Summary Judgment in Favor of Bankrupt Wisconsin Company Affirmed on Statute of Limitations Grounds

CALIFORNIA — Plaintiff David Hart appealed the entry of summary judgment in favor of Special Electric Company on the basis that the claims against the company were time-barred under Wisconsin law. The plaintiff sued Special Electric alleging that his mesothelioma was caused by exposure to asbestos from products supplied by the company.

Special Electric, a Wisconsin corporation, filed for bankruptcy under Chapter 11 in 2004, and by 2006, a plan of reorganization had been entered. By then, all of the company’s assets had been sold and it had no operations, officers or directors. Its lone employee served as its post-bankruptcy director and president. The company was administratively dissolved in 2012, pursuant to Wisconsin law, after failing to submit the required annual reports and fees. On May 8, 2014, the company’s insurers published a Notice of Dissolution in three Wisconsin newspapers stating that a two year statute for claims against Special Electric would expire in May 2016. The plaintiff was diagnosed with mesothelioma in late 2015. He filed suit approximately four months after the claims period in the Notice of Dissolution had expired. Summary judgment was granted on the basis that the Notice of Dissolution was sufficient under Wisconsin law and the claim was therefore time-barred.

On appeal, the plaintiff argued that the statute of limitations was preempted by Special Electric’s bankruptcy reorganization plan. The court found this argument unpersuasive since the plan specifically allowed for the application of state law. The plaintiff also argued that the Notice of Dissolution was insufficient under Wisconsin law. The court analyzed the Notice, and found that the bankruptcy reorganization plan permitted such notice, and further, required Special Electric’s insurers to defend against unliquidated personal injury claims. The plaintiff also argued that the Notice of Dissolution failed to include the type of information that must be included in a claim, but the court found this defect to be not fundamental. The court concluded that this technical defect did not prejudice plaintiff, and affirmed the entry of summary judgment in favor of Special Electric.

Read the full decision here.