Johns-Manville Corp., In re

• Decision Date: 04 October 1993
• Docket Number: D,No. 1851,JOHNS-MANVILLE,1851
• Citation: 7 F.3d 32
• Parties: In reCORP., et al., Debtors. The HOSPITAL AND UNIVERSITY PROPERTY DAMAGE CLAIMANTS, Appellants, v. CORPORATION, et al., Appellees. ocket 93-5022.
• Court: U.S. Court of Appeals — Second Circuit

Page 32

7 F.3d 32

In re JOHNS-MANVILLE CORP., et al., Debtors The HOSPITAL AND UNIVERSITY PROPERTY DAMAGE CLAIMANTS, Appellants, v. JOHNS-MANVILLE CORPORATION, et al., Appellees.

No. 1851, Docket 93-5022.

United States Court of Appeals Second Circuit.

Argued Aug. 9, 1993.

Decided Oct. 4, 1993.

Anthony C. Valiulis, Chicago, IL (Charles F. Vihon, Scott N. Schreiber, Much Shelist Freed Denenberg & Ament, P.C., Chicago, IL; Salomon, Green & Ostrow, P.C., New York City, of counsel), for appellants.

Allen G. Kadish, New York City (Herbert S. Edelman, Bruce F. Rubin, Kaye, Scholer, Fierman, Hays & Handler, Davis Polk & Wardwell, of counsel), for appellees.

Before: WINTER, MINER and WALKER, Circuit Judges.

MINER, Circuit Judge:

Appellants, The Hospital and University Property Damage Claimants (the "Hospitals"), ¹ are hospitals that have sustained property damage arising from the removal of asbestos that was sold or manufactured by Johns-Manville Corporation and related companies, debtors in this chapter 11 proceeding and appellees here (collectively, "Manville"). On January 31, 1985, the Hospitals filed a claim against Manville for property damage arising from the removal of asbestos sold or produced by Manville. Manville moved to disallow and expunge the Hospitals' claim on December 15, 1988, and, in an order dated March 19, 1992, the bankruptcy court (Lifland, C.B.J.) granted the motion upon a finding that the claim improperly was filed as a class claim. The district court (McKenna, J.) affirmed the bankruptcy court's order on March 4, 1993, after concluding On appeal, the Hospitals argue that: (1) the bankruptcy court lacked jurisdiction to entertain Manville's motion; (2) Manville's motion was not timely filed; (3) Manville did not have standing to make a motion to disallow and expunge their claim; (4) their claim was not a class claim; (5) even if their claim was a class claim, it should have been allowed; (6) if their claim was a properly disallowed class claim, they should have been permitted to amend their claim; and (7) Manville waived its right to make its motion to disallow and expunge their claim. For the reasons set forth below, we hold that the bankruptcy court lacked jurisdiction to decide Manville's motion and that Manville's motion was not timely filed. We therefore decline to reach the other arguments advanced by appellants.

that the bankruptcy court had jurisdiction to hear Manville's motion and that the bankruptcy court's decision to disallow the Hospitals' class claim was not an abuse of discretion.

BACKGROUND

1. The PD Trust

Manville is the world's largest manufacturer of asbestos. On August 26, 1982, facing unprecedented liability for claims filed by current and future victims of asbestos-related deaths and injuries, Manville filed a voluntary petition for reorganization under chapter 11 of the United States Bankruptcy Code. 11 U.S.C. §§ 1101-1174 (1988); see In re Joint E. & S. Dist. Asbestos Litig.: In re Johns-Manville Corp., 129 B.R. 710, 751 (E. & S.D.N.Y.1991), vacated on other grounds, 982 F.2d 721 (1992), modified, 993 F.2d 7 (2d Cir.1993). Four years later, on December 22, 1986, the bankruptcy court entered an order confirming Manville's Second Amended and Restated Plan of Reorganization (the "Plan"). The Plan established two trusts. The Manville Personal Injury Settlement Trust was established to pay personal injury claims arising from exposure to asbestos. The Manville Property Damage Settlement Trust (the "PD Trust") was established to pay claims for property damage arising from asbestos removal.

The Plan provided that a claims resolution facility (the "PD Facility") would be created to resolve all asbestos-related property damage claims against Manville filed for payment by the PD Trust. The Plan defined "property damage claims" as

all Claims timely filed ... for damages arising or allegedly arising from the presence in buildings or other structures of asbestos (alone or as contained in asbestos-containing products), which was sold, supplied or produced, or allegedly sold, supplied or produced, by [Manville] prior to the Confirmation Date....

Section 10.1(A) of the Plan provides that, after confirmation of the Plan, the bankruptcy court shall retain jurisdiction "[t]o determine any and all objections to the allowance of Claims to the extent permitted by law (excluding Class 3 [i.e., property damage] Claims....)" (emphasis added).

The Confirmation Order provided that:

Except with respect to Class 3 [i.e., property damage] Claims and Class 4 Claims ... [Manville] may file within one hundred and twenty (120) days from the date of this Order any and all objections to the allowance of any Claim not heretofore objected to.... [I]n the event of a failure to do so, any objections to the allowance of the Claims affected thereby will be deemed waived.

(emphasis added). The Confirmation Order became final on October 28, 1988, after it was affirmed by this Court. See Kane v. Johns-Manville Corp. (In re Johns-Manville Corp.), 843 F.2d 636 (2d Cir.1988).

According to the Claims Resolution Guidelines (the "PD Guidelines"), the PD Facility "provide[s] the exclusive method for the disposition and payment of [p]roperty [c]laims against the PD Trust as provided in the Plan." (footnote omitted). The PD Guidelines apply to "[d]eterminations as to the allowance and payment of [property] claims" and "are designed to provide a no-fault, non-litigated, low transaction cost method of effectuating the consensual settlement of [p]roperty [c]laims asserted against [Manville]." "Pursuant to the PD Guidelines, the PD Facility receives and reviews documentation of asbestos property damage claims, determines the allowed amounts of claims, and The PD Guidelines also set forth the procedure for processing and reviewing claims. All claims must be submitted on the PD Facility's standardized claim form and must include certain documentary evidence (e.g., proof of abatement costs) to substantiate the claim. If a claimant's documentation or claim form is incomplete, the PD Facility cannot evaluate the claim and must notify the claimant that he has sixty days to provide the missing information or his claim will be disallowed. A claimant whose claim has been disallowed by the PD Facility has the right to request that the PD Facility reconsider his claim, and if such reconsideration is denied, to submit the matter to binding arbitration.

makes distributions thereon from assets of the PD Trust." State Gov't Creditors' Comm. for Property Damage Claims v. McKay (In re Johns-Manville Corp.), 920 F.2d 121, 123 (2d Cir.1990).

2. The Hospitals' Claim

On July 16, 1984, the bankruptcy court issued a Bar Order requiring, inter alia, that all of Manville's creditors holding property damage claims file proofs of claim on or before October 31, 1984 (the "Bar Date"). Prior to the Bar Date, the bankruptcy court extended the Bar Date for certain property damage claims to January 31, 1985, and later, in response to specific requests by various claimants, further extended the Bar Date to March 1, 1985.

Prior to the applicable Bar Date, twenty proofs of claim that purported to assert property damage claims were filed on behalf of persons or entities executing the proof of claim form and/or on behalf of similarly situated named or unnamed persons and entities that did not timely file individual proofs of claim. One of these claims (No. 22,079) was filed by the Hospitals and purportedly presented the claims of hospitals that were "members of the American...