Bankruptcy Bullets – Owens Corning

Wright v. Owens Corning, No. 09-1567 (W.D. Pa.)

  • On March 21, 2011, District Court Judge Joy Flowers Conti granted Owens Corning’s motion for summary judgment in a class action lawsuit filed by two plaintiffs with respect to separate warranty claims discharged pursuant to Owens Corning’s plan of reorganization.  The plaintiffs’ claims arose from shingles manufactured by Owens Corning and purchased by the first plaintiff prior to Owens Corning’s bankruptcy filing and by the second plaintiff after the bankruptcy filing but prior to confirmation of Owens Corning’s plan.
  • In holding that the plaintiffs’ claims were discharged by the confirmed plan, the District Court found that a claim arises when an individual is exposed prepetition to a product giving rise to an injury that underlies a “right to payment” under the Bankruptcy Code.  This ruling built off the Third Circuit’s recent ruling in Jeld-Wen, Inc. v. Van Brunt (In re Grossman’s), 607 F.3d 114 (3d Cir. 2010).
  • The first plaintiff had purchased and installed the shingles prior to the petition date.  The Court held that the plaintiff had a prepetition claim regardless of whether the harm occurred post-confirmation.  Whether a claimant is aware of the defect until the injury manifests itself is “irrelevant under the Grossman’s standard.”  Accordingly, the Court found that the first plaintiff’s claims were discharged pursuant to Owens Corning’s plan.
  • The second plaintiff’s claim arose at the time the shingles were purchased and installed, post-petition date but prior to confirmation of Owens Corning’s plan.  The Court held that the plan also discharged the second plaintiff’s postpetition claim because the Grossman’s test was not limited to prepetition relationships and the focal point of claim analysis had shifted from the petition date to the confirmation date so as to encompass injuries occurring postpetition but pre-confirmation.
  • The Court also determined that advertisement in three national newspapers and 250 local newspapers sufficed to provide unknown claimants like the plaintiffs with adequate notice.
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