United States Bankruptcy Court, D. Maryland. March 02, 2020
The plaintiffs were various entities who filed for bankruptcy protection under Chapter 11 in 2001. Their bankruptcy confirmation order set a bar date for the filing of claims by creditors against the entities. Nearly 16 years later, asbestos claimants filed claims for exposure to asbestos in Pennsylvania. The plaintiffs then filed suit against the asbestos claimants as an adversarial bankruptcy proceeding. Motions for summary judgment were filed by both sides.
The court first set out to determine whether the defendants’ claims for asbestos exposure were subject to the order. The court reminded that the term “claim” in the context of discharge is vastly broad but holds a critical meaning. Here, the court noted that the claimants allegations of exposure predated the petition for protection and certainly predated the order. The defendants contested the court’s position that the exposure and activities related thereto were pre-petition. Relying on Pennsylvania law, the defendants argued that their claims did not exist at the time of the bankruptcy case. The court disagreed and noted that there is a difference between the existence of a claim and the enforcement of one. The analysis then turned to whether the defendants had been given notice to be heard on their claims. If notice had not been given, due process may have been violated. The plaintiffs took the position that the defendants had proper notice under its bankruptcy publication notice because the defendants were unknown creditors at that time. The defendants countered that notice was not proper because the plaintiffs could have discovered the claims had they performed a reasonable search at the time of the bankruptcy. However, the court disagreed as discovery showed that the plaintiffs were unable to access records of the plaintiffs’ predecessor. Therefore, the plaintiffs couldn’t confirm whether one of the defendants worked for the plaintiffs’ predecessor. Therefore, the plaintiffs’ due diligence was satisfactory in the context of bankruptcy. Accordingly, the order barred the defendants’ claims.