Honeywell International, Inc. v. North American Refractories Asbestos Personal Injury Settlement Trust (In re North American Refractories Co.), 542 B.R. 350

Background

NARCO filed bankruptcy in 2002; Honeywell became NARCO’s parent in 1986 and helped fund a confirmed reorganization plan that created the NARCO Asbestos Trust (the Trust) in 2007.
The Trust is an "evergreen" §524(g) asbestos trust funded primarily by Honeywell (stock plus ongoing cash contributions with annual caps) and governed by a Trust Agreement (TA) and Trust Distribution Procedures (TDP).
The Trust processes two classes of claims: Pre-Established Claims (separately funded) and Annual Contribution Claims (subject of this dispute), with Annual Contribution Claims handled under Expedited Review (lower proof, fixed payouts) or Individual Review (higher proof, larger awards).
Honeywell sued seeking a preliminary injunction (and other relief) challenging the Trust’s interpretation of TDP §4.7(b) on (1) the Trust’s so‑called “refractory inference” (allowing exposure findings absent naming a specific NARCO product) and (2) the meaning of “competent evidence” (whether it requires judicially admissible evidence). The Motion focused on Counts I–IV (exposure standards).
Through discovery and cooperation the disputed claims dropped from ~481 (~$10.2M) to <30 (~$750,000); the Trust agreed not to apply the refractory inference in the contested form while the litigation proceeds and implemented process improvements (e.g., rejecting form affidavits, adding monitoring access for Honeywell).
After hearing, the Bankruptcy Court denied the preliminary injunction without prejudice, finding Honeywell failed to show irreparable harm and failed to show a likelihood of success on the merits given insufficient evidence about the Trust’s creation and the intended meaning of the TDP.

Issues

Issue	Honeywell's Argument	Trust's Argument	Held
Whether Trust may infer exposure from general evidence of "refractory products" (the "refractory inference") when claimant worked at a Worksite List site but did not name a specific NARCO product	TDP requires two distinct prongs: presence of a specific NARCO asbestos‑containing product and proof of occupational exposure; refractory inference improperly expands recoveries absent naming a specific product	Trust says it evaluates totality of circumstances; any inference is case‑by‑case and within trustee discretion under TA/TDP	Court denied preliminary injunction; Trust represented it would refrain from using the refractory inference in the objectionable blanket form and Court found current practice and commitments acceptable for now
Whether "competent evidence" in TDP §4.7(b) means only evidence admissible in judicial proceedings (i.e., excludes hearsay/second‑hand affidavits)	Competent evidence should equal judicially admissible evidence; affidavits based on hearsay are insufficient	Trust contends a more relaxed evidentiary standard was intended to provide recovery without tort‑system burdens; TDP itself lists various forms (affidavits, co‑worker statements, records) as acceptable	Court found insufficient record to resolve issue on likelihood of success; recent procedural changes and ambiguity about Trust creators’ intent preclude injunction now
Whether Honeywell will suffer irreparable harm absent injunction because paid claims would be irretrievable and borne by Honeywell	Payments made pending litigation would be unrecoverable from claimants and thus constitute irreparable monetary harm	Trust argued any economic injury is monetary and Honeywell can be compensated later; trustees may face liability for breach; Honeywell’s exposure is small relative to its funding commitment	Court held Honeywell failed to show irreparable harm — potential unrecoverable loss (~$750,000) is de minimis relative to Honeywell’s multi‑billion funding exposure and Honeywell offered no evidence that loss would be peculiarly damaging
Whether public interest and balance of equities favor injunction	Enforcement of contract/TA/TDP protects settlor rights and fiduciary expectations	Public interest favors timely compensation to present and future asbestos claimants under §524(g); delay harms future claimants	Court found public interest and Congress’s §524(g) objectives favored denying an injunction that would indefinitely delay claimants; balance of equities neutral to slight favor of Trust/claimants

Key Cases Cited

Winter v. Natural Resources Defense Council, 555 U.S. 7 (2008) (sets the four‑factor standard for preliminary injunctions)
Adams v. Freedom Forge Corp., 204 F.3d 475 (3d Cir. 2000) (irreparable harm requires specific, personal, non‑monetary or otherwise unrecoverable injury)
Liberty Lincoln‑Mercury, Inc. v. Ford Motor Co., 562 F.3d 553 (3d Cir. 2009) (purely monetary injury generally does not satisfy irreparable harm)
A.O. Smith Corp. v. Federal Trade Commission, 530 F.2d 515 (3d Cir. 1976) (economic injuries alone are generally insufficient for injunctive relief absent a peculiar or onerous hardship)
Coca‑Cola Bottling Co. of Shreveport, Inc. v. Coca‑Cola Co., 563 F. Supp. 1122 (D. Del. 1983) (refused preliminary relief for irrecoverable monetary loss where plaintiffs failed to show uniquely burdensome harm)
In re W.R. Grace & Co., 729 F.3d 311 (3d Cir. 2013) (discusses §524(g) protections for future asbestos claimants)
Annan v. Wilmington Trust Co., 559 A.2d 1289 (Del. 1989) (settlor’s intent governs trust instrument interpretation under Delaware law)