Court Opinion

ID: 9371251
Source: CourtListenerOpinion
Date Created: 2023-02-15 21:00:27.577817+00
Date Added: 2024-06-11T17:16:26.463253
License: Public Domain

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                                                PUBLISHED

                               UNITED STATES COURT OF APPEALS
                                   FOR THE FOURTH CIRCUIT

                                                 No. 21-1858

        IN RE: KAISER GYPSUM COMPANY, INC.; HANSON PERMANENTE CEMENT,
        INC.,

                  Debtors.
        __________________________________

        TRUCK INSURANCE EXCHANGE,

                     Plaintiff – Appellant,

               v.

        KAISER GYPSUM COMPANY, INC.; HANSON PERMANENTE CEMENT, INC.,

                     Debtors – Appellees,

               and

        LEHIGH HANSON, INC.,

                     Defendant – Appellee,

               and

        OFFICIAL COMMITTEE OF ASBESTOS PERSONAL INJURY CLAIMANTS;
        FUTURE CLAIMANTS REPRESENTATIVE,

                      Appellees.

        Appeal from the United States District Court for the Western District of North Carolina, at
        Charlotte. Graham C. Mullen, Senior District Judge. (3:20-cv-00537-GCM)
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        Argued: October 25, 2022                                   Decided: February 14, 2023

        Before KING, AGEE and QUATTLEBAUM, Circuit Judges.

        Affirmed by published opinion. Judge Agee wrote the opinion in which Judge King and
        Judge Quattlebaum joined.

        ARGUED: Allyson Newton Ho, GIBSON, DUNN & CRUTCHER, LLP, Dallas, Texas,
        for Appellant. C. Kevin Marshall, JONES DAY, Washington, D.C.; Kevin C. Maclay,
        CAPLIN & DRYSDALE, CHARTERED, Washington, D.C.; Edwin J. Harron, YOUNG,
        CONAWAY, STARGATT & TAYLOR, Wilmington, Delaware, for Appellees. ON
        BRIEF: Michael A. Rosenthal, Michael K. Gocksch, New York, New York, David W.
        Casazza, Washington, D.C., Robert B. Krakow, Russell H. Falconer, Elizabeth A. Kiernan,
        Dallas, Texas, Matthew G. Bouslog, GIBSON, DUNN & CRUTCHER LLP, Irvine,
        California; Michael L. Martinez, GRIER WRIGHT MARTINEZ, PA, Charlotte, North
        Carolina; Scott R. Hoyt, PIA ANDERSON MOSS HOYT, LLC, Salt Lake City, Utah, for
        Appellant. Todd E. Phillips, James P. Wehner, CAPLIN & DRYSDALE, CHARTERED,
        Washington, D.C.; Sara (Sally) W. Higgins, Raymond E. Owens, Jr., HIGGINS &
        OWENS, PLLC, Charlotte, North Carolina, for Appellee the Official Committee of
        Asbestos Personal Injury Claimants. James L. Patton, Jr., Sharon M. Zieg, Sara Beth A.R.
        Kohut, YOUNG CONAWAY STARGATT & TAYLOR, LLP, Wilmington, Delaware;
        Felton E. Parrish, John M. “Jack” Spencer, ALEXANDER RICKS PLLC, Charlotte, North
        Carolina, for Appellee Lawrence Fitzpatrick the Future Claimants’ Representative. Robert
        M. Horkovich, ANDERSON KILL PC, New York, New York for Appellees the Official
        Committee of Asbestos Personal Injury Claimants and the Future Claimants’
        Representative. Gregory M. Gordon, Amanda Rush, Dallas, Texas, Daniel C. Villalba,
        Washington, D.C., Paul M. Green, JONES DAY, Houston, Texas; Ross R. Fulton, John R.
        Miller, Jr., RAYBURN COOPER & DURHAM, P.A., Charlotte, North Carolina, for
        Appellees Kaiser Gypsum Company, Inc. and Hanson Permanente Cement, Inc. Mark A.
        Nebrig, MOORE & VAN ALLEN PLLC, Charlotte, North Carolina, for Appellee Lehigh
        Hanson, Inc.

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        AGEE, Circuit Judge:

               This bankruptcy appeal involves a primary insurer’s attempts to block its insureds’

        Chapter 11 reorganization plan (the “Plan”), which establishes a trust under 11 U.S.C.

        § 524(g) for current and future asbestos personal-injury liabilities. In adopting the

        bankruptcy court’s recommendation to confirm the Plan, the district court concluded in

        relevant part that the primary insurer was not a “party in interest” under 11 U.S.C.

        § 1109(b) and thus lacked standing to object to the Plan. Having carefully considered the

        parties’ briefs and the record, we affirm, but we do so on both § 1109(b) grounds and

        Article III grounds.

                                                       I.

                                                      A.

               Enacted as part of the Bankruptcy Reform Act of 1994, Pub. L. No. 103-394, 108

        Stat. 4106, § 524(g) of the Bankruptcy Code allows a Chapter 11 debtor with substantial

        asbestos liabilities to obtain a channeling injunction that diverts all asbestos claims, current

        and future, to a trust established by the debtor’s reorganization plan and funded by the

        debtor. See 11 U.S.C. § 524(g)(1)–(2). In formulating § 524(g), Congress sought to ensure

        equitable treatment for future claimants who, because of the long latency period associated

        with some asbestos-related illnesses, may not know of their claims until years after the

        bankruptcy. See In re W.R. Grace & Co., 13 F.4th 279, 283 (3d Cir. 2021); In re Quigley

        Co., 676 F.3d 45, 58–59 (2d Cir. 2012); see also H.R. Rep. No. 103-835, at 40. At the same

        time, Congress also sought to enable the debtor, who would otherwise face an unknown

                                                       3
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        but potentially large number of future claims, to emerge from bankruptcy as an

        economically viable entity. See W.R. Grace & Co., 13 F.4th at 283; see also H.R. Rep. No.

        103-835, at 40–41.

               For a debtor to obtain § 524(g) relief, several statutory criteria must be met, most of

        which are designed to safeguard “the due process rights” of claimants, particularly future

        claimants. In re Grossman’s Inc., 607 F.3d 114, 127 (3d Cir. 2010) (quoting In re

        Combustion Eng’g, Inc., 391 F.3d 190, 234 n.45 (3d Cir. 2004)); see 11 U.S.C.

        § 524(g)(2)(B), (4)(B). For example, the court must appoint a representative to protect the

        interests of future claimants during the reorganization, 11 U.S.C. § 524(g)(4)(B)(i), and

        must determine that the plan treats “present claims and future demands that involve similar

        claims in substantially the same manner,” id. § 524(g)(2)(B)(ii)(V); see also id.

        § 524(g)(4)(B)(ii) (stating that the court must find that the channeling injunction is “fair

        and equitable” to future claimants). Additionally, 75 percent of current claimants must vote

        to approve the plan. Id. § 524(g)(2)(B)(ii)(IV)(bb).

                                                     B.

               Debtors-Appellees Kaiser Gypsum Company, Inc., and Hanson Permanente

        Cement, Inc., (collectively, the “Debtors”) used to manufacture and sell asbestos-

        containing products. Since 1978, the two sister companies have been named in over 38,000

        asbestos-related lawsuits nationwide. Despite maintaining liability insurance, the Debtors’

        outstanding asbestos liabilities combined with the risk of unknown future asbestos claims,

        including claims for punitive damages, drove the Debtors to seek Chapter 11 relief in 2016,

        at which time 14,000 lawsuits remained pending.

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               Following extensive negotiations with multiple parties, including several insurance

        companies,    various   creditors   and    government     agencies,     and   court-appointed

        representatives of current and future asbestos claimants, 1 the Debtors arrived at the nearly

        consensual proposed Plan of reorganization. The Plan would establish a § 524(g) trust to

        resolve the Debtors’ present and future asbestos personal-injury liabilities, with a

        channeling injunction to protect the Debtors from future asbestos claims, including claims

        for punitive damages, in the state and federal tort systems nationwide.

               Critical to the trust’s viability were the Debtors’ rights under certain primary

        liability insurance policies issued by Appellant Truck Insurance Exchange (“Truck”) from

        the 1960s through the 1980s. Under those policies, Truck must investigate and defend each

        covered asbestos personal-injury claim or suit asserted against the Debtors, “even if such

        claim or suit is groundless, false or fraudulent.” J.A. 792. Truck must also indemnify the

        Debtors for each such claim up to a per-claim limit, typically $500,000 per claim, 2

        excluding punitive damages. Importantly, Truck’s primary coverage applies on a per-claim

        basis without a maximum aggregate limit, meaning that Truck’s coverage is non-eroding,

        subject only to the $500,000 per-claim limit. The policies further specify that “[b]ankruptcy

        or insolvency of the [Debtors] or of the [Debtors’] estate[s] shall not relieve [Truck] of any

        of its obligations hereunder.” J.A. 804. As for the Debtors, the policies require them to pay

               These include Appellee Official Committee of Asbestos Personal Injury Claimants
               1

        and Appellee Future Claimants’ Representative.
               2
                The Debtors maintained excess insurance coverage that would respond to amounts
        exceeding the per-claim limit of their primary coverage.

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        a deductible, typically $5,000 per claim, and to assist and cooperate with Truck in

        defending against asbestos claims asserted against them.

               As part of the proposed reorganization Plan, the Debtors would assign their rights

        under the Truck policies to the § 524(g) trust. Those rights to non-eroding coverage, along

        with a one-time $49 million contribution by parent company Appellee Lehigh Hanson,

        Inc., and a secured five-year $1 million note issued by the Debtors, would provide the

        funding for the trust.

               Structured to capitalize on the Truck policies, the proposed Plan provided that

        holders of insured asbestos personal-injury claims—claims that fall within available

        insurance coverage—would continue to assert actions against the reorganized Debtors, in

        name only, in the tort system to collect available insurance. Importantly, these claims

        would still be subject to all the insurers’ pre-petition coverage defense rights—including

        the right to deny coverage should the Debtors fail to honor their assistance-and-cooperation

        obligations. If a claimant were to obtain a favorable judgment, the trust would pay the

        deductible, and Truck, pursuant to its coverage obligations under the policies, would pay

        up to the per-claim limit.

               Holders of uninsured asbestos personal-injury claims—claims that fall outside

        available insurance coverage—would submit their claims directly to the trust for resolution

        through an administrative process. As part of that process, each claimant would have to

        provide certain disclosures and authorizations that would help ensure that the trust paid

        only valid, non-duplicative claims. In particular, a claimant would have to provide specific

        information regarding all other claims that relate in any way to the alleged asbestos injury

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        and would also have to authorize the trust to obtain the claimant’s submissions, if any, to

        other asbestos trusts. 3 After an individualized assessment of a particular uninsured claim,

        the trust could respond with a settlement offer, which the claimant could accept or reject.

               Aside from the asbestos personal-injury claims, the proposed Plan would resolve

        the Debtors’ other outstanding liabilities. For example, the Plan would settle the Debtors’

        decades-old asbestos-related environmental liabilities. It would also satisfy, in full, all

        general unsecured creditor claims, including a claim held by Truck for unpaid deductibles

        under the policies.

               Consequently, the only remaining “impaired” class of creditors under the proposed

        Plan would be the asbestos personal-injury claimants, whose claims would be addressed

        by the trust.

                                                     C.

               Following a vote, 100 percent of the asbestos personal-injury claimants approved

        the proposed Plan. The Plan also had unanimous support from all the other parties involved

        in the bankruptcy, save one—Truck.

               Truck’s chief objection to the Plan was that it did not require holders of insured

        claims, who would continue to pursue their claims in the tort system, to provide the same

        disclosures and authorizations that the Plan required of holders of uninsured claims. In

        other words, the Plan would provide “anti-fraud” protections to the trust in resolving

               3
                The initial version of the Plan did not require these disclosures and authorizations,
        but the Debtors added them after the bankruptcy judge expressed concern about their
        absence.

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        uninsured claims but not to Truck in resolving insured claims. Truck contended that this

        disparate treatment would expose it to millions of dollars in fraudulent tort claims.

               Despite Truck’s insistence that the Debtors add these anti-fraud measures for

        insured claims to be litigated in the tort system, the Debtors declined to disturb the already

        negotiated Plan and proceeded to seek court approval. Truck in turn sent the Debtors a

        reservation-of-rights letter stating that the Debtors’ proposed Plan “appear[ed] to be

        collusive and in violation of [the Debtors’] duty to cooperate and assist” under the Truck

        policies. J.A. 864.

               Following receipt of Truck’s letter, the Debtors sought, in conjunction with

        confirmation of the Plan, a judicial determination that their conduct in negotiating and

        drafting the Plan did not transgress their assistance-and-cooperation obligations under the

        Truck policies or breach the implied covenant of good faith and fair dealing—a proposed

        finding termed the “Plan Finding.”

               Truck responded by filing a separate declaratory judgment action seeking the

        opposite judicial pronouncement—that the Debtors’ bankruptcy conduct did violate the

        Truck policies’ assistance-and-cooperation provision and the implied covenant of good

        faith and fair dealing; that the Debtors were not entitled to the Plan Finding; and that Truck

        should thereby be relieved of its coverage obligations. The district court stayed Truck’s

        action pending the bankruptcy court’s recommendation regarding whether to confirm the

        proposed Plan.

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                                                    D.

               After extensive briefing by the parties, the bankruptcy court held a hearing on the

        proposed Plan. Both in the briefing and at the hearing, Truck raised three main objections

        to confirmation. First, Truck contended that the Plan was not proposed in good faith, as

        required for all plans of reorganization under 11 U.S.C. § 1129(a)(3), because it reflected

        a collusive agreement between the Debtors and the claimant representatives to perpetuate

        fraudulently inflated recoveries in the tort system. Second, Truck argued that the proposed

        Plan Finding would impermissibly alter its rights under the policies by relieving the

        Debtors of their assistance-and-cooperation obligations and by barring Truck from raising

        the Debtors’ bankruptcy conduct as a defense in future coverage disputes. And third, Truck

        claimed that the proposed trust did not comply with several § 524(g) requirements.

               At a subsequent hearing, the bankruptcy court issued an oral ruling, later

        memorialized in writing, setting forth proposed findings of fact and conclusions of law and

        recommending confirmation of the Plan.

               The bankruptcy court first observed that, as an insurer, Truck had standing to

        challenge the proposed Plan only to the extent that it was not “insurance neutral.” In its

        analysis, the court found that the Plan didn’t alter Truck’s rights or obligations under the

        policies and therefore deemed the Plan insurance neutral. As a result, the bankruptcy court

        concluded that Truck was not a “party in interest” under 11 U.S.C. § 1109(b) 4 and thus

               4
                Section 1109(b) provides that “[a] party in interest . . . may raise and may appear
        and be heard on any issue in a [Chapter 11] case.” 11 U.S.C. § 1109(b).

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        lacked standing to challenge other aspects of the Plan, including whether the Plan was

        proposed in good faith and whether the trust complied with § 524(g). The bankruptcy court

        also found that Truck’s additional status as a general unsecured creditor did not confer

        § 1109(b) standing because all general unsecured claims would be fully satisfied under the

        Plan.

                In nonetheless considering Truck’s objections on the merits, the bankruptcy court

        rejected them, finding that the trust satisfied § 524(g)’s requirements and that the Plan,

        which was extensively negotiated and maximized the Debtors’ available assets to satisfy

        claims, was proposed in good faith. In arriving at its good-faith finding, the bankruptcy

        court dismissed as purely speculative Truck’s claim that unchecked rampant fraud would

        define the resolution of insured claims in the tort system absent the proposed anti-fraud

        measures. The bankruptcy court further determined that any effort to implement those

        measures would improperly invade the province of other federal and state courts by

        mandating “what kind of discovery is required in asbestos cases.” J.A. 6639.

                Following a de novo review, complete with additional briefing and a hearing, the

        district court confirmed the Plan over Truck’s renewed objections. See In re Kaiser

        Gypsum Co., No. 16-31602 (JCW), 2021 WL 3239513 (W.D.N.C. July 28, 2021)

        (confirmation order); In re Kaiser Gypsum Co., No. 16-31602 (JCW), 2021 WL 3215102

        (W.D.N.C. July 28, 2021) (findings of fact and conclusions of law). In doing so, the district

        court adopted the bankruptcy court’s findings of fact and conclusions of law in all material

        respects, thereby foreclosing Truck’s requested declaratory relief. The district court also

        denied Truck’s motion for a stay pending appeal.

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               Truck timely appealed, and we likewise denied Truck’s request for a stay.

        Thereafter, the Debtors, joined by their parent Lehigh Hanson, moved to dismiss the

        appeal, asserting both that Truck lacks bankruptcy appellate standing to challenge the Plan

        and that the appeal is equitably moot.

               Because the district court’s order confirming the Plan is a final order, we have

        jurisdiction over this appeal under 28 U.S.C. § 1291.

                                                    II.

               We begin with the Debtors’ contention that Truck lacks bankruptcy appellate

        standing to challenge the Plan.

               Under this circuit’s “well-established” doctrine of bankruptcy appellate standing,

        only a “person aggrieved”—that is, a party “directly and adversely affected pecuniarily”—

        by a bankruptcy order may appeal that order. In re Urb. Broad. Corp., 401 F.3d 236, 243–

        44 (4th Cir. 2005) (quoting In re Clark, 927 F.2d 793, 795 (4th Cir. 1991)). 5

               5
                  As we explained in Clark, this doctrine of bankruptcy appellate standing,
        sometimes called the “person aggrieved” test, derives from the original Bankruptcy Code,
        which permitted only a “person aggrieved” to appeal a bankruptcy order. 927 F.2d at 795
        (citing 11 U.S.C. § 67(c) (1976) (repealed 1978)). And as we also explained in Clark,
        although that specific textual limitation was later repealed, courts, including this one,
        “continue[] to use the test.” Id. This continued use reflects a judicial recognition “that
        Congress [did not] intend[] to alter the right to appellate review by leaving undefined in
        the Code the requisites for standing.” In re Fondiller, 707 F.2d 441, 443 (9th Cir. 1983);
        accord In re Westwood Cmty. Two Ass’n, 293 F.3d 1332, 1334 (11th Cir. 2002) (“Our
        sister circuits have agreed that, although Congress did not define who has standing to
        appeal in the Bankruptcy Code, no evidence exists that Congress intended to alter the
        definition set forth in the prior law, the Bankruptcy Act of 1898.”).

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               According to the Debtors, Truck is not a person aggrieved by confirmation of the

        Plan because neither the Plan’s lack of fraud-prevention measures for insured claims

        litigated in the tort system nor the Plan Finding directly and pecuniarily harms Truck.

        Rather, the Debtors say, Truck’s alleged harm hinges on the progression and outcome of

        future litigation and thus is not a direct harm sufficient for bankruptcy appellate standing.

               Truck responds that the Supreme Court foreclosed further application of the person-

        aggrieved test in Lexmark International, Inc. v. Static Control Components, Inc., 572 U.S.

        118 (2014). According to Truck, Lexmark rejected prudential forms of standing like

        bankruptcy appellate standing. But even if that standard survived Lexmark, Truck

        continues, it has satisfied it here.

               We need not address these specific arguments as presented by the parties. This is

        because whatever its ability to show a direct and pecuniary harm resulting from

        confirmation of the Plan, Truck indisputably has standing to appeal the district court’s

        conclusion that it lacked § 1109(b) standing, either as an insurer or as a creditor, to

        challenge the Plan in the first instance. Indeed, as the Third Circuit has explained,

        bankruptcy appellate standing refers to “standing to appeal the substance of the bankruptcy

        court’s decision,” which is “distinct from standing to appeal the bankruptcy court’s

        decision regarding bankruptcy standing” under § 1109(b). In re Glob. Indus. Techs., Inc.,

        645 F.3d 201, 209–10 n.23 (3d Cir. 2011) (en banc) (emphasis added).

               By finding that Truck was not a party in interest under § 1109(b), the district court

        denied Truck standing to otherwise object to the Plan in the first instance. Truck’s seeking

        review of that determination therefore does not equate to an appeal of the “substance” of

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        the Plan, which would trigger the rigorous requirements of bankruptcy appellate standing.

        Rather, it’s an appeal of an adverse § 1109(b) standing determination. That being the case,

        the bankruptcy appellate-standing doctrine is not implicated. See id. (“[A] party denied

        standing to sue, or to intervene, or to object, may obviously appeal such a determination.”

        (quoting In re Pittsburgh & Lake Erie R.R. Co. Sec. & Antitrust Litig., 543 F.2d 1058, 1064

        (3d Cir. 1976))). To otherwise hold that a party must satisfy the more-exacting person-

        aggrieved standard to appeal a lower court’s determination that the party lacked standing

        to challenge plan confirmation in the first instance “would risk leaving parties in interest

        who have been erroneously denied bankruptcy standing, but who do not meet the more

        stringent requirements for appellate standing, without legal redress for that error.” Id. We

        do not erect such a barrier to redress here, and our decisions in Clark and Urban

        Broadcasting—neither of which involved facts like those presented here—don’t counsel

        otherwise.

               Because the district court’s § 1109(b) findings denied Truck standing to object to

        the Plan at the outset, Truck has standing to appeal those findings, to which we now turn. 6

                                                    III.

               The district court held that Truck, as an insurer, was not a party in interest with

        standing to challenge the Plan because it was insurance neutral and therefore did not affect

               6
                 We thus have no occasion to assess Lexmark’s effect, if any, on this circuit’s
        bankruptcy appellate-standing jurisprudence. We also decline to consider the Debtors’
        equitable-mootness defense as it is similarly unnecessary to our resolution of this appeal.

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        Truck’s rights or obligations under the subject policies. As part of that insurance-neutrality

        determination, the district court made the Plan Finding, an affirmative declaration that the

        Debtors’ conduct in bankruptcy—namely, their agreeing to a plan that lacked Truck’s

        desired anti-fraud measures for insured claims litigated in the tort system—breached

        neither the Debtors’ assistance-and-cooperation obligations under the Truck policies nor

        the implied covenant of good faith and fair dealing. The district court also determined that

        Truck’s additional status as a creditor did not independently render Truck a party in interest

        because Truck’s claim was fully satisfied under the Plan.

               These findings are legal conclusions that we review de novo. See Foodbuy, LLC v.

        Gregory Packaging, Inc., 987 F.3d 102, 115, 118 (4th Cir. 2021); see also In re Thorpe

        Insulation Co., 677 F.3d 869, 879 (9th Cir. 2012).

                                                      A.

               Under § 1109(b), “[a] party in interest, including the debtor, the trustee, a creditors’

        committee, an equity security holders’ committee, a creditor, an equity security holder, or

        any indenture trustee, may raise and may appear and be heard on any issue in a case under

        [Chapter 11].” 11 U.S.C. § 1109(b).

               Our prior cases have not closely examined the scope of § 1109(b), but other courts

        have held that the statutory list of potential parties in interest is not exhaustive. See, e.g.,

        In re Tower Park Props., 803 F.3d 450, 457 (9th Cir. 2015). Instead, that list reflects an

        understanding that a “party in interest” includes “anyone who has a legally protected

        interest that could be affected by a bankruptcy proceeding.” In re James Wilson Assocs.,

        965 F.2d 160, 169 (7th Cir. 1992); accord Glob. Indus. Techs., 645 F.3d at 210. This

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        interpretation of the statute tracks our general recognition that “the term ‘including’ is not

        one of all-embracing definition, but connotes simply an illustrative application of the

        general principle.” United States v. Hawley, 919 F.3d 252, 256 (4th Cir. 2019) (quoting

        Fed. Land Bank of St. Paul v. Bismarck Lumber Co., 314 U.S. 95, 100 (1941)).

               Viewed through that lens, a party in interest could include a debtor’s insurer. In

        determining whether a particular reorganization plan sufficiently affects an insurer’s legal

        rights to render that insurer a party in interest, courts typically look to see whether the plan

        is “insurance neutral.” See, e.g., Glob. Indus. Techs., 645 F.3d at 212. A plan is insurance

        neutral if it doesn’t increase the insurer’s pre-petition obligations or impair the insurer’s

        pre-petition policy rights. Id. (citing Combustion Eng’g, 391 F.3d at 218). Stated another

        way, a plan is insurance neutral if it “does not materially alter the quantum of liability that

        the insurer[] would be called to absorb.” Id. If a plan is insurance neutral, the objecting

        insurer ordinarily is not a party in interest under § 1109(b) and thus lacks standing to

        challenge the substance of the Plan. See id.

               Here, the district court held that the Plan was insurance neutral because it expressly

        preserved Truck’s coverage defenses and the Debtors’ assistance-and-cooperation

        obligations under the policies, thereby placing Truck in the same position as it was pre-

        bankruptcy. Part and parcel of that determination was the Plan Finding, which the district

        court found appropriate and necessary given Truck’s assertion that the Debtors’ bankruptcy

        conduct violated the policies’ assistance-and-cooperation provision and thereby voided

        coverage.

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               Although the Plan includes an “Insurance Neutrality” section expressly preserving

        Truck’s pre-petition coverage defenses, J.A. 1711; see also J.A. 1704 (retaining the

        Debtors’ assistance-and-cooperation obligations under the Truck policies), Truck argues

        that the Plan is not insurance neutral for two primary reasons. First, Truck asserts that the

        Plan Finding impermissibly alters Truck’s policy rights by barring Truck from asserting

        future coverage defenses based on the Debtors’ bankruptcy conduct. And second, Truck

        contends that the Plan reflects a scheme between the Debtors and the claimant

        representatives to expose Truck to fraudulent claims in the tort system. We address each

        contention in turn. 7

                                                       i.

               We first consider Truck’s claim that the Plan Finding effectively rewrites the

        policies and impairs Truck’s contractual rights. Because it is impossible to assert

        contractual rights that never existed in the first place, assessing Truck’s claim necessarily

        requires determining whether the district court correctly held that the Debtors didn’t breach

        their assistance-and-cooperation obligations or the implied covenant of good faith and fair

        dealing by agreeing to a plan that lacked Truck’s desired anti-fraud measures. That inquiry,

        in turn, depends on the proper interpretation of the Truck policies under California law, the

        governing law as applicable to the policies.

               7
                  Were Truck to prove that the Plan is not insurance neutral, then clearly its rights
        as an insurer would be adversely affected. Accordingly, Truck has Article III standing to
        raise its insurance-neutrality arguments on appeal. See Thorpe Insulation Co., 677 F.3d at
        887. As discussed below, however, the same cannot be said of Truck’s creditor-based
        § 1109(b) arguments, which assert only the interests of third parties.

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               In California, an insurance agreement is a contract to which the ordinary principles

        of contract interpretation apply. Bank of the W. v. Super. Ct., 833 P.2d 545, 551–52 (Cal.

        1992). Courts must therefore interpret an insurance policy’s language in its “ordinary and

        popular sense,” and in its proper context, with the goal of giving effect to the “mutual

        intention of the parties.” Id. at 552.

               Turning to the pertinent policy provision here, it provides:

               8.      ASSISTANCE AND COOPERATION OF THE INSURED:
                       The insured shall cooperate with the company, and upon the
                       company’s request, shall attend hearings and trials and shall assist in
                       effecting settlements, securing and giving evidence, obtaining the
                       attendance of witnesses and in the conduct of suits. The insured shall
                       not, except at his own cost, voluntarily make any payment, assume
                       any obligation or incur any expense other than for such immediate
                       medical and surgical relief to others as shall be imperative at the time
                       of the occurrence.

        J.A. 803.

               According to Truck, the Debtors’ obligations to “cooperate with [Truck]” and to

        “assist in effecting settlements [and] securing and giving evidence,” J.A. 803, require the

        Debtors, in this bankruptcy proceeding, to help Truck secure the disclosures and

        authorizations it considers necessary to combat potential fraud in litigating insured claims

        in the tort system.

               The district court rejected Truck’s broad reading, finding instead that the provision

        requires the Debtors to assist and cooperate with Truck only in relation to “Truck’s defense

        efforts in individual suits.” Kaiser Gypsum Co., 2021 WL 3215102, at *32.

        Notwithstanding Truck’s urging that the provision’s language is not so limited, we agree

        with the district court.
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               To begin, nothing in the policy provision suggests that the Debtors’ assistance-and-

        cooperation obligations extend to bankruptcy-plan negotiations. True, the first sentence

        obligates the Debtors to “cooperate” with Truck and to assist Truck in “effecting

        settlements [and] securing and giving evidence.” J.A. 803. But the same sentence also

        specifically speaks of “attend[ing] hearings and trials,” “obtaining the attendance of

        witnesses,” and “in the conduct of suits.” J.A. 803. Taken together with “effecting

        settlements” and “securing and giving evidence,” these activities—along with the phrase

        “in the conduct of suits”—indicate traditional litigation activities, as opposed to activities

        typically undertaken in a bankruptcy proceeding. See Bank of the W., 833 P.2d at 552

        (stating that “policy terms must be read in their ordinary and popular sense” (internal

        quotation marks omitted)).

               In addition, the policy provision’s second and final sentence, which Truck ignores

        altogether, discusses the Debtors’ ability to “voluntarily make any payment, assume any

        obligation or incur any expense other than for such immediate medical and surgical relief

        to others as shall be imperative at the time of the occurrence.” J.A. 803 (emphasis added).

        The term “occurrence,” a well-known term of art in the insurance industry, see, e.g., 9

        Steven Plitt et al., Couch on Insurance § 126:29 (3d ed. 2022); Occurrence, Black’s Law

        Dictionary (11th ed. 2019), is defined in the Truck policies as “an event, or continuous or

        repeated exposure to conditions which results in personal injury or property damage during

        the policy period,” J.A. 801–02 (emphasis added). Utilizing that term in the assistance-

        and-cooperation provision is highly probative of the provision’s intended scope—a scope

        limited to the defense of claims stemming from an “occurrence.” See Bank of the W., 833

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        P.2d at 552 (stating that a court “must interpret the language in context, with regard to its

        intended function in the policy”).

               The provision’s precise placement in the policy reinforces this view. Immediately

        preceding the assistance-and-cooperation provision are two provisions that require the

        Debtors to notify Truck whenever “an occurrence takes place” and whenever a “claim is

        made or suit is brought against” the Debtors. J.A. 803. The assistance-and-cooperation

        provision’s placement immediately after these two provisions is instructive contextual

        evidence that the Debtors’ assistance-and-cooperation obligations are triggered only in

        response to an “occurrence”-based “claim” or “suit” brought against the Debtors—not in

        response to a bankruptcy declaration. See Travelers Cas. & Sur. Co. v. Transcon. Ins. Co.,

        19 Cal. Rptr. 3d 272, 278 (Ct. App. 2004) (concluding that a provision’s placement in an

        insurance policy supplied necessary context for policy interpretation); cf. Campbell v.

        Regents of the Univ. of Cal., 106 P.3d 976, 988 (Cal. 2005) (interpreting a section of the

        California Labor Code and finding that the immediately preceding statutory sections

        provided interpretive context).

               It’s also informative that the cooperation language at issue arises out of a general

        liability insurance policy. Truck hasn’t cited a single decision by any court holding that

        such a policy’s cooperation provision encompassed an insured’s conduct in proposing a

        reorganization plan in a bankruptcy proceeding. Indeed, when pressed on this point at oral

        argument, Truck’s counsel conceded that the provision here is a “standard provision that

        so far as I’m aware has never been [alleged] to apply in a circumstance like this.” Oral

        Argument      at   5:36–7:01,        https://www.ca4.uscourts.gov/OAarchive/mp3/21-1858-

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        20221025.mp3. Absent cognizable evidence to the contrary, which is not present here, we

        cannot conclude that the policy provision at issue has the broad reach that Truck posits.

        See Admiral Ins. Co. v. Grace Indus., Inc., 409 B.R. 275, 283 (E.D.N.Y. 2009) (holding

        that a similar cooperation clause required the debtor-insured only to assist its insurer “in

        the ultimate disposition of the actual claims, not to take on [its insurer as] a partner” in its

        own bankruptcy proceeding).

               Considering both the immediate and broader context, we have little doubt that an

        ordinary reader would understand that any activities required under the assistance-and-

        cooperation clause are those that the parties intended the Debtors to perform in assisting

        Truck in the defense against individual claims triggering coverage under the policies. The

        Debtors could not have reasonably expected otherwise when they purchased those policies.

        And nothing in the Plan purports to alter the presentation of a claim on the merits in tort-

        system litigation on the part of the claimants, the Debtors, or Truck.

               We therefore agree with the district court that the Debtors did not breach their

        assistance-and-cooperation obligations under the Truck policies by proffering a

        reorganization plan that lacked Truck’s desired fraud-prevention measures. We likewise

        agree that the Debtors did not breach the implied covenant of good faith and fair dealing

        as that claim is premised on the same conduct just discussed. See McKnight v. Torres, 563

        F.3d 890, 893 (9th Cir. 2009) (stating that California’s implied covenant of good faith and

        fair dealing “is limited to assuring compliance with the express terms of the contract, and

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        cannot be extended to create obligations not contemplated by the contract” (quoting Spinks

        v. Equity Residential Briarwood Apartments, 90 Cal. Rptr. 3d 453, 477 (Ct. App. 2009))). 8

               Given these conclusions, we reject Truck’s assertion that the Plan Finding alters

        Truck’s policy rights. Simply put, those alleged rights never existed under the policies. As

        a result, the Plan Finding, which merely resolved a confirmation objection by Truck (an

        objection, we note, that would not exist independent of the bankruptcy proceeding), does

        not pose an obstacle to insurance neutrality. 9

                                                      ii.

               Truck’s second argument—that the Plan is not insurance neutral because it

        facilitates fraudulent claims against Truck in the tort system—fares no better. The basis for

               8
                 Truck argues that it is entitled to have a jury decide these issues. We disagree. As
        stated above, whether the Debtors’ conduct in bankruptcy violated the Truck policies’
        assistance-and-cooperation provision turns not on any disputed fact but on the correct
        interpretation of the unambiguous policy provision, a pure question of law. See MacKinnon
        v. Truck Ins. Exch., 73 P.3d 1205, 1212 (Cal. 2003).
               9
                  Truck suggests that, in adopting the bankruptcy court’s recommendation to
        confirm the Plan, the district court overstepped its bounds by giving preclusive effect to
        the Plan Finding, thereby stripping Truck of a critical coverage defense in the tort system.
        But that argument assumes that such a defense is available under the Truck policies. And
        as explained above, it isn’t as to the Debtors’ conduct in preparing and presenting the Plan
        for confirmation. More to the point, the district court could not have confirmed the Plan
        unless the Plan Finding was prospectively binding on Truck given that the assignment of
        the Debtors’ coverage rights under the Truck policies is essential to the trust’s viability and
        thus to the overall success of the Plan. Permitting Truck to later raise the Debtors’
        bankruptcy conduct as a coverage defense in individual suits across the country would
        defeat the reorganization’s entire purpose and create inequitable results for claimants. The
        district court thus acted well within its authority in giving preclusive effect to the Plan
        Finding to avoid such an outcome. See 11 U.S.C. § 105(a) (empowering a court in
        bankruptcy to “issue any order, process, or judgment that is necessary or appropriate to
        carry out the provisions” of the Bankruptcy Code).

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        this claim is the Plan’s lack of fraud-prevention measures for insured claims that are to be

        resolved in the tort system. But what Truck fails to acknowledge is that it was not entitled

        to those measures before the bankruptcy proceeding. To the contrary, the Truck policies

        specifically obligate Truck to “[i]nvestigate and defend any claim or suit against the

        [Debtors] . . . even if such claim or suit is groundless, false or fraudulent.” J.A. 792

        (emphasis added). By not instituting Truck’s desired anti-fraud measures, therefore, the

        Plan in no way alters Truck’s pre-bankruptcy “quantum of liability,” Glob. Indus. Techs.,

        645 F.3d at 212; it merely retains Truck’s decades-old pre-petition coverage obligations

        (and defenses). That the Plan doesn’t instead seek to now limit Truck’s potential liability

        exposure in the tort system provides no basis to conclude that the Plan isn’t insurance

        neutral. To hold otherwise would expand the Debtors’ obligations under the policies and

        grant Truck broad license to dictate the terms of the Debtors’ own bankruptcy

        reorganization. We do not approve such a result.

                                                    ****

               Because the Plan does not impair Truck’s policy rights or otherwise alter Truck’s

        quantum of liability but simply maintains Truck in its pre-petition position with all its

        coverage defenses intact, the Plan is insurance neutral. Accordingly, we hold that Truck,

        in its capacity as an insurer, is not a party in interest under § 1109(b) and therefore lacks

        standing to challenge the Plan in that capacity.

                                                       B.

               Aside from its status as the Debtors’ insurer, Truck argues that it is a party in interest

        with standing to challenge the Plan because it is (or at least was prior to confirmation of

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        the Plan) one of the Debtors’ creditors. As set out above, § 1109(b) states that a party in

        interest, including “a creditor,” may raise and be heard on “any issue” in a Chapter 11 case.

        11 U.S.C. § 1109(b). And because it is “a creditor,” Truck says that the statute confers on

        it an unrestricted right to raise and be heard on “any issue,” regardless of whether that issue

        impacts it in any way. In Truck’s view, therefore, whether the Plan was proposed in good

        faith under 11 U.S.C. § 1129(a)(3) and whether the trust satisfies § 524(g)’s requirements

        are issues that Truck can challenge regardless of any nexus between those issues and

        Truck’s legally protected interests.

               The Debtors disagree. Pointing to the Seventh Circuit’s decision in James Wilson

        Associates, the Debtors insist that § 1109(b) does not grant an entity standing to object to

        aspects of a reorganization plan that do not affect its legally protected interests. See James

        Wilson Assocs., 965 F.2d at 169 (“We think all [§ 1109(b)] means is that anyone who has

        a legally protected interest that could be affected by a bankruptcy proceeding is entitled to

        assert that interest with respect to any issue to which it pertains.”). To that end, the Debtors

        argue that because Truck’s general unsecured claim is fully satisfied under the Plan,

        Truck’s status as a creditor is insufficient to satisfy § 1109(b)’s party-in-interest

        requirement.

               But we need not decide this issue because, even if its claim is consistent with the

        text of § 1109(b), Truck still must have Article III standing to press its objections. See

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        Thorpe Insulation Co., 677 F.3d at 887; Glob. Indus. Techs., 645 F.3d at 210. 10 And Truck

        does not raise any objections relating to its interests as a creditor, which is no surprise given

        that its only claim is fully satisfied under the Plan. Rather, Truck’s objections either relate

        to its interests as an insurer or don’t implicate its interests at all, such as the Plan’s good-

        faith basis and the trust’s compliance with § 524(g). In these circumstances, we fail to see

        how Truck has alleged any injury in fact as a creditor—and an unimpaired one at that—

        giving it Article III standing to object to aspects of a reorganization plan that in no way

        relate to its status as a creditor but instead implicate only the rights of third parties (who

        actually support the Plan). See Warth v. Seldin, 422 U.S. 490, 499 (1975) (stating that to

        establish Article III standing, a party “generally must assert his own legal rights and

        interests, and cannot rest his claim to relief on the legal rights or interests of third parties”).

                                                        C.

               In sum, as an insurer, Truck fails to show that the Plan impairs its contractual rights

        or otherwise expands its potential liability under the subject insurance policies, so it is not

        a party in interest under § 1109(b) with standing to challenge the Plan in that capacity.

        Similarly, as a creditor, Truck objects to parts of the Plan that implicate only the rights of

               10
                  We recognize that courts are split on the interplay of Article III and § 1109(b).
        Compare Glob. Indus. Techs., 645 F.3d at 211 (observing that “Article III standing and
        standing under the Bankruptcy Code are effectively coextensive”), with Tower Park
        Props., 803 F.3d at 457 n.6 (declining to “collapse the § 1109(b) requirements into Article
        III standing”). But we need not choose a side here. Whether or not Article III standing is
        coextensive with § 1109(b) standing, Article III standing is still required in every case. See
        Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992) (“[T]he core component of standing is
        an essential and unchanging part of the case-or-controversy requirement of Article III.”).

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        third parties, which fails to allege an injury in fact sufficient to confer Article III standing.

        Accordingly, none of Truck’s objections to the Plan can survive.

                                                      IV.

               For these reasons, we affirm the district court’s judgment.

                                                                                           AFFIRMED

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