Chubb Permitted to Sue Travelers in Manville Asbestos Claim

The Second Circuit Court of Appeals has held that Chubb was denied its due process in a claim flowing from the Manville bankruptcy that was filed in 1982. In a long and convoluted judicial history, Chubb was seeking reimbursement from Travelers, its insured, for lack of notice of a bankruptcy settlement years before. As a result of that settlement, to which Chubb was not a party, Chubb was sued by a new group of plaintiffs in 2004 as a result of Travelers malfeasance in the asbestos conspiracy.

While denying the asbestos personal injury claimants from seeking recovery, the Court allowed Chubb to proceed with its claim.

"We further hold that Chubb was not adequately represented in the proceedings that lead to the bankruptcy court's approval of the 1984 Insurance Settlement Agreement and the Manville Plan, and that it did not receive adequate notice of the 1986 Orders. Accordingly, both the bankruptcy court and the district court erred by rejecting Chubb's due process argument. Chubb is therefore not bound by the terms of the 1986 Orders. Consequently, it may attack the Orders collaterally as jurisdictionally void. And, as we held in Manville III, that attack is meritorious."

In re Johns-Manville Corp., --- F.3d ----, 2010 WL 1007832, C.A.2 (N.Y.),2010., March 22, 2010

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