Trust payments reduce Philly asbestos award

John O'Brien Jan. 13, 2011, 12:15pm

PHILADELPHIA (Legal Newsline) - A Philadelphia judge says the current system of recovery for plaintiffs with asbestos claims can help them recover more than a jury determines they deserve.

Common Pleas Judge Stephen Levin expressed that viewpoint in a Dec. 22 opinion that reduced the amount a jury ordered Honeywell International pay to the family of a deceased brake mechanic. The $492,000 verdict was reduced by nearly $150,000 to reflect settlements the plaintiffs made with asbestos bankruptcy trusts.

Several dozen companies named in asbestos lawsuits have gone bankrupt, and trusts have been established to pay out asbestos claims.

According to Levin, it is possible for plaintiffs to recover from trusts without defendants in their civil lawsuits ever knowing.

"This has led to the potential of double recovery, as there has only been haphazard reporting, if at all by plaintiffs of funds received from bankruptcy trusts, despite recoveries also received at trial," Levin wrote.

In Philadelphia's Complex Litigation Center, asbestos trials contain two phases. The first asks the jury to determine the amount of damages the plaintiff is owed, and the second determines if the defendant is liable for those damages.

Levin wrote that bankrupt companies may not be placed on the verdict sheet, like settling defendants are. Bankruptcy trusts have more than $30 billion in assets.

"(T)he total recovery available to many plaintiffs exceeds the damage amount set by the jury during Phase I asbestos trials," he wrote.

"Here, the releases allow Honeywell, which was found liable at trial, to pursue contribution, but the trust releases stipulate that the plaintiffs hold the trusts harmless and indemnify them from liability."

Levin wrote that it would be a waste of time and resources for Honeywell to seek contribution from the trusts for an entire verdict because it would require the plaintiffs to return the trusts' funds so they could be given to Honeywell.

So Levin reduced the jury award.

"Moreover, such a procedure could further delay compensation for the plaintiffs," he wrote.

Plaintiffs attorneys wrote that no evidence was presented at trial as to asbestos exposure caused by the bankrupt companies.

"Plaintiffs cannot now come before this court and argue that there was no evidence of exposure to asbestos from said manufacturers' products presented at trial in order to effect a double recovery," he wrote. "Plaintiffs applied to the bankruptcy trusts based on the fundamental contention that they were liable for Plaintiffs' decedent's mesothelioma."

Bankruptcy law prevents the introduction of evidence against bankrupt manufacturers in civil trials.

So-called "double-dipping" from civil lawsuits and bankruptcy trusts has been a hot topic. In West Virginia last year, a judge's case management order ensured defendants receive proper credit when plaintiffs are paid by trusts.

The order was a product of negotiations related to legislation. That legislation was reintroduced this week for West Virginia's new session.

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