In re North American Refractories Co.
| Decision Date | 28 June 2002 |
| Docket Number | No. 02-21626(JKF).,No. 02-20198(JKF).,02-20198(JKF).,02-21626(JKF). |
| Citation | 280 B.R. 356 |
| Parties | In re NORTH AMERICAN REFRACTORIES COMPANY, et al., Debtor. In re 6/24/02 Agenda Item 17, Motion & Memorandum of Law by Reed & Armstrong for Creditor Minnesota Mining & Manufacturing Co. in Support of Motion to Transfer Cases Related to Chapter 11 Cases, Docket Nos. 301, 302, Motion 02-2177. In re Global Industrial Technologies, Inc., et al., Debtors. In re 6/24/02 Agenda Item 18, Motion & Memorandum by Thorp Reed & Armstrong for Creditor Minnesota Mining & Manufacturing Co. in Support of Motion to Transfer Cases Related to Chapter 11 Cases, Docket Nos. 209, 210, Motion No. 02-2262. In re 6/24/02 Agenda Item 19, Motion & Memorandum by Hopeman Brothers to Transfer Cases Related to Chapter 11 Cases, Docket Nos. 434, 435, Motion No. 3114 (Harbison-Walker). In re 6/24/02 Agenda Item 20, Motion & Memorandum by Hopeman Brothers to Transfer Cases Related to Chapter 11 cases, Motion No. 02-3115 (Docket Nos. 436, 437)(A.P. Green). |
| Court | U.S. Bankruptcy Court — Western District of Pennsylvania |
Paul M. Singer, Reed, Smith, Shaw & McClay, Pittsburgh, PA, for Debtor.
FINDINGS OF FACT AND CONCLUSIONS OF LAW STATED ON THE RECORD ON JUNE 24, 2002, IN ORAL OPINION
On June 5, 2002, I heard argument on the above captioned motions filed on behalf of 3M and Hopeman Brothers to transfer cases. At that time I informed the parties that I would render oral findings of fact and conclusions of law in court on June 24, 2002. The following is the typescript of my oral rendition on June 24, 2002. My findings of fact and conclusions of law are as follows:
1. THERE IS NO CLAIM. 3M has no claim cognizable in this bankruptcy case. Although "claim" is broadly defined in 11 U.S.C. § 101(5) and has been broadly interpreted by courts, not every conceivable future interest constitutes a claim for bankruptcy purposes. As a threshold matter, in order to have a claim for bankruptcy purposes, there must be a right to payment or a right to an equitable remedy. § 101(5)(A), (B). At this point neither 3M nor Hopeman Brothers has a right to a remedy with one exception: a judgment was entered against 3M in one of the state court cases. If 3M has a claim against the Debtors based on that judgment, its remedy in bankruptcy is to file a proof of claim in this court.
With respect to the asserted claims in the other state court actions pending against these movants, movants have no right to payment under Mississippi state law. 3M and Hopeman Brothers assert before me that they have common law contribution/subrogation claims. However, if they have no right to payment under state law, there is no right to payment under bankruptcy law unless the cause of action is created by the Bankruptcy Code. There is no bankruptcy-created right to payment for 3M or Hopeman Brothers under the circumstances presented here.
Illustrative of 3M's and Hopeman Brothers' position is that of the purported creditors in In re Utilimax.Com, Inc., 265 B.R. 63 (Bankr.E.D.Pa.2001). Although not a tort case, the court found that purported creditors who sought to join an involuntary petition did not satisfy the threshold requirement of holding a claim against the debtor because their claims were derivative of another creditor's claim which had been reassessed to others. Although 3M's and Hopeman Brothers' asserted claims are not derivative as such, they are based on the fact that 3M and Hopeman Brothers will suffer liability for their part in the state court plaintiffs' injuries, which were actually caused by Debtors' asbestos products so that if 3M and Hopeman Brothers are found liable in the state court action, they can recover against Debtors if they prove Debtors are liable to them. In 3M's case it is alleged that its dust masks failed to filter asbestos and Hopeman Brothers' alleged liability is apparently based on the fact that it installed asbestos-containing products manufactured by Debtors and others.
Under the common law, movants, as joint tortfeasors with Debtors (in different actions), would have no right of contribution if found liable. Wilson v. Giordano Insurance Agency, Inc., 475 So.2d 414 (Miss.1985). Formerly, Mississippi Code Ann. § 85-5-5 [repealed 1989] "recognizes a right of contribution amongst two or more joint tort-feasors after the claims against them have been reduced to judgment." Id. at 420, Robertson, J., dissenting. There was no contribution pre-judgment in a tort context under the former Mississippi law. Id. Current Mississippi law is not different. Section 85-5-7 provides that
... (2) [I]n any civil action based on fault, the liability for damages caused by two (2) or more persons shall be joint and several only to the extent necessary for the person suffering injury, death or loss to recover fifty percent (50%) of his recoverable damages.
(3) Except as otherwise provided in subsections (2) and (6) of this section, in any civil action based on fault, the liability for damages caused by two (2) or more persons shall be several only, and not joint and several and a joint tort-feasor shall be liable only for the amount of damages allocated to him in direct proportion to his percentage of fault. In assessing percentages of fault an employer and the employer's employee or a principal and the principal's agent shall be considered as one (1) defendant when the liability of such employer or principal has been caused by the wrongful or negligent act or omission of the employee or agent.
(4) Any defendant held jointly liable under this section shall have a right of contribution against fellow joint tort-feasors. A defendant shall be held responsible for contribution to other joint tort-feasors only for the percentage of fault assessed to such defendant.
Narkeeta Timber Company, Inc. v. Jenkins, 777 So.2d 39, 41-42 (Miss.2001). Subsection 6 of § 85-5-7 provides for a right of contribution only as to other defendants who were made party to the action. I will return to this issue later. With respect to allocation of liability among joint tortfeasors, the Mississippi Supreme Court in Narkeeta Timber continued:
In order to cure the problem of lack of contribution between joint tortfeasors, Mississippi instituted a third-party practice under Mississippi Rule of Civil Procedure 14. However, the usefulness of Rule 14 was greatly diminished if a joint tortfeasor had no substantive right of contribution such as the derivative or secondary liability of the third-party defendant to the third-party plaintiff. Miss.R.Civ.P. 14 cmt. In summary, prior to 1989, plaintiffs had the option to sue one, all or a select group of tortfeasors and collect full damages from those parties sued. Hall v. Hilbun, 466 So.2d 856, 879 (Miss.1985). Plaintiffs could recover the entire amount of the award from any single tortfeasor, no matter the allocation of fault. Id.
¶ 10. On July 1, 1989, the Legislature enacted Miss.Code Ann. § 85-5-7 (1999)1 wherein it modified the previous rule of law with regard to the amount of damages for which a tortfeasor could be held responsible. Under the old system, we had joint and several liability up to 100% of the judgment. Contrary to the statement of the Court in Hunter, § 85-5-7 does not abolish joint and several liability for up to 50% of the plaintiffs injuries and replace it with several liability. Estate of Hunter v. General Motors Corp., 729 So.2d 1264, 1274 (Miss.1999). Rather, § 85-5-7, by its express language, abolishes joint and several liability over 50% of the judgment and leaves untouched joint and several liability up to 50% of the judgment.
In Estate of Hunter v. General Motors Corporation, 729 So.2d 1264 (Miss.1999) (rehearing denied), the court said:
At first blush, § 85-5-7(4) appears to permit contribution, ...
Although Mississippi has enacted Mississippi Rules of Civil Procedure ("MRCP") Rule 14 providing for impleader, this rule is of little use to a defendant who lacks a substantive right of contribution. The comment to Rule 14 provides that:
Id. at 1275-76 (citations omitted).
In the Berry, et al. v. Combustion Engineering, Inc., et al. state court action in which Hopeman Brothers is involved, the court entered a case management order that provides on page 5 that claims for indemnity or contribution must be filed in accordance with Mississippi Rules of Civil Procedure but that
Cross-claims and Third Party Complaints for indemnity and/or...
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