In re Quigley Co., Inc., Bankruptcy No. 04-15739 (SMB).
| Decision Date | 30 January 2007 |
| Docket Number | Adversary No. 04-04262.,Bankruptcy No. 04-15739 (SMB). |
| Citation | 361 B.R. 670 |
| Parties | In re QUIGLEY COMPANY, INC. Debtor. Quigley. Company, Inc., Plaintiff, v. A.C. Coleman, The Other Parties Listed on Exhibit a to the Complaint, John Does 1-1000 and Jane Does 1-1000, Defendants. |
| Court | U.S. Bankruptcy Court — Southern District of New York |
Schulte Roth & Zabel LLP, Michael L. Cook, Esq., Lawrence V. Gelber, Esq., of counsel, New York, NY, for Plaintiff Quigley Company, Inc.
Cadwalader, Wickersham & Taft LLP, Bruce R. Zirinsky, Esq., John H. Bae, Esq., Jason A. Cohen, Esq., of counsel, New York, NY, for Pfizer, Inc.
Sheppard, Mullin, Richter & Hampton LLP, Michael H. Ahrens, Esq., Steven B. Sacks, Esq., Mary L. Johnson, Esq., Jeffrey K. Rehfeld, Esq., of counsel, New York, NY, for Janet Warren, W. Jean Evans and Leanne Shipman.
On the same day that Quigley Company, Inc. ("Quigley") filed this asbestos bankruptcy case, it also filed an adversary proceeding, which culminated in an order preliminarily enjoining asbestos-related litigation (the "Preliminary Injunction") against its non-debtor parent, Pfizer Inc. ("Pfizer"). Three personal-injury plaintiffs, Janet Warren, W. Jean Evans and Leanne Shipman (collectively, the "Claimants") filed the instant motion for relief from the preliminary injunction to sue Pfizer on account of asbestos-related claims. Quigley and Pfizer strenuously opposed the motion.
The Claimants were not parties to this adversary proceeding, and contend that they did not have any notice of the application for a preliminary injunction. Under the circumstances, they are entitled to their day in court. Accordingly, the Court will schedule an evidentiary proceeding to resolve the issues raised by their motion.
Pfizer is a well-known pharmaceutical company, and at all relevant times, owned liability insurance. In 1963, Pfizer acquired Coty, Inc., a cosmetics company. Coty manufactured a product known as Coty Airspun Face Powder, which allegedly contained an asbestos product. Pfizer sold Coty in 1992, but while it was a Pfizer subsidiary, it was covered by Pfizer's liability insurance.
In 1968, Pfizer acquired Quigley. Quigley was engaged in the refractories business, and manufactured and sold products that contained asbestos. After Quigley became a Pfizer subsidiary, it was also covered by Pfizer's liability insurance. Quigley subsequently sold substantially all of its assets to a third-party, and retained the liabilities stemming from products sold prior to the sale of its business. Since then, Quigley's principal business has been the management of personal injury claims brought against it by persons allegedly exposed to asbestos-containing products formerly made, used or sold by Quigley.
By the time Quigley filed this chapter 11 case on September 3, 2004, it was defending against over 160,000 asbestos-related lawsuits and claims. Pfizer had also been sued. Many of the lawsuits asserted derivative claims against Pfizer based upon its relationship to Quigley (the "Pfizer Derivative Claims"). Others asserted claims that arose from Pfizer's former connection with Coty, and had nothing to do with Quigley (the "Pfizer Only Claims"). Quigley and Pfizer were using certain shared insurance policies and the funds contained in a certain insurance trust, under which Quigley and Pfizer are joint beneficiaries (collectively, the "Shared Insurance"), to satisfy settlements, judgments and defense costs in connection with the asbestos-related claims. Consequently, every dollar that Pfizer spent defending or satisfying the Pfizer Only Claims diminished the Shared Insurance and the amount of insurance available to Quigley.
Prior to the bankruptcy filing, Quigley and Pfizer began plan negotiations with creditors and a representative of those future claimants who had not yet asserted claims against Quigley. Under the Plan that Quigley subsequently filed, and pursuant to § 524(g) of the Bankruptcy Code, Quigley's asbestos-related liabilities, as well as Pfizer's liabilities that were based on Quigley's conduct or products (i.e., the Pfizer Derivative Claims), will be channeled to a trust fund (the "Asbestos PI Trust"). (Disclosure Statement § I.A; Plan §§ 1.1 (defining "Asbestos PI Trust"); 9.3.)1 The Asbestos PI Trust will be funded by the transfer of certain assets, including a contribution of Pfizer's rights to proceeds under various insurance policies and settlement agreements. (See Plan § 9.3(d).) Creditors holding claims against Quigley or Pfizer Derivative Claims will be limited to the trust, and enjoined from otherwise pursuing their claims against Quigley or Pfizer. The proposed plan will not affect those holding Pfizer Only Claims.
The asbestos-related litigation against Quigley and Pfizer was depleting the Shared Insurance. While the filing of the bankruptcy petition stayed the claims against Quigley, see 11 U.S.C. § 362(a)(1), it did not stay any litigation against Pfizer. Consequently, Quigley filed this adversary proceeding on the Petition Date, and simultaneously moved for a temporary restraining order and a preliminary injunction. Quigley sought to enjoin the commencement or continuation of all present and future actions against Pfizer that alleged personal injury or wrongful death based on purported exposure to asbestos or asbestos-containing products. (Adv. Proc. No. 04-04262, ECF Doc. # 2.)
Neither the summons nor the complaint nor the Preliminary Injunction application was served on the Claimants. At that time, they had not yet asserted any claims against Pfizer, and were unknown to Quigley. Nevertheless, on September 14, 2004, Quigley published a notice of the hearing seeking the Preliminary Injunction in the New York Times and the Wall Street Journal (National Edition).
After Judge Beatty signed a temporary restraining order, she conducted hearings on the motion for a preliminary injunction. She received several objections, with some related to the power and propriety of staying claims against Pfizer that had nothing to do with Quigley. Judge Beatty resolved the issue by crafting a broad injunction that enjoined all present and future claims against Pfizer, but provided a procedure for relief from its terms if the Claimant held a Pfizer Only Claim that did not impact the Shared Insurance. The pertinent provisions of the preliminary injunction, dated December 17, 2004, (ECF Doc. # 122) stated:
ORDERED, that pursuant, to sections 105(a) and 362(a) of the Bankruptcy Code, all parties, including the defendants in this action, their agents, servants, employees and counsel, are hereby stayed, restrained and enjoined from taking any action in any and all pending or future Asbestos Related Claims against Pfizer during the pendency of Quigley's chapter 11 case; and it is further
ORDERED, that, subject to the provisions of the immediately succeeding paragraph, the automatic stay of section 362(a) of the Bankruptcy Code extends to: (1) all pending and future Asbestos Related Claims against Pfizer; and (2) against any property in which both Pfizer and Quigley have a legal, beneficial, contractual or other interest including, without limitation, the Shared Insurance Policies and the funds in the Insurance Trust; and it is further
ORDERED, that any party that asserts it holds an Asbestos Related Claim solely against Pfizer based on a product having no relation to Quigley or any product not manufactured, sold or distributed by Quigley (a "Pfizer-only Claim") may obtain relief from this order and shall not be stayed or enjoined from prosecuting such Pfizer Only Claim if, after notice and a hearing, (1) such party demonstrates to the Court, based on competent evidence, and this Court finds based upon such competent evidence, that the party has a Pfizer-only Claim, and (2) this Court finds that the Shared Insurance ... could not be utilized to satisfy any portion of the defense costs, settlements or judgments related to the Pfizer-only Claim or that such Shared Insurance ... would not in any way be diminished or impaired by the prosecution of the Pfizer-only Claim.
While the first quoted paragraph was limited to the parties to the adversary proceeding and to their agents, the second quoted paragraph extended the automatic stay to pending and future claims against Pfizer and against any property in which Quigley and Pfizer shared an interest, including the Shared Insurance. The final paragraph described the procedure for obtaining relief from the Preliminary Injunction, and required the applicant to show that it held a Pfizer Only Claim that did not implicate the Shared Insurance.
The Ad-Hoc Committee of Tort Victims moved for leave to appeal from the Preliminary Injunction. After first concluding that the Preliminary Injunction was an interlocutory order, the District Court denied the motion. Quigley Co. v. A.C. Coleman (In re Quigley Co.), 323 B.R. 70 (S.D.N.Y.2005).2
On November 16, 2006, the Claimants filed a motion for relief from the Preliminary Injunction....
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In re Quigley Company, Inc., Case No. 04-15739(SMB) (Bankr. S.D.N.Y. 5/15/2008)
...Court Injunctions The facts leading up to the issuance of the Preliminary Injunction are described in Quigley Co v. Coleman (In re Quigley Co.), 361 B.R. 670 (Bankr. S.D.N.Y. 2007). I assume familiarity with that decision, and highlight the facts relevant to the instant motion. Pfizer is a ......