In re Related Asbestos Cases

Decision Date23 September 1982
Docket NumberC-81-3871,No. C-79-3588,C-81-2693 and C-81-3843.,C-81-2702,C-79-3588
Citation23 BR 523
CourtU.S. District Court — Northern District of California

Kenneth W. Carlson, Burke W. Bradley, John Gigounas, Law Offices of Kenneth W. Carlson, Oakland, Cal., Gerald C. Sterns, Law Offices of Gerald C. Sterns, San Francisco, Cal., for plaintiffs.

Norman B. Hendricks, Law Offices of Norman B. Hendricks, Berkeley, Cal., for plaintiff Deanne J. Snyder.

Arthur Jay Moore, Moore, Clifford, Wolfe, Larson & Trutner, Oakland, Cal., for defendant Johns-Manville Corp.

Charles Negley, Douglas G. Wah, Maloney, Chase, Fisher & Hurst, San Francisco, Cal., for defendant Raybestos-Manhattan, Inc.

Frank E. Bondonno, Popelka, Allard, McCowan & Jones, San Jose, Cal., for defendant Owens-Corning Fiberglas Corp.

Ronald E. Hothem, San Francisco, Cal., for defendant Fibreboard Corp.

Berry & Berry, Oakland, Cal., for defendant Celotex Corp.

Winningham, Roberts & Rogie, San Francisco, Cal., for defendant Eagle-Picher Industries, Inc.

Gary T. Drummond, Stevens & Drummond, Walnut Creek, Cal., Haims, MacGowan & McInerney, Oakland, Cal., for Amatex Corp.

Charles W. LaGrave, Law Offices of William J. Duke, San Francisco, Cal., for defendant H.K. Porter Inc.

Law Offices of Hassard, Bonnington, Rogers & Huber, San Francisco, Cal., for defendant Pittsburgh Corning Corp.

Wilkes R. Morgan, Bronson, Bronson & McKinnon, San Francisco, Cal., for defendant Unarco Industries, Inc.

Lawrence E. Mullally, Oakland, Cal., for defendant Keene Corp.

Gudmundson, Siggins & Stone, San Francisco, Cal., for defendant Armstrong Cork Co.

McCutchen, Doyle, Brown & Enersen, San Francisco, Cal., for defendant GAF Corp.

Law Offices of William I. Duke, San Francisco, Cal., for defendant Southern Textile & Thermoid.

Robert A. Ford, Case & Ford, San Francisco, Cal., for defendant Combustion Engineering, Inc. Morgenstein, Ladd & Jubelirer, San Francisco, Cal., for defendant Owens-Illinois, Inc.

St. Clair, Zappettini, McFetridge & Griffin, San Francisco, Cal., for defendant Nicolet, Inc.

Albert B. Norris, Crosby, Heafey, Roach & May, Oakland, Cal., for defendant Southern Pacific Trans. Co.

Stuart M. Gordon, Gordon & Rees, San Francisco, Cal., for defendant The Bendix Corp.

Harold Cohn, O'Connor, Cohn, Dillon & Barr, James L. English, San Francisco, Cal., Douglas L. Field, Taylor & Field, Oakland, Cal., Frederick Bradley, Mead, Bradley & Keenan, San Francisco, Cal., W. Conrad Hoskins, Bianchi, Hoskins & Rosenberg, San Rafael, Cal., for defendant Ryder Industries, Inc.

James R. Busselle, Ream, Train, Horning, Ellison & Roskoph, Palo Alto, Cal., for defendant Wagner Elec. Corp.

Patrick H. Fabian, Sullivan, Roche & Johnson, San Francisco, Cal., for defendant Abex Corp.

Ropers, Majeski, Kohn, Bentley, Wagner & Kane, San Francisco, Cal., for cross-defendant Thiokol Corp.

Law Offices of Glenn P. Lewis, Lafayette, Cal., for cross-defendant Carlisle Corp.

George W. Ball, Low, Ball & Lynch, San Francisco, Cal., for cross-defendant American Motors.

James J. Marchiano, Crosby, Heafey, Roach & May, Oakland, Cal., for cross-defendant Chrysler Corp.

Thompson, Mayhew & Michel, Sacramento, Cal., for cross-defendant Worldbestos.


PECKHAM, Chief Judge.


Across the country, thousands of asbestos-related personal injury actions are pending. Plaintiffs therein contend that their injuries have been caused by asbestos products, allegedly manufactured, sold or distributed by the numerous codefendants. Unarco Industries, Inc., and Johns-Manville Corporation are two such codefendants. Unarco alone is a defendant in an estimated 14,000 actions nationwide. Johns-Manville is the largest manufacturer of asbestos products amongst the codefendants. Johns-Manville and Unarco are codefendants in approximately 70 actions in this court. Both Unarco and Johns-Manville have had brought against them by other codefendants, and have themselves filed, various cross-claims seeking indemnity and contribution.

On July 29, 1982, Unarco and its affiliated companies filed a petition for reorganization under Chapter 11 of the Bankruptcy Reform Act of 1978, 11 U.S.C. § 1101 et seq., in the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division. On August 26, 1982, defendant Johns-Manville and its affiliated companies similarly filed a Chapter 11 petition in the Southern District of New York. These events have created a state of confusion throughout the country in regard to pending asbestos litigation and settlement proceedings; all parties desire a clarification concerning the extent to which the automatic stay provision of 11 U.S.C. § 362 affects the course of existing asbestos litigation in this court. Section 362(a)(1) reads:

Except as provided in subsection (b) of this section, a petition filed under section 301, 302, or 303 of this title operates as a stay, applicable to all entities, of
(1) The commencement or continuance, including issuance or employment of process, of a judicial, administrative, or other proceeding against the debtor that was or could have been commenced before the commencement of the case under this Title, or to recover a claim against the debtor that arose before the commencement of the case under this Title;

After having received extensive briefing from all parties, the court now addresses the following issues:

1) whether claims against Unarco and Johns-Manville may be severed and plaintiffs\' claims against other codefendants continue unabated;
2) whether cross-claims brought by non-bankrupt codefendants against Unarco and Johns-Manville may likewise be severed and stayed;
3) whether this court must obtain Bankruptcy Court approval of such severance orders.

At the outset, defendants concede that the court continues to have jurisdiction over the cases. The automatic stay provision merely suspends those proceedings to which it applies and does not divest the court of jurisdiction. David v. Hooker, Ltd., 560 F.2d 412, 418 (9th Cir. 1977); Paden v. Union for Experimenting Colleges and Universities, 7 B.R. 289, 290-91 (Bkrtcy.N.D.Ill.1980). Furthermore, the maintenance of a bankruptcy proceeding does "not divest other courts of jurisdiction over lawsuits involving the bankrupt," Duncan v. Royal Tops Manufacturing Co., 381 F.2d 879, 882 (7th Cir. 1967), although such proceedings may be subject to the stay provisions. Defendants do contend, however, that this court lacks jurisdiction to construe section 362. We disagree. Despite the broad jurisdiction conferred upon the bankruptcy courts by section 1471 of Title 281, that jurisdiction does not necessarily include the exclusive power to determine the scope of section 362. Instead, this court concludes that it possesses jurisdiction independently to construe the meaning of that section without the concurrence of the bankruptcy court.

The only case relied upon by defendants, In re Coleman American Companies, 8 B.R. 384 (Bkrtcy.D.Kan.1981), is not to the contrary. The debtor therein had filed a chapter 11 petition in the Bankruptcy Court for the District of Kansas. A secured creditor holding a senior lien on property of the debtor in Colorado filed a complaint for relief from the stay provisions of section 362 to foreclose the property in the Bankruptcy Court for the District of Colorado. No relief was sought from the Kansas bankruptcy court. The Kansas court held the creditor in contempt for violating the provisions of section 362. This case is distinguishable. It focuses upon an action to lift a legitimate stay whose proper scope was not at issue. The court analogized the stay provision to an injunction, remarking that an action to stay "has no life of its own independent of the primary proceeding from which it flows and but for that primary proceeding could not be filed anywhere." Id. at 388. The court emphasized that "courts of equal rank may not vacate one another's stay or injunction." Id. at 389. Such reasoning may be appropriate when applied in the context of a request for relief from a stay; the original bankruptcy courts alone should have exclusive power to lift an actual stay under section 362. A contrary conclusion would contravene the intention of Congress to centralize litigation concerning the bankrupt's affairs in a single forum.

Neither Coleman nor the cases cited therein2 are relevant to the instant issue — the proper scope of the stay. All involved proceedings which would have directly affected the property of the bankrupt and which, if allowed to continue by another court, would truly have had a disintegrative impact on the primary reorganization action. Under such circumstances, it is reasonable to require parties to seek relief from the court in which all actions actually affecting the bankrupt are to be centralized. The present actions, if claims against Unarco and Johns-Manville are severed therefrom, do not directly affect the bankrupt.

Applying the well-settled principle that a court has jurisdiction to decide its own jurisdiction, that is, to determine whether it has jurisdiction over the parties to, and subject matter of, a suit (see United States v. United Mine Workers of America, 330 U.S. 258, 67 S.Ct. 677, 91 L.Ed. 884 (1947); C. Wright, Federal Courts 57-62 (3d ed. 1976)), we conclude that this court has jurisdiction to examine the automatic stay provision and that it does not operate to suspend actions against codefendants and cross-claims between non-bankrupt codefendants.


The plain language of section 362, supra, clearly and repeatedly refers to actions against the debtor; it nowhere purports to encompass other related interparty claims. Such a literal reading of the statutory language is consistent with the purposes of an automatic stay, as described by the court in Paden, supra, 7 B.R. at 290 (describing Rule 11-44 of the 1898 Act):

to prevent the dissipation or diminution of

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