Court Opinion

ID: 990803
Source: CourtListenerOpinion
Date Created: 2013-07-03 23:27:07.28497+00
Date Added: 2024-06-11T09:12:31.261378
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

In Re: A. H. ROBINS COMPANY,
INCORPORATED,
Debtor.

C. F. ANDERSON COMPANY,
INCORPORATED,
Claimant-Appellant,
                                                               No. 96-1007
v.

DALKON SHIELD OTHER CLAIMANTS
TRUST,
Trust-Appellee.

DALKON SHIELD CLAIMANTS TRUST,
Amicus Curiae.

Appeal from the United States District Court
for the Eastern District of Virginia, at Richmond.
Robert R. Merhige, Jr., Senior District Judge.
(CA-85-1307-R)

Argued: September 26, 1996

Decided: November 12, 1996

Before RUSSELL and MICHAEL, Circuit Judges, and
MICHAEL, Senior United States District Judge for the
Western District of Virginia, sitting by designation.

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Affirmed by unpublished per curiam opinion.

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COUNSEL

ARGUED: William Ray Baldwin, III, HIRSCHLER, FLEISCHER,
WEINBERG, COX & ALLEN, Richmond, Virginia, for Appellant.
Orran Lee Brown, Sr., Richmond, Virginia, for Appellee. ON
BRIEF: Melody G. Foster, Richmond, Virginia, for Amicus Curiae.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

The district court and bankruptcy court, sitting together, disallowed
certain contingent and unliquidated claims that had been assumed by
one of the trusts created to effect A. H. Robins Company, Inc.'s (Rob-
ins') Plan of Reorganization.1 One of the claimants, C. F. Anderson
Company, Inc. (Anderson) appeals, and we affirm.

I.

This is another appeal in the case in which Robins (the Debtor)
went into Chapter 11 bankruptcy because of claims relating to the
Dalkon Shield device, a product manufactured by Robins. Claims
against Robins were divided into two categories pursuant to the Plan
of Reorganization affirmed by this court in In re A.H. Robins Com-
pany, Inc., 880 F.2d 694 (4th Cir.), cert. denied, 493 U.S. 959 (1989).
The Dalkon Shield Claimants Trust (Claimants Trust) handles all per-
sonal injury claims (that would have been asserted against Robins)
arising from the use of the Dalkon Shield. The Dalkon Shield Other
_________________________________________________________________
1 When the district court and bankruptcy court sat together or entered
joint orders, we refer to them as "the district court" or "the court."

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Claimants Trust (Other Claimants Trust or Trust), the appellee in this
case, handles most other claims, as we explain next. 2

Anderson, a Dalkon Shield distributor, was a co-defendant with
Robins in various cases pending when Robins filed for Chapter 11
reorganization. Anderson thus held a contingent claim against Robins
for indemnification or contribution. The Sixth Amended and Restated
Plan of Reorganization (the Plan) established the Other Claimants
Trust for the purpose of assuming and processing third-party claims
for contribution or indemnity by doctors, hospitals, health care profes-
sionals, corporate employees, and suppliers and distributors like
Anderson. See Plan ¶ 1.63 (defining"Other Claimant").3 Anderson's
claim was assumed by the Other Claimants Trust when the Plan was
confirmed on July 26, 1988.

On August 29, 1990, the trustees filed their First Omnibus Objec-
tion to the contingent and unliquidated claims assumed by the Other
Claimants Trust on the grounds that § 502(e)(1)(B) of the Bankruptcy
Code requires disallowance of contingent claims. See First Omnibus
Objection to Dalkon Shield Other Claims ¶ 8 (asserting that "[to]
date, no entity with a Contingent Claim has informed the Trust of
Facts supporting an actual, noncontingent claim for contribution,
reimbursement or indemnification."). See also Other Claimants Trust
¶ 4.03(b)(iii) (stating that the trustees have the power to "compromise,
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2 There is also a third trust, which handles the claims of personal injury
claimants who missed the April 30, 1996, bar date.
3 Specifically, the Other Claimants Trust Agreement (Trust Agree-
ment), in Paragraph 2.02(b)(i), assumed a broad set of claims, including
all liabilities "present or future (including, without limitation, liabilities
and obligations for contribution to and indemnification of all Other
Claimants), whether liquidated or non-liquidated, contingent or non-
contingent, asserted or unasserted . . . ." This definition substantively
mirrors the definition of "Claim" in the Plan, which incorporates the defi-
nition of claim in the Bankruptcy Code. The Bankruptcy Code defines
claim as a "right to payment, whether or not such right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unma-
tured, disputed, undisputed, legal, equitable, secured, or unsecured . . . ."
11 U.S.C. § 101(5). The Other Claimants Trust thus assumed all poten-
tial third-party claims against Robins.

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adjust, arbitrate, sue on or defend, abandon, or otherwise deal with
and settle all Dalkon Shield Other Claims . . . ."). The district court
overruled the objection without prejudice on March 5, 1991. On Janu-
ary 30, 1992, the bankruptcy court entered an order allowing the Trust
to renew its objection. The bankruptcy court held a hearing on the
renewed objection on March 2, 1992, and took the matter under
advisement.

On September 15, 1995, the district court held another hearing on
the pending objection by the Trust. As to Anderson in particular, the
trustees reemphasized that Anderson's claim remains contingent and
that no one is in fact threatening Dalkon Shield-related legal action
against Anderson. This time, the court agreed with the trustees and on
November 28, 1995, entered an order disallowing the claims on the
grounds that "the claims referenced in [the objections] are claims for
reimbursement or contributions that presently are contingent and
unliquidated and therefore are subject to disallowance at the time of
objection pursuant to 11 U.S.C. § 502(e)(1)(B)." Anderson appeals.

II.

The main issue is whether the district court has the power to disal-
low Anderson's claim on the grounds asserted by the trustees. The
trustees press for disallowance because Anderson's claim has
remained contingent for the entire eight-year existence of the Trust,
and no legal action is being threatened against Anderson. We believe
that the district court has the power to disallow the claim.

Under the Plan the district court retained jurisdiction over a wide
variety of matters. Paragraph 8.05 of the Plan states:

          Notwithstanding entry of the Confirmation Order . . . the
          Court will retain jurisdiction . . . (c) to resolve controversies
          and disputes regarding interpretation and implementation of
          the Plan, the Trust Agreements, . . . and amendments of the
          Trust Agreements . . . (d) to enter orders in aid of the Plan
          [and] the Trust Agreements . . . .

The court's express retention of jurisdiction is entirely appropriate.
See Goodman v. Phillip R. Curtis Enterprises, 809 F.2d 228, 232 (4th

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Cir. 1987) (noting that 11 U.S.C. § 1142(a) grants authority for plan
implementation); In re Dilbert's Quality Supermarkets, Inc., 268 F.2d
922, 924 (2d Cir. 1966) (holding that court did not abuse its discretion
by passing on validity of lease and mortgage claims after confirma-
tion date under retained jurisdiction). See generally 5 Collier on
Bankruptcy ¶ 1142.01 at 1142-5 (15th ed. 1986) (describing broad
powers of court under retained jurisdiction).

Anderson argues that, even though the district court has continuing
jurisdiction, it erred in relying on § 502(e)(1)(B) to disallow Ander-
son's claim.4 Anderson says that§ 502(e) drops out of the picture
because the Plan and Trust Agreement require the Trust to assume
contingent and unliquidated claims.5

Indeed, the Plan did intend for the Other Claimants Trust to assume
contingent claims despite § 502(e). The Trust Agreement gives the
trustees the power to pay such claims, once they become fixed, if the
trustees or a court deems them valid. See Other Claimants Trust
Agreement ¶ 5.02(a). But nothing in the Plan or Trust Agreement pre-
vents the trustees from raising an objection to claims or prohibits the
district court from disallowing claims. Nor does anything in the Plan
or Trust Agreement limit the grounds on which the trustees or the
court may disallow claims. Therefore, we believe that under the broad
authority retained by the district court, it could rely on § 502(e) to dis-
allow claims.

We turn now to whether the district court was correct in disallow-
ing Anderson's claim at this juncture. Anderson wants continuing
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4 Section 502(e)(1) states:

          . . . the court shall disallow any claim for reimbursement or con-
          tribution of an entity that is liable with the debtor on, or has
          secured, the claim of a creditor, to the extent that--

          (B) such claim for reimbursement or contribution is contingent
          as of the time of allowance or disallowance of such claim for
          reimbursement or contribution . . . .

11 U.S.C. § 502(e)(1).
5 Paragraph 5.02 of the Plan incorporates the Other Claimants Trust
Agreement.

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protection throughout the life of the Trust, which could extend until
December 31, 2008. The trustees objected to Anderson's claim in
1990, two years after the Trust was established. The district court,
however, has been very cautious. Until very recently, the court
refused to disallow the claim, thus giving Anderson an extra five
years of protection in the event a claim against Anderson material-
ized. None did, and Anderson has offered no evidence to indicate that
any ever will. There is no longer any justification for keeping Ander-
son's contingent claim open. Accordingly, the court did not err in dis-
allowing Anderson's claim.

The order of the district court is affirmed.

AFFIRMED

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