuant to Sections 362 and 105 of the Code. The debtor contends that these actions and proceedings against entities related to Manville are brought solely because these individuals or institutions either acted for Manville or are legally responsible for the Manville activities which purportedly gave rise to the very asbestos-related health claims stayed as to Manville.
On August 26, 1982, Manville and twenty of its subsidiaries or affiliates filed petitions for reorganization under title 11 of the Code. Manville continues to operate its business and manage its property as a debtor-in-possession under Sections 1107 and 1108 of the Code.
Manville is a diversified manufacturing, mining and forest products company conducting its business through five principal operating subsidiaries. Manville is the world's largest miner, processor, manufacturer and supplier of asbestos and asbestos-containing products.
Manville's financial difficulties are alleged to have arisen from its position as a defendant or co-defendant in the more than 11,000 asbestos-related personal injury and property damage suits brought by more than 15,500 plaintiffs in 46 states. Some court systems have more than 2000 asbestos suits presently pending. An average of 425 new asbestos lawsuits per month were brought against Manville pre-petition and it estimates that approximately 32,000 additional suits could be brought against it in the next 27 years.
Manville estimates its current cost for the suits at approximately $40,000 per case, including defense expenses, but excluding cases on appeal. Since 1981, Manville has been found liable for punitive damages in several asbestos lawsuits and anticipates additional punitive damages awards which would greatly increase its potential liabilities. According to a study commissioned by Manville, its potential liability attributable to asbestos litigation will not be less than $2 billion over the next twenty years. Manville represents that these enormous actual and potential liabilities constitute the principal reason for its Chapter 11 filing.
In addition, Manville is engaged in vital litigation with its insurance carriers regarding coverage for the claims asserted against it in the asbestos litigation. Most of Manville's insurance carriers have largely disclaimed coverage and have refused to conduct the defense of or to indemnify Manville from its liability in the asbestos litigation. At least twenty actions are now pending to resolve these questions. The difficulty in identifying the carrier which issued a particular insurance policy to Manville thirty or forty years ago has complicated the coverage issues. (For further data regarding the background of the instant proceeding, see facts sections in the accompanying decision on the Motion for Summary Judgment For Declaratory Relief to Extend the Stay to Encompass Co-Defendants ("the Co-Defendants Stay Extension Proceeding"), In re Johns-Manville, (GAF Corp., Keene Corp. et al. v. Johns-Manville Corp., et al.), Adversary Proceeding No. 82-6221A.)
This first claim also alleges that these defendants are attempting to achieve an "end run" by continuing to prosecute proceedings against Manville's employees, agents and others notwithstanding that these actions involve the same issues and subject matter as are involved in the stayed litigations against Manville.
In the second cause of action, Manville alleges that the continuation of discovery and related proceedings against "Employees, Agents and Others" in these 250 lawsuits "represents nothing more than procedural devices employed by certain of the Defendants to attempt to thwart and foil the fundamental debtor protection and effect of the automatic stay." See Amended Complaint ¶ 19. Manville also makes the same allegations as in the first cause of action as to the negative impact that such continued discovery will have on the reorganization of Manville's business.
The third cause of action seeks extention of the automatic stay to enjoin "direct action" lawsuits against insurers and sureties of the debtor to collect and recover claims against the debtor that arose before the Manville filing. Manville contends that these coverages represent property of its estate which must be preserved for the benefit of all creditors.
The fourth cause of action seeks extension of the automatic stay to enjoin the Herrman litigation, Herrman v....
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