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A nonprofit organization that acted as an agent for defendants in asbestos litigation cannot be held responsible for a portion of a settlement that one of the defendants refused to pay, the Superior Court has ruled. The corporate defendant argued that the organization, the Center for Claims Resolution, did not have the express authority to obligate it to pay the portion of liability CCR assigned to it in the underlying asbestos settlement. But the three-judge panel in Casey v. GAF Corp. looked to the language of the agreement between CCR and the corporate defendant, GAF Corp., and found that it clearly stipulated an agency relationship between the two. “According to the unambiguous language of the producer agreement, CCR had the express authority to settle the plaintiffs’ claims, CCR had the express authority to apportion liability among the member defendant corporations, and GAF, as a member during the time the instant case was settled, became responsible for payment of the settlement share and expenses allotted to it by CCR,” Superior Court Judge John T. Bender, the opinion author, said. The underlying case involved four consolidated cases brought by plaintiffs alleging asbestos-related injuries for themselves or their spouses against the defendants. The defendants were all members of CCR, a nonprofit organization that had acted as its members’ exclusive agent for evaluating and settling asbestos-related claims. CCR and its members were governed by a “producer agreement concerning the Center for Claims Resolution,” Bender said. Under the agreement, the members designated CCR sole agent in asbestos-related claims and authorized CCR to calculate and allocate the percentage share and costs of settlement attributed to each member, Bender said. CCR would receive funds from its members with an obligation to pay those funds to settling plaintiffs. GAF, now G-1 Holdings Inc., was a CCR member at the time the plaintiffs’ cases were settled. The remaining corporate defendants and the plaintiffs were the appellees in the instant case. CCR was not a party to the case, Bender said, but submitted an appellees’ brief on the appellees’ behalf. According to Bender, CCR negotiated a $480,000 settlement with the plaintiffs and the corporate defendants. The settlement agreement was confirmed in writing on Dec. 15, 1999. The plaintiffs also signed releases, he said, which absolved the corporate defendants, and sent them to CCR. CCR allocated the members’ shares, according to the agreement, and each member but GAF forwarded its share to CCR. CCR thereafter forwarded a check for $324,556 to the plaintiffs. The check was missing the $155,443 GAF had not paid, which CCR explained to the plaintiffs in a letter sent along with the check, Bender said. CCR said GAF refused to pay its portion of the settlement. CCR terminated GAF’s membership on the basis that it failed to pay. Under the agreement, Bender said, a corporation whose membership is terminated is still required to honor the obligations it incurred under its agreement while it was a member. The plaintiffs filed a motion to enforce settlement against GAF and CCR, requesting an order for payment from either entity. Montgomery County Common Pleas Judge William J. Furber ultimately entered judgment in the plaintiffs’ favor against GAF in the amount of $155,443 plus interest. GAF appealed, but in January 2001, it filed for bankruptcy, also filing a bankruptcy notice in the U.S. Bankruptcy Court for the District of New Jersey and an imposition of automatic stay with the Superior Court The plaintiffs followed with a motion in the New Jersey bankruptcy court for modification of the automatic stay so that the appeal could proceed in Superior Court. The bankruptcy judge granted the plaintiffs’ motion but further ordered that no execution on a bond or other enforcement action would be allowed without additional orders from the bankruptcy court. On appeal to the Superior Court, GAF argued that the trial court erred by ordering it to pay the missing settlement funds because CCR was actually entered into the settlement and was, therefore, responsible for payment. Bender said GAF did not argue that CCR was not authorized to enter into the settlement. But GAF did argue with CCR’s authority to obligate it to pay a portion of that settlement. Bender said that that issue was without merit, relying on the principles of agency law. “As the trial court recognized, the producer agreement created an actual agency relationship, with CCR as the agent and GAF and other member corporations as the principals,” Bender said. “Accordingly, CCR had the express authority to act in accordance with the terms of the producer agreement.” Bender cited specific language from the agreement, which said: “As sole agent, the center shall have exclusive authority and discretion to administer, evaluate, settle, pay or defend all asbestos-related claims.” That language conveyed to CCR the express authority to settle any claims against GAF that existed at the time it was a member corporation, Bender said. The language in the agreement also gave CCR the express authority to apportion liability among the members, he said, and the apparent authority to negotiate and enter into a settlement with the plaintiffs on behalf of the corporate defendants. Bender likened CCR’s relationship with GAF to the situation of a lawyer acting as an agent on behalf of a client to enter into a settlement with a third party. Because CCR’s agency relationship was established, Bender said, GAF also failed to established that CCR had any direct liability to the plaintiffs. “According to the plain language of Article VI of the producer agreement . . . the obligation to pay apportioned shares of liability lies with each member defendant corporation, not CCR,” Bender said. Bender also said it is a basic principle of agency law that an agent is not personally liable in a contract between the principal and a third party unless otherwise stated in the contract. (Copies of the 18-page opinion in Casey v. GAF Corp. , PICS NO. 03-0890, are available from The Legal Intelligencer . Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information. Some cases are not available until 1 p.m.)

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