Court Ruling

The Delaware Court of Chancery recently took a rare foray into the world of asbestos litigation after it was asked to appoint a receiver to distribute the remaining reserves from casualty insurance policies issued to Krafft-Murphy Company, Inc. (“Krafft-Murphy”) to plaintiffs who allege injury from asbestos-containing products used by Krafft-Murphy.  The Chancery Court, in an opinion dated February 4, 2013 (pdf download available here), concluded that Krafft-Murphy was no longer amendable to suit, as it had been dissolved in 1999.  Consequently, there was no need to appoint a receiver because there were no assets to distribute, as the insurance reserves were not assets of the corporation.  A more detailed summary of the case background and opinion are below.

Factual Background

Krafft-Murphy was incorporated in Delaware in 1952, and performed plastering and insulating services in Maryland, Virginia, and Washington, D.C.  It is alleged that Krafft-Murphy workers used Sprayed Limpet Asbestos as part of their insulating work.  Krafft-Murphy was first a defendant in asbestos personal injury lawsuits in approximately 1989.  Three years later, Krafft-Murphy ceased operations and, in 1999, the company filed a certificate of dissolution, but did not formally adopt a plan of dissolution.  Notwithstanding the fact that Krafft-Murphy has been dissolved, it allegedly still has insurance reserves that could provide payment in the event of a judgment against Krafft-Murphy.   

The Petition for a Receiver

In July 2010, Krafft-Murphy moved to dismiss asbestos personal injury cases pending against it in Maryland on the grounds that it was no longer a legal person pursuant to Delaware law, and, therefore, not amenable to suit.  In response, counsel for plaintiffs in those cases petitioned the Delaware Court of Chancery to appoint a receiver for the purpose of distributing Krafft-Murphy’s unpaid insurance reserves to the current and future claimants against Krafft-Murphy.  The petitioners asserted that the remaining insurance reserves were undistributed assets of Krafft-Murphy and argued that the Delaware Code empowered the Court of Chancery to appoint a receiver for the purpose of distributing those assets. 

Krafft-Murphy opposed the petition on the grounds that unpaid insurance reserves are only an asset of an insured once there has been a judgment against the insured.  Due to the fact that Krafft-Murphy was dissolved and is no longer amendable to suit, there can be no judgment against Krafft-Murphy.  Thus, the insurance reserves are not an asset of the company.

The Chancery Court’s Opinion

The Court agreed with Krafft-Murphy that insurance reserves become an asset of the insured only if and when that insured becomes liable to a third party.  The Court further concluded that Krafft-Murphy was not subject to liability for claims which arose more than 10 years after its dissolution.  As such, the insurance policies do not represent an asset to the corporation with respect to those claims.  Pursuant to Delaware law, the Court held that a dissolved corporation’s liability for claims extends up to 10 years from the date of dissolution.  The Court’s conclusion was based on sections of the Delaware Code that provide

Continue Reading Free and Clear: Dissolved Delaware Corporation Deemed Not Liable for Asbestos-Related Liabilities More than 10 Years After Dissolution

Court RulingOn July 27, 2012, a jury in the matter of Michael Galliher v. American Optical Corp., et al., an asbestos personal injury lawsuit pending in the Superior Court of the State of Delaware, awarded over $2.8 million to the surviving wife and the estate of Michael Galliher.  The jury found the sole defendant at trial, R.T. Vanderbilt (“RTV”), negligent for failing to adequately warn of the hazards of its industrial talc product that was used at Michael Galliher’s workplace.  The $2.8 million verdict is the largest jury award in an asbestos personal injury lawsuit in Delaware in the past decade and well over the $1.7 million in total awarded to the plaintiffs in November 2010 in the consolidated trials of the Elizabeth Henderson and Bruce Henderson matters.

A summary of the Michael Galliher matter is provided below.

Background Facts:

In August of 2010, Michael Galliher was diagnosed with malignant pleural mesothelioma.  He died just a few months later on February 3, 2011 at the age of 62.  He was survived by a wife of nearly 35 years, a son, and a step-son.  From 1966 until the early 2000s, Mr. Galliher worked at a Borg Warner facility in Mansfield, Ohio that manufactured bathroom fixtures, such as toilets and sinks.[1]  The worked at the Borg Warner facility for the majority of his working life and, aside from a few brake changes and some minor home renovation work, all of his known asbestos exposure occurred there.

Mr. Galliher worked at a number of different locations in the Borg Warner facility.  Most important for the purposes of the case was his time in the cast area, where molds were used to form the bathroom fixtures.  Plaintiffs alleged that talc was applied to the molds in the cast area so that mold could be easily removed from the finished bathroom fixture once it had set.  Plaintiffs also alleged that talc was used in an area of the facility where the glaze was applied to the finished products, called the slip area.  Although Mr. Galliher never personally worked in the slip house, the plaintiff alleged that talc dust from the slip area blew into areas of the plant where Mr. Galliher was working.

Plaintiffs’ Case:

Plaintiffs alleged that industrial talc from RTV’s Gouverneur, New York mine was used at the Borg Warner facility and that Mr. Galliher was exposed to asbestos or asbestiform bodies in that talc, which caused his mesothelioma.  Plaintiffs alleged that the talc that RTV mined in New York and supplied to the Borg Warner facility was a fibrous talc, not a “platy” talc as is used in baby powder, and that the fibrous talc was contaminated with other minerals, such as tremolite and anthophyllite.

A number of experts—both medical and mineralogical—testified on behalf of Plaintiffs.  A fiber digestion analysis was performed on Mr. Galliher’s lung tissue after his death and several of Plaintiffs’ experts, including Dr. Jerrold Abraham, Dr. James Millette, and Sean Fitzgerald (a geologist), reviewed the results of
Continue Reading Verdict Alert: Delaware jury awards $2.8 million to surviving wife and estate of a 62 year-old deceased man with mesothelioma in a talc case

Navy ShipAs has been discussed on this blog, a number of Courts—including the Eastern District of Pennsylvania and the DE Maritime—have recently held that maritime law may apply to claims brought by former Navy sailors who allege exposure to asbestos while performing maintenance work on ships while at sea.  Now, the Supreme Court of Virginia, in John Crane, Inc. v. Hardick, has held that parties bringing such claims under maritime law on behalf of deceased Navy sailors may be limited in the damages they can recover.  In the March 2, 2012 opinion, available here, the Court held that a Virginia trial court erred by allowing a jury to award non-pecuniary damages to the widow of a former Navy sailor who died as a result of mesothelioma.  A summary of the case follows.

Factual Background:

Robert Hardick served in the Navy from 1957 to 1976 as a machinery repairman aboard various ships.  He allegedly worked with asbestos-containing gaskets and packing products used in connection with valves, pumps, and other equipment on the ships.  Mr. Hardick performed work on ships while they were in shipyards in territorial waters, and also worked on the ships while they were underway at sea, such as during several trips to Guantanamo Bay, Cuba, and during a 13-month cruise to the Mediterranean.

The Case and Verdict:

In 2007, Mr. Hardick was diagnosed with mesothelioma and filed suit against a number of product and equipment manufacturers, including John Crane.  Mr. Hardick died in 2009 during the pendency of his action, which was revived as a wrongful death claim by his wife, who is also the administratrix of his estate.  The case was tried before a jury, which returned a verdict for the plaintiff in the amount $5,977,482.[1]  The verdict consisted of:

  1. $2 million for Mr. Hardick’s pain and suffering;
  2. $1.15 million for Mrs. Hardick’s loss of society;
  3. $2.5 million for Mrs. Hardick’s expected loss of Mr. Hardick’s income; and
  4. $327,482 for funeral and medical expenses.

After the verdict, John Crane filed a motion arguing, among other things, that the non-pecuniary portion of the verdict should be vacated.  At issue were the $2 million for Mr. Hardick’s pain and suffering and $1.15 million for Mrs. Hardick’s loss of society.  The trial court denied the motion, a decision that was appealed to the Supreme Court of Virginia and overturned.

The Virginia Supreme Court’s Opinion:

The Court made two rulings in its decision, which are best understood by examining the second ruling first.  The Court concluded its opinion by holding that in wrongful death actions brought under maritime law, the estate of a seaman is limited to recovery of pecuniary losses, relying on the U.S. Supreme Court’s holding in Miles v. Apex Marine Corp., 498 U.S. 19 (1990).  The Court rejected Mrs. Hardick’s argument that non-pecuniary losses were recoverable under a “common law” or general maritime law cause of action, even though non-pecuniary damages may be barred under either the Death on the High Seas Act (“DOHSA”) or

Continue Reading John Crane v. Hardick: No Non-Pecuniary Damages for the Estate of a Former Navy Sailor

Co-authored by Brian Gross

Navy fighter ship Choice of law analyses can, at times, be complicated affairs.  That is particularly true in asbestos cases in which a plaintiff alleges exposure to numerous asbestos-containing products in multiple states over a prolonged period of years.  An additional layer of complexity is added when some or all of the plaintiff’s allegations relate to asbestos exposure on United States Navy ships.  The question of whether maritime law should apply in such instances has perplexed both state and federal courts for years – sometimes resulting in inconsistent decisions.

Recognizing the history of conflicting case law, Judge Eduardo Robreno – who currently presides over the federal asbestos MDL docket – recently brought some clarity to the maritime law question in a lengthy, 30-page opinion.  See Conner v. Alfa Laval, Inc., 2011 WL 3101810 (E.D. Pa.).  In Conner, Judge Robreno concluded that maritime law will apply to the claims of sea-based Navy servicemen where the allegedly defective product was produced for use on a vessel, but that maritime law will not apply to the claims of predominantly land-based Navy work, even if the allegedly defective product was produced for use on a vessel.  A detailed summary of the decision follows.

Continue Reading Judge’s Decision Brings Much Needed Clarity On The Issue of Maritime Jurisdiction in Asbestos Exposure Cases.