Joint Eastern and Southern Dist. Asbestos Litigation, In re
| Citation | 14 F.3d 151 |
| Decision Date | 11 January 1994 |
| Docket Number | Nos. 634,635,JOHNS-MANVILLE,633,D,s. 634 |
| Parties | , Bankr. L. Rep. P 75,669 In re JOINT EASTERN AND SOUTHERN DISTRICT ASBESTOS LITIGATION. In reCORPORATION, Debtor. 1,087 VIRGINIA ASBESTOS DISEASE JUDGMENT AND SETTLEMENT CREDITORS OF the MANVILLE CORPORATION ASBESTOS DISEASE COMPENSATION FUND (Manville Personal Injury Settlement Trust), et al., Cimino, A Group of Approximately 2,236 Individuals, Appellants, v. MANVILLE PERSONAL INJURY SETTLEMENT TRUST, Appellee. 1,087 VIRGINIA ASBESTOS DISEASE JUDGMENT AND SETTLEMENT CREDITORS OF the MANVILLE CORPORATION ASBESTOS DISEASE COMPENSATION FUND (Manville Personal Injury Settlement Trust), Cimino, A Group of Approximately 2,236 Individuals, Majorie Ocasek Special Administrator of the Estate of Hugh Wilson, 34 Tennessee Claimants, et al., Appellees, v. Paul L. SAFCHUCK, Napoleon Cathcart, and 650 Similarly Situated Persons, and Inez B. Walters and 10,177 Similarly Situated Persons, Appellants, Manville Personal Injury Settlement Trust, Leslie Gordon Fagen, Legal Representative of Future Claimants, Appellees. ocket 93-5064, 93-5066 and 93-5070. |
| Court | United States Courts of Appeals. United States Court of Appeals (2nd Circuit) |
Shepard A. Hoffman, Washington, DC, Connerton, Ray & Simon, for Cathcart & 650 Similarly Situated Persons.
Richard F. Scruggs, Pascagoula, MS (Lawson F. Bernstein, New York City, on the brief), for Walters & 10,177 Similarly Situated Persons.
Joel I. Klein, Washington, DC (Paul M. Smith, Klein, Farr, Smith & Taranto, Washington DC, Michael E. Schoeman, Schoeman, Marsh & Updike, New York City, Robert R. Hatten, Patten, Wornom & Watkins, Newport News, VA, Richard S. Glasser, Glasser & Glasser, Norfolk, VA, on the brief), for Virginia Judgment Creditors.
Murray Drabkin, Washington, DC (Hopkins & Sutter, Washington, DC, Alan Nisselson, Brauner Baron Rosenzweig & Klein, New York City, Greg Thompson, Provost & Umphrey, Wayne A. Reaud, Reaud, Morgan & Quinn, Beaumont, TX, on the brief), for Cimino Group.
Michael Y. Rowland, Knoxville, TN, for 34 Tennessee Claimants.
Kathy Byrne, Cooney & Conway, Chicago, IL, submitted a brief, for Ocasek.
James L. Stengel, New York City (Donovan Leisure Newton & Irvine, on the brief), for Manville Personal Injury Settlement Trust.
Leslie Gordon Fagen, New York City (Paul, Weiss, Rifkind, Wharton & Garrison, on the brief), for Legal Representative of Future Claimants.
Before: NEWMAN, Chief Judge, MINER and McLAUGHLIN, Circuit Judges.
This appeal primarily presents a challenge to the settlement of the claims of three groups of asbestos victims who have obtained final judgments or settlements against the Manville Personal Injury Settlement Trust ("the Trust"). The appeal is a further round in the protracted class action, see In re Joint Eastern and Southern District Asbestos Litigation, 982 F.2d 721 (2d Cir.1992), modified, In re Findley, 993 F.2d 7 (2d Cir.1993) ("Findley "), that was initiated in response to the financial difficulties encountered by the Trust, which had been established pursuant to the Chapter 11 proceeding of the Johns-Manville Corporation, see Kane v. Johns-Manville Corp., 843 F.2d 636 (2d Cir.1988).
The principal appeal, No. 93-5070, is brought on behalf of two groups of asbestos victims, more particularly described below, who have claims against the Trust. These appellants (collectively "the Safchuck appellants") appeal from the July 22, 1992, orders jointly entered by the District Courts of the Eastern and Southern District of New York and the Bankruptcy Court of the Southern District of New York (Jack B. Weinstein, District Judge, and Burton R. Lifland, Chief Bankruptcy Judge) ("the Trial Courts"). The July 22 orders approved payment to three groups of asbestos victims (collectively "the VJC/C/EC claimants"), more particularly described below, of amounts that represent approximately a 25 percent discount from the judgments or settlements to which they would otherwise be entitled.
Also pending are appeals by two groups within the VJC/C/EC claimants, the Virginia Judgment Creditors in No. 93-5064 and the Cimino Plaintiffs in No. 93-5066, from the June 8, 1992, order of the Trial Courts staying enforcement of the judgments these appellants hold against the Trust, judgments that were compromised for payment by the July 22 orders challenged in No. 93-5070.
We affirm the orders of July 22 and dismiss as moot the appeal from the June 8 order.
The facts concerning the Manville Chapter 11 reorganization, the establishment of the Trust, and the filing of the pending class action, which seeks to restructure the Trust, have been detailed in our prior opinions and need only brief recapitulation here. The reorganization plan ("the Plan") and implementing orders of the Trial Courts established the Trust as the exclusive vehicle for paying asbestos health claims of present and future claimants alleging pre-petition exposure to Manville asbestos, channeled to the Trust substantial assets and a 20 percent share of future profits of the reorganized Manville Corporation, and required present and future health claimants to seek recovery only from the Trust. The number of present health claimants is approximately 170,000. The number of future health claimants is subject to widely varying estimates: the Trust now estimates 140,000 future claimants; reports cited by the Safchuck appellants indicate that, under some circumstances the total could be between 400,000 and 450,000.
Included in the broad category of present health claimants are three groups of claimants whose prospect of receiving cash from the Trust has precipitated the pending appeal. The first group, known as the Virginia Judgment Claimants ("the VJC Claimants"), are 1,088 claimants from Virginia who sued the Trust in the District Courts for the Eastern or Western Districts of Virginia or in Virginia state courts. These claimants settled their claims against the Trust, resulting in judgments entered, in most instances, on June 8, 1990. Those separate judgments were then compromised by a November 16, 1990, settlement between the VJC Claimants as a group and the Trust. That settlement contemplated three scheduled payments in satisfaction of the underlying judgments. The total amount of the underlying judgments is $63,010,616.
The second group, known as the Cimino Plaintiffs, are 2,972 members of the plaintiff class in a class action filed in the District Court for the Eastern District of Texas, Cimino v. Raymark Industries, Inc., No. 86-B-456 (E.D.Tex.1986). The Cimino Plaintiffs settled their claims with the Trust, resulting in a judgment entered September 12, 1990. 1 This settlement contemplated six scheduled payments. The total amount of the Cimino Plaintiffs' judgment is $140,564,000.
The third group, known as the Eligible Claimants, are approximately 7,600 individuals whose claims against the Trust had been liquidated either by a settlement or a litigated judgment entered in whatever courts their suits were pending, provided that the settlement or judgment was entered prior to November 19, 1990, and, in the case of judgments, had become final and nonappealable as of July 22, 1993. The total amount of the settlements and judgments of the Eligible Claimants is approximately $279,000,000.
Thus, as of November 19, 1990, the three groups--the VJC/C/EC claimants--held settlements or judgments entitling them to be paid by the Trust an aggregate amount of nearly half-a-billion dollars.
In the face of what appeared to be the insolvency of the Trust, Judge Weinstein issued an order on July 9, 1990, which included a partial stay of payments by the Trust, including, with some exceptions, payments due with respect to settlements and judgments. Shortly thereafter, the Trust beneficiaries and the Trust participated in negotiations aimed at restructuring the Trust. These negotiations resulted in an agreement that was expected to be consummated by the filing and prompt settlement of a class action brought by the Trust beneficiaries. That class action was filed on November 19, 1990, a date that has significance for the issues raised in the pending appeal. Simultaneously, there was filed a proposed stipulation of settlement of the class action. The proposed settlement ("the Restructuring Settlement") modified the previous arrangements concerning the liquidation and payment of unliquidated claims. As to liquidated claims, which were defined as claims that had been reduced to judgments or settlements prior to November 19, 1990, the Restructuring Settlement provided that all would be paid according to their terms.
The Trial Courts approved the Restructuring Settlement in June of 1991. An appeal was taken by some health claimants and by other parties who had objected to the Restructuring Settlement. The Safchuck appellants had not objected to the Restructuring Settlement and did not appeal from the judgment approving it. On that appeal, we ruled that the class action had not been validly settled because required subclasses had not been designated and had not given consents. Findley, 982 F.2d at 739-45. We therefore vacated the judgment approving the Restructuring Settlement and remanded for further proceedings in the class action. Id. at 751.
After our remand, the Trial Courts entered an order on June 8, 1993, continuing the prior stay of payments. That order is the subject of the appeals in Nos. 93-5064 and 93-5066 brought by the VJC Claimants and the Cimino Plaintiffs. With payment of their judgments enjoined, the VJC Claimants and the Cimino Plaintiffs negotiated with the Trust and with other parties to the class action. That negotiation resulted in further settlements, referred to by the parties as the "Modification Agreements," which are the subject of the appeal in 93-5070 by the Safchuck appellants.
The Modification Agreements provide for the immediate payment...
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