Barraford v. T&N Limited
778 F.3d 258
1st Cir.2015Background
- T&N, a U.K. asbestos manufacturer, confirmed a Chapter 11 reorganization plan that created the Federal‑Mogul Asbestos Personal Injury Trust to handle asbestos claims and to access a £500 million insurance policy (the Hercules Policy).
- The Plan uniquely (1) preserved T&N’s asbestos liability until the Hercules Policy was exhausted, (2) assigned asbestos claims to the Trust and authorized the Trust to sue T&N as agent, and (3) contemplated recovery mechanisms tied to a stock subscription and exhaustion of a large self‑insured retention.
- Daniel Barraford died of mesothelioma in 2002; his widow sued other manufacturers in 2004 but did not sue T&N because T&N filed bankruptcy in 2001 and the automatic stay barred pre‑petition claims.
- Under Massachusetts law, Barraford’s claims would have expired three years after death (2005); 11 U.S.C. § 108(c)(2) tolls statutes that expire during an automatic stay until 30 days after notice of termination/expiration of the stay.
- The Trust filed suit on behalf of Barraford in 2011 (more than three years after the Plan’s effective date). T&N moved to dismiss/for summary judgment arguing the claims were time‑barred; the district court granted judgment for T&N and the Trust appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Plan kept the automatic stay (or otherwise tolled limitations) for asbestos claims until the Hercules Policy was exhausted | The Plan’s delayed discharge for asbestos claims plus Code § 362(c)(2)(C) and § 108(c)(2) means the stay never terminated for asbestos claims, so the Trust may sue anytime before policy exhaustion | The Plan’s confirmation and its allowance for the Trust to sue terminated the stay and triggered § 108(c)(2)’s 30‑day toll; limitations ran | Held for T&N: the Plan terminated the stay by unambiguously authorizing suit; no Plan language tolled limitations beyond Code § 108(c)(2) |
| Whether the Plan’s allowance to sue was a “modification” of the stay that extended it until the Trust sued each claim | The Plan’s grant to the Trust to sue in the ordinary course is a modification that allows the stay to persist until the Trust elects to sue | A grant to sue removes the stay’s effect; nothing remained to be modified after confirmation | Held for T&N: the “modification” theory fails—once the Plan allowed suit, the stay’s preventive effect ended; no ongoing stay remained to modify |
| Whether the Plan’s silence on limitations can be interpreted (by extrinsic evidence) as an implicit toll in favor of the Trust | The Plan negotiators’ intent and conduct show parties expected limitations to be neutralized until policy exhaustion; equitable reading should preserve stale claims | The Plan’s plain language does not toll limitations and expressly preserves defenses, including statutes of limitations; Delaware contract rules do not permit rewriting unambiguous terms | Held for T&N: no latent ambiguity or Delaware contract doctrine supports inferring tolling; plan language controls |
| Whether T&N preserved statute‑of‑limitations defenses under the Plan | Trust argued preservation of defenses was not a waiver of limitations | T&N pointed to Plan § 4.5.8(e) expressly preserving all defenses and counterclaims | Held for T&N: explicit preservation of defenses includes limitations defenses; Plan contains no carve‑out |
Key Cases Cited
- In re Grossman’s, Inc., 607 F.3d 114 (3d Cir.) (en banc) (for accrual rule: personal‑injury asbestos claims accrue at time of exposure)
- In re Federal‑Mogul Global, Inc., 684 F.3d 355 (3d Cir. 2012) (discussing asbestos PI trusts and § 524(g) framework)
- United States v. White, 466 F.3d 1241 (11th Cir. 2006) (discharge upon plan confirmation generally relieves debtor of liability)
- CTS Corp. v. Waldburger, 134 S. Ct. 2175 (2014) (noting purposes and importance of statutes of limitations)