Commentary On The Definition of Occurrence in Insurance Policies - Another Reason GCs for Insureds Get Grey Hair Managing Legacy Claims

An interesting post at the Adams Drafting blog points out various issues regarding the meaning of the word "occurrence" in commercial insurance policies. Billions and soon trillions of dollars will change hands based on the meaning given or found by court's deciding insurance coverage cases for underlying toxic tort cases. The post includes comments from some lawyers who focus on insurance coverage for insureds, including Scott Godes. The following words from Scott are key:

"Although the term was designed to be a clarification of coverage, it comes as no surprise to someone who represents policyholders when claims have been denied that insurance companies would have courts believe that instead, “occurrence” was designed to support coverage denials or limitations. Insurance companies also are happy to argue conflicting interpretations of “occurrence,” depending on which interpretation will mean less coverage for the policyholder in the dispute at issue."

Asbestos Awareness and Asbestos Ban in Dubai

An article here describes a construction group in Dubai trying to raise consciousness regarding asbestos in building projects. This type of activity was what the US went through in the mid to late 1980s, and it spawned tort litigation seeking to recover the costs of coping with asbestos regulations. According to the article:

"By volume, there is more asbestos here than in the UK. The asbestos here is different to what you find back in the UK. It is usually asbestos cement and is classified as a lower risk. There is also legislation but it did not come into effect till 2006 and there is low awareness and a possibility that it is present in projects before that period. Besides, the current law only applies to asbestos boards. So it is legal to use water pipes for water supplies and sewage," said Faulkner. "Hence we are working with Build Safe UAE to create greater awareness among the 90 signatories of BSU."

Update: Chinese Drywall Litigation - More Signs of Interest - What Does It All Mean and Where May It Go ?

Update: The drywall litigation industry apparently is booming. A friend told me that prior seminars were attended by lots and lots of lawyers, and that the insurance coverage seminar for drywall was especially popular. I'm also getting emails telling me that only 9 seats are left for a June seminar in New Orleans on the topic by the HB Litigation Conferences Group.
Tort litigation is probably one of the few industries that tends to increase when there are tough economic times.

___________________________________________________________________
Media stories abound regarding the purported hazards of "Chinese drywall," and some websites provide links to some of underlying class action complaints.

Now my email inbox is filling up with other signs of the litigation picking up speed.



For one, a conference on the topic is being organized by Harris-Martin, which is a firm that publishes specialized litigation reporters and puts on specialty litigation conferences.



For another, industrial hygiene companies are touting their skills in this area and providing links to various online sources of information on the topic.

So, how far will this all go and what does it mean? I'm sure I do not know all the answers. What I can say with confidence is that the plaintiff's bar will use this situation to expand their knowledge of and precedents regarding suits against Chinese manufacturers and their distributors here in the US. I'm less sure of what the American distributors will do, but one suspects that they will want to minimize their risk of being the target defendants by working to help bring the actual manufacturers into court in the United States.

Blazing Saddles (the movie), Bankruptcy Injunctions, and Self-Created Deadlines and Emergencies

The point of this post is to explore, briefly, whether injunctive relief is warranted in chapter 11 cases for harm that may arise if deadlines can not be met that arise from self -created emergencies? Indeed, can a debtor be deemed to have the "clean hands" typically required for equitable relief if it has fouled up a business so badly that it will fail with so little money that it will be unable to pay even 1 cent per dollar of tort claims against it?

These questions of course are posed in the light of the recent Chrysler situation where the debtor and Fiat cited deadlines they had agreed to as the basis for obtaining rapid injunctive relief. Certainly there are some situations in which a deadline actually may be real, and perhaps Chrysler was such a case. But certainly there also is room to question self-imposed deadlines and/or the genuineness of alleged harms said to arise from agreed dates for agreed actions. In some bankruptcy cases, courts have rejected self-created deadlines as a basis for preliminary or permanent injunctive relief. This issue arose, for example, in an asbestos bankruptcy, In re Federal-Mogul Global, Inc., No. 01-10578 (D.N.J.). There, bankruptcy Judge Raymond T. Lyons was called on to consider a request for a preliminary injunction to block the litigation of underlying asbestos cases against a non-debtor. According to the debtor, a preliminary injunction was critical because the debtor had made a deal that required the injunction by a date certain as a condition of the contract.

Ultimately, Judge Lyons held that injunctive relief was inappropriate because the situation involved essentially a self-created emergency. The path that took Judge Lyon to that result is presented in a January 20, 2006 hearing transcript available here. The debtors opened the hearing on their motion by arguing that a preliminary injunction could be issued under section 105 of the Code in order to protect the possibility of later entering a section 524(g) injunction to enjoin a host of underlying asbestos cases. See Tr. at 87. Various counsel for asbestos plaintiffs’ lawyers, on the other hand, opposed the injunction, arguing that their clients should not be deprived of their underlying tort trials. The lawyers making this argument included lawyers representing asbestos plaintiffs’ firms SimmonsCooper; Seitz Van Ogtrop & Green; Levy Phillips & Konigsberg; David Lipman and Gebhardt & Smith. One of the plaintiffs’ lawyers, Mr. Ruckdeschol of the David Lipman law firm in Florida, explicitly argued that the injunction should be denied because it was "an emergency of the creation of the drafters of the term sheet." Tr. at 115.

Ultimately, Judge Lyons accepted that argument, among others, and denied the request for injunctive relief. In ruling, Judge Lyons memorably referred to a self-created emergency depicted in the movie Blazing Saddles:

"Let me focus first of all upon irreparable harm. And one of the opponents here has characterized this as a self created irreparable harm. And this really reminds me of the scene from the movie Blazing Saddles where the sheriff played by Clevon Little is being hassled by a crowd and he's being threatened with physical violence. And he pulls out a gun and he holds it to his head. And he says, stand back or I'll shoot the sheriff. The debtor in this case has agreed to a deal in which they've undertaken to get a preliminary injunction and the other party to the deal has said, if I don't get this preliminary injunction I'm going to withdraw from the deal. This to me is a totally self created scenario for irreparable harm. "

It seems to me pretty hard to argue with the logic of Judge Lyons.

FELA Plaintiffs Must Prove A Genuine and Serious Fear of Cancer

In a win for defendants in general and some asbestos defendants in particular, the U.S. Supreme Court issued a June 1, 2009 per curiam opinion holding that when FELA claimants pursue "fear of cancer" claims, the defendant is entitled to an instruction that the jury must find evidence that the fear is "genuine and serious." The opinion is titled CSX Transp., Inc. v. Hensley, 556 U.S. _______ (2009). The slip opinion is here. The issue arose because a plaintiff said to have suffered other severe diseases also claimed damages for alleged fear of cancer due to having been diagnosed as having asbestosis.


The win is significant for railroads and others because FELA applies nationally since it is a federal statute. Click here for a Wikipedia article on the history of FELA.

Sovereigns - US Supreme Court Says Legislation Blocks Suits Against Iraq Under FSIA

The June 8, 2009 opinion is here. I've not made time to read it. Scotusblog provides a synopsis here. The bottom line is a holding that claims for torture etc under Hussein can not be made because of legislation signed by President Bush II.

Chrysler & GM Dealers - Promissory Estoppel Claims ?

Now that the Chrsyler asset sale has been consummated, there apparently will be ample numbers of angry yterminated car dealers thinking about legal remedies. Especially for those who recently purchased or invested ample money in a dealership, a very recent Illinois Surpeme Court decision may become popular for some of those seeking remedies as it explictly allows a promissory estoppel remedy even when a contract-based recovery would not succeed. The damages awarded may be limited but could prove better than nothing IF a source of funds could be found. The April 2, 2009 decision is Newton Tractor Sales, Inc. v. Kubota Tractor Corp. , --- N.E.2d ----, 233 Ill.2d 46, 2009 WL 886866 (Ill.). The Court's free version of the opinion is here. There may also be exploration of claims that seek to reach pockets of insurance, such as D & O coverage.

Legal Humor - Judicial Fiat

http://www.courtoons.net/2009/06/10/fiat/

Sovereign Suits - 9/11 Claims Against Saudi Arabia

Walter Olson's Overlawyered blog post steers readers to a New York Times article with a link to the US government's brief opposing suit against Saudi Arabia for 9/11. Interesting reading on the Foreign Sovereign Immunities Act.

Federal Liens Against Some Tort Settlement Payments - The Medicare, Medicaid, and SCHIP Extension Act of 2007

The Medicare, Medicaid, and SCHIP Extension Act of 2007 is prompting lots of concern among tort litigants. The gist is that many but not all parties expecting to pay a tort settlement - to a person eligible for Medicare - must register with the federal government and then report payments to the federal government effective as of July 1, 2009. The point of course is to let the government seek to obtain reimbursement for its expenses to delay the day when Medicare becomes insolvent.


Guidance on compliance is out there. For example, the basic rules are spelled out in a short online article by defense lawyer Keith Whitson and others at Schnader Harrison, and other more detailed online articles also are avaible here . On the plaintiff's side, bar groups are advertising seminars to educate plaintiff's lawyers about the rules. Some deep background from Matt Garretson to plaintiff lawyers is available here, but is useful for anyone.

Chrysler Stay Lifted; Further Attacks to Follow

The stay was lifted in a two page order available here. The experts at Scotus blog offered some interesting views on how much this order does or does not mean and noted in commentary that one appeal for certiorari has been filed with the Court. As to the issues for future product liability claimants, it seems fair to assume that collateral changes will arise in the future, as was successfully done in the later stages of the Agent Orange litigation by future claimants whose interests were not properly represented in the original Agent Orange proceedings. See Stephenson v. Dow Chemical, 273 F.3d 279 (2d Cir. 2001). Here, it seems difficult to realistically argue that future product liability claimants could be or were given meaningful or timely notice of the Chrysler proceedings, and there was no designated futures representative, much less an adequate future representative or a meaningful hearing on the issues specific to the future claimants. Time will tell what happens on direct appeal or later collateral attacks. But the Manville/Travelers opinion should be out withing the next three weeks and perhaps will include relevant rulings or clues.

How Many Chances Will You Actually Have to Save a Life ?

How many chances will you have to actually save a life? An opportunity for you may be at hand. June 8 - 22 is the time period for free registration to be a potential donor for the bone marrow cells that may well be the only chance life for the hundreds of thousands of individuals in the United States who every day are battling blood cancers and other diseases. The matches really do happen; a recent news story describes one such match. http://abclocal.go.com/wls/story?section=news/local&id=6854698

Perhaps you, like me, may have thought the need for bone marrow donations is an old problem that's been solved by new science. Not so. In fact, the need for bone marrow donors actually is increasing rapidly !

Why? Two key reasons, among others.

First, the rates for lymphomas and leukemias are spiraling upwards to stunning annual numbers. Consider just one of those cancers - non-Hodgkins lymphoma. The rate used to be 55,000 cases per year in the United States, but now the rate is up to 66,000 new cases per year in just the United States.

As of 2008, about 575,000 people in the United States are living with NHL, and the victims may relapse at any time even after having achieved remission through treatment. Some persons will need more than one bone marrow transplant to come even close to a normal life span. For all the grim statistics, go to the website for the Leukemia and Lymphoma Society. It has all the stunning numbers. http://www.leukemia-lymphoma.org/all_page.adp?item_id=7087

Second, there are today many inter-racial children, and many more will arrive in the future due to the huge growth in international adoptions that move children into a new continent where the odds are they will not marry another person from the same race. Finding marrow for children from inter-racial marriages is a rapidly growing challenge that will only get bigger due to globalization.

In short, leukemias, lymphomas and other diseases can be treated (sometimes cured) through bone marrow donations, so please register now while registration is free.

Two more things. Treating these diseases through chemotherapy requires significant amounts of blood transfusions to replace cells killed during chemotherapy, and therefore blood donations also are very important. Umbilical cord blood donations also are welcomed. So, please keep those donation paths in mind, including mentioning cord blood donations when grandchildren are arriving. And, donations for scientific research are always welcomed.

The online donation form is at the link below. All you have to do is fill out the forms and mail back in a swab you will be sent by mail.

Please take action now - time may well be short for the person whose life you really could save by donating bone marrow your body will easily replace !

http://www.marrow.org/JOIN/index.html

Comments and Briefs Related to the Stay in Chrysler

Akin Gump's SCOTUS blog provides expert Supreme Court commentary that includes a post explaining why why the stay issued by Justice Ginsberg may not have much substantive meaning. The so-called "consumer groups' " request for a stay is here. The papers cogently cite some of the caselaw recognizing the constitutional issue inherent in enjoining future claims. The stay request filed by Ms. Pascale, the asbestos claimant, may be found here.

The government responded on the TARP issues, but its brief does not address the arguments raised by product liability claimants. Chrysler responded in a brief that is here.

The Chrysler brief is noteworthy in two ways for tort issues. Overall, the message of the brief is a disturbing one for tort claimants because the basic premise is that Chrysler is so badly off and so mismanaged that there is not enough money left to pay tort claimants, and the remaining money should instead go to secured creditors without delay.

The general argument includes two parts. First, Chrysler argues that the tort victims lack are simply out of luck because there is, they say, no money left for them and so the claimants will not be harmed if the sale goes through. This argument is false because it ignores the relief the claimants seek - to limit the scope of the order of the bankruptcy court so that there is an open door to invoke state law to try to recover from the Buyer entity. Chrysler's argument is as follows:

"The unfortunate but unavoidable fact is that future tort claimants who will have claims against the Debtors based on vehicles manufactured by Chrysler simply have no value to be protected.
Accordingly, just as with the Funds, because the price paid by New CarCo Acquisition for the Fiat Sale exceeds Chrysler’s liquidation value, creditors stand to gain more from the Fiat Sale than any other viable alternative. For both past and future tort claimants, their claims are valueless under either scenario. Accordingly, the “irreparable harm” that they claim will ensue in the absence of a stay is entirely the product of the economic collapse of Chrysler. It has nothing to do with the Fiat Sale or the Bankruptcy Court order approving it. The tort claimants’ application for a stay should therefore be denied."

Second, Chrysler argues that an enormous bond must be posted in order to prosecute an appeal. The argument creates for the would-be appellants/objectors a problem reminiscent of the problems faced by oil companies and tobacco companies hit with large verdicts they sought to appeal. Specifically, the Chrysler brief argues:

"While the Funds’ application for a stay should be denied for all of the reasons set forth above, even assuming that a stay were to be entered here it should thus be conditioned on the Funds posting a bond in at least the amount of $1.2 billion to protect Chrysler against damages that would be caused by a stay. See In re Calpine Corp., No. 05-60200, 2008 WL 207841, at * 6-7 (Bankr. S.D.N.Y. Jan. 24, 2008) (requiring bond of $900 million to cover “aggregate additional interest expense the Debtors could suffer if they were unable to close their existing exit financing”); ACC Bondholder Group v. Adelphia Commc’ns Corp. (In re Adelphia Commc’ns Corp.), 361 B.R. 337, 347 (S.D.N.Y 2007) (requiring supersedeas bond of $1.3 billion). (footnote omitted)

Requests for a Stay in Chrysler Reach Supreme Court - Timely Reminders of Why the Travelers/Manville Asbestos Case is So Key

This weekend, the Supreme Court has received stay motions regarding Chrysler that provide concrete examples of the importance of the issues the Court faces in the Manville/Travelers case regarding how far a bankruptcy court can go in issuing injunctive orders that limit the rights of third-parties, including so-called "future claimants." Indeed, some of the concerns raised this weekend illustrate the importance of due process issues raised in an amicus brief filed Manville/Travelers by a far-sighted group of bankruptcy law professors.

Specifically, the Court has received petitions seeking stays of the orders by Judge Gonzalez and by the 2d Circuit. The briefs are nicely collected and in general analyzed on the Scotus blog.

The current product liability claimants, and self-declared representatives of future product liability claimants, are of course complaining that their rights have been trampled by Chrsyler since no mony is being left behind to pay their claims, and the bankruptcy court has issued an order purporting to preclude claims against New Chrsyler. The latter of course takes away from the claiamnts their state law rights based on state law rules that would or may allow "successor liability" claims against New Chrsyler. At page 4 of their brief, they explain the rulings to data as follows:

"On June 1, 2009, the Bankruptcy Court for the Southern District of New York, Judge Arthur J. Gonzalez presiding, issued an opinion granting the relief sought in the sale motion. The opinion stated that tort claims and any potential successor liability claims are “interests in such property” that can be extinguished by § 363(f). Bankr. Op. at 42-43. The Court also held that the sale did not violate future claimants’ due process rights because “notice of the proposed sale was published in newspapers with very wide circulation,” id. at 43., citing Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 317 (1950), for the proposition that “publication of notice in such newspapers provides sufficient notice to claimants ‘whose interests or whereabouts could not with due diligence be ascertained.’” In addition, the court stated that the interests of future tort claimants had been presented to the Court. Bankr. Op. at 43. The order signed by Judge Gonzalez authorized the sale of substantially all of Chrysler’s assets free and clear of all liens, claims, interests, and encumbrances, “whether arising before or after the Petition date,” “including all claims or rights based on any successor or transferee liability.” Sale Order at 2-3; see also id. at 40, ¶ 35 (stating that New Chrysler “shall not have any successor, derivative or vicarious liabilities of any kind or character for any Claims, including, but not limited to, on any theory of successor or transferee liability, . . . whether known or unknown as of the Closing, now existing or
hereafter arising . . . .”).