The opinion of the court was delivered by: WILLIAM BASSLER, District Judge
In this bankruptcy appeal, Plaintiffs G-I Holdings, Inc. (f/k/a
GAF Corporation) ("G-I"), Building Materials Corporation of
America ("BMCA"), Building Materials Investment Corporation
("BMIC"), and Building Materials Manufacturing Corporation
("BMMC") (collectively, "Plaintiffs") seek a declaratory judgment
that BMCA, BMIC, and BMMC cannot be held liable for the
asbestos-related claims brought against G-I under any theory of
successor liability or "alter ego" (piercing the corporate veil).
Defendant Official Committee of Asbestos Claimants (the "Official
Committee") have counterclaimed, alleging that BMCA, BMIC, and
BMMC could be held vicariously liable for the claims. The
defendants also demanded a jury trial on both counts of the
complaint and the counterclaims.
Plaintiffs have filed a motion to strike the jury demand. For
the reasons stated below, the Court concludes that the defendants
are entitled to a jury trial under the Seventh Amendment on both
the issue of successor liability and the issue of piercing the
corporate veil. Accordingly, the Court denies Plaintiffs'
motion to strike the jury demand. I. Background
G-I, formerly GAF Corporation ("GAF"), a holding company that
owns BMCA, BMIC, and BMMC, filed for Chapter 11 bankruptcy on
January 5, 2001 to provide for a fair resolution of all its
liabilities, including a resolution of all asbestos-related
claims against it. (First Am. Compl. ¶¶ 2,5.) G-I claims that it
was forced to file for bankruptcy due to an increase in both the
number of asbestos claims filed against G-I and the settlement
amounts demanded by asbestos claimants. (Id. ¶ 4.)
Additionally, asbestos claimants began joining BMCA, BMIC, and
BMMC along with G-I in their tort suits, seeking money damages
and alleging that G-I's subsidiaries were vicariously liable for
GAF's asbestos torts on theories of piercing the corporate veil
and successor liability. (Id. ¶ 3.)
In response to these complaints against BMCA, BMIC, and BMMC,
Plaintiffs filed the above-captioned adversary proceeding seeking
a declaration that BMCA, BMIC, and BMMC cannot be held liable for
asbestos-related claims based on injuries alleged to have been
caused by products sold by G-I and GAF. Specifically, in their
First Amended Complaint, Plaintiffs have requested that the Court
provide:
1. Entry of judgment on Count I for Plaintiffs
declaring that BMCA, BMIC, and/or BMMC are not liable
for Asbestos Claims under any theory of successor
liability;
2. Entry of judgment on Count II for Plaintiffs declaring that BMCA, BMIC, and/or BMMC are not liable
for Asbestos Claims based on a theory that MCA, BMIC,
and/or BMMC are the "alter ego" of either G-I, GAF
BMC, and/or GAF Corporation . . .
(Id. at 11.) Plaintiffs filed the adversary proceeding against
three groups: the Official Committee, individuals who sued BMCA
and have become defendants in this case ("Individual
Defendants"),
*fn1 and C. Judson Hamlin, the Legal
Representative of Present and Future Holders of Asbestos-Related
Demands ("Legal Representative"). The Legal Representative has
since been dismissed from this action pursuant to the Court's
Opinion and Order dated July 6, 2005.
The Individual Defendants filed their Answer to the
First Amended Complaint with their Jury Demand on November 14, 2002.
The Official Committee filed its Answer, Affirmative Defenses,
Counterclaims, and Demand for Jury Trial in Response to the
First Amended Complaint on November 18, 2002. The Official Committee's
Counterclaims seek a declaration that BMCA, BMIC, and BMMC are
successors in liability to all of the asbestos-related claims
against G-I and GAF (Count I) and that the corporate veil of
these entities should be disregarded (Count II). If granted, the
requested relief would allow asbestos claimants to hold BMCA,
BMIC, and BMMC liable for asbestos-related claims based on products by G-I and GAF. Plaintiffs now move to strike the jury
demand by the Official Committee and the Individual Defendants
(collectively, "Defendants"). This Court exercised jurisdiction
over this matter on May 13, 2003 by granting the Official
Committee's request to withdraw the reference from the Bankruptcy
Court with respect to this Adversary Proceeding, No. 01-3066.
Defendants' assert that they have a constitutional right to a
trial by jury under the Seventh Amendment of the United States
Constitution. Ratified in 1791, the Seventh Amendment provides
that "[i]n Suits at common law, where the value in controversy
shall exceed twenty dollars, the right of trial by jury shall be
preserved . . ." U.S. Const. amend. VII. The phrase "Suits at
common law" refers to "suits in which legal rights were to be
ascertained and determined, in contradiction to those where
equitable rights alone were recognized, and equitable remedies
were administered." Feltner v. Columbia Pictures Television,
Inc., 523 U.S. 340, 348 (1998) (quoting Parsons v. Bedford,
(1830) (emphasis in original)).
The Seventh Amendment also applies to claims that did not exist
at common law in 1791, if they "are analogous to common-law
causes of action ordinarily decided in English law courts in the
late 18th century, as opposed to those customarily heard by
courts of equity or admiralty." Feltner, 523 U.S. at 348 (quoting Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 42
(1989)).
"[T]o determine whether a [claim] is more analogous to cases
tried in courts of law than to suits tried in court of equity or
admiralty, [the court] examine[s] both the nature of the [claim]
and the remedy sought." Feltner 523 U.S. at 348. The trial
court engages in a two-step process:
First, [the court] compare[s] the [claim] to
18th-century actions brought in the courts of England
prior to the merger of the courts of law and equity.
Second, [the court] examine[s] the remedy sought and
determine[s] whether it is legal or equitable in
nature. The second stage of this analysis is more
important than the first.
Granfinanciera, 492 U.S. at 42 (citing Tull v. United States,
481 U.S. 412, 417-18 (1987)). "`[A]ny seeming curtailment of the
right to a jury trial should be scrutinized with the utmost
care.'" Billings v. Ravin, Greenberg & Zanick, P.A.,
22 F.3d 1242, 1260 (3d Cir. 1994) (quoting Chauffeurs, Teamsters &
Helpers Local No. 391 v. Terry,
494 U.S. 558, 565 (1990)).
A. Effect of a Declaratory Judgment Action
Plaintiffs initiated this lawsuit as a declaratory judgment
action. The fact that Plaintiffs have filed for a declaratory
judgment does not affect Defendants' right to a jury trial. A
declaratory judgment in itself is neither legal nor equitable in
nature. See Gulfstream Aerospace Corp. v. Mayacamas Corp.,
485 U.S. 271, 284 (1988). If the asbestos claimants would have
been entitled to a trial by jury had they sued Plaintiffs for their
injuries, the claimants cannot be deprived of their right to a
jury trial merely because Plaintiffs filed for declaratory relief
first. See Beacon Theatres, Inc. v. Westover, 359 U.S. 500,
504 (1959).
The Third Circuit Court of Appeals clarified the holding of
Beacon Theatres in Owens-Illinois, Inc. v. Lake Shore Land
Co., 610 F.2d 1185 (3d Cir. 1979). That court held that the
relevant question in determining whether a right to a jury trial
exists in an action for declaratory relief is "in what kind of
suit the claim would have come to the court if there was no
declaratory judgment remedy," and whether a right to trial by
jury applies to that underlying claim. Id. at 1189.
If the declaratory judgment action does not fit into
one of the existing equitable patterns but is
essentially an inverted law suit[,] an action brought
by one who would have been a defendant at common
law[,] then the parties have a right to a jury. But
if the action is the counterpart of a suit in equity,
there is no such right.
Id. In this case the issue is whether, had Defendants first
brought an action for recovery on their ...