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Members of a nonprofit organization that acts as an agent for defendants in asbestos litigation cannot be expected to make up the difference in the amount of settlement owed to plaintiffs when another member defaults on its share, a judge on the Philadelphia Common Pleas Court has ruled. The decision in Estate of Anderson v. CertainTeed Corp. comes on the heels of a Superior Court ruling that the organization itself, the Center for Claims Resolution, cannot be held responsible for a portion of a settlement a defendant refuses to pay. Considering the language from Common Pleas Judge Norman Ackerman’s decision in Anderson and the Superior Court’s ruling in Casey v. GAF Corp., it appears that plaintiffs’ attorneys won’t have much recourse collecting from a defendant who can’t or won’t pay on a CCR settlement agreement. “The CCR structure and its dealings with the plaintiffs’ attorneys in the long history of asbestos litigation are well known and have been in existence for many years,” Ackerman said. “By entering into these settlement agreements with the CCR, plaintiffs’ counsel knowingly accepted the allocation formula prescribed in the producer’s agreement for each member and understood that each defendant was responsible only for its own share.” Ackerman said the case arose from two settlement agreements, entered into in December 1999 and October 2000, each involving a separate group of seven cases. The 14 plaintiffs were represented by the Shein Law Center, he said. Each of the defendants was then a member of CCR, Ackerman said. CCR acts as its members’ exclusive agent for evaluating and settling asbestos-related claims. CCR and its members are governed by a “producer agreement concerning the Center for Claims Resolution,” the opinion says. Under the agreement, the members designate CCR its sole agent in asbestos-related claims and authorize CCR to calculate and allocate the percentage share and costs of settlement attributed to each member. Apportionment of liability, Ackerman said, is based on a percentage share in the total amount of claims brought against the participating producers and was predetermined prior to settlement. The members become responsible for their share of settlement at the time of apportionment, Ackerman said. CCR receives funds from its members, with an obligation to pay those funds to settling plaintiffs. Armstrong World Industries Inc. and GAF Corp. were two of the defendants in the settlements at issue: the December 1999 settlement, for $325,000, and the October 2000 settlement, for $800,000. Both Armstrong and GAF filed for bankruptcy after the settlements were reached but before payment was made. Therefore, the funds CCR forwarded to the plaintiffs’ attorney for settlement were missing the portion allocated to Armstrong and CCR. CCR’s attorney included a letter with the check explaining the reason for the decreased amount and saying that CCR was attempting to collect payment from Armstrong and GAF. The plaintiffs accepted the check as payment, Ackerman said. In the amended motion to enforce settlement before Ackerman in the instant case, the 14 plaintiffs sought under the theory of joint and several liability to recover from the non-defaulting members on the basis that they were members of CCR and were named in the settlement releases. Because none of the parties provided the court with a copy of the settlement agreement, Ackerman focused on the intent of the parties. Under the producer agreement, he said, each member agreed to pay its share of liability and expenses. He cited one portion of the agreement in particular: “Liability payments and allocated expenses shall be apportioned to each participating producer from the date such producer becomes a signatory to the agreement and a member of the center. Such apportionment shall establish the responsibility of each participating producer for a percentage share of liability payments.” That language showed a clear intent on the part of CCR members to remain individually responsible for the apportioned shares, Ackerman said. “Therefore, this court finds that the language employed in the producer’s agreement illustrates the intent of the producers to remain severally liable; and defendants have presented sufficient evidence to overcome the presumption that a joint obligation was created in the producer’s agreement,” Ackerman said. Ackerman found support for his decision from a 2000 decision from Montgomery County Common Pleas Judge William Furber in DeClerico v. Bell Asbestos Mines Ltd. In DeClerico, the plaintiffs filed a motion to enforce a settlement reached with CCR against a defaulting defendant, also GAF. Furber said it was proper to enforce settlement against the defaulting party only. Forcing other members of CCR to make up GAF’s share would “discourage both settlements and participation in joint settlement facilities by defendants in mass tort litigation, since members who abide by the agreement would be forced to pay or advance the share of a party which dishonors it,” Furber said. Ackerman said he agreed and would take Furber’s decision one step further. “In addition, this court extends said rationale by holding that the non-defaulting CCR members are not responsible for the shortfall of GAF and Armstrong, not only by the terms in the producer’s agreement, but also by the conduct of the parties to such agreements,” Ackerman said. In the recent Superior Court case on the issue, Casey, the corporate defendant argued that CCR 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 looked to the language of the agreement between CCR and the corporate defendant, GAF, 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,” said Superior Court Judge John T. Bender, the opinion author.

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