Editor’s note: This article is part of a series examining evidence submitted in Garlock Sealing Technologies’ bankruptcy proceeding that was recently unsealed as a result of Legal Newsline’s legal challenge.
CHARLOTTE, N.C. (Legal Newsline) – A verdict that was a source of pride for the asbestos firm Williams Kherkher was used against it during a defendant's ensuing bankruptcy proceeding.
In 2010, Garlock Sealing Technologies was assigned 45 percent of the fault by a Brownsville, Texas, jury in a case filed by Oscar Torres and his wife Dora.
The firm issued a press release to publicize the verdict, which included $1 million in past damages and $2 million for future damages.
However, while Garlock was attempting to prove that asbestos attorneys had been manipulating evidence to maximize recovery against it, it was revealed that Torres testified that he had never heard of the company Babcock & Wilcox.
Babcock & Wilcox is one of the dozens of companies that was forced to create a bankruptcy trust to compensate asbestos victims to resolve its liabilities.
One day before Torres testified he had never heard of the company, he had submitted a claim to Babcock & Wilcox’s trust.
“It was filed because a tolling provision for the Babcock & Wilcox trust was expiring,” Torres attorney Troy Chandler testified in a deposition during Garlock’s bankruptcy case.
“That would have allowed any plaintiff to get the benefit of the tolling provision without worrying about a statute of limitations being expired.
“Now, as it turned out, Mr. Torres didn’t need that protection. But out of an abundance of caution, the bankruptcy department filed and deferred the proof of claim on July 15, 2009.”
When asked if the claim was disclosed to Garlock during Torres’ lawsuit against the company, Chandler, who now practices at Chandler & McNulty testified that the lawyers working on the lawsuit did not know the claim was submitted.
The claim was submitted by the firm’s bankruptcy department, which was headed by Charles Finley.
Chandler said Finley reported to him, and then was asked if those reporting duties included telling him about bankruptcy trust claims he filed in cases in which the firm was representing a plaintiff.
Williams Kherkher’s attorney, Raymond Owens of Higgins & Owens, instructed Chandler not to answer, as it related to work product.
Later, Chandler said the claim was filed because Torres worked at a Union Carbide facility that held the possibility for a claim against Babcock & Wilcox because its boilers were used there, and that the firm was preserving his rights when it filed the deferred claim.
According to Garlock, and a ruling by bankruptcy Judge George Hodges, plaintiffs attorneys manipulated evidence in order to maximize settlements and verdicts in lawsuits against the company.
During a trial that determined how much money Garlock needed to put in a bankruptcy trust to compensate asbestos victims, the company was permitted full discovery into the cases of 15 plaintiffs.
What the company found showed that plaintiffs attorneys routinely delayed submitting claims to bankruptcy trusts while lawsuits against solvent defendants, like Garlock used to be, were pending.
This was done with the intention of pinning more blame on Garlock, the company said.
Hodges’ landmark 2014 ruling agreed with the company’s assertions, and he ordered the company to put $125 million in the trust – more than $1 billion less than plaintiffs attorneys had requested.
The Torres case was one of 15 into which Garlock was allowed full discovery. More discovery, which is currently being debated in Garlock's racketeering case against Belluck & Fox, would show more abuse, Hodges ruled.
Garlock appealed the Torres verdict to the Texas 13th District Court of Appeals in 2010, the same year its bankruptcy put a stay on the case.
The last activity occurred in March, when the court asked the two sides to file an advisory of whether the appeal should be reinstated or dismissed.
From Legal Newsline: Reach editor John O’Brien at email@example.com.