The opinion of the court was delivered by: WILLIAM BASSLER, District Judge
Plaintiffs, G-I Holding Inc. ("G-I"), a debtor in bankruptcy
proceedings, and its nonbankrupt subsidiaries filed an adversary
proceeding seeking a declaration that the subsidiaries could not
be held liable for asbestos-related claims under successor
liability or alter ego theories. On July 6, 2005, this Court dismissed the Legal Representative of Present and Future Holders
of Asbestos-Related Demands ("Legal Representative")from the
action finding that his involuntary participation in the matter
is not statutorily authorized and would be an abuse of his role.
Plaintiffs bring the current motion requesting the Court to
direct entry of that order ("July 6 Order") as final or, in the
alternative, certify the order for interlocutory appeal.
The Court properly exercises jurisdiction over this matter
pursuant to 28 U.S.C. §§ 1334(b) and (e). Venue is proper in this
district pursuant to 28 U.S.C. § 1409(a).
For the reasons set forth below, the Court denies Plaintiffs'
Plaintiff G-I, the successor to GAF Corporation, is a holding
company, which filed for Chapter 11 bankruptcy on January 5,
2001. (First Amended Complaint ("First Am. Compl.") ¶¶ 2,5). GAF
was a building materials company that produced asbestos products.
GAF has been named in 500,000 asbestos lawsuits and G-I remains
liable for approximately 150,000 claims that have been filed and
for unknown numbers of asbestos claims that will be filed in the
future. Due to the massive liability it faced, G-I claims that it
was forced to file for bankruptcy. (Id. ¶ 4).
G-I is the parent company of Plaintiffs Building Materials
Corporation of America, Building Materials Investment Corporation and Building Materials Manufacturing Corporation (collectively
"BMCA"). BMCA is a leading manufacturer of roofing and building
products. Established in 1994, BMCA received substantially all
assets of GAF's products business and expressly assumed $204
million of asbestos liability with G-I indemnifying BMCA against
additional asbestos liability. In re G-I Holdings, Inc.,
323 B.R. 583, 588 (Bankr D.N.J. 2005) (citing In re G-I Holdings,
Inc., 313 B.R. 612, 621 (Bankr. D.N.J. 2004)). Approximately
2,500 state law actions were filed pre-petition against BMCA
alleging asbestos-related claims under theories of "successor
liability" and/or "alter ego" between G-I and BMCA (First Am.
Compl. ¶ 3).
Shortly after G-I filed for chapter 11 bankruptcy protection,
the United States trustee appointed the Official Committee of
Asbestos Claimants (the "Committee") to represent present
asbestos claimants or individuals exposed to G-I's asbestos
products pre-petition who had manifested an asbestos related
injury prior to plan confirmation. The Bankruptcy Court later
appointed C. Judson Hamlin as the Legal Representative to protect
the interests of those individuals currently unknown to the
parties that have not yet manifested an asbestos-related injury
but may hold future claims.
On February 7, 2001, Plaintiffs filed an action seeking a
declaration that BMCA was not liable for asbestos claims under successor liability and/or alter ego theories. Plaintiffs
initiated the suit against six individual asbestos claimants
("Individual Defendants")*fn1 on behalf of themselves and
all others similarly situated, including all future asbestos
claimants. (Id. at 1). The Bankruptcy Court granted the
Committee's request to intervene in November 2001. In October
2002, Plaintiffs amended their complaint to drop the class action
allegations and to add the Legal Representative as a defendant.
The Legal Representative then moved for a judgment on the
pleadings, claiming that Plaintiffs were not entitled to relief
because: "1) BMCA may not use the Declaratory Judgment Act to
obtain a preemptive declaration of non-liability based on state
law defenses; 2) the action does not involve a controversy of
sufficient immediacy; and 3) Plaintiffs may not seek relief under
the Declaratory Judgment Act because Congress has enacted a
statute that provides for the specific relief requested." In re
G-I Holdings, Inc., 328 B.R. 691, 694 (D.N.J. 2004).
In the meantime, the Committee commenced an avoidance action in
the Southern District of New York alleging that G-I's predecessor effected a fraudulent transfer of assets to its
shareholders, including Samuel Heyman. In May 2003, over G-I's
strenuous objection, the Bankruptcy Court granted the Legal
Representative's motion to intervene in the Committee's avoidance
action against Mr. Heyman. In re G-I Holdings, Inc.,
292 B.R. 804, 815 (Bankr. D.N.J. 2003).
In its July 6 Order, this Court ruled in favor of the Legal
Representative solely on ground three, finding that the forced
participation of the Legal Representative is not statutorily
authorized and will distort the statutory function of the Legal
Representative provided under 11 U.S.C. § 524(g).
328 B.R. at 691. The Court rejected the argument that the Bankruptcy Court's
decision allowing the Legal Representative to intervene in the
New York avoidance case "confer[s] upon Plaintiffs the power to
conscript the Legal Representative as an unwilling defendant in
this action." 328 B.R. at 696. The Court reasoned that, because
the Legal Representative is a creation of 11 U.S.C. § 524(g), he
has no role in this "essentially . . . nonbankruptcy action to
determine whether BMCA, a non-debtor, carries successor liability
from G-I and is therefore liable to asbestos claimants." Id. It
further held that Plaintiffs' attempt to bypass the safeguards
provided under Federal Rule of Civil Procedure 23 by dismissing
its class action claims and § 524(g), which each protect the
rights of future claimants, was a violation of due process. Plaintiffs now ask the Court to certify as a final judgment or
certify for interlocutory appeal its ruling that the Legal
Representative is an inappropriate party in this matter so that
Plaintiffs may immediately obtain appellate review of the Court's
The Court of Appeals has jurisdiction to review only "final
decisions" of the district court under 28 U.S.C. § 1291. In re
Diet Drugs Products Liability Litigation, 401 F.3d 143 (3d Cir.
2005). Although an order that disposes of fewer than all claims
or the rights and liability of fewer than all parties is normally
not appealable, an exception to the general rule exists when an
order is certified as appealable by a district court pursuant to
Federal Rule of Civil Procedure Rule 54(b). Id. at 162. Rule
54(b) permits the district court to separate final decisions from
non-final decisions in multiple party or multiple ...