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Travelers Opinion

Travelers Opinion

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Published by melaniel_co

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Published by: melaniel_co on Mar 05, 2012
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UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK
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 IN RE JOHNS-MANVILLE CORPORATION, ET AL.,Debtors.THE TRAVELERS INDEMNITY COMPANY ANDTRAVELERS CASUALTY AND SURETYCOMPANY (F/K/A AETNA CASUALTY ANDSURETY COMPANY), Appellants,- against -STATUTORY AND HAWAII DIRECT ACTIONSETTLEMENT COUNSEL AND COMMON LAWSETTLEMENT COUNSEL, Appellees.
 ──────────────────────────────────── 
 11 Civ. 1312 (JGK)11 Civ. 1329 (JGK)OPINION AND ORDER 
 The appellants, Travelers Indemnity Company and TravelersCasualty and Surety Company (“Travelers”), appeal from a finaljudgment of the United States Bankruptcy Court for the SouthernDistrict of New York (Lifland, J.), dated January 20, 2011,requiring Travelers to pay over $500 million to certain asbestosplaintiffs that had filed direct actions against Travelers. TheJudgment sought to enforce three settlement agreements that wereexecuted by the parties in 2004. Because a condition precedentin the settlement agreements was not satisfied, it was error torequire Travelers to make the settlement payments. To thatextent, therefore, the judgment must be reversed.
Case 1:11-cv-01312-JGK Document 47 Filed 03/01/12 Page 1 of 32
 
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I.
This appeal is the latest chapter in a long-runninglitigation involving Johns-Manville Corporation (“Manville”),Travelers, and asbestos claimants. The history of thatlitigation is recounted here only to the extent necessary tounderstand the current appeal.
 A.
From the 1920s until the 1970s, Manville was the largestmanufacturer of asbestos-containing products and the largestsupplier of raw asbestos in the United States. In re Johns-Manville Corp. (“Manville I”), Nos. 82 B 11656, 82 B 11657, 82 B11660, 82 B 11661, 82 B 11665, 82 B 11673, 82 B 11675, 82 B11676, 2004 WL 1876046, *2, ¶ 1 (Bankr. S.D.N.Y. Aug. 17, 2004).Travelers was Manville’s primary insurer from 1947 through 1976,providing comprehensive general liability coverage and otherinsurance policies. Id. at *5, 12. In 1982, faced withoverwhelming litigation stemming from the health problemsassociated with asbestos, Manville filed a voluntary petitionfor reorganization under chapter 11 of the United StatesBankruptcy Code, 11 U.S.C. § 1101 et seq. In re Johns-ManvilleCorp. (“Manville II”), 340 B.R. 49, 54 (S.D.N.Y. 2006). Soonafter Manville filed for bankruptcy, Travelers and other
Case 1:11-cv-01312-JGK Document 47 Filed 03/01/12 Page 2 of 32
 
3Manville insurers became enmeshed in so-called “direct action”suits by asbestos plaintiffs, which sought to recover directlyagainst insurers based on those insurers’ relationships withManville (“Direct Action Suits”). Id. at 55. There were also aseries of contribution claims, cross claims, and indemnityclaims between and among many of the companies that had insuredManville over the years. Id. Travelers and other insurers werealso embroiled in a contentious coverage dispute with Manville.Id.Ultimately, Travelers and other insurers entered into asettlement agreement with Manville. Pursuant to this agreement,Travelers agreed to contribute nearly $80 million to thebankruptcy estate in exchange for a complete release forTravelers of liabilities that were related to or based onManville and an injunction that channeled all claims related topolicy claims to the Manville Personal Injury Settlement Trust(“Manville Trust”). Manville I, 2004 WL 1876046, at *15, ¶¶ 58,61. After considering objections to this settlement and holdinga series of hearings, the Bankruptcy Court approved theagreement and entered two orders intended “to fully and finallyextricate Travelers from the Manville morass” (“the 1986
Case 1:11-cv-01312-JGK Document 47 Filed 03/01/12 Page 3 of 32

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