534 B.R. 553
Bankr. S.D.N.Y.2015Background
- Johns-Manville (Manville) filed Chapter 11 in 1982 to resolve massive present and future asbestos claims; the confirmed 1986 Plan and associated Insurance Settlement Order channeled present and future asbestos claims to a trust and enjoined suits against Manville’s insurers and related parties.
- Marsh USA, as a settling insurer/broker, paid into the trust in exchange for a release and an injunction protecting it from claims “based upon, arising out of or relating to services ... performed by [Marsh] for [Manville].”
- Salvador Parra sued Marsh in state court (2010), alleging Marsh conspired with Manville to conceal asbestos hazards and asserting claims (negligent undertaking, conspiracy, aiding and abetting) based on Marsh’s long relationship with Manville.
- Marsh moved in bankruptcy court to enforce the 1986 Orders and enjoin Parra’s claims as barred; Parra opposed on procedural, discovery, scope, and due-process grounds.
- Procedural history includes litigation over similar Travelers claims culminating in the Supreme Court’s Bailey decision—which held the 1986 Orders unambiguous—and later Second Circuit decisions addressing notice (Chubb) and settlement-payment obligations (Common Law Settlement Counsel).
- The bankruptcy court held the motion ripe after related appeals concluded and ultimately granted Marsh’s motion, finding Parra’s complaint allegations bring his claims within the unambiguous scope of the 1986 Orders and that Parra had adequate representation/notice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Marsh had to file an adversary proceeding to enforce the 1986 Orders | Parra: enforcement here seeks new injunction so Rule 7001(7) requires an adversary | Marsh: only seeks enforcement of an existing injunction; a contested matter is sufficient | Court: No adversary needed; enforcement of an existing injunction may proceed by motion |
| Whether Parra is entitled to discovery before the Court decides enforcement | Parra: discovery needed to show Marsh’s knowledge came from non-Manville sources | Marsh: Complaint’s allegations judicially admit Marsh–Manville relationship; no discovery necessary | Court: Discovery denied; Court may decide on face of Complaint and admissions |
| Whether Parra’s claims fall within the scope of the 1986 Orders’ injunction | Parra: injunction should be limited to claims "inextricably intertwined" with insurer–Manville coverage | Marsh: injunction covers claims "based upon, arising out of, or related to" Marsh’s services for Manville — broad scope | Court: Applied plain language; injunction covers any claim "related to" Marsh’s insurance relationship with Manville; Parra’s allegations fall within it |
| Whether Parra received constitutionally sufficient notice (and thus is bound) | Parra: future claimants’ representative did not represent claimants as to settling insurers’ independent misconduct | Marsh/Travelers: representative was appointed broadly to represent future asbestos claimants and participated in settlements | Court: Representative’s role encompassed claims against settling insurers; Parra received adequate representation/notice and is bound |
Key Cases Cited
- MacArthur Co. v. Johns-Manville Corp., 837 F.2d 89 (2d Cir. 1988) (affirming Insurance Settlement Order and noting insurer releases were cornerstone of Plan)
- Kane v. Johns-Manville Corp., 843 F.2d 636 (2d Cir. 1988) (affirming confirmation order and channeling injunction for asbestos claims)
- Travelers Indem. Co. v. Bailey, 557 U.S. 137 (2009) (Supreme Court: 1986 Orders unambiguous; they barred direct actions related to Manville insurance)
- Travelers Cas. & Sur. Co. v. Chubb Indem. Ins. Co. (In re Johns-Manville Corp.), 600 F.3d 135 (2d Cir. 2010) (second circuit: some parties not bound because of inadequate notice)
- Solow v. Kalikow (In re Kalikow), 602 F.3d 82 (2d Cir. 2010) (enforcement of a preexisting injunction may proceed as a contested matter rather than an adversary)