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Barraford v. T & N Limited

United States Court of Appeals, First Circuit

February 11, 2015

NORA M. BARRAFORD, individually and as executrix of the estate of Daniel M. Barraford, by her agent THE FEDERAL-MOGUL ASBESTOS PERSONAL INJURY TRUST, Plaintiff, Appellant, KATHERINE LYDON, individually and as executrix of the estate of John T. Lydon, Jr., Plaintiff,
T& N LIMITED, f/k/a T& N PLC, f/k/a Turner & Newell Plc, f/k/a Turner & Newell Limited; TAF INTERNATIONAL LIMITED, f/k/a Turners Asbestos Fibres Limited, f/k/a Raw Asbestos Distributors Limited, Defendants, Appellees


Richard Levin, with whom Rowan D. Wilson and Cravath, Swaine & Moore LLP were on brief, for appellants.

Mark A. Perry, with whom Scott P. Martin, Lindsay S. See, Gibson, Dunn & Crutcher LLP, Bruce F. Smith, Steven C. Reingold, Timothy J. Durken, and Jager Smith P.C. were on brief, for appellees.

Before Lynch, Chief Judge, Stahl and Kayatta, Circuit Judges.


Page 259

KAYATTA, Circuit Judge.

Appellee T& N[1] was an asbestos manufacturer that faced significant liability after the deadly qualities of its product became clear. Like many other asbestos manufacturers, it chose to address this liability through a Chapter 11 bankruptcy reorganization plan (the " Plan" ). T& N's Plan, among other things, created the Federal-Mogul Asbestos Personal Injury Trust (the " Trust" ). The Plan transferred to the Trust certain of T& N's assets and rights, with which the Trust was to pay asbestos claims brought by persons who could have sued T& N but for its bankruptcy. While bankruptcy reorganization plans typically discharge all of a reorganizing company's liability upon plan confirmation, this Plan provided that T& N's asbestos liability would continue post-confirmation, and that the Trust would bring asbestos suits against T& N as the agent of the actual claimants. The purpose of this provision was to allow the Trust to

Page 260

take advantage of a particular T& N insurance policy.

In this lawsuit filed in 2011, the Trust brought an asbestos claim that had accrued roughly a decade earlier. When T& N raised a statute of limitations defense, the Trust argued that the reorganization Plan allows it to bring this claim (and any other asbestos claims that had not become stale prior to T& N's filing for bankruptcy protection) whenever it wishes to do so until all of the proceeds of T& N's insurance policy are exhausted. The district court disagreed. Having reviewed the Plan documents and relevant provisions of the Bankruptcy Code, we now affirm the district court's dismissal of the Trust's suit on statute of limitations grounds.

I. Background

A. The Barraford Claims

Daniel Barraford died in 2002 of mesothelioma, a cancer generally caused by asbestos inhalation. Barraford had been exposed to asbestos products manufactured by T& N, among others, when he worked as an electrician and engineer on the construction of the Prudential Center in Boston, Massachusetts. In 2004, his widow Nora Barraford brought suit against a number of asbestos manufacturers on her own behalf and as executrix of his estate. Barraford did not name T& N as a defendant because T& N had filed in 2001 for protection under Chapter 11 of the United States Bankruptcy Code (the " Code" ). 11 U.S.C. § § 101 et seq. Under the Code, the filing of a bankruptcy petition triggers a so-called automatic stay that bars the commencement of suit against the debtor on any claim " that arose before the commencement of the [bankruptcy] case." Id. § 362(a)(1). The stay covered Barraford's claims because, for bankruptcy purposes, any claim for personal injury arising from exposure to a product arises when the claimant was first exposed to the product. See In re Grossman's, Inc., 607 F.3d 114, 125 (3d Cir. 2010) (en banc).

Under Massachusetts law, Barraford's state-law claims would have expired at the latest in 2005, three years after his death. Mass. Gen. Laws ch. 229, § 2; ch. 260, § 2A. The Code, however, delays the expiration of any limitations period that would otherwise end during the duration of the automatic stay until thirty days have passed after notice of termination of the stay. 11 U.S.C. § 108(c)(2). The question posed by this case is whether that stay was terminated no later than December 27, 2007, the effective date of T& N's reorganization Plan,[2] such that the Barraford claims became time-barred thirty days thereafter, or whether the Plan modified and ...

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