Eagle-Picher Industries, Inc. and Eagle-Picher Industries, Inc.

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
In Re
EAGLE-PICHER INDUSTRIES,
INC., et al.
Debtor(s)
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Eagle-Picher Industries, Inc.
et al
Reorganized Debtor(s)
vs.
Asarco Incorporated, Blue Tee
Corp., The Doe Run Resources
Corporation, Gold Fields
Mining Corporation
Contribution Claim
Respondents
Burlington Northern, Santa Fe
Railway Company
Cross Claim Respondent
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Case No. 1-91-10100
Chapter 11
Judge Burton Perlman
This document has been electronically entered in the records of the United
States Bankruptcy Court for the Southern District of Ohio.
IT IS SO ORDERED.
Dated: October 06, 2005
____________________________________________________________
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DECISION ON MOTIONS OF REORGANIZED DEBTOR
RE: CONTRIBUTION CLAIMS AND CROSS CLAIM
An order of confirmation was entered in this case on
November 18, 1996. The reorganized debtor seeks now to invoke
the retained jurisdiction provision in the plan for a purpose
hereafter to be described.
Seven personal injury actions have been commenced in the U.
S. District Court for the Northern District of Oklahoma. These
cases were brought by fifty one minor plaintiffs who allege that
they have been injured from exposure to the by-products which
occur in the mining of lead. Such by-products occur when crude
ore is crushed and the desired minerals, zinc and lead, are
extracted. These by-products are familiarly called chat or
tailings. The cases pending in Oklahoma refer to by-products to
be found in the Ottawa county, Oklahoma portion of the Tri-State
Mining District. (The Tri-State Mining District consists of
about 2,500 square miles of land located in the northeast corner
of Oklahoma, the southeast corner of Kansas and the southwest
corner of Missouri.) Named as defendants in the seven Oklahoma
District Court cases are ASARCO Incorporated, Blue Tee Corp.,
The Doe Run Resources Corporation, and Gold Fields Mining
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Corporation. The Oklahoma defendants have filed third party
contribution claims against the reorganized debtor because they
believe that the debtor’s predecessors conducted mining and
milling activities in Ottawa county between 1914 and 1970.
In addition to naming Eagle Picher in their third party
complaint for contribution, the defendants in the Oklahoma cases
named Burlington Northern and Santa Fe Railway (hereafter
“BNSF”)as a third party defendant. BNSF then filed a cross
claim against Eagle Picher, the reorganized debtor.
The reorganized debtor purpose in invoking retained
jurisdiction is to file motions barring the Oklahoma cases on
the grounds that such claims have been discharged by the
confirmed plan and/or the contribution and cross claim should be
channeled to the Personal Injury Trust created under the
confirmed plan.
1. The Channeling Injunction. §524(g)of the Bankruptcy Code
by statute provides a channeling injunction. The effect of the
that injunction is to discharge claims which are subject to it
and relegate such claimants to a Personal Injury Trust which was
created in the confirmed plan. Debtor contends that the
contribution and cross claims for relief on account of Lead
Personal Injury, are subject to that injunction. The basis for
the contention is to be found at §3.2.17 of the confirmed plan
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which provides, in part, that
the sole recourse of the holder of an Asbestos
Personal Injury Claim or Lead Personal Injury Claim
shall be the PI Trust, and such holders shall have no
right whatsoever at anytime to assert its Asbestos
Personal Injury Claim or Lead Personal Injury Claim,
as the case maybe, against any PI Protected Party.
Debtor asserts that the claims for contribution and cross claim
fall within this language, and because respondents are
proceeding against the reorganized debtor directly in the
Oklahoma District Court, they are in violation of the injunction
contained in the confirmed plan.
Respondents argue that their claims are not subject to the
channeling injunction. It is their position that the
contribution claims and cross claim are not Lead Personal Injury
Claims as that phrase is defined in the plan. Essentially it
is the position of respondents that only manufactured goods
containing asbestos or lead are within the plan definition of
Asbestos Personal Injury Claim or Lead Personal Injury Claim
respectively. They say that the injury for which damages are
now sought were caused not by manufactured products but by the
lead contained in the by-products of mining of ore for lead
subsequently extracted therefrom. Respondents say that
examination of the disclosure statement supports its position
that it was the intention that the term Lead Personal Injury
Claim refer only to a claim for personal injuries from exposure
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to lead paint or pigment manufactured by Eagle Picher. The
injuries for which damages are now sought by respondents were
clearly not caused in that manner.
After considering the respective positions of the parties,
the Court has reached the conclusion that the position of debtor
that claims of respondent are subject to the channeling
injunction is incorrect. The plan at §1.1.86 defines Lead
Personal Injury Claim as follows:
Any right to payment, claim, remedy, liability or
Demand, now existing or hereafter arising, whether or
not such right, claim, remedy, liability, or Demand is
reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, legal,
equitable, secured, or unsecured, whether or not the
facts of or legal bases for such right, claim, remedy,
liability, or Demand are known or unknown, for, under
any theory of law, equity, admiralty, or otherwise,
death, bodily injury, or other personal damages
(whether physical, emotional, or otherwise) to the
extent caused or allegedly caused, directly or
indirectly, by exposure to products that contained
lead chemicals that were manufactured, sold, supplied,
produced, distributed, or in any way marketed by any
of the Debtors prior to the Petition Date, including,
without express or implied limitation, any right,
claim, remedy, liability, or Demand for compensatory
damages (such as loss of consortium, wrongful death,
survivorship, proximate, consequential, general, and
special damages) and including punitive damages and
any Asbestos or Lead Contribution Claim.
The plain language of this definition makes it clear that it is
manufactured goods containing lead that are subject to the
channeling injunction.
In addition, in Debtor’s Disclosure Statement may be found
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the following:
The Trustees shall administer the processing and
payment of Lead Personal Injury Claims pursuant to EPI
Lead Claims Procedures to be adopted by the Trustees.
These procedures shall be similar to the Asbestos PI
Claims Procedures, except that the PI Trust shall not
process a lead Personal Injury Claim unless the holder
can demonstrate that either the holder or a similarly
situated Claimant has obtained a final, nonappealable
judgment against a lead pigment manufacturer under the
state law applicable to the holder’s claim. Due to
the absence of any court judgment imposing liability
on a lead pigment manufacturer and the difficulty in
estimating the value of Lead Personal Injury Claims,
the Trustees are not required to set aside a reserve
for these claims unless certain events occur which are
specified in the Trust Agreement. See Section VI.B.1,
entitled, “THE PI TRUST - Asbestos Personal Injury
Claims Resolution Procedures - Payment Percentage.”
There can be no argument that what is intended by the debtor by
the phrase Lead Personal Injury Claim, is one arising from
exposure to lead pigment, a manufactured product. This language
from the disclosure statement supports our conclusion that only
lead claims arising from exposure to manufactured products are
subject to the channeling injunction. That reference to the
disclosure statement is a valid technique to utilize in support
of our conclusion is recognized in General Electric Credit
Corporation v. Nardulli and Sons Inc. 836 F 2d 184(3rd Cir.
1988) where the court said at page 188:
Our conclusion is bolstered by reference to Nardulli’s
disclosure statement submitted pursuant to 11 U.S.C.
§1125(b). That section requires a debtor, before or
at the time of soliciting approval of the debtor’s
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plan of reorganization from a holder of a claim or
interest, to submit a written disclosure statement
containing adequate information to allow a reasonable
holder to make an informed judgment about the plan.
11 U.S.C. §1125(a)(1) &(b)(1982 & Supp. II 1984).
That language supplemented the conclusion of the court in
Nardulli that certain creditors were secured.
The motion of reorganized debtor to refer contribution
claims and cross claims to the Personal Injury Trust will be
denied.
2. The Discharge Injunction. As an alternative basis for its
motion, debtor asserts that the contribution claims and cross
claims violate §524 and 1141 of the bankruptcy code, that is,
they are barred by the injunction put in place by the
confirmation of the plan. But the only post confirmation
claims which may be and are barred in this case by the
confirmation order are the Asbestos Personal Injury Claims and
Lead Personal Injury Claims. These post petition claims, unlike
any other post petition claims, may be barred because of the
enactment of 11 U.S.C. §524(g). It is settled bankruptcy law
that post petition claims are unaffected by a discharge
injunction. CPT Holdings, Inc. v. The Industrial and Allied
Employees Union Pension Plan 162 F.3d 405, 407-08 (6th Cir.
1998). The motion of movant therefore cannot be granted on
its alternative basis.
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In support of its motion, movant argues that the court
should find that the personal injury claims here in question
arose prior to the confirmation date by applying the “underlying
action” standard for determining when a claim arises. In other
litigation proceeding before this court we have held that the
“underlying action” standard rather than the “fair
contemplation” test is the proper one in determining when a
claim arises. In that matter, however, the court was dealing
with environmental claims, not claims for personal injury. It
hardly needs saying that the date of onset of illness in an
individual is different from the date when the condition which
may have given rise to the illness was created.
The plan itself in its definition section states different
definitions for Asbestos Personal Injury Claims, Lead Personal
Injury Claims, and Environmental Claims. Because movants only
basis for arguing that respondents claims arose pre-confirmation
is the “underlying action” test which we have held inapplicable
here, its motion fails on the alternative ground. In opposing
the motion, respondents present an extended exegeses of various
tests which may be applied in determining when a claim arises,
but we find this discussion unnecessary for a ruling on the
present motion.
3. Allowed Other Product Liability Tort Claim. As second
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alternative basis for contending that the discharge injunction
does not bar the Oklahoma claim, respondents argue that its
claims should be regarded as “Allowed Other Product Liability
Tort Claims.”
The term “Other Product Liability Tort Claim” is defined at
paragraph 1.1.95 of the plan thus:
Any Product Liability Tort Claim as to which the facts
or existence of first become apparent to the holder of
such claim after the Effective Date other than
Asbestos Personal Injury Claims and Lead Personal
Injury Claims.
Also defined in the plan at 1.1.106 is Product Liability
Tort Claim as follows:
Any right to payment, claim, remedy, liability, or
Demand, now existing or hereafter arising, whether or
not such right, claim, remedy, liability, or Demand is
reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured, or unsecured, whether or
not the facts of or legal bases for such right, claim,
remedy liability, or Demand are known or unknown, for,
under any therory of law, equity, admiralty, or
otherwise, death, bodily injury, or other personal
damages (whether physical, emotional, or otherwise) to
the extend caused or allegedly caused, directly or
indirectly, by exposure to any products or byproducts
that were manufactured, sold, supplied, produced,
released, distributed, or in any way marketed by any
of the Debtors prior to the Petition Date, including,
without express or implied limitation, any right,
claim, remedy, liability, or Demand for compensatory
damages (such as loss of consortium, wrongful death,
survivorship, proximate, consequential, general, and
special damages), including punitive damages, and
including, without express or implied limitation, any
Asbestos Personal Injury Claim or Lead Personal Injury
Claim.
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Both parties consider that these provisions may have
applicability here. That may be so, but however applied these
provisions cannot serve to bar post confirmation personal injury
claims. For a case holding that the foregoing provisions of
the plan provided the means for a contribution claim to be
asserted against the reorganized debtor after confirmation see
The Ohio Medical Instrument Co. v. Eagle Picher Industries Inc.
270 BR 842 (Bank. SC Ohio 2001).
The motion of reorganized debtor, Eagle-Picher Industries,
Inc., to bar prosecution of contribution claims and cross claims
in suits for personal injury will be denied.
Copy to:
Stephen D. Lerner, Esq
Kenneth R. Craycraft, Esq
Squire,Sanders, Dempsey,
L.L.P.
312 Walnut St.; Ste 3500
Cincinnati, OH 45202
Office of the U.S. Trustee
36 E. Seventh Street
Suite 2050
Cincinnati, OH 45202
Michael D. Graves
T. Lane Wilson
Karissa K. Waterbury
Hall, Estill, Hardwick,
Gable, Golden & nelson
320 South Boston Ave; Ste 400
Tulsa, OK 74103-3708
Richard A. Ahrens
Robert J. Will
C. David Goerisch
Lewis, Rice & Fingerish
500 North Broadway; Ste 2000
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St. Louis, MO 63102
Stanley D. Davis
John K. Sherk III
Mark D. Anstoetter
Kirk F. Marty
Shook, Hardy & Bacon
2555 Grand Blvd.
Kansas City, MO. 64108
Robert J. Joyce
Chris A. Paul
Scott McDaniel
Stacy L. Accord
John M. Payne
Joyce, Paul & McDaniel
111 W. Fifth Street; Ste 500
Tulsa, OK 74103
Ronald N. Ricketts
Gable & Gotwals
1100 ONEOK Plaza
100 W. Fifth Street
Tulsa, OK 74103-4217
Loretta F. Radford
Assistant U.S. Attorney
333 W. Fourth Street; Ste
3460
Tulsa, OK 74103-3880
Steven M. Talson
Jason S. Patil
U.S. Department of Justice
Civil Division, Torts Branch
Environmental Torts Section
P.O. Box 340
Benjamin Franklin Station
Washington, D.C. 20044
Judy Garner Vanderflute
1505 Sky Lane
Miami, OK 74354
Charles R. Babst, Jr.
U.S. Department of Interior
Regional Solicitor SW Region
7906 E. 33rd Street; Ste 100
Tulsa, OK 74145-1308
John Anthony Nicholas
Blanchard Robertson Mitchell
& Carter, P.C.
P.O. Box 1626
Joplin, MO 64801
Barry C. Reynolds
Kelley Gilbert Loud
Titus, Hillis & Reynolds P.C.
15 E. Fifth Street; Ste 2750
Tulsa, OK 74103
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George Gibbs
Tom L. Armstrong
George Mullican
Christopher D. Wolek
500 Petroleum Club Bldg
601 S. Boulder
Tulsa, OK 74119
Henry E. Menninger Jr.
Wood & Lamping, LLP
600 Vine Street; Ste 2500
Cincinnati, OH 45202
Richard D. Gibbon
Bradford D. Barron
Zazhary T. Barron
Richard Gibbon & Associates
2 W. Sixth
Tulsa, OK 74119
Kenneth N. McKinney
Ronald L. Walker
David A. Walls
Kris Ted Ledford
McKinney & Stringer
401 S. Boston, Ste 3100
Tulsa, OK 74103
Stephen D. Susman
Vineet Bhatia
Michael P. Fritz
Susman Godfrey
1000 Louisiana St.; Ste 5100
Houston, Tx 77002-5096
Tony W. Edwards
Anthony Laizure
Stipe Law Firm
P.O. Box 1369
McAlester, OK 74502-1369
Christopher A. Seeger
Christopher J. Murray
Seeger, Weiss LLP
One William Street
New York, N. Y 10004-2502
Charles F. Speer
Payne & Jones, Chtd.
11000 King
P.O. Box 25626
Overland Parks, KS 66225-5626
Robert J. Kennedy Jr.
Kevin J. Madonna
Kennedy & Madonna, LLP
109 Mountain Laurel Lane
Woodstock, NY 12498
Dennis C. Reich
Reich & Binstock, LLP
Whitney Bank Bldg
4265 San Felipe, Ste 1000
Houston, TX 77027
G. Michael Lewis
Linda C. Martin
Russell W. Kroll
William Hayden Spitler
Doerner, Saunders, Daniel &
Anderson
320 South Boston, Ste 500
Tulsa, OK 74103-3725
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