Hearing set in Garlock's fraud case against asbestos attorneys
CHARLOTTE, N.C. (Legal Newsline) - A bankruptcy judge has scheduled an Oct. 11 hearing on asbestos claimants' motion to intervene in Garlock Sealing Technologies' accusation of fraud against asbestos attorneys.
Judge George Hodges scheduled the hearing Thursday. Written response or opposition to the motion to intervene, in which the Official Committee of Asbestos Personal Injury Claimants says it will support the asbestos attorneys, must be filed by Monday.
Garlock accuses the Houston law firm Williams Kherkher Hart Boundas of making inconsistent claims about the origin of a client's mesothelioma.
The claimants' committee says Garlock has attempted to make similar claims since its bankruptcy proceedings began in 2010.
"The fraud allegations that Garlock... raise(s) here clearly have bearing on the issues being litigated in the proceeding to estimate Garlock's asbestos liabilities in the aggregate," the committee's motion says.
"Such allegations are part and parcel of Garlock's larger objectives in the estimation case to trump its settlement history, to develop a new way of valuing its asbestos liability, to oust the non-bankruptcy courts that typically administer the tort laws, and to come out smelling like a rose in comparison to the $1.8 billion it paid before bankruptcy for the defense and payment of asbestos claims..."
Garlock is one of more than 60 asbestos defendants to have created a bankruptcy trust. Injured individuals submit claims to the trusts for compensation, but file lawsuits against still-solvent defendants.
Williams Kherkher sued Garlock in 2008 in a Texas state court, alleging that Phillips' illness was caused by a rare type of asbestos (crocidolite) that came solely from Garlock's products, the company claims, at the same time it was pursuing claims against a manufacturer of products that contained the same type of asbestos.
Garlock says it was induced to enter into a far larger settlement than it would have paid. In Texas, juries can allocate a percentage of liability to responsible third parties.
Phillips worked at Triplex, a company that sold parts that contained asbestos, from 1966-68, but no records still exist detailing the company's inventory then.
The company claims the firm could have asserted Johns-Manville's asbestos-containing gaskets were to blame, but Johns-Manville had already filed for bankruptcy. More than 90 companies have declared bankruptcy from asbestos litigation, and more than 60 bankruptcy trusts have been established to pay out claims.
The claimants' committee is a group of plaintiffs with pending claims against Garlock. Attorney Trevor Swett of Caplin & Drysdale in Washington, D.C., filed the motion Sept. 6.
Co-counsel for the claimants' committee is Travis Moon of Moon Wright & Houston in Charlotte.
Garlock wrote in its complaint that Williams Kherkher attorneys told two different stories about its client's exposure history.
"(The lawyers) repeatedly signed responses to requests for information about their client's claim against Garlock by describing a history of exposure to asbestos products that did not include exposure to the products of (CAPCO)," Garlock's complaint says.
"The lawyers had reason to believe that telling two different stories would succeed because their ballots would not be readily available to the public and their bankruptcy trust claims, when made, would be kept confidential."
Garlock obtained copies of ballots cast on plans of reorganization in certain bankruptcy cases in April. They showed that a Williams Kherkher attorney certified that Phillips held a claim against ASARCO, the owner of CAPCO.
A second ballot cast in 2009 after a settlement with Garlock showed Phillips had a claim against CAPCO in which he listed a disease level that required evidence of exposure to products mined, manufacture, sold, supplied, produced, specified, selected, distributed or marketed by CAPCO or ASARCO, the company says.
"Garlock is informed and believes that the firm knew about Phillips' exposure to CAPCO products during 2008-09 when it responded to or supplemented Garlock's discovery," the complaint says, "and failed to disclose such exposure to Garlock because it would decrease the value of the claims against Garlock."
Garlock called the current status of bankruptcy claims and civil lawsuits "a two-track system that is rife with potential for abuse."
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