Pennsylvania Act 2001-101 — ASSOCIATIONS CODE (15 PA.C.S.) AND JUDICIAL CODE (42 PA.C.S.) - OMNIBUS AMENDMENTS

Act text

ASSOCIATIONS CODE (15 PA.C.S.) AND JUDICIAL CODE (42 PA.C.S.) OMNIBUS
                                AMENDMENTS
                 Act of Dec. 17, 2001, P.L. 904, No. 101              Cl. 15
                             Session of 2001
                               No. 2001-101

     SB 216

                                  AN ACT

     Amending Titles 15 (Corporations and Unincorporated
        Associations) and 42 (Judiciary and Judicial Procedure) of
        the Pennsylvania Consolidated Statutes, providing for
        limitations on asbestos-related liabilities relating to
        certain mergers or consolidations; and further providing for
        certain statutes of limitations and for certain transfers.

        The General Assembly of the Commonwealth of Pennsylvania
     hereby enacts as follows:

        Section 1.  Title 15 of the Pennsylvania Consolidated
     Statutes is amended by adding a section to read:
     § 1929.1.  Limitations on asbestos-related liabilities relating
                to certain mergers or consolidations.
        (a)  Limitation on successor asbestos-related liabilities.--
            (1)  Except as further limited in paragraph (2), the
        cumulative successor asbestos-related liabilities of a
        domestic business corporation that was incorporated in this
        Commonwealth prior to May 1, 2001, shall be limited to the
        fair market value of the total assets of the transferor
        determined as of the time of the merger or consolidation, and
        such corporation shall have no responsibility for successor
        asbestos-related liabilities in excess of such limitation.
            (2)  If the transferor had assumed or incurred successor
        asbestos-related liabilities in connection with a prior
        merger or consolidation with a prior transferor, then the
        fair market value of the total assets of the prior
        transferor, determined as of the time of such earlier merger
        or consolidation, shall be substituted for the limitation set
        forth in paragraph (1) for purposes of determining the
        limitation of liability of a domestic business corporation.
        (b)  Limitation on total assets available to satisfy
     successor asbestos-related liabilities.--
            (1)  Except as further limited in paragraph (2), the
        assets of a domestic business corporation that was
        incorporated in this Commonwealth prior to May 1, 2001, shall
        be exempt from restraint, attachment or execution on
        judgments related to claims for successor asbestos-related
        liabilities if the cumulative amounts which, after the time
        of the merger or consolidation as to which the fair market
        value of total assets is determined for purposes of this
        subsection and subsection (a), are paid or committed to be
        paid by or on behalf of the corporation, or by or on behalf
        of a transferor, in connection with settlements, judgments or
        other discharges of claims of asbestos-related liabilities
        exceed the fair market value of the total assets of the
        transferor, determined as of the time of the merger or
        consolidation.
            (2)  If the transferor had assumed or incurred successor
        asbestos-related liabilities in connection with a prior
        merger or consolidation with a prior transferor, then the
        fair market value of the total assets of the prior
        transferor, determined as of the time of such earlier merger
        or consolidation, shall be substituted for the limitation set
        forth in paragraph (1) for purposes of determining the extent
        of the exemption of the assets of a domestic business
        corporation.
        (c)  Fair market value of total assets.--
            (1)  A domestic business corporation may establish the
        fair market value of total assets through any method
        reasonable under the circumstances, including by reference to
        the going concern value of such assets or to the purchase
        price attributable to or paid for such assets in an arm's
        length transaction, or, in the absence of other readily
        available information from which fair market value can be
        determined, by reference to the value of such assets recorded
        on a balance sheet. Total assets shall include intangible
        assets. A showing by the domestic business corporation of a
        reasonable determination of the fair market value of total
        assets shall be prima facie evidence of their fair market
        value.
            (2)  Once a reasonable determination of the fair market
        value of total assets has been thus established by a domestic
        business corporation, a claimant disputing that determination
        of value shall then have the burden of establishing a
        different fair market value of such assets.
            (3)  For the purpose of adjusting the limitations set
        forth in subsections (a) and (b) to account for the passage
        of time, the fair market value of total assets at the time of
        a merger or consolidation shall be increased annually until
        the earlier of:
                (i)  the date of the settlement, judgment or other
            discharge to which the limitations in subsection (a) or
            (b) are being applied; or
                (ii)  the date on which such adjusted fair market
            value is first exceeded by the cumulative amounts paid or
            committed to be paid by or on behalf of the corporation,
            or by or on behalf of a transferor, after the time of the
            merger or consolidation as to which the fair market value
            of total assets is determined for purposes of subsections
            (a) and (b) in connection with settlements, judgments or
            other discharges of the successor asbestos-related
            liabilities;
        at the rate equal to the prime rate as listed in the first
        edition of the Wall Street Journal published for each
        calendar year since such merger or consolidation, plus 1%,
        not compounded.
        (d)  Application.--
            (1)  The limitations set forth in subsections (a) and (b)
        shall apply to mergers or consolidations effected under the
        laws of this Commonwealth or another jurisdiction consummated
        prior to May 1, 2001.
            (2)  The limitations set forth in subsections (a) and (b)
        shall apply to all asbestos claims, including existing
        asbestos claims, and all litigation, including existing
        litigation, and shall apply to successors of a domestic
        business corporation to which this section applies.
            (3)  The limitations set forth in subsections (a) and (b)
        shall not apply to workers' compensation benefits paid by or
        on behalf of an employer to an employee pursuant to the act
        of June 2, 1915 (P.L.736, No.338), known as the Workers'
        Compensation Act, or comparable workers' compensation law of
        another jurisdiction.
            (4)  The limitations set forth in subsections (a) and (b)
        shall not apply to any claim against a domestic business
        corporation that does not constitute a successor asbestos-
        related liability.
            (5)  This section shall not apply to an insurance
        corporation as defined in section 3102 (relating to
        definitions).
            (6)  The limitations set forth in subsections (a) and (b)
        shall not apply to any obligations arising under the National
        Labor Relations Act (49 Stat. 449, 29 U.S.C. § 151 et seq.)
        or under any collective bargaining agreement.
        (e)  Definitions.--As used in this section, the following
     words and phrases shall have the meanings given to them in this
     subsection:
        "Asbestos claim."  Any claim, wherever or whenever made, for
     damages, losses, indemnification, contribution or other relief
     arising out of, based on or in any way related to asbestos,
     including property damage caused by the installation, presence
     or removal of asbestos, the health effects of exposure to
     asbestos, including any claim for personal injury, death, mental
     or emotional injury, risk of disease or other injury or the
     costs of medical monitoring or surveillance. The term shall also
     include any claim made by or on behalf of any person exposed to
     asbestos or any representative, spouse, parent, child or other
     relative of any such person.
        "Successor asbestos-related liabilities."  Any liabilities,
     whether known or unknown, asserted or unasserted, absolute or
     contingent, accrued or unaccrued, liquidated or unliquidated or
     due or to become due, related in any way to asbestos claims,
     that were assumed or incurred by a domestic business corporation
     or foreign business corporation as a result of or in connection
     with a merger or consolidation, or the plan of merger or
     consolidation related thereto, with or into another domestic
     business corporation or foreign business corporation effected
     under the laws of this Commonwealth or another jurisdiction or
     which are related in any way to asbestos claims based on the
     exercise of control or the ownership of stock of such
     corporation prior to such merger or consolidation. The term
     shall also include liabilities which, after the time of the
     merger or consolidation as to which the fair market value of
     total assets is determined for purposes of subsections (a) and
     (b), were or are paid or otherwise discharged, or committed to
     be paid or otherwise discharged, by or on behalf of the
     corporation, or by or on behalf of a transferor, in connection
     with settlements, judgments or other discharges in this
     Commonwealth or another jurisdiction.
        "Transferor."  A domestic business corporation or foreign
     business corporation from which successor asbestos-related
     liabilities are assumed or incurred.
        Section 2.  Section 5524 of Title 42 is amended by adding a
     paragraph to read:
      § 5524.  Two year limitation.
        The following actions and proceedings must be commenced
     within two years:
            * * *
            (8)  An action to recover damages for injury to a person
        or for the death of a person caused by exposure to asbestos
        shall be commenced within two years from the date on which
        the person is informed by a licensed physician that the
        person has been injured by such exposure or upon the date on
        which the person knew or in the exercise of reasonable
        diligence should have known that the person had an injury
        which was caused by such exposure, whichever date occurs
        first.
        Section 3.  Section 8128 of Title 42 is amended to read:
      § 8128.  Transfer of claim to avoid policy of Commonwealth.
        (a)  General rule.--It shall be unlawful for any creditor or
     obligee to commence an action on or to transfer any claim
     against a resident of this Commonwealth for the purpose of
     having such claim collected by proceedings in a forum which
     accords such resident less favorable exemptions from attachment
     or execution than are accorded by this Commonwealth, or for the
     purpose of depriving such resident of the right to have his
     personal earnings while in the hands of his employer exempt from
     application to the payment of his debts.
        (b)  Remedy.--In addition to remedy by injunction or
     otherwise, a resident of this Commonwealth who is aggrieved by
     any action by a creditor or obligee in violation of subsection
     (a) shall have a right of action against the creditor or obligee
     for treble the amount recovered from such resident in violation
     of this section and reasonable counsel fees. The transfer of any
     claim against the resident and the commencement of any action
     thereon outside this Commonwealth shall be prima facie evidence
     of a purpose to violate the provisions of subsection (a).
        (c)  Application to Title 15.--The provisions of this section
     shall also apply to the limitations set forth in 15 Pa.C.S. §
     1929.1 (relating to limitations on asbestos-related liabilities
     relating to certain mergers or consolidations).
        Section 4.  This act shall take effect as follows:
            (1)  The addition of 42 Pa.C.S. § 5524(8) shall take
        effect in 60 days.
            (2)  The remainder of this act shall take effect
        immediately.

     APPROVED--The 17th day of December, A. D. 2001.

     MARK S. SCHWEIKER