440 B.R. 604
Bankr. S.D.N.Y.2010Background
- Long-running Johns-Manville asbestos settlements; 1986 Orders barred Direct Actions against Travelers; Settlements among Manville, Travelers, and claimants created statutory, Hawaii, and common-law funds.
- Three settlement agreements required: (i) statutory, (ii) Hawaii, (iii) common-law Direct Actions; funds funded by Travelers to pay eligible claimants.
- Disputed condition precedent: entry of a Clarifying Order that is a Final Order, enjoining claims as broad as Exhibit A, and timing of payment.
- Second Circuit decisions: Manville II held jurisdictional limits; Manville III held Chubb due-process issues; Bailey (Supreme Court) affirmed jurisdiction to interpret/enforce, not to re-examine scope.
- This memorandum grants the motions to compel payment, finding the condition precedent satisfied and Travelers obligated to pay; interests issue to bebriefed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Disputed Condition Precedent has been satisfied. | Settlements satisfied by Bailey's affirmation; Final Order attained. | Manville III voids the scope, releasing Travelers. | Disputed Condition Precedent satisfied; Travelers obligated to pay. |
| Whether the 2004 Clarifying Order is a Final Order. | Bailey affirmed, making Clarifying Order final. | Because Chubb lacked notice, Clarifying Order not fully final. | 2004 Clarifying Order is a Final Order; settlements enforceable. |
| Whether Manville III disturbs the Settlements or Travelers' payment obligations. | Settlements should remain intact despite Manville III. | Manville III voids the injunction as to some parties. | Manville III does not disturb the Settlements; Travelers remains bound. |
| Whether interest on settlement proceeds should be awarded. | Beneficiaries entitled to interest from June 2009. | No final order, no interest due until payments. | Interest issue ongoing; briefing ordered or consent order within 60 days. |
Key Cases Cited
- Bailey v. Travelers Indem. Co., 129 S. Ct. 2195 (2009) (Supreme Court held the 1986 Orders' scope was properly interpreted; jurisdiction affirmed.)
- In re Johns-Manville Corp., Manville II, 517 F.3d 52 (2d Cir. 2008) (Second Circuit held the 1986 Orders lacked jurisdiction to bar certain non-estate claims.)
- In re Johns-Manville Corp., Manville III, 600 F.3d 135 (2d Cir. 2010) (Second Circuit held Chubb lacked due-process notice; issues limited to status of settlements.)
- MacArthur Co. v. Johns-Manville Corp., 837 F.2d 89 (2d Cir. 1988) (Notice and hearing adequacy for settlements; related precedents.)
- Local Loan Co. v. Hunt, 292 U.S. 234 (1934) (Supreme Court principle: Bankruptcy Court may interpret and enforce its orders.)