Evelyn Nye v. Bayer Cropscience, Inc. - Concurring/Dissenting ( 2011 )

IN THE SUPREME COURT OF TENNESSEE
AT KNOXVILLE
September 2, 2010 Session
EVELYN NYE v. BAYER CROPSCIENCE, INC. ET AL.
Appeal by Permission from the Court of Appeals, Eastern Section
Circuit Court for Hamilton County
No. 06C760 W. Neil Thomas, III, Judge
No. E2008-01596-SC-R11-CV - Filed June 7, 2011
J ANICE M. H OLDER, J., concurring in part and dissenting in part.
I concur in the majority’s conclusion that the learned intermediary doctrine is not
applicable to the facts of this case. I disagree, however, that Pittsburgh Corning Corporation
(“Pittsburgh Corning”) and Owens Corning Corporation (“Owens Corning”) were
unavailable for service of process and that North Brothers, Inc. (“North Brothers”) therefore
is subject to suit in strict liability pursuant to Tennessee Code Annotated section 29-28-106
(2000).
In September 2005, Hugh Todd Nye was diagnosed with mesothelioma, a disease that
results from exposure to asbestos. On May 15, 2006, Mr. Nye and his wife, Evelyn Nye,
(“the Nyes”) filed a complaint alleging that North Brothers was liable for injuries to Mr. Nye.
North Brothers sold, but did not manufacture, the asbestos products to which Mr. Nye was
exposed. The Nyes alleged that North Brothers was strictly liable for Mr. Nye’s injury.
Tennessee Code Annotated section 29-28-106(b) permits a seller to be held strictly liable for
a defective product manufactured by another if the manufacturer of that product is not
“subject to service of process . . . or has been judicially declared insolvent.” The trial court
found that all of the defendant manufacturers of the asbestos products, Johns Manville
Corporation (“Johns Manville”), Raybestos-Manhattan, Inc. (“Raybestos”), Owens Corning,
and Pittsburgh Corning, were unavailable for service of process and that North Brothers
therefore faced potential liability on strict liability grounds.
“The construction of a statute and its application to the facts of a case are questions
of law, which we review de novo.” Larsen-Ball v. Ball, 301 S.W.3d 228, 232 (Tenn. 2010).
Tennessee Code Annotated section 29-28-106(b) states that no product liability action based
on strict liability “shall be commenced or maintained against any seller . . . unless the
manufacturer . . . shall not be subject to service of process.” (emphasis added). The statute
specifically references the commencement of the action. This language requires us to
determine the status of the law and facts on the date the action was commenced. Cf.
Braswell v. AC and S, Inc., 105 S.W.3d 587, 589-90 (Tenn. Ct. App. 2002) (holding that a
claim made pursuant to Tennessee Code Annotated section 29-28-106 accrues and the statute
of limitations begins to run when the manufacturer declares bankruptcy). Whether the Nyes’
claim against North Brothers can be commenced or maintained pursuant to Tennessee Code
Annotated section 29-28-106(b) requires us to determine whether the Nyes could have
obtained service of process on the asbestos manufacturers on the date the Nyes commenced
their case.
On the date the Nyes filed their complaint, each of the manufacturers had filed for
bankruptcy. A petition for bankruptcy automatically stays proceedings against the debtor.
11 U.S.C. § 362(a) (2006). The automatic stay applies to claims1 determined to arise before
the debtor files for bankruptcy (“pre-petition claims”). Jeld-Wen, Inc. v. Van Brunt (In re
Grossman’s, Inc.), 607 F.3d 114, 122 (3d Cir. 2010) (en banc). Claims that arise after the
debtor petitions for bankruptcy (“post-petition claims”) are not subject to the automatic stay.
In particular, the automatic stay prevents service of process on a debtor in bankruptcy. 11
U.S.C. § 362(a)(1).2
The bankruptcy court has exclusive jurisdiction to determine the nature of the claims
and the extent of the automatic stay. Cf. Cathey v. Johns-Manville Sales Corp., 711 F.2d 60,
62 (6th Cir. 1983) (holding that the bankruptcy court has exclusive authority to grant relief
from a stay). Determination of whether the claims against the manufacturers were pre- or
post-petition, therefore, requires us to apply the test the presiding bankruptcy court would
have applied at the time the Nyes filed their complaint against North Brothers.
The bankruptcy cases of Owens Corning and Pittsburgh Corning were both filed in
the Third Circuit. In re Owens Corning, 419 F.3d 195, 201-02 (3d Cir. 2005); In re
Pittsburgh Corning Corp., 417 B.R. 289, 295 (Bankr. W.D. Pa. 2006). On the date the Nyes
filed their complaint against North Brothers, the Third Circuit followed the now-abandoned
1
A bankruptcy claim is a “right to payment, whether or not such right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured, or unsecured.” 11 U.S.C. § 101(5)(A) (2006).
2
11 U.S.C. § 362(a)(1) creates an automatic stay that prevents “the commencement or continuation,
including the issuance or employment of process . . . or other action . . . that was or could have been
commenced before the commencement of the case under this title, or to recover a claim against the debtor
that arose before the commencement of the case under this title.”
2
accrual test set forth in Avellino & Bienes v. M. Frenville Co. (In re M. Frenville), 744 F.2d
332 (3d Cir. 1984) overruled by In re Grossman’s, 607 F.3d at 121.
According to the Frenville test, a claim is post-petition if the cause of action accrues
according to the law of the forum state after the bankruptcy petition is filed. Frenville, 744
F.2d at 337. At the time the Nyes commenced their action, a bankruptcy court applying the
law of the Third Circuit to the Nyes’ claims against the manufacturers would look to the law
of the state of Tennessee to determine when the Nyes’ cause of action accrued. Tennessee
law dictates that in “creeping disease” cases, such as asbestos-related injuries, the cause of
action accrues with the diagnosis of the disease. See Wyatt v. A-Best Co., Inc., 910 S.W.2d
851, 856-57 (Tenn. 1995); see also Potts v. Celotex Corp., 796 S.W.2d 678, 683 (Tenn.
1990) (holding the plaintiff’s cause of action for mesothelioma did not accrue until the
condition was diagnosed or reasonably could have been diagnosed).
Mr. Nye was diagnosed with mesothelioma in September 2005. The cause of action,
and therefore the claim, accrued in 2005. Pittsburgh Corning filed for bankruptcy on April
16, 2000, and Owens Corning filed for bankruptcy on October 5, 2000. In re Pittsburgh
Corning, 417 B.R. at 295; In re Owens Corning, 419 F.3d at 201-02. According to the
Frenville test in effect at the time the Nyes commenced their action against North Brothers,
the Nyes’ claims against both Pittsburgh Corning and Owens Corning are post-petition. The
automatic stay did not apply because both bankruptcies were filed before the Nyes’ claim
accrued in September 2005. The Nyes therefore could have obtained service of process on
both Owens Corning and Pittsburgh Corning on the date they filed their complaint against
North Brothers.
The Third Circuit’s opinion in Grossman’s overruled Frenville on June 2, 2010. 607
F.3d at 121. The majority asserts that the new test adopted in Grossman’s to determine
whether a claim is pre- or post-petition must be applied retroactively. See Wright v. Owens
Corning, No. 09-1567, 2011WL 1085673, at *10 (W.D. Pa. Mar. 21, 2011) (memorandum
opinion).3 If the Grossman’s test is applied, the Nyes’ claim would be a pre-petition claim
and would be subject to the automatic stay. If the Grossman’s test had been applied by a
court on May 15, 2006, therefore, Pittsburgh Corning and Owens Corning would not be
available for service of process.
3
The majority also asserts that this court should not be obligated to follow the Frenville test because
it is “bad law.” I recognize that the Frenville test was widely disparaged. Even in the face of harsh criticism,
however, courts in the Third Circuit were obligated to follow the Frenville test as established precedent.
Jones v. Chemtron Corp., 212 F.3d 199, 206 (3d Cir. 2000) (“We are cognizant of the criticism the Frenville
decision has engendered, but it remains the law of this circuit.”) (footnote omitted). Although we may prefer
a different test, when we apply the law of the Third Circuit in a bankruptcy matter, we are obligated to follow
established Third Circuit precedent.
3
The majority concludes that a change in the substantive law in a foreign jurisdiction
should be retroactively applied to a procedural determination made pursuant to Tennessee
state law on the date the complaint was filed. As a result, the majority holds that a retroactive
application of the Grossman’s test today makes Pittsburgh Corning and Owens Corning
unavailable for service of process on May 15, 2006.
I disagree that the retroactive application of Grossman’s provides the result reached
by the majority. On the date the Nyes filed the complaint against North Brothers, the Nyes
could have served process on both Pittsburgh Corning and Owens Corning because the Third
Circuit followed the now-abandoned Frenville accrual test. Subsequent actions of the Third
Circuit Court of Appeals cannot make service of process unavailable retroactively. The
determinative issue before us is whether service of process was available against Pittsburgh
Corning and Owens Corning at the time the Nyes filed their complaint. The majority
conflates this issue with a second issue of whether the lawsuits against those manufacturers
would have been dismissed when the Third Circuit Court of Appeals subsequently overruled
Frenville. Whether actions commenced against Pittsburgh Corning and Owens Corning
would have been viable four years later when the Third Circuit Court of Appeals overruled
Frenville is not before us.
Moreover, the case before us differs from both Grossman’s and Wright. In those
cases, the plaintiffs obtained service of process on the defendants after bankruptcy plans had
been confirmed. See In re Grossman’s, 607 F.3d at 117; Wright, 2011 WL 1085673, at *1.
The issue before the Grossman’s and Wright courts was whether the plaintiffs’ claims were
pre-petition and had been discharged by the confirmation of the defendants’ bankruptcy
plans. See In re Grossman’s, 607 F.3d at 117; Wright, 2011 WL 1085673, at *1. The
Grossman’s and Wright courts did not retroactively invalidate service of process. Instead,
those courts ruled that the claims on which the lawsuits were based were subject to discharge
by the bankruptcy confirmation. In re Grossman’s, 607 F.3d at 127; Wright, 2011 WL
1085673, at *13.4
In contrast, the Nyes never attempted to serve process to commence lawsuits against
Pittsburgh Corning and Owens Corning although service of process could have been obtained
as to these manufacturers. Tennessee Code Annotated section 29-28-106(b) provides that
an action may be commenced against a non-manufacturing seller on strict liability grounds
when the manufacturer is not amenable to service of process. Having failed to serve these
4
The Wright court ruled that the plaintiff’s claims were discharged and granted the defendant’s
summary judgment motion. 2011 WL 1085673, at *13. The Grossman’s court ruled that the claims were
subject to discharge, but remanded the case to determine if discharge of the bankruptcy claims violated due
process. 607 F.3d at 127-28.
4
manufacturers, the Nyes now seek a ruling that service of process that had never been
attempted would have been invalid at the time the action was commenced.
I would hold that service of process could have been obtained against both Pittsburgh
Corning and Owens Corning on May 15, 2006. I agree with the majority, however, that
service of process was not available against both Johns Mansville and Raybestos by virtue
of the effect of the channeling injunctions included in the confirmation of their bankruptcy
plans.5
The trial court erred when it found that Pittsburgh Corning and Owens Corning were
not amenable to service of process. The trial court permitted the liability of North Brothers,
a seller, to be determined by the jury pursuant to Tennessee Code Annotated section
29-28-106(b). In addition, the trial court specifically declined to rule on the issue of whether
the manufacturers were insolvent, and the record does not contain sufficient evidence for us
to make this determination as to Owens Corning and Pittsburgh Corning. This Court has
previously remanded a case to the trial court to make a determination of whether the
manufacturer was insolvent for the purposes of Tennessee Code Annotated section
29-28-106. Baker v. Promark Prods. W., Inc., 692 S.W.2d 844, 849 (Tenn. 1985). I would
remand this case to the trial court for a determination as to the solvency of Pittsburgh
Corning and Owens Corning.
I am authorized to state that Justice Koch concurs in this opinion.
_________________________________
JANICE M. HOLDER, JUSTICE
5
The legislative intent of Tennessee Code Annotated section 29-28-106 was to provide a remedy for
an injured plaintiff “against whomever was most likely to compensate plaintiff for his or her injuries.”
Braswell, 105 S.W.3d at 589. The last legislative action on section 29-28-106 occurred in 1983, nearly a
decade before this Court adopted comparative fault in McIntyre v. Balentine, 833 S.W.2d 52 (Tenn. 1992).
Tennessee Code Annotated section 29-28-106 was enacted when joint and several liability among all
manufacturers applied, and the statute refers to “a manufacturer.” This Court has never addressed the issue
of the interrelationship between comparative fault and Tennessee Code Annotated section 29-28-106.
5