Opinion, Barraford v. T&N Ltd., 14-1281 (1st Cir. Feb. 11, 2015)

8/9/2019 Opinion, Barraford v. T&N Ltd., 14-1281 (1st Cir. Feb. 11, 2015)

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United States Court of AppealsFor the First Circuit

No. 14- 1281

NORA M. BARRAFORD, i ndi vi dual l y and as execut r i x of t he est at e of Dani el M. Bar r af or d, by her agent THE FEDERAL- MOGUL ASBESTOS

PERSONAL I NJ URY TRUST,

Pl ai nt i f f , Appel l ant ,

KATHERI NE LYDON, i ndi vi dual l y and as execut r i x of t he est ate of J ohn T. Lydon, J r . ,

Pl ai nt i f f ,

v.

T&N LI MI TED, f / k/ a T&N PLC, f / k/ a Turner & Newel l Pl c, f / k/ a Turner & Newel l Li mi t ed; TAF I NTERNATI ONAL LI MI TED, f / k/ a TurnersAsbest os Fi br es Li mi t ed, f / k/ a Raw Asbest os Di st r i but or s Li mi t ed,

Def endant s, Appel l ees.

APPEAL FROM THE UNI TED STATES DI STRI CT COURT FOR THE DI STRI CT OF MASSACHUSETTS

[ Hon. F. Denni s Sayl or I V, U. S. Di st r i ct J udge]

Bef or e

Lynch, Chi ef J udge,St ahl and Kayat t a, Ci r cui t J udges.

Ri char d Levi n, wi t h whom Rowan D. Wi l son and Cr avat h,Swai ne & Moor e LLP wer e on br i ef , f or appel l ant s.

Mar k A. Per r y, wi t h whomScot t P. Mar t i n, Li ndsay S. See,Gi bson, Dunn & Cr ut cher LLP, Br uce F. Smi t h, St even C. Rei ngol d, Ti mot hy J . Durken, and J ager Smi t h P. C. wer e on br i ef , f orappel l ees.

Case: 14-1281 Document: 00116797281 Page: 1 Date Filed: 02/11/2015 Entry ID: 588542


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KAYATTA, Circuit Judge. Appel l ee T&N1 was an asbest os

manuf act ur er t hat f aced si gni f i cant l i abi l i t y af t er t he deadl y

qual i t i es of i t s pr oduct became cl ear . Li ke many ot her asbest os

manuf act ur er s, i t chose t o addr ess t hi s l i abi l i t y t hr ough a Chapt er

11 bankr upt cy r eor gani zat i on pl an ( t he "Pl an" ) . T&N' s Pl an, among

ot her t hi ngs, cr eat ed t he Feder al - Mogul Asbest os Per sonal I nj ur y

Tr ust ( t he "Tr ust " ) . The Pl an t r ansf er r ed t o t he Tr ust cer t ai n of

T&N' s asset s and r i ght s, wi t h whi ch t he Tr ust was t o pay asbest os

cl ai ms br ought by persons who coul d have sued T&N but f or i t s

bankrupt cy. Whi l e bankrupt cy r eor gani zat i on pl ans t ypi cal l y

di schar ge al l of a r eor gani zi ng company' s l i abi l i t y upon pl an

conf i r mat i on, t hi s Pl an pr ovi ded t hat T&N' s asbest os l i abi l i t y

woul d cont i nue post - conf i r mat i on, and t hat t he Tr ust woul d br i ng

asbest os sui t s agai nst T&N as t he agent of t he act ual cl ai mant s.

The pur pose of t hi s provi si on was t o al l ow t he Tr ust t o t ake

advant age of a par t i cul ar T&N i nsur ance pol i cy.

I n t hi s l awsui t f i l ed i n 2011, t he Tr ust br ought an

asbest os cl ai mt hat had accrued r oughl y a decade ear l i er . When T&N

r ai sed a st at ut e of l i mi t at i ons def ense, t he Tr ust ar gued t hat t he

r eor gani zat i on Pl an al l ows i t t o br i ng t hi s cl ai m ( and any ot her

asbest os cl ai ms t hat had not become st al e pr i or t o T&N' s f i l i ng f or

bankrupt cy pr ot ect i on) whenever i t wi shes t o do so unt i l al l of t he

1 We use t he si ngul ar name "T&N" t o ref er col l ect i vel y t o theappel l ees T&N Li mi t ed and TAF I nt er nat i onal Li mi t ed.

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pr oceeds of T&N' s i nsur ance pol i cy ar e exhaust ed. The di st r i ct

cour t di sagreed. Havi ng r evi ewed t he Pl an document s and r el evant

pr ovi si ons of t he Bankrupt cy Code, we now af f i r m t he di st r i ct

cour t ' s di smi ssal of t he Tr ust ' s sui t on st at ut e of l i mi t at i ons

grounds.

I. Background

A. The Barraford Claims

Dani el Barr af ord di ed i n 2002 of mesot hel i oma, a cancer

gener al l y caused by asbest os i nhal at i on. Bar r af ord had been

exposed to asbest os pr oduct s manuf act ured by T&N, among ot her s,

when he worked as an el ect r i ci an and engi neer on t he const r uct i on

of t he Pr udent i al Cent er i n Bost on, Massachuset t s. I n 2004, hi s

wi dow Nora Bar r af ord br ought sui t agai nst a number of asbest os

manuf actur er s on her own behal f and as execut r i x of hi s est ate.

Bar r af ord di d not name T&N as a def endant because T&N had f i l ed i n

2001 f or pr otect i on under Chapt er 11 of t he Uni t ed St ates

Bankr upt cy Code ( t he "Code") . 11 U. S. C. §§ 101 et seq. Under t he

Code, t he f i l i ng of a bankr upt cy pet i t i on t r i gger s a so- cal l ed

aut omat i c st ay t hat bars t he commencement of sui t agai nst t he

debt or on any cl ai m "t hat arose bef ore t he commencement of t he

[ bankrupt cy] case. " I d. § 362( a) ( 1) . The st ay cover ed Bar r af or d' s

cl ai ms because, f or bankrupt cy pur poses, any cl ai m f or per sonal

i nj ur y ar i si ng f r om exposur e t o a pr oduct ar i ses when t he cl ai mant

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was f i r st exposed t o t he pr oduct . See I n r e Gr ossman' s, I nc. , 607

F. 3d 114, 125 ( 3d Ci r . 2010) ( en banc) .

Under Massachuset t s l aw, Bar r af or d' s st at e- l aw cl ai ms

woul d have expi r ed at t he l at est i n 2005, t hr ee year s af t er hi s

deat h. Mass Gen. Laws ch. 229, § 2; ch. 260, § 2A. The Code,

however , del ays t he expi r at i on of any l i mi t at i ons per i od t hat woul d

ot her wi se end dur i ng t he dur at i on of t he aut omat i c st ay unt i l

t hi r t y days have passed af t er not i ce of t er mi nat i on of t he st ay.

11 U. S. C. § 108( c) ( 2) . The quest i on posed by t hi s case i s whet her

t hat st ay was t ermi nat ed no l at er t han December 27, 2007, t he

ef f ect i ve dat e of T&N' s r eor gani zat i on Pl an, 2 such t hat t he

Bar r af ord cl ai ms became t i me- bar r ed t hi r t y days ther eaf t er , or

whet her t he Pl an modi f i ed and extended t he st ay i ndef i ni t el y, such

t hat t he cl ai ms wer e not t i me- bar r ed when t hi s sui t was brought i n

2011. The answer t o t hi s quest i on l i es pr i mar i l y i n t he l anguage

of t he Pl an.

B. The T&N Reorganization Plan

To expl ai n t he pert i nent t er ms of T&N' s r eorgani zat i on

Pl an, we f ocus f i r st on i t s creat i on of t he Tr ust . A per sonal

i nj ur y t r ust i s a speci al t ool aut hor i zed by Congr ess f or deal i ng

wi t h t he l ong l at ency per i od of mesot hel i oma. See 11 U. S. C.

2 T&N does not concede t hat i t s non- asbest os l i abi l i t y wasdi schar ged on t he Pl an' s ef f ect i ve dat e, r at her t han November 8,2007, when the bankr upt cy cour t ent er ed i t s or der conf i r mi ng T&N' sr eor gani zat i on Pl an. However , we need not pi ck bet ween t hese t wodat es as t he cor r ect answer i s i r r el evant t o t hi s appeal .

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§ 524( g) ; I n r e Feder al - Mogul Gl obal I nc. , 684 F. 3d 355, 357- 59 ( 3d

Ci r . 2012) . A t r ust al l ows a r eor gani zi ng asbest os manuf act ur er t o

wash i t s hands of f ur t her asbest os l i abi l i t y by, i n addi t i on t o

sat i sf yi ng ot her st at ut or y r equi r ement s, assi gni ng al l l i abi l i t y

f or asbest os cl ai ms t o t he t r ust and conveyi ng at l east f i f t y

per cent of i t s equi t y ( or t he r i ght t o acqui r e t hat equi t y) t o t he

t r ust . I d. § 524( g) ( 2) ( B) . Cust omar i l y, or so t he par t i es t el l

us, a reor gani zi ng company al so assi gns any appl i cabl e i nsur ance

pol i ci es t o t he t r ust . See, e. g. , I n r e Feder al - Mogul , 684 F. 3d at

366- 67, 382. Upon pl an conf i r mat i on, t he r eorgani zed manuf actur er

r ecei ves a di schar ge of al l l i abi l i t y f or t he cl ai ms. 11 U. S. C.

§§ 944( b) ( 1) , 1141( d) . Cur r ent and f ut ur e cl ai mant s then pr oceed

sol el y agai nst the t r ust . I d. § 524( g) ( 1) ( B) .

Her e, we ar e t ol d, t wo i mpedi ment s t o t hi s cust omary

cour se l oomed. Fi r st , a £500 mi l l i on l i abi l i t y pol i cy owned by T&N

( t he "Her cul es Pol i cy" ) coul d not be assi gned t o t he Trust under

cont r ol l i ng Uni t ed Ki ngdom l aw. Second, no pr oceeds under t he

Her cul es Pol i cy coul d be r eached unt i l T&N sat i sf i ed a

"sel f - i nsur ed r et ent i on" ( basi cal l y, a deduct i bl e) of £690

mi l l i on. 3 I n or der t o t r y t o get ar ound t hese i mpedi ment s, t he

Pl an adopt ed an ar r angement t hat t he par t i es t el l us i s i n some

si gni f i cant r espect s unusual . We br i ef l y summar i ze t hat

3 I n a 2004 di scl osur e st at ement , T&N i ndi cat ed i t had al r eadypai d cl ai ms t ot al i ng £387 mi l l i on.

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arr angement , al bei t i gnor i ng f or a moment any t wi st s cr eat ed by

stat ut e of l i mi t at i ons i ssues.

Fi r st , al t hough conf i r mat i on of a r eor gani zat i on pl an

t ypi cal l y di schar ges t he r eor gani zed company' s l i abi l i t y, 11 U. S. C.

§ 1141( d) ( 1) , see al so Uni t ed St at es v. Whi t e, 466 F. 3d 1241, 1245

( 11t h Ci r . 2006) , Pl an § 4. 5. 6 i nst ead pr ovi des t hat t he l i abi l i t y

of t he so- cal l ed "Her cul es- Pr ot ect ed Ent i t i es, " i ncl udi ng T&N,

woul d "cont i nue i n f ul l " f or asbest os cl ai ms unt i l t he Her cul es

Pol i cy i s exhaust ed ( t he "Her cul es Pol i cy Expi r y Dat e" ) . 4

4 The Pl an pr ovi si ons r ead, i n r el evant par t , as f ol l ows:

4.5.6. Limited Recourse to assets of Reorganized

Hercules-Protected Entities. On and f r om t heEf f ect i ve Dat e unt i l di schar ge and r el ease underSecti on 4. 5. 20 of t he Pl an, any l i abi l i t y of t heReor gani zed Her cul es- Pr ot ect ed Ent i t i es f orAsbest os Per sonal I nj ur y Cl ai ms . . . shal lcont i nue i n f ul l . . . .

4.5.20. Discharge of liability for Debtor HPE

Asbestos Claims . . .

( a) From and af t er t he Her cul es Pol i cy Expi r y Dat e,

( i ) t he Tr ust wi l l assume sol e and excl usi vel i abi l i t y f or al l r emai ni ng Asbest osPer sonal I nj ur y Cl ai ms ( whet her t henexi st i ng or at any t i me i n t he f ut ur ecomi ng i nt o exi st ence) agai nst t he

Reor gani zed Her cul es- Pr ot ect ed Ent i t i es. . . ;

( i i ) t he Reor gani zed Her cul es- Pr ot ect edEnt i t i es shal l aut omat i cal l y and wi t houtf ur t her or der of cour t be di schar ged andr el eased f r om any and al l l i abi l i t y wi t h

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Second, t he Pl an pr ecl udes t he cl ai mant s t hemsel ves f r om

act ual l y br i ngi ng any asbest os cl ai ms agai nst T&N. Pl an

§ 4. 5. 7( a) . Rat her , t he Pl an assi gns al l of t he asbest os cl ai ms t o

t he Tr ust , whi ch i s t hen al l owed t o sue T&N as agent f or t he

cl ai mant s. Pl an § 4. 5. 8( a) . The Pl an al l ows such cl ai ms t o

pr oceed " i n t he or di nar y cour se t o j udgment or set t l ement . " Pl an

§ 4. 5. 8( f ) ( i i ) . The Pl an al so pr ovi des t hat when t he Tr ust br i ngs

such cl ai ms, T&N r ef er s t he Tr ust t o i t s i nsur er s, who cont r ol t he

def ense. Pl an § 4. 5. 8. ( f ) ( i ) . Hence, t he Tr ust br i ngs t hi s acti on

as agent f or Bar r af ord agai nst T&N, whose def ense i s managed by i t s

i nsur er s.

Thi r d, t o t he ext ent t hat t he Tr ust pr evai l s i n a cl ai m

agai nst T&N, i t s recover y i ni t i al l y t akes t he f or m of a r educt i on

i n a £338 mi l l i on payment obl i gat i on t o T&N under a twent y- year

st ock subscri pt i on agr eement . Pl an §§ 4. 5. 5, 4. 5. 10( a) ( i ) . ( Thi s

agr eement i s, i n par t , how t he Tr ust acqui r ed t he f i f t y per cent

equi t y i n t he r eor gani zed company requi r ed by t he Bankr upt cy

Code. 5) When t he sel f - i nsur ed r et ent i on i s sat i sf i ed, t he Tr ust

r espect t o Asbest os Per sonal I nj ur yCl ai ms ( whet her t hen exi st i ng or at anyt i me i n t he f ut ur e comi ng i nt o exi st ence. . . ) .

5 On t he Pl an' s ef f ect i ve date, T&N' s parent company i ssued t ot he Trust 50. 1 mi l l i on shar es of Cl ass B Common St ock, 57. 5% of whi ch woul d be di st r i but ed pur suant t o t he subscr i pt i on agr eement .Pl an §§ 8. 3. 4, 4. 5. 5. The Pl an al so pr ovi ded f or t he i mmedi at esal e t o an i nvest or of an opt i on on t he shar es t hat t he Tr ust

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may seek r ecover y di r ect l y f r om t he Her cul es Pol i cy. Pl an

§§ 4. 5. 3, 4. 5. 10( a) ( i v) . Upon t he Her cul es Pol i cy Expi r y

Dat e- - essent i al l y, t he dat e on whi ch t he sel f - i nsur ed r et ent i on i s

met and t he £500 mi l l i on pol i cy i s exhaust ed- - T&N wi l l "be

di schar ged and r el eased" f r om al l asbestos l i abi l i t i es. Pl an

§ 4. 5. 20( a) ( i i ) .

Four t h, t he Tr ust ' s net asset s are used t o pay t hose

cl ai mant s who successf ul l y pur sue an admi ni st r at i ve cl ai m t hr ough

a pr ocess def i ned i n t he Tr ust Di st r i but i on Pr ocedur es. Pl an

§§ 4. 5. 1, 4. 5. 2. As best we can t el l , under t hese pr ocedur es,

Bar r af or d' s r ecover y f r om t he Tr ust i s not cont i ngent on t he

Tr ust ' s r ecover y f r om T&N. At t he same t i me, al l cl ai mant s,

i ncl udi ng Bar r af or d, pr esumabl y have an i nt er est i n t he Tr ust ' s

abi l i t y to pr evai l on enough cl ai ms so as t o el i mi nat e t he Tr ust ' s

debt t o T&N and exhaust t he Hercul es Pol i cy. 6

The par t i es' br i ef s subst ant i al l y share t hi s

char act er i zat i on of t he Pl an. Wher e t hey di f f er i s on t he quest i on

of when t he Tr ust needed t o have br ought asbest os cl ai ms agai nst

T&N t hat woul d have been st al e but f or t he aut omat i c st ay. The

Tr ust ar gues t hat t he i nt ent of t he Pl an was t o preser ve al l

asbest os cl ai ms f or as l ong as i t t akes t o exhaust t he Her cul es

r ecei ved out r i ght . Pl an § 8. 3. 6.

6 The par t i es' br i ef s ar e spar i ng, at best , i n descr i bi ngexact l y how t he admi ni st r at i ve cl ai mprocess works and exact l y whatt he pract i cal rami f i cat i ons of t hi s l i t i gat i on wi l l be.

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Pol i cy. T&N ar gues t hat t he Pl an cont ai ns not hi ng t hat woul d

ext end appl i cabl e l i mi t at i ons per i ods, so cl ai ms had t o be f i l ed

bef or e t hei r l i mi t at i ons per i ods expi r ed or , i f t hat per i od expi r ed

dur i ng t he bankrupt cy pr oceedi ngs, t hen wi t hi n t hi r t y days of

not i ce of t he Pl an' s ef f ect i ve dat e. We ar e t ol d by counsel f or

t he Tr ust t hat t her e may be thousands of cl ai ms t hat t he Tr ust di d

not f i l e i n t i me t o qual i f y as t i mel y under T&N' s r eadi ng of t he

Pl an. 7

C. The Present Suit

On November 22, 2011- - ni ne years af t er Dani el Barr af ord' s

deat h and more t han three years af t er t he Pl an became

ef f ect i ve- - t he Tr ust f i l ed sui t agai nst T&N i n Massachuset t s st at e

cour t , asser t i ng negl i gence, br each of war r ant i es, wr ongf ul deat h,

and other t or t cl ai ms on behal f of Nora Barr af ord and her husband' s

est ate. T&N r emoved t he case t o t he Uni t ed St ates Di st r i ct Cour t

f or t he Di st r i ct of Massachuset t s. 8 T&N moved f or j udgment on t he

7 The recor d shows t hat bet ween August 2010 and J une 2012, t he Tr ust r ecei ved near l y 50, 000 cl ai ms i t det er mi ned wer e compensabl e,i ncl udi ng over 5, 000 compensabl e mesot hel i oma cl ai ms, out of near l y350, 000 cl ai ms f i l ed. The Tr ust does not of f er dat a i ndi cat i ng howmany of t hose cl ai ms woul d be unt i mel y under T&N' s r eadi ng of t hePl an.

8 For pur poses of pr et r i al di scover y onl y, t he case was

consol i dat ed under Fed. R. Ci v. P. 42( a) wi t h anot her sui t br oughtby t he Tr ust on behal f of anot her mesot hel i oma vi ct i m who hadworked on t he Prudent i al Cent er . Lydon v. T&N Lt d. ,12- cv- 10013- FDS ( D. Mass. J une 23, 2014) . The vi ct i m i n t he Lydoncase di ed i n 2010 and T&N di d not argue t hat hi s cl ai ms weret i me- bar r ed, so t hat case pr oceeded t o j ur y t r i al . On J une 20,2014, t he j ur y r et ur ned a ver di ct f or t he pl ai nt i f f and awar ded

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pl eadi ngs under Fed. R. Ci v. P. 12( c) , ar gui ng t hat t he Tr ust ' s

sui t was bar r ed by Massachuset t s' t hr ee- year st at ut e of

l i mi t at i ons. Mass. Gen. Laws ch. 260, § 2A; ch. 229, § 2.

Tr eat i ng t he mot i on as one f or summar y j udgment , as i s al l owed by

Fed. R. Ci v. P. 12( d) , t he di st r i ct cour t gr ant ed T&N' s mot i on,

hol di ng t he cl ai ms t i me- bar r ed. Bar r af or d v. T&N Lt d. , 17 F. Supp.

3d 96, 104 ( D. Mass. 2014) . The Trust appeal ed. I t ar gues t hat

t he i nt er act i on of t he Code and t he Pl an pr eserved Bar r af or d' s

cl ai ms t hr ough t he cont i nued oper at i on of t he aut omat i c st ay

i mposed by Code § 362( a) .

II. Standard of Review

I n t hi s appeal f r om a gr ant of summary j udgment on

st at ut e of l i mi t at i ons gr ounds, our r evi ew i s de novo, t aki ng t he

f act s i n t he l i ght most f avor abl e t o t he non- movi ng par t y and

dr awi ng al l r easonabl e i nf er ences i n i t s f avor . Gener eux v. Am.

Ber yl l i a Cor p. , 577 F. 3d 350, 359 ( 1st Ci r . 2009) . The di st r i ct

cour t ' s i nt er pr et at i on of Code pr ovi si ons i s al so revi ewed de novo.

I n r e Chr i st o, 192 F. 3d 36, 37 ( 1st Ci r . 1999) .

"A pl an of r eor gani zat i on i s a bi ndi ng cont r act bet ween

t he debt or and t he cr edi t or s and i s subj ect t o t he gener al r ul es of

cont r act const r uct i on and i nt er pr et at i on. " I n r e New Seabur y Co. ,

450 F. 3d 24, 33 ( 1st Ci r . 2006) . The Pl an pr ovi des t hat i t i s

$9. 3 mi l l i on i n compensat ory and puni t i ve damages t o t he Trust .I d.

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gover ned by Del aware l aw. Pl an § 11. 15. Under Del aware l aw,

const r uct i on and i nt er pr et at i on of cont r act l anguage, i ncl udi ng t he

quest i on of whet her ambi gui t y exi st s, i s a quest i on of l aw. See I n

r e Ol ympi c Mi l l s Cor p. , 333 B. R. 540, 554 ( B. A. P. 1st Ci r . 2005)

( appl yi ng Del awar e subst ant i ve l aw) . " I f t he l anguage of t he

cont r act i s cl ear , i t wi l l be t he sol e sour ce f or det er mi ni ng [ t he

par t i es' ] i nt ent " ; t er ms ar e ambi guous onl y i f t hey ar e " r easonabl y

suscept i bl e of di f f er ent meani ngs. " I d.

III. Analysis

The di l emma f aci ng t he Tr ust i s t hat i t needs t o f i nd i n

t he i nt eract i on between t he Pl an l anguage and t he Code somethi ng

t hat : ( 1) kept t he st ay i n f or ce ( or other wi se ext ended t he

l i mi t at i ons per i od) unt i l t he Tr ust br ought t hi s sui t agai nst T&N,

but t hat al so (2) al l owed t hi s sui t t o be br ought not wi t hst andi ng

t hat st ay. The l anguage of t he Pl an cl ear l y accompl i shes t he

l at t er by aut hor i zi ng t he Tr ust t o br i ng sui t "i n any appr opr i at e

f or um, " Pl an § 4. 5. 8( a) , and by st at i ng t hat such cl ai ms " shal l be

al l owed to pr oceed i n t he or di nary cour se t o j udgment or

set t l ement , " Pl an § 4. 5. 8( f ) ( i i ) . But nowher e does t he Pl an even

ment i on cont i nuance of t he st ay, or any t ype of extensi on of any

l i mi t at i ons per i od.

For i t s ar gument t hat t he Pl an l ef t t he st ay i n pl ace

even t hough t he Pl an expr essl y al l owed sui t t o be br ought , t he

Tr ust f i r st hangs i t s hat on t he f act t hat t he Pl an provi ded t hat

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onl y upon t he Hercul es Pol i cy Expi r y Dat e woul d T&N be "di scharged

and r el eased" f r om l i abi l i t y on t he asbest os cl ai ms. Pl an

§ 4. 5. 20( a) ( i i ) . The Tr ust t hen poi nt s t o t wo pr ovi si ons of t he

Code: Code § 362( c) ( 2) ( C) , whi ch pr ovi des t hat t he st ay cont i nues

unt i l "a di schar ge i s gr ant ed or deni ed, " and Code § 108( c) ( 2) ,

whi ch pr ovi des t hat t he st ay ext ends t he l i mi t at i ons per i od f or any

st ayed cl ai ms unt i l "30 days af t er not i ce of t er mi nat i on or

expi r at i on of t he st ay. " From t hese pr ovi si ons, t he Tr ust argues

t hat : ( 1) even t hough t he Pl an pr ovi ded f or t he di schar ge of

non- asbest os cl ai ms upon Pl an conf i r mat i on, because i t di d not

di schar ge t he asbest os cl ai ms, t he st ay has not been l i f t ed f or

t hose cl ai ms; and ( 2) i f t he st ay has not been l i f t ed on t he

cl ai ms, t he thi r t y- day wi ndow t o br i ng sui t t r i gger ed by t he

t er mi nat i on or expi r at i on of t he st ay has t her ef or e not cl osed.

T&N cont est s t hi s r eadi ng of Code § 362( c) ( 2) ( C) , and ar gues t hat

t he pr ovi si on means t hat di schar ge of any cl ai m i n a bankrupt cy

case t er mi nat es t he aut omat i c st ay f or al l cl ai ms i n t hat case.

Under t hat r eadi ng, t he di schar ge of T&N' s non- asbest os cl ai ms on

t he Pl an' s ef f ecti ve dat e, Pl an § 9. 1. 1, l i f t ed t he st ay f or al l

cl ai ms agai nst T&N. The di st r i ct cour t si ded wi t h T&N on t hi s

quest i on of how t he di schar ge oper at ed, whi l e a Rhode I sl and st at e

cour t has si nce si ded wi t h t he Tr ust . See Gal l agher v. Amer i can

I nsul at ed Wi r e Corp. , No. PC 11- 5269, 2014 WL 5297914 ( R. I . Super .

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Ct . Oct . 24, 2014) ; Podedworny v. Am. I nsul ated Wi r e Corp. , No. PC

11- 5268, 2014 WL 5490028 ( R. I . Super . Ct . Oct . 24, 2014) .

We need not det ermi ne who i s cor r ect about t he ef f ect of

t he Pl an' s del ayed di schar ge pr ovi si ons f or t he si mpl e r eason t hat

Code § 362( c) ( 2) ( C) , t he pr ovi si on t hat cont i nues t he aut omat i c

st ay unt i l di schar ge, expr essl y r ecogni zes an except i on: t he ent r y

of an or der under Code § 362( d) " t er mi nat i ng, annul l i ng, modi f yi ng,

or condi t i oni ng such st ay. " That l anguage di r ect s our at t ent i on

back t o t he cour t ' s or der appr ovi ng t he Pl an. Does t he or der , by

appr ovi ng t he Pl an, t er mi nat e t he st ay wi t h r espect t o asbest os

cl ai ms? As we note above, i t pl ai nl y does so by unambi guousl y

al l owi ng t he Tr ust t o br i ng cl ai ms agai nst T&N and by al l owi ng,

al so uncondi t i onal l y, f or t hose cl ai ms " t o pr oceed i n t he or di nar y

cour se t o j udgment or set t l ement . " Pl an §§ 4. 5. 8( a) , 4. 5. 8( f ) ( i i ) .

I ndeed, i f t he Pl an wer e not r ead as t er mi nat i ng t he aut omat i c st ay

f or t hese cl ai ms, t hen t hey coul d not yet have been br ought . Thus,

r egar dl ess of t he ef f ect of a del ayed di schar ge on t he aut omat i c

st ay under t he Code, her e, t he Pl an i t sel f t er mi nat ed t he st ay,

t r i gger i ng t he t hi r t y- day wi ndow i n Code § 108( c) ( 2) .

The Tr ust ' s ar gument t o t he cont r ar y i s t hat t he Pl an' s

uncondi t i onal al l owance t o sue i n t he or di nar y cour se i s a

"modi f i cat i on" of t he st ay under Code § 362( d) , r at her t han a

"t er mi nat i on. " Under t he Tr ust ' s vi ew, t hi s modi f i cat i on ext ends

t he st ay unt i l t he moment at whi ch t he Tr ust br i ngs sui t , at whi ch

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poi nt t he st ay di sappear s wi t h r espect t o t hat cl ai m. Thi s readi ng

woul d accompl i sh t wo thi ngs: i t woul d get around t he l anguage i n

Code § 108( c) ( 2) t hat pr ovi des t hat t he t hi r t y- day wi ndow i s

t r i gger ed when t he st ay "t er mi nat [ es] , " and i t woul d pr esumabl y

expl ai n how t he Pl an coul d achi eve t he count er i nt ui t i ve f eat of

si mul t aneousl y ext endi ng t he st ay and al l owi ng sui t .

Thi s "modi f i cat i on of t he s t ay" ar gument st r et ches beyond

t he Pl an' s reach. Bef or e t he Pl an became ef f ect i ve, t he st ay had

one r el evant ef f ect on as- yet unf i l ed asbest os cl ai ms: i t

pr event ed sui t . Once t he Pl an became ef f ect i ve, t hat si ngl e ef f ect

ent i r el y di sappear ed. And because t he Pl an' s di schar ge of

l i abi l i t y f or non- asbest os cl ai ms i ndi sput abl y el i mi nat ed t he

ef f ect of any st ay on those cl ai ms, upon Pl an conf i r mat i on t her e

r emai ned no st ay at al l t hat even ar guabl y coul d be "modi f i ed. " I n

other words, once the Pl an became ef f ect i ve, nothi ng was bei ng

st ayed.

I n cont r ast t o t hi s st r ai ght f or war d r eadi ng of t he Pl an,

t he Tr ust woul d have us i nf er a meani ng t hat seems anyt hi ng but

st r ai ght f or war d. I n subst ance, t he Trust woul d have us r ead a

gr ant of a r i ght t o sue i n t he or di nar y cour se as t he equi val ent of

somet hi ng t hat i s har dl y i n t he or di nar y cour se: a r i ght t o sue

whenever t he Tr ust uni l at er al l y deci des t o sue, no mat t er how l ong

i t wai t s, at l east unt i l t he Her cul es Pol i cy Expi r y Dat e. Even i f

we assume t hat t he par t i es coul d have agr eed on such a pr ovi si on,

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t he Pl an l anguage pr ovi des no cl ue t hat t hey di d so. I n t hi s

r egar d, we not e t hat t he Tr ust i t sel f appears t o have devel oped on

t he f l y i t s t ext ual ar gument f or how t he Pl an pr ovi des f or an

ext ensi on and modi f i cat i on of t he st ay, r at her t han put t i ng i t

f or war d i n t he di st r i ct cour t as a readi ng t hat was accept ed at t he

t i me t he Pl an was agr eed on. The Trust al so does not poi nt t o a

si ngl e case i n whi ch an uncondi t i onal al l owance t o f i l e sui t was

deemed t o be somet hi ng other t han a l i f t i ng of t he aut omat i c st ay

wi t h r espect t o t he cl ai ms subj ect t o t hat al l owance.

The Tr ust ' s f ai l ure t o present l anguage i n t he Pl an

ei t her cont i nui ng t he st ay or - - get t i ng t o t he r eal i ssue- - ot her wi se

t ol l i ng t he r unni ng of l i mi t at i ons per i ods i s par t i cul ar l y

si gni f i cant gi ven t hat i t pr esumabl y woul d have been qui t e si mpl e

t o i ncl ude such l anguage. Thi s compl ete absence of any l anguage

ext endi ng t he st at ut e of l i mi t at i ons f or cl ai ms br ought by t he

Tr ust agai nst T&N speaks especi al l y l oudl y because t he Tr ust

Di st r i but i on Pr ocedur es do expr essl y t ol l appl i cabl e l i mi t at i ons

per i ods wi t h r egar d t o cl ai ms br ought agai nst t he Tr ust . 9 See

Feder al - Mogul For m of Asbest os Per sonal I nj ur y Tr ust Di st r i but i on

Pr ocedur es § 5. 1( a) ( 2) .

9 At or al ar gument , t he par t i es hi nt ed t hat t he dr af t er s mayhave eschewed adopt i ng such an express and di r ect approach t oover r i de t he l i mi t at i ons bar t o sui t s agai nst T&N because theHer cul es Pol i cy bar r ed T&N f r om wai vi ng any def enses. I n anyevent , what ever t he r eason i s f or t he omi ssi on, t he Tr ust i s l ef twi t h no pl ausi bl e t oehol d i n t he Pl an i t sel f .

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I n cont r ast , t he Pl an pr ovi si on t hat speaks most cl ear l y

t o t he i ssue of def enses cut s agai nst t he Tr ust ' s posi t i on. Pl an

§ 4. 5. 8( e) expl i ci t l y pr eser ved T&N' s r i ght ( and t hat of i t s

r ei nsur er s) t o "asser t any def enses, count er cl ai ms, of f set s, r i ght s

of cont r i but i on or any ot her r i ght s and r emedi es f or t he pur pose of

r educi ng or def eat i ng t hei r l i abi l i t y f or any [ cl ai m] , " whi ch by

i t s pl ai n t er ms i ncl udes t he af f i r mat i ve def ense t hat a gi ven cl ai m

i s t i me- bar r ed. See Fed. R. Ci v. P. 8( c) ( 1) . The Tr ust ar gues

t hat t he r i ght t o br i ng a def ense does not mean t he r i ght t o br i ng

a successf ul def ense. Thi s i s cor r ect , but besi de t he poi nt . Even

i f one coul d ot her wi se r ead i nt o t he mer e aut hor i t y to br i ng sui t

a de f act o wai ver of any st at ut e of l i mi t at i ons, t he expl i ci t

conf i r mat i on i n Pl an § 4. 5. 8( e) t hat al l def enses r emai n on t he

t abl e- - wi t hout anyt hi ng even suggest i ng a car ve- out f or l i mi t at i ons

def enses- - woul d bel i e such a readi ng.

We ar e especi al l y r el uct ant t o accept t he Tr ust ' s at t empt

t o read so much unusual and si gni f i cant meani ng i nt o the Pl an when

t he ai mi s t o creat e an i mpl i ci t modi f i cat i on of t he aut omat i c stay

under Code § 362( d) . That pr ovi si on al l ows t he st ay t o be modi f i ed

"af t er not i ce and a hear i ng, " a requi r ement t he Tr ust ar gues was

sat i sf i ed by t he hear i ng and or der conf i r mi ng t he Pl an. Whi l e we

accept t he pr oposi t i on t hat any reader of t he Pl an woul d concl ude

t hat sui t coul d pr oceed on t he asbest os cl ai ms, we ar e l oat he t o

say t hat t he Pl an l anguage gave not i ce t hat t he aut omat i c st ay

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woul d cont i nue i ndef i ni t el y on each asbest os cl ai munt i l t he Tr ust

uni l at er al l y t er mi nat ed i t f or t hat cl ai m. So even i f t he dr af t er s

i nt ended t o secur e such a modi f i cat i on, t hey never gave anyt hi ng

t hat mi ght be descr i bed as f ai r not i ce t hat such an unusual and

si gni f i cant modi f i cat i on was bei ng sought .

The Tr ust i s t heref or e r educed t o ar gui ng t hat we shoul d

f i nd i n t he Pl an what ever ef f ect i s r equi r ed t o pr eser ve t he

ot her wi se st al e cl ai ms i ndef i ni t el y so as to f ul f i l l t he i nt ent of

some of t he Pl an negot i at or s as i nf er r ed f r om t hei r i nt er est s and

conduct . Vi ewed under t he summary j udgment st andar d, t he r ecord

wel l suppor t s t he f act ual pr emi se t hat at l east some par t i es t o t he

negot i at i on of t he Pl an di d i ndeed act as i f t hey had succeeded i n

l ar gel y wi pi ng out any l i mi t at i ons def enses t hat mi ght r un bef or e

t he Her cul es Pol i cy i s exhaust ed. Speci f i cal l y, no st eps wer e

t aken t o ensur e t hat t he Tr ust commenced sui t ( or even was prepared

t o commence sui t ) on any expi r i ng cl ai ms pr ompt l y i n the mont h

f ol l owi ng t he Pl an becomi ng ef f ect i ve.

Ther e ar e t wo probl ems wi t h t hi s ar gument . Fi r st , t here

i s no evi dence t hat all part i es i n t he T&N bankr upt cy pr oceedi ng

shar ed t he i nt er pr et at i on of t he Pl an now put f or ward by t he Tr ust .

I ndeed, T&N' s ver y asser t i on of a st at ut e of l i mi t at i ons def ense i n

i t s answer i n t hi s case seems t o say t hat at l east one par t y di d

not shar e t hat under st andi ng. Cf . Ol d Republ i c I ns. Co. v.

St r at f ord I ns. Co. , Nos. 14- 1179, 14- 1229, 2015 WL 310445, at *6- 7

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( 1st Ci r . J an. 26, 2015) ( i nt er pr et i ng an i nt er nal i nconsi st ency i n

an i nsur ance pol i cy wi t h t he ai d of ext r i nsi c document at i on t hat

al l par t i es t o t he pol i cy shar ed t he same under st andi ng of i t s

pr ovi si ons) . Second, t he Tr ust poi nt s to no doct r i ne of Del awar e

cont r act l aw t hat woul d al l ow us t o i nt er pr et t he Pl an i n a manner

t hat i s bel i ed by i t s pl ai n l anguage. Whi l e a cour t may somet i mes

l ook beyond t he cor ner s of a document t o det ermi ne whet her

seemi ngl y cl ear l anguage cont ai ns a l at ent ambi gui t y, t hi s doct r i ne

t ypi cal l y appl i es onl y i n a nar r ow set of ci r cumst ances i n whi ch "a

word, t hought t o have onl y a si ngl e meani ng, act ual l y has t wo or

mor e meani ngs, " Ri char d A. Lor d, 11 Wi l l i st on on Cont r act s § 33: 43

( 4t h ed. ) , such as when a word "denot es more t han one act ual t hi ng"

or "desi gnat es somet hi ng par t i cul ar wi t hi n t he i ndust r y' s j ar gon. "

Cof f i n v. Bowat er I nc. , 501 F. 3d 80, 97 ( 1st Ci r . 2007) . The Tr ust

present s no such ar gument about any Pl an t erm.

Fi nal l y, t he ambi t i ous r each of t he Tr ust ' s desi r ed

r eadi ng of t he Pl an r ei nf or ces our r el uct ance t o gl ean such a

r eadi ng f r om l anguage t hat cut s so st r ongl y ot her wi se. As t he

Tr ust ' s counsel st at ed at or al ar gument , under t he Tr ust ' s r eadi ng

of t he Pl an, i t s abi l i t y t o post pone i ndef i ni t el y t he br i ngi ng of

sui t as i f t her e wer e no st at ut es of l i mi t at i ons woul d appl y even

t o t he cl ai ms of vi ct i ms who got si ck or di ed af t er Pl an appr oval . 10

10 Whi l e we need not deci de t hi s i ssue, t hi s concl usi on doesappear t o f ol l ow f r om t he Tr ust ' s posi t i on. The Code deemsasbest os cl ai ms t o have accrued at t he t i me of exposur e. See I n r e

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I t has been sai d of st at ut es t hat one does not nor mal l y hi de

el ephant s i n mousehol es. See Whi t man v. Am. Trucki ng Ass' ns, I nc. ,

531 U. S. 457, 468 ( 2001) . Here, we do not have i n t he Pl an even a

mousehol e wi t hi n whi ch t o l ook f or such a maj or and unusual t er mof

t he deal . Gi ven t he i mpor t ant pur poses t hat l i mi t at i ons per i ods

serve, see, e. g. , CTS Cor p. v. Wal dbur ger , 134 S. Ct . 2175, 2183

( 2014) , t hi s woul d be a hi ghl y si gni f i cant concessi on t o r ead i nt o

t he mer e aut hor i zat i on t o br i ng sui t agai nst T&N.

Al t hough not hi ng i n t hi s opi ni on bar s t he br i ngi ng of any

cl ai ms by i nj ur ed cl ai mant s agai nst t he Trust , we acknowl edge t hat

t he Tr ust ' s f ai l ur e t o t i mel y commence sui t has t he pot ent i al ( i f

non- st al e cl ai ms are not enough t o exhaust t he r et ent i on and t he

Her cul es Pol i cy) t o reduce ul t i mat el y the amount of asset s and

i nsur ance pr oceeds t hat t he Tr ust has avai l abl e t o sat i sf y cl ai ms

Gr ossman' s, I nc. , 607 F. 3d 114, 125 ( 3d Ci r . 2010) ( en banc) . Code§ 362( a) ( 1) , i n t ur n, pr ovi des t hat t he aut omat i c st ay appl i es t oact i ons or pr oceedi ngs " t o r ecover a cl ai m agai nst t he debt or t hatarose bef ore t he commencement of t he case, " meani ng t hat f orpur poses of t he Code, t he st ay appl i es t o any cl ai ms ari si ng f r ompr e- pet i t i on asbest os exposur e, whenever such cl ai ms ar edi scover ed. Moreover , as di scussed above, a pr i mary pur pose of t het r ust mechani smi s t o ensur e t hat l at er - di scover ed cl ai ms ar e boundby t he t erms of a reor gani zat i on pl an so t hat compani es can move ondespi t e t he l ong l atency per i od of mesot hel i oma. See I n r eCombust i on Eng' g, I nc. , 391 F. 3d 190, 234 ( 3d Ci r . 2004) . Agai nstt hat backdr op, t he Pl an pr ovi si ons t hat t he Tr ust ar gues ext end and

modi f y t he aut omat i c st ay do not di st i ngui sh bet ween cl ai ms t hatwer e di scover ed bef ore conf i r mat i on, and t hose t hat woul d bedi scover ed l at er . See, e. g. , Pl an § 4. 5. 6 ( pr ovi di ng t hat "any"l i abi l i t y f or asbestos cl ai ms cont i nues i n f ul l ) ; Pl an § 4. 5. 7( a)( pr ovi di ng t hat "each" hol der of an asbest os cl ai m assi gns t hei rr i ght t o t he pr oceeds f r om such cl ai m t o t he Tr ust , "whenever suchr i ght s may ar i se") .

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agai nst i t . Whet her t hi s r esul t coul d have been avoi ded wi t h

bet t er dr af t i ng, we cannot say. What we can say i s t hat t he

Tr ust ' s ar gument f ai l s because t he Pl an unambi guousl y t er mi nat ed

t he aut omat i c st ay wi t hout l i mi t at i on or qual i f i cat i on and cont ai ns

no pr ovi si on t hat even r emot el y pr ovi des f or any f ur t her t ol l i ng of

t he l i mi t at i ons per i od beyond t hat gr ant ed by t he Bankr upt cy Code.

IV. Conclusion

For t he f oregoi ng r easons, we AFFI RM t he order of t he

di s t r i ct cour t .

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Documents

Opinion, Barraford v. T&N Ltd., 14-1281 (1st Cir. Feb. 11, 2015)