Asbestos Bankruptcies in Asbestos Cases

Decisions in our library in which the court ruled on a defendant's bankruptcy: 249 cases, by state. Each line gives what the court held, in our words; the law differs from state to state and changes, so read the opinion and talk to a lawyer before relying on any of them.

Delaware

• In re Federal-Mogul Global Inc. (2005). For the limited purpose of formulating a reorganization plan and trust, a court may estimate aggregate asbestos personal injury liability under 11 U.S.C. § 502(c) by using the debtor's own claims history and the more reliable expert method, without mathematical precision and without adjudicating individual claims.
• In re Federal-Mogul Global, Inc. (2005). In estimating aggregate asbestos liability under 11 U.S.C. § 502(c) to fund a personal injury trust, the court may choose the estimation methodology it finds more reliable. The estimate rests on the debtor's own claims history, a disease-incidence model, and adjusted discount and inflation rates, rather than on mathematical precision.
• Owens Corning v. Credit Suisse First Boston (2005). Under Bankruptcy Code section 502(c), asbestos claims are estimated by their value in the state-law tort system as of the petition date, with historical settlement and verdict values adjusted for factors unlikely to recur, including punitive damages, which are subordinated in bankruptcy.
• In re Combustion Engineering (2003). A § 524(g) channeling injunction can cover non-debtor affiliates only for liabilities shared with the debtor, not their independent direct claims. A § 105(a) injunction for those direct claims may be available if the Dow Corning factors are met.
• In re Usg Corp. (2003). Bankruptcy jurisdiction does not displace state law governing the substance of claims, so the court has discretion over claims administration but none over substantive law. It may therefore sequence estimation to address the cancer claimants first.
• Arnold v. Garlock, Inc. (2001). A non-debtor co-defendant that has no valid contribution claim against a bankrupt co-defendant cannot rely on bankruptcy 'related to' jurisdiction to transfer personal injury and wrongful death cases under 28 U.S.C. § 157(b)(5). Nor can it obtain a discretionary stay pending appeal, because it was unlikely to succeed on the merits and a stay would harm the plaintiffs.
• Money v. Manville Corp. Asbestos Comp. Fund (1991). To make a prima facie case that a defendant's asbestos product caused an asbestos-related disease, a plaintiff must offer direct expert medical testimony, stated in terms of reasonable medical probability, that the defendant's product was a proximate (but-for) cause of the injury; causation cannot be left to lay inference.

District of Columbia

• Consolidated Rail Corp. v. Ray EX rel. Boyd (2010). The Rail Act's requirement that rail assets be conveyed "free and clear of any liens or encumbrances" covers in rem property interests and does not categorically bar state-law successor liability for in personam FELA tort claims arising from pre-conveyance asbestos exposure.

Florida

• In re Eight Adversary Proceedings (2019). A court receiving a removed case decides remand before any motion to transfer venue to the home bankruptcy court. Even assuming "related to" bankruptcy jurisdiction, it may remand on any equitable ground under 28 U.S.C. § 1452(b), and the relevant factors here favored remand.
• In re Evans Products Company (2009). Prior rulings in the Delaware bankruptcy did not preclude the Florida court from deciding whether its own confirmation order discharged the claims. The court held that latent asbestos injury claims not provided for in the confirmed plan were not discharged, and it declined to apply the Eleventh Circuit's Piper Aircraft analysis to asbestos claims.
• Matter of Celotex Corp. (1997). Under Illinois law, timely and reasonable notice is a condition precedent to excess coverage, and a sophisticated insured must give notice when a reasonably prudent insured would believe the excess layers would be affected; the debtor bore the burden of proving notice and did not.
• Matter of Celotex Corp. (1996). Under Illinois law, asbestos in a building is covered "physical injury to tangible property" once it reaches a threshold such as fiber levels above outdoor levels or governmental limits, or a legal requirement to remove or remedy it; mere presence of asbestos-containing material is not enough. Coverage is triggered continuously over multiple policy periods, and the insured need not prove its own liability.
• Matter of Celotex Corp. (1994). Under the plain-meaning rule of Florida, Illinois, New York and Ohio law, extrinsic evidence cannot create an ambiguity in an insurance exclusion. "Asbestosis" is a single non-malignant disease, and "related diseases" covers only diseases resulting from asbestosis.

Georgia

• In re Fairbanks Company (2019). Any party in interest may nominate a future claimants' representative and the court must independently inquire without deferring to the debtor's choice. The representative must be disinterested, qualified, objective, independent and an effective advocate, like a guardian ad litem.
• Williams v. Flintkote Co. (2002). To survive summary judgment, an asbestos plaintiff must show that the defendant's asbestos-containing product was used at the job site and that the plaintiff was in proximity to it while it was used; the court declined to adopt a presumption of exposure from merely working at a site where the defendant's products were used.
• Hoffman v. AC&S, Inc. (2001). A plaintiff in an asbestos case must present non-speculative evidence that the defendant's asbestos-containing product was used at the job site while the exposed person was nearby; testimony that a defendant's products were used at the site at some unspecified time during the 1960s is insufficient. An expert's general opinion that workers were exposed to asbestos products does not supply the missing link to a particular defendant.

Illinois

• Hicks v. Ford Motor Company (2020). A non-diverse defendant dismissed by involuntary summary judgment may be treated as fraudulently joined when procedural rules (waiver, and Illinois limits on reconsideration with late evidence) leave no reasonable possibility of reinstating the claim; the common-defense exception does not apply where the reason is specific to that defendant.
• Shipley v. Hoke (4th District, 2014). Termination of supplementary proceedings under Illinois Supreme Court Rule 277(f) does not remove subject-matter jurisdiction, but it is an affirmative defense that bars later relief under section 2-1402(f)(1). A citation's restraining provision binds only the party the citation is directed to, so a third party must be served with its own citation.
• Fuller v. AW Chesterton, Inc. (2009). A state-law personal injury claim removed on the ground that a co-defendant's bankruptcy may trigger an indemnity right is a non-core, at most related matter, and a federal court may remand it sua sponte under permissive abstention and equitable remand (28 U.S.C. §§ 1334(c)(1), 1452(b)).
• Funk v. AW Chesterton, Inc. (2009). A removed state-law claim only remotely related to a co-defendant's bankruptcy (through a potential indemnification claim) is a non-core matter, and a federal court may sua sponte remand it on permissive abstention and equitable grounds under 28 U.S.C. §§ 1334(c)(1) and 1452(b).
• Thacker v. Unr Industries, Inc. (1992). In asbestos cases a plaintiff must show frequency, regularity and proximity of exposure to the defendant's asbestos. Fiber drift evidence can meet the proximity element, and it need not come from expert testimony.
• Thacker v. Unr Industries, Inc. (4th District, 1991). Evidence that asbestos dust from all sources drifted through the plant, combined with testimony that slight contact with asbestos could cause cancer, created a jury question on whether Manville asbestos was a proximate cause. Claims of error not raised in the post-trial motion in a jury case are waived under Rule 366(b)(2)(iii).
• In re Unr Industries, Inc. (1987). A bankruptcy court has the power under its equitable authority to expand a legal representative's duties. Making the representative for future claimants also represent putative claimants who are not sick was neither necessary nor appropriate because of conflicts of interest.
• In re Unr Industries, Inc. (1985). Relief from the automatic stay for cause requires a showing that continuing the suit would not greatly prejudice the debtor or estate and that the plaintiff's hardship considerably outweighs the debtor's; here the court found that lifting the stay would undermine the stay's purposes and the claim was better liquidated in the bankruptcy with similar asbestos claims.
• In re Unr Industries, Inc. (1983). A bankruptcy court cannot appoint a legal representative to bind future claimants who are exposed to asbestos but have no known disease. Such persons have no claim under state law or the Bankruptcy Code, and a representative could not adequately represent them or give them the notice due process requires.

Indiana

• Sorenson v. Allied Products Corp. (1999). A company that buys another's assets is not liable for the seller's liabilities unless an exception applies (assumption, fraud, de facto merger, or mere continuation). Here no continuity of ownership or management and no dissolution of the seller meant no de facto merger or mere continuation. A bankruptcy court's asset sale did not strip the state trial court of jurisdiction over a post-sale successor liability tort claim.

Kentucky

• Clouse v. Associated Drywall Suppliers, Inc. (2019). The potential effect of a talc injury suit against Johnson & Johnson on its supplier's pending bankruptcy is too remote to give 'related-to' bankruptcy jurisdiction, and remand would in any event be warranted on equitable grounds under 28 U.S.C. § 1452(b).
• Hayes v. Colgate-Palmolive Company (2019). A federal court may remand a removed bankruptcy-related claim on any equitable ground under 28 U.S.C. § 1452(b), and the court may do so without deciding related-to jurisdiction where, for example, trial is imminent, only state-law claims are asserted, and the state court has long handled the case.
• Sunbeam Corporation v. Dortch (2010). State courts have concurrent jurisdiction with bankruptcy courts to decide whether a claim falls within a bankruptcy discharge. Ordinary litigation expense does not make an appeal inadequate, so a writ is not available.
• Parker v. Henry A. Petter Supply Co. (2005). Kentucky's middleman statute applies to distributors once the manufacturer is identified and subject to the court's jurisdiction, even if the manufacturer is bankrupt or other manufacturers are unnamed; but the distributor's knowledge of the defect is a fact question that needs discovery. A purchaser of a corporation's assets is not a successor unless it continues the seller's ownership or management.

Louisiana

• Gomez v. Huntington Ingalls Inc. (2024). Avondale cannot invoke the Boyle or Yearsley government contractor defenses against failure-to-warn and failure-to-enact-safety-measures claims, following earlier decisions of the same court. A party seeking more discovery before summary judgment must show the discovery will likely create a genuine issue of material fact.
• Lagrange v. Eagle, Inc. (2024). The automatic bankruptcy stay does not automatically cover non-debtor co-defendants, but a court may grant a discretionary stay that rests on the balance of party interests, clear inequity to co-defendants, and reasonable limits on its length.
• Reulet v. Lamorak Ins. Co. (2022). Where a siege of tort claimants threatens the debtor's estate beyond policy limits, insurance proceeds may be property of the bankruptcy estate, so the automatic stay can apply to direct actions against the debtor's insurers; the bankruptcy court is the best forum to decide this first.
• Gooding v. Liberty Mutual Insurance Co. (2021). A federal court may use its discretion to stay claims against an insolvent insurer and its insureds out of deference to state liquidation proceedings, and severing claims against only the insurer and its insureds is inappropriate where it would prejudice them and risk inconsistent verdicts.
• In re Friede Goldman Halter, Inc. (2019). A bankruptcy court that has jurisdiction to interpret its own confirmation order does not have exclusive jurisdiction, and it may permissively abstain and equitably remand a removed state-law case even when mandatory abstention does not apply.
• Brazan v. Lamorak Insurance Co. (2018). A case not removable on its initial pleadings becomes removable only through a voluntary act of the plaintiff, and a nondiverse defendant whose claims are stayed by its bankruptcy has not been voluntarily dismissed, so its citizenship still counts for diversity.
• Bourke v. Exxon Mobil Corporation (2016). A removing defendant must show there is no reasonable possibility of recovery against the non-diverse defendant. A non-diverse defendant's later bankruptcy stay does not remove its citizenship from the diversity analysis unless the plaintiff dismisses it, and early-stage discovery favors remand.
• Poche v. Eagle, Inc. (2015). A case not removable at the outset becomes removable only when nondiverse defendants are dismissed through the plaintiff's voluntary act; a bankruptcy automatic stay is a temporary suspension, not a certain and voluntary dismissal, so it does not make the case removable.
• Boudreaux v. Able Supply Co. (3rd Circuit, 2009). The automatic bankruptcy stay under 11 U.S.C. § 362 applies only to the debtors who filed for bankruptcy and does not extend to non-bankrupt co-defendants, so an appeal may proceed against them.
• In re Babcock & Wilcox Co. (2002). Future unasserted asbestos liabilities count as liabilities in measuring insolvency under the Louisiana revocatory action, and the plaintiffs must prove insolvency by an objective estimate; GAAP is relevant but neither controlling nor presumptively valid.
• Abadie v. Metropolitan Life Ins. Co. (5th Circuit, 2001). A product is unreasonably dangerous per se if its danger-in-fact outweighs its utility, regardless of the manufacturer's knowledge. Working near contractors who cut the product is enough evidence of exposure to support liability.
• In re Davis (1984). Extraordinary relief requires a clear and indisputable right and the absence of other adequate remedies. The bankruptcy court could stay direct actions and discovery against Manville's insurers if the policies were property of the estate, and the workers had other routes of review, including the New York district court and a motion for relief from the stay.

Maine

• Austin v. Unarco Industries, Inc. (1983). A shipyard worker's asbestos products liability claim against manufacturers is not within admiralty jurisdiction because his work was not traditional maritime activity. A bankruptcy debtor's automatic stay does not extend to solvent co-defendants. An appellate court applies a state-law clarification made after trial.

Maryland

• In re RailWORKS Corporation (2020). A claim arises for bankruptcy purposes upon prepetition exposure to asbestos, not upon manifestation of disease. A debtor that used reasonably diligent efforts to identify creditors may give unknown creditors publication notice of the bar date, and that notice satisfies due process so the discharge applies.
• In re RailWORKS Corporation (2020). Under the Fourth Circuit's conduct test, a bankruptcy claim arises upon exposure, not manifestation, so an asbestos claim based on prepetition exposure is a dischargeable claim. A debtor that used reasonably diligent efforts to identify creditors may give unknown creditors publication notice of the bar date, which satisfies due process.
• Kerkhof v. Johnson & Johnson (2019). A state-law tort action against a non-debtor is not "related to" a supplier's Chapter 11 case where indemnification or shared insurance is speculative and the debtor is no longer a party. Even if related-to jurisdiction existed, equitable grounds under 28 U.S.C. § 1452(b) favored remand.
• Stein v. Pfizer Inc. (2016). Under the objective reliance test, the actual reliance test, and the enterprise liability test alike, a parent company is not an "apparent manufacturer" of a subsidiary's industrial product where the sophisticated purchaser knew it bought from the subsidiary and the parent did not substantially participate in the design, manufacture or distribution.
• National Union Fire Insurance Company OF Pittsburgh, PA v. Porter Hayden Company (2014). Under Maryland law, an insurer that was notified of claims and chose not to respond cannot rely on a voluntary obligation or consent-to-settle provision to deny coverage, but it may still challenge the reasonableness of the settlements. The insurer has the burden of production and the insured has the ultimate burden of persuasion on reasonableness.
• Brannan v. Wallace & Gale Asbestos Settlement Trust (2012). Under Maryland's final judgment rule, a plaintiff gets one recovery for a single harm. Estates that took judgments and settlements from other tortfeasors while a joint tortfeasor was in bankruptcy cannot later reopen them to collect from that tortfeasor's successor trust.
• National Union Fire Insurance Company OF Pittsburgh v. Porter Hayden Company (2005). Under Maryland law, coverage for asbestos bodily injury claims is triggered on exposure, exposure-in-residence and manifestation, so every policy on the risk in that span is triggered. Allocation among triggered policies is pro rata by time on the risk, and injury occurring after operations were completed is subject to the aggregate limits of policies then in effect, following In re Wallace & Gale, but fact questions remained on when Porter Hayden's operations were completed.