1:91-bk-10100•Eagle-Picher Industries, Inc. and Eagle-Picher Industries, Inc.
Eagle-Picher Industries, Inc. and Eagle-Picher Industries, Inc.
1:91-bk-10100OhsbOct 6, 2005
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UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION In Re EAGLE-PICHER INDUSTRIES, INC., et al. Debtor(s) ---------------------------- 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 ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) 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 ____________________________________________________________ Case 1:91-bk-10100 Doc 6809 Filed 10/06/05 Entered 10/07/05 09:45:27 Desc Main Document Page 1 of 12
2 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 Case 1:91-bk-10100 Doc 6809 Filed 10/06/05 Entered 10/07/05 09:45:27 Desc Main Document Page 2 of 12
3 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 Case 1:91-bk-10100 Doc 6809 Filed 10/06/05 Entered 10/07/05 09:45:27 Desc Main Document Page 3 of 12
4 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 Case 1:91-bk-10100 Doc 6809 Filed 10/06/05 Entered 10/07/05 09:45:27 Desc Main Document Page 4 of 12
5 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 Case 1:91-bk-10100 Doc 6809 Filed 10/06/05 Entered 10/07/05 09:45:27 Desc Main Document Page 5 of 12
6 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 Case 1:91-bk-10100 Doc 6809 Filed 10/06/05 Entered 10/07/05 09:45:27 Desc Main Document Page 6 of 12
7 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. Case 1:91-bk-10100 Doc 6809 Filed 10/06/05 Entered 10/07/05 09:45:27 Desc Main Document Page 7 of 12
8 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 Case 1:91-bk-10100 Doc 6809 Filed 10/06/05 Entered 10/07/05 09:45:27 Desc Main Document Page 8 of 12
9 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. Case 1:91-bk-10100 Doc 6809 Filed 10/06/05 Entered 10/07/05 09:45:27 Desc Main Document Page 9 of 12
10 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 Case 1:91-bk-10100 Doc 6809 Filed 10/06/05 Entered 10/07/05 09:45:27 Desc Main Document Page 10 of 12
11 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 Case 1:91-bk-10100 Doc 6809 Filed 10/06/05 Entered 10/07/05 09:45:27 Desc Main Document Page 11 of 12
12 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 Case 1:91-bk-10100 Doc 6809 Filed 10/06/05 Entered 10/07/05 09:45:27 Desc Main Document Page 12 of 12
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