In Re: Johns-Manville Corp., No. 12-1094 (2d Cir. 2014)

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Justia Opinion Summary

The bankruptcy court required Travelers to pay over $500 million to asbestos plaintiffs based on Travelers' obligations under certain settlement agreements. On appeal, plaintiffs challenged the district court's reversal of the bankruptcy court's judgment, holding that conditions precedent to payment under the agreements were never met and that Travelers' obligation to pay never matured. The court vacated the district court's order because the relevant conditions precedent were satisfied and the court remanded with instructions to reinstate the bankruptcy court's final judgment; Travelers' arguments regarding the Agreements' conditions that the movants either execute a specific number of releases and deliver them into escrow or dismiss their claims with prejudice were waived because Travelers did not timely raise its arguments; and the court held that the bankruptcy court correctly applied prejudgment interest to the amount owed and that it correctly calculated the total payment due from the appropriate date.

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12-1094-bk(L) In Re: JOHNS-MANVILLE CORPORATION Common Law Settlement Counsel, et al. v. The Travelers Indemnity Co., et al. 1 UNITED STATES COURT OF APPEALS 2 FOR THE SECOND CIRCUIT 3 August Term, 2012 4 (Argued: January 10, 2013 Decided: July 22, 2014) 5 Docket Nos. 12-1094-bk(L), 12-1150-bk(Con), 12-1205-bk(Con) 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - IN RE: JOHNS-MANVILLE CORPORATION, MANVILLE CORPORATION, MANVILLE INTERNATIONAL CORPORATION, MANVILLE EXPORT CORPORATION, JOHNS-MANVILLE INTERNATIONAL CORPORATION, MANVILLE SALES CORPORATION, f/k/a JOHNS-MANVILLE SALES CORPORATION, successor by merger to MANVILLE BUILDINGS MATERIALS CORPORATION, MANVILLE PRODUCTS CORPORATION and MANVILLE SERVICE CORPORATION, MANVILLE INTERNATIONAL CANADA, INC., MANVILLE CANADA, INC., MANVILLE INVESTMENT CORPORATION, MANVILLE PROPERTIES CORPORATION, ALLAN-DEANE CORPORATION, KEN-CARYL RANCH CORPORATION, JOHNS-MANVILLE IDAHO, INC., MANVILLE CANADA SERVICE INC., SUNBELT CONTRACTORS, INC., Debtors. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - COMMON LAW SETTLEMENT COUNSEL, STATUTORY AND HAWAII DIRECT ACTION SETTLEMENT COUNSEL, Movants-Appellants, ASBESTOS PERSONAL INJURY PLAINTIFFS, Interested Parties-Appellants, v. THE TRAVELERS INDEMNITY COMPANY, TRAVELERS CASUALTY AND SURETY COMPANY, f/k/a AETNA CASUALTY AND SURETY COMPANY, Objectors-Appellees.* - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - __________ *The Clerk of the Court is instructed to conform the caption in accordance herewith. 1 2 3 B e f o r e: 4 for the Southern District of New York (John G. Koeltl, Judge), 5 reversing the bankruptcy court s final judgment (Burton R. 6 Lifland, Judge) that had enforced settlement agreements and 7 compelled appellees to make payments to asbestos plaintiffs under 8 the agreements. 9 reinstatement of the final judgment of the bankruptcy court. 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 WINTER, POOLER, and CHIN, Circuit Judges. Appeal from a judgment of the United States District Court We vacate the district court s order and order PAUL D. CLEMENT (Matthew Gluck & Kent A. Bronson, Milberg LLP, New York, NY, on the brief), Bancroft PLLC, Washington, D.C., for Movant-Appellant Statutory and Hawaii Direct Action Settlement Counsel. RONALD BARLIANT (Kenneth S. Ulrich & Danielle Wildern Juhle, on the brief), Goldberg Kohn Ltd., Chicago, IL, for Movant-Appellant Common Law Settlement Counsel. SANDER L. ESSERMAN (Cliff I. Taylor, on the brief), Stutzman, Bromberg, Esserman & Plifka, P.C., Dallas, TX, for Interested Parties-Appellants Asbestos Personal Injury Plaintiffs. BARRY R. OSTRAGER (Andrew T. Frankel, Jonathan M. Weiss & Bryce A. Pashler, on the brief), Simpson Thacher & Bartlett LLP, New York, NY, for ObjectorsAppellees The Travelers Indemnity Company & Travelers Casualty and Surety Company. WINTER, Circuit Judge: Common Law Settlement Counsel, Statutory and Hawaii Direct Action Settlement Counsel, and Asbestos Personal Injury 2 1 Plaintiffs1 appeal from Judge Koeltl s reversal of a bankruptcy 2 court s final judgment. 3 appellees -- The Travelers Indemnity Company and Travelers 4 Casualty and Surety Company (together, Travelers ) -- to pay 5 over $500 million to asbestos plaintiffs based on Travelers 6 obligations under certain settlement agreements (the 7 Agreements ). 8 conditions precedent to payment under the Agreements were never 9 met, and that Travelers obligation to pay therefore never 10 Bankruptcy Judge Lifland had required The district court reversed, holding that matured. 11 Because we conclude that the relevant conditions precedent 12 were satisfied, we vacate the district court s order and remand 13 with instructions to reinstate the bankruptcy court s final 14 judgment. 15 its arguments regarding the Agreements conditions that the 16 movants either execute a specific number of releases and deliver 17 them into escrow or dismiss their claims with prejudice, we deem 18 those arguments waived. 19 court correctly applied prejudgment interest to the amount owed 20 and that it correctly calculated the total payment due from the 21 appropriate date. In addition, given that Travelers did not timely raise Finally, we hold that the bankruptcy 22 23 1 The nature of the various appellants will become clear, to the extent relevant, in the course of this opinion. The Asbestos Personal Injury Plaintiffs are six asbestos personal injury claimants who stand to recover from the Common Law Settlement Trust. 3 1 BACKGROUND 2 For many years, Travelers was the primary insurer for the 3 Johns-Manville Corporation ( Manville ), once the largest 4 supplier of asbestos and asbestos-containing products. 5 Johns-Manville Corp. (Manville I), Nos. 82 B 11656, 82 B 11657, 6 82 B 11660, 82 B 11661, 82 B 11665, 82 B 11673, 82 B 11675, 82 B 7 11676(BRL), 2004 WL 1876046, at *2-3 ¶¶ 1, 3, *5 ¶ 12 (Bankr. 8 S.D.N.Y. Aug. 17, 2004). 9 problems triggered litigation, Manville, faced with the prospect In re In 1982, after asbestos-related health 10 of tremendous liability, filed a Chapter 11 petition for 11 bankruptcy protection and reorganization. 12 Corp. (Manville II), 340 B.R. 49, 54 (S.D.N.Y. 2006); Travelers 13 Indem. Co. v. Bailey, 557 U.S. 137, 140 (2009). 14 In re Johns-Manville With Manville entangled in bankruptcy proceedings, asbestos 15 plaintiffs began to file direct-action2 suits against Travelers 16 and other insurers based on the insurers relationships with 17 Manville. 18 Travelers and other insurers were involved in a policy-coverage 19 dispute with Manville, and numerous contribution, indemnity, and 20 cross claims were asserted among Manville s insurers. 21 Manville I, 2004 WL 1876046, at *14-15 ¶¶ 54, 57. 22 23 Manville II, 340 B.R. at 55. At the same time, Id.; Consequently, Travelers and the other insurers entered into a settlement agreement with Manville. 2 Pursuant to the A direct action is [a] lawsuit by a person claiming against an insured but suing the insurer directly instead of pursuing compensation indirectly through the insured. Black s Law Dictionary 525 (9th ed. 2009). 4 1 settlement, Travelers agreed to contribute roughly $80 million to 2 a trust established as part of the bankruptcy estate (the 3 Manville Trust ) in exchange for a complete release of Manville 4 policy-related liabilities. 5 ¶¶ 58, 61. 6 regarding the settlement, and it also appointed a Future Claims 7 Representative ( FCR ) to represent future asbestos claimants 8 during relevant proceedings. 9 (Manville IV), 600 F.3d 135, 140-41 (2d Cir. 2010). 10 Manville I, 2004 WL 1876046, at *15 The bankruptcy court provided extensive notice In re Johns-Manville Corp. The bankruptcy court eventually approved the settlement and 11 entered two orders, the Insurance Settlement Order and the 12 Confirmation Order (together, the 1986 Orders ). 13 2004 WL 1876046, at *15-16 ¶¶ 60-61, 64. 14 meant to provide the broadest protection possible to facilitate 15 global finality for Travelers as a necessary condition for it to 16 make a significant contribution to the Manville estate. 17 *31 ¶ 23. 18 the other settling insurers from Manville-related obligations, 19 enjoined all future claims for bad faith or insurer misconduct, 20 and channeled all such claims to the Manville Trust. 21 ¶ 61. 22 plan, incorporating the Insurance Settlement Order by reference 23 and enjoining all persons from commencing any action against any 24 of the Settling Insurance Companies for the purpose of, directly 25 or indirectly, collecting, recovering or receiving payment of, on Manville I, The 1986 Orders were Id. at The Insurance Settlement Order released Travelers and Id. at *15 The Confirmation Order confirmed Manville s reorganization 5 1 or with respect to any Claim . . . or Other Asbestos 2 Obligation . . . . 3 quotation marks omitted). 4 Id. at *16 ¶ 64 (internal citation and Despite the 1986 Orders, asbestos plaintiffs filed more 5 actions against Travelers in several states. Id. at *17 ¶ 70. 6 The majority of these claims did not allege violations derivative 7 of Manville s actions; instead, they were based on Travelers own 8 alleged wrongdoing as Manville s insurer. 9 misnomer, see infra note 3, we will style these claims as the Although it is a 10 Direct Actions. The Direct Actions were brought by three 11 categories of plaintiffs. 12 Direct Action Plaintiffs, Hawaii Direct Action Plaintiffs, and 13 Common Law Direct Action Plaintiffs. 14 categories of claims. 15 Plaintiffs and Hawaii Direct Action Plaintiffs alleged, among 16 other things, that Travelers conspired to violate state laws 17 prohibiting unfair insurance . . . practices by fraudulently 18 perpetuating a state of the art defense, id. at *18-19 ¶¶ 74- 19 79, and allegedly misrepresenting Manville s knowledge of 20 asbestos hazards. 21 Plaintiffs claimed similarly that Travelers violated common law 22 duties when it failed to disclose what it knew about asbestos We will call them the Statutory They asserted two First, the Statutory Direct Action Second, the Common Law Direct Action 6 1 hazards from its relationship with Manville. 2 80-82.3 3 Id. at *19 ¶¶ Relying on the 1986 Orders, in June 2002, Travelers moved 4 before the bankruptcy court to enjoin the Direct Actions. 5 Manville II, 340 B.R. at 55. 6 temporary restraining order against prosecution of certain 7 lawsuits against Travelers but also referred the matter to 8 mediation. 9 Governor Mario M. Cuomo, resulted in the three Settlement Id. The bankruptcy court issued a The mediation, conducted by former New York 10 Agreements between Travelers and the Statutory, Hawaii, and 11 Common Law Direct Action Plaintiffs. 12 (Manville III), 517 F.3d 52, 58 (2d Cir. 2008); Manville I, 2004 13 WL 1876046, at *1, *22-23 ¶¶ 96, 101, 105. 14 agreed to pay up to $360 million to the Statutory Plaintiffs, up 15 to $15 million to the Hawaii Plaintiffs, and up to $70 million to 16 the Common Law Plaintiffs, in three respective funds separate 17 from the Manville Trust. 18 ¶¶ 96, 101, 105. 19 In re Johns-Manville Corp. In all, Travelers Manville I, 2004 WL 1876046, at *22-23 Under the Agreements, the Direct Action Plaintiffs were to 20 be paid from the funds, but only after three conditions were 21 satisfied. 22 detail immediately infra, concerned the breadth of an order to be Id. at *22 ¶¶ 96-100. 3 These conditions, described in As noted by the Supreme Court in Travelers Indem. Co. v. Bailey, 557 U.S. 137, 143 n.2 (2009), these suits were not direct actions in the terms of strict usage, because they sought to hold Travelers liable for independent wrongdoing rather than for a legal wrong by Manville. Nevertheless, because all courts in the course of this litigation have dubbed these suits direct actions, we do so here. See In re Johns-Manville Corp. (Manville IV), 600 F.3d 135, 142 (2d Cir. 2010). 7 1 entered by the bankruptcy court ( Clarifying Order ) regarding 2 the interpretation of the 1986 Orders, the finality of the 3 Clarifying Order, and various provisions regarding disposal of 4 the Direct Actions. 5 First, the Agreements required that the bankruptcy court, 6 once it approved the settlements, enter a Clarifying Order. 7 The Statutory and Hawaii Direct Action Settlement Agreements 8 required that the Clarifying Order contain[] prohibitions 9 against Claims at least as broad as those contained in Exhibit 10 A. 11 Agreement required that the Clarifying Order contain language 12 substantially in the form of Exhibit A.4 13 App. at 231, 269. Similarly, the Common Law Direct Action Id. at 307. Exhibit A of each Agreement was a proposed Clarifying Order 14 containing provisions barring all claims against Travelers 15 arising out of, or relating to, Travelers handling of asbestos- 16 related claims, including contribution and indemnity claims. 17 proposed Clarifying Order also expressly barred the new, 18 nonderivative Direct Actions that were the subject of the 19 settlements. 20 Clarifying Order is an order clarifying the Confirmation Order 21 [of the 1986 Orders] and that all the barred claims listed The Finally, each Exhibit A conveyed that the proposed 4 Although the language of the Common Law Direct Action Settlement Agreement differs somewhat from that of the Statutory and Hawaii Direct Action Settlement Agreements, we find, as did both the district court and the bankruptcy court, that the distinctions are not meaningful with regard to the issues on appeal. See In re Johns-Manville Corp. (Manville VI), 845 F. Supp. 2d 584, 588 & nn.4&6 (S.D.N.Y. 2012); In re Johns-Manville Corp. (Manville V), 440 B.R. 604, 612 n.12 (Bankr. S.D.N.Y. 2010). We therefore reject the Common Law Settlement Counsel s arguments that rely on supposed differences in the Agreements language. 8 1 within the proposed Clarifying Order were covered by the 2 Confirmation Order and permanently enjoined as against Travelers, 3 which [was] released therefrom under the Confirmation Order. 4 Id. at 245, 283. 5 Second, the Clarifying Order had to become a Final Order 6 under the Agreements definition, i.e., an order from which no 7 appeal is taken, or an order that has been affirmed by the 8 highest court to which such order was appealed or certiorari has 9 been denied and the time to take any further appeal or petition 10 11 for certiorari shall have expired. Id. at 228, 265, 304. Third, another set of conditions precedent required either 12 the execution and delivery into escrow of at least 49,000 general 13 releases of claims (under the Statutory Direct Action Settlement 14 Agreement), at least 14,000 general releases of claims against 15 Travelers (under the Common Law Direct Action Settlement 16 Agreement), or dismissals with prejudice of all named plaintiffs 17 pending claims against Travelers (under the Hawaii Direct Action 18 Settlement Agreement). 19 With the Agreements in place, the parties moved for the 20 bankruptcy court s approval in 2004. Manville I, 2004 WL 21 1876046, at *1. 22 including Chubb Indemnity Insurance Company ( Chubb ). 23 issued asbestos-related insurance policies -- although it never 24 insured Manville -- and complained that any potential 25 contribution and indemnification claims it might have against 26 Travelers would be unlawfully barred if the Clarifying Order were Various third parties filed objections, 9 Chubb had 1 entered by the bankruptcy court. 2 56; see also Manville IV, 600 F.3d at 143-44. 3 other objectors argued that the bankruptcy court lacked subject 4 matter jurisdiction to enjoin third parties Direct Actions and 5 related claims against nondebtors. 6 on due process grounds, arguing that it could not be bound by the 7 Clarifying Order because it had never received constitutionally 8 sufficient notice of the 1986 Orders. 9 143, 147. 10 Manville II, 340 B.R. at 54, Chubb and the Additionally, Chubb objected Manville IV, 600 F.3d at On August 17, 2004, the bankruptcy court rejected the 11 objections and approved all three Agreements. 12 the Clarifying Order (the 2004 Orders ). 13 Clarifying Order was substantially the same as the language 14 contained in each Agreement s appended Exhibit A. 15 court concluded that it had authority to enter both the 16 Clarifying Order and the 1986 Orders, and that the Direct Actions 17 -- and related contribution and indemnity claims -- were barred 18 by the 1986 Orders.5 19 1-9, *30-34 ¶¶ 17-35. 20 21 It also entered The language of the The bankruptcy Manville I, 2004 WL 1876046, at *26-28 ¶¶ Chubb and the other objectors appealed. The district court affirmed the bankruptcy court s order in all material respects. 5 Specifically, the bankruptcy court determined that potential claims by insurers such as Chubb were properly barred by the 1986 Orders. In re Johns-Manville Corp. (Manville I), Nos. 82 B 11656, 82 B 11657, 82 B 11660, 82 B 11661, 82 B 11665, 82 B 11673, 82 B 11675, 82 B 11676(BRL), 2004 WL 1876046, at *34 ¶ 38 (Bankr. S.D.N.Y. Aug. 17, 2004); see also id. at *33-34 ¶¶ 34-35. Additionally, the bankruptcy court reasoned that a judgment reduction provision protect[ed] the interests of non-settling defendants in the direct action claims so completely as to render their objections to the settlements moot. Id. at *34 ¶ 38. 10 1 It concluded that the bankruptcy court had authority to enter the 2 Clarifying Order because it had jurisdiction to enter the 1986 3 Orders and that the Clarifying Order interpreted and enforced 4 those orders. 5 court also reasoned that Chubb, a sophisticated insurer, received 6 sufficient notice regarding its purported claims. 7 determined further that, even if notice in the usual sense was 8 lacking, Chubb s claims could be foreclosed upon because of the 9 special nature of the remedial scheme at issue: 10 11 Manville II, 340 B.R. at 59-67. of the bankruptcy estate. The district Id. at 68. It reorganization Id. at 68-69. The objectors appealed again, and this court vacated and 12 remanded, concluding that entry of the 1986 Orders (as 13 interpreted by the Clarifying Order) exceeded the proper bounds 14 of the bankruptcy court s jurisdiction insofar as they enjoined 15 state-law claims, nonderivative of the debtor s wrongdoing, that 16 did not seek recompense from the Manville corpus. 17 517 F.3d at 61-68. 18 deemed it unnecessary to reach Chubb s due process argument. 19 at 60 n.17. 20 Manville III, Having vacated on these grounds, this court Id. The Supreme Court granted certiorari and then reversed. 21 Bailey, 557 U.S. at 137, 147. The Court held that the Direct 22 Actions were -- and always had been -- barred by the 1986 Orders, 23 and it concluded that this court had erred in reevaluating the 24 bankruptcy court s jurisdiction to enter those orders: 25 Orders became final on direct review over two decades ago ; 26 whether the Bankruptcy Court had jurisdiction and authority to 11 the 1986 1 enter the injunction in 1986 was not properly before th[e Court] 2 in 2008 . . . . 3 Id. at 148. The Court concluded that the Clarifying Order s entry was a 4 proper exercise of the bankruptcy court s jurisdiction because it 5 plainly had jurisdiction to interpret and enforce its own prior 6 orders. 7 expand the scope of the 1986 Orders. 8 determine, however, whether any parties in particular were bound 9 by the 1986 Orders, nor did it assess the propriety, as a general Id. at 151. The Clarifying Order, therefore, did not The Court did not 10 matter, of a bankruptcy court enjoining third-party claims 11 against nondebtors that were not derivative of the debtor s 12 wrongdoing. 13 court to consider whether Chubb was bound by the 1986 Orders and 14 the Clarifying Order. 15 See id. at 155. The Supreme Court remanded for this Id. at 155-56. On remand, this court concluded that Chubb was not bound by 16 the 1986 Orders -- nor, by extension, the Clarifying Order -- 17 because it had not been afforded constitutionally sufficient 18 notice of the 1986 Orders and their attendant proceedings. 19 Manville IV, 600 F.3d at 138, 148-49, 158. 20 holding was the determination that the bankruptcy court 21 interpreted the 1986 Orders to have in personam, not just in rem, 22 effect. 23 determine the effect of this holding on the Agreements, however, Id. at 153-54. Underpinning this This court expressly refused to 12 1 leaving remaining issues to be resolved by the parties, with the 2 aid of the bankruptcy court. 3 Id. at 159.6 In September 2010, counsel for the Direct Action Plaintiffs, 4 claiming that all the conditions precedent had been satisfied, 5 moved before the bankruptcy court to compel Travelers to make the 6 payments required by the Agreements. 7 contending only that the breadth and finality conditions 8 precedent to payment under the Agreements were unsatisfied 9 because Chubb was now free to bring claims against it. Travelers objected, In re 10 Johns-Manville Corp. (Manville V), 440 B.R. 604, 613-15 (Bankr. 11 S.D.N.Y. 2010). 12 The bankruptcy court granted the Direct Action Settlement 13 Counsel s motions to compel. 14 concluded that the disputed conditions precedent had been 15 satisfied. 16 required breadth had been entered in 2004, see id. at 613-14; 17 (ii) the Order became a Final Order when it was affirmed by 18 the Supreme Court, the court of last resort, in Bailey on June 19 18, 2009, id. at 614; and, (iii) even after Manville IV s 20 holding that Chubb was not bound by the injunctions due to its 21 lack of notice, the Order enjoined the bargained-for breadth of 22 claims, id. 23 of the release/dismissal conditions precedent was not disputed by It reasoned that: See id. at 615. The court (i) a Clarifying Order of the It explicitly noted for the record that satisfaction 6 Travelers filed petitions for writs of certiorari and mandamus with the Supreme Court, and the petitions were denied on November 29, 2010. See Travelers Indem. Co. v. Chubb Indem. Ins. Co., 131 S. Ct. 644 (2010). 13 1 Travelers. 2 to fulfill its payment obligations immediately. 3 Id. at 608. The bankruptcy court directed Travelers Id. at 615. Proceedings regarding the propriety and amount, if any, of 4 prejudgment interest then began. Travelers sought to broaden the 5 issues by claiming, for the first time, that the Agreements 6 conditions precedent regarding disposal of the Direct Actions had 7 not been met. 8 ground that Travelers had not asserted this issue in response to 9 the motion to compel. The bankruptcy court rejected this attempt on the A final judgment was subsequently issued 10 against Travelers requiring it to pay over more than $500 million 11 (more than $65 million of which was prejudgment interest). 12 The district court reversed on February 29, 2012, holding 13 that the disputed conditions precedent had not been satisfied 14 because (i) the breadth of the language represented in each 15 Agreement s Exhibit A had been narrowed by this court s Manville 16 IV decision; and (ii) the Clarifying Order never became a Final 17 Order as defined in the Agreements. 18 (Manville VI), 845 F. Supp. 2d 584, 592-96 (S.D.N.Y. 2012). 19 district court therefore did not determine whether other 20 conditions precedent under the Agreements had been satisfied, nor 21 did it rule on matters pertaining to the bankruptcy court s award 22 of prejudgment interest. 23 24 In re Johns-Manville Corp. The This appeal followed. DISCUSSION We review a bankruptcy court s decision that has 25 subsequently been appealed to the district court independently. 26 In re Baker, 604 F.3d 727, 729 (2d Cir. 2010). 14 In doing so, we 1 accept the bankruptcy court s factual findings unless clearly 2 erroneous but review[] its conclusions of law de novo. 3 a) 4 Id. Contested Conditions Precedent The interpretation of unambiguous settlement-agreement terms 5 is a question of law subject to de novo review. See Tourangeau 6 v. Uniroyal, Inc., 101 F.3d 300, 307 (2d Cir. 1996). 7 Agreements here are governed by and construed in accordance with 8 the laws of the State of New York. 9 Under New York law, a written agreement that is complete, clear The App. at 239, 276, 312. 10 and unambiguous on its face must be enforced according to the 11 plain meaning of its terms. 12 Inc., 98 N.Y.2d 562, 569 (2002). 13 strict compliance with settlement agreements, which are binding 14 and enforceable contracts between parties. 15 Grp., S.A.R.L., 13 N.Y.3d 209, 213-14 (2009). 16 [e]xpress conditions must be literally performed; substantial 17 performance will not suffice. 18 Presstek, Inc., 12 N.Y.3d 640, 645 (2009). Greenfield v. Philles Records, New York law also requires IDT Corp. v. Tyco Further, MHR Capital Partners LP v. 19 1) Breadth and Finality of the Clarifying Order 20 The parties primarily contest whether: (i) the breadth of 21 the bankruptcy court s Clarifying Order met the breadth 22 requirement in Exhibit A of the Agreements; and (ii) the 23 Clarifying Order became final within the definition of the 24 Agreements. 25 conditions precedent to Travelers obligation to pay have been 26 satisfied. These questions, of course, govern whether the We conclude that they have been satisfied. 15 1 A) Breadth 2 Under both the Statutory and Hawaii Direct Action 3 Settlement Agreements, the relevant condition precedent requires 4 entry of a Clarifying Order containing prohibitions against 5 Claims at least as broad as those contained in Exhibit A . . . . 6 App. at 231, 269. 7 Agreement, the relevant condition precedent requires the [e]ntry 8 of an order or orders of the Bankruptcy Court, issued pursuant to 9 the [1986 Orders] . . . substantially in the form attached hereto 10 11 Similarly, under the Common Law Direct Action as Exhibit A . . . . Id. at 307. We begin by observing that the injunctive language found in 12 each Agreement s appended Exhibit A was included, nearly 13 verbatim, in the Clarifying Order. 14 But Travelers argues, and the district court agreed, that this 15 court s holding in Manville IV diminished the reach of the 16 Clarifying Order because the order became jurisdictionally void 17 as to Chubb, 600 F.3d at 158, which failed to receive 18 constitutionally sufficient notice of the 1986 Orders. 19 asserts that, consequently, the Clarifying Order does not 20 contain[] prohibitions against Claims at least as broad as those 21 in Exhibit A, because Chubb could potentially bring a claim 22 against Travelers. 23 quotation marks omitted). 24 Travelers concedes as much. Travelers Brief for Appellees at 40-41 (internal We disagree. The Clarifying Order s injunctive language was affirmed in 25 Bailey and has not been altered since. 26 Court determined that the bankruptcy court had, in substance, 16 In Bailey, the Supreme 1 properly interpreted the 1986 Orders in the Clarifying Order with 2 respect to the new, nonderivative Direct Actions: 3 Bankruptcy Court correctly understood that the Direct Actions 4 fall within the scope of the 1986 Orders . . . . 5 148. 6 only those traditional direct-action claims that sought redress 7 from Travelers based on Manville s own wrongdoing, but also those 8 nonderivative claims against nondebtor Travelers that were the 9 subject of the 2002-2004 settlement negotiations. The 557 U.S. at The injunction that Bailey approved, therefore, bars not The Clarifying 10 Order, as a restatement of the 1986 Orders injunction, precludes 11 claimants who have brought any Direct Actions -- or related 12 indemnity or contribution claims -- from further prosecution of 13 those claims against Travelers. 14 F. Supp. 2d at 595. 15 Id. at 149-50; Manville VI, 845 Travelers had maintained that the 1986 Orders enjoined the 16 Direct Actions throughout the 2002-2004 settlement negotiations, 17 Manville I, 2004 WL 1876046, at *21 ¶ 93, but its position was 18 not vindicated until Bailey was issued. 19 scope of the injunctive language contained within the Agreements 20 Exhibit As, and the Clarifying Order bars all such claims -- all 21 it was meant to do. 22 Bailey thus affirmed the The fact that Chubb may collaterally attack the 23 applicability of the Clarifying Order to actions it might bring 24 -- because it never received constitutionally sufficient notice 25 -- does not alter our conclusion. 26 reading of the Clarifying Order stems from the conflation of two 17 The error in Travelers 1 separate issues: 2 order for lack of constitutional notice; and (ii) the integrity 3 of that order and the breadth of claims it bars. 4 (i) a party s ability to collaterally attack an Travelers reading asks us to adopt an interpretation of the 5 Clarifying Order that could not reasonably have been intended by 6 the parties, whatever Travelers private hopes and dreams, and is 7 not supported by the language of the Agreements. 8 interpretation proposed by Travelers would have required the 9 bankruptcy court either to: The (i) certify that all potential 10 claimants -- all entities and individuals on the planet, from now 11 until the end of time -- have received constitutionally 12 sufficient notice of the 1986 Orders and their relevant 13 proceedings; or (ii) bar all claimants whether or not they had 14 constitutionally sufficient notice. 15 have been intended by sophisticated parties because each would 16 have been well beyond the bankruptcy court s power. 17 that is the reason why no such requirement is found in the 18 Agreements terms or their Exhibit As, whatever Travelers 19 secret or subjective intent. 20 168 (2d Cir. 1997). 21 But neither action could Undoubtedly, Klos v. Lotnicze, 133 F.3d 164, The district court disagreed that Travelers position 22 required the bankruptcy court to enter an order clarifying that 23 all Direct Action claims were enjoined . . . regardless of 24 whether the parties . . . received constitutionally sufficient 25 notice of the 1986 Orders. 26 (quoting Manville V, 440 B.R. at 613). Manville VI, 845 F. Supp. 2d at 593 18 It correctly noted that 1 Travelers is not seeking to enforce an injunction against 2 claimants in an unconstitutional manner but is asking only for a 3 recognition that the disputed condition precedent was never 4 fulfilled. 5 above, proceeds on the erroneous premise that the Agreements 6 called for a Clarifying Order that bound entities without 7 constitutionally sufficient notice. 8 the ensuing Clarifying Order, would have been a nullity, and 9 common canons of contract construction call upon us to reject However, this argument, like the argument rejected As such, the Agreements, or 10 such an interpretation, see Restatement (Second) of Contracts § 11 203 (1981), which is not a difficult task where, as here, such an 12 interpretation finds no support in the language. 13 Moreover, Travelers interpretation amounts to a contractual 14 term that is incapable of ever being fulfilled, because some 15 claimant somewhere on the planet could always appear to attack 16 the order collaterally. 17 condition -- with no support in contractual language and clearly 18 not intended by the parties -- would have rendered the contract a 19 nullity from its inception. See id. § 76 cmt. b. Such an impossible See id. 20 Travelers interpretation must be rejected for the 21 additional reason that the parties bargained only for a 22 clarification, not an expansion, of the 1986 Orders, and the 23 jurisdictional reach of those Orders was already at issue at the 24 time of negotiations. 25 discussed supra, of whether the bankruptcy court could have 26 extended the Orders scope, the portions of the Agreements at Leaving aside the separate issue, 19 1 issue here evidence no intent by the parties that the Clarifying 2 Order would do so. 3 interpretation of the breadth of the 1986 and Clarifying Orders, 4 but that breadth had already been determined to be coextensive 5 with respect to the issues here and could not have been affected 6 by our decision in that case. 7 Manville IV, therefore, was rooted in an Rooted in the 1986 Orders, the Clarifying Order could bar 8 claims only by those parties that received constitutionally 9 sufficient notice of the 1986 Orders and relevant proceedings. 10 As a party to the proceedings leading up to the 1986 Orders, 11 Travelers knew the scope of notice attendant to those 12 proceedings. 13 appointed by the bankruptcy court to represent the interests of 14 future asbestos claimants, but that no equivalent FCR had been 15 appointed regarding the interests of future indemnity and 16 contribution claimants. 17 For example, Travelers knew that an FCR was To be sure, had Travelers believed that the bankruptcy court 18 exercised in rem as opposed to in personam jurisdiction in 19 entering the 1986 Orders, it might also have believed that the 20 Clarifying Order s injunction barred Chubb s attack. 21 Manville II, 340 B.R. at 68-69. 22 nature of the jurisdiction exercised by the bankruptcy court in 23 releasing nondebtors from third-party claims demands that any 24 party barred by the 1986 Orders (and by extension, the Clarifying 25 Order) must have received constitutionally sufficient notice 26 accordant with that jurisdiction. See, e.g., Of course, the in personam 20 1 But Travelers recognized the possibility of this: In its 2 October 26, 2009 post-argument submission, Travelers argued that 3 the bankruptcy court s notice procedures relating to the 1986 4 Orders were wholly consistent with the exercise of both in rem 5 jurisdiction and in personam jurisdiction over all Chubb 6 entities. 7 conceded that the claims underlying the Direct Actions, which 8 were the subject of the 2002-2004 negotiations, were 9 unimaginable during the proceedings that led to the 1986 Manville IV, 600 F.3d at 154 n.14. 10 Orders. 11 Travelers also brl); App. at 642. 12 Travelers Reply Brief at 5, Manville V (No. 82-11656- Nonetheless, the pertinent portions of the Agreements did 13 not provide for an injunction any greater than that contained 14 within the 1986 Orders, nor did they address issues of notice or 15 due process. 16 circumstances surrounding the formation of the contract indicate 17 that the parties, when the contract was made, must have foreseen 18 the contingency at issue and the agreement can be enforced 19 according to its terms. 20 N.Y.2d 195, 199 (2001). 21 beyond the Agreements obvious meaning and to consider Travelers 22 subjective hopes. A court will not imply a term where the Reiss v. Fin. Performance Corp., 97 We decline Travelers invitation to look 23 We therefore hold the Clarifying Order contains an 24 injunction as broad as, or substantially in the form of, that 25 contained in the Agreements Exhibit As. 26 21 1 2 B) Finality We next consider whether the Clarifying Order became final 3 and unappealable after the Supreme Court s ruling in Bailey. 4 Travelers argues here, and the district court concluded, that 5 when Manville IV reversed the district court s decision as to 6 Chubb, 845 F. Supp. 2d at 594, it rendered the Clarifying Order 7 not final. 8 Clarifying Order became final under the Agreements definition 9 once Bailey was decided by the Supreme Court. 10 We conclude, as the bankruptcy court did, that the As noted, under the Agreements, a Final Order is an order 11 from which no appeal is taken or one that has been affirmed by 12 the highest court to which such order was appealed or certiorari 13 has been denied and the time to take any further appeal or 14 petition for certiorari shall have expired. 15 265, 304. 16 App. at 227-28, In reviewing the 2004 Orders, Bailey rejected the 17 jurisdictional challenges brought by Chubb and the other 18 objectors. 19 for decades, were no longer subject to challenges to the 20 bankruptcy court s power to enjoin third-parties from bringing 21 claims that did not affect the res of the bankruptcy estate 22 against nondebtors. 23 Orders became final on direct review (whether or not proper 24 exercises of bankruptcy court jurisdiction and power), they 25 became res judicata to the parties and those in privity with them 26 . . . . (internal quotation marks omitted)). It determined that the 1986 Orders, having been final Bailey, 557 U.S. at 152 ( [O]nce the 1986 22 The Court also 1 held, just as this court had in Manville III, that the bankruptcy 2 court plainly had [subject matter] jurisdiction to interpret and 3 enforce its own prior orders. 4 Id. at 151. Therefore, the pertinent portion of the injunction contained 5 within the Clarifying Order, as an extension of the 1986 Orders, 6 was similarly not subject to challenges regarding the bankruptcy 7 court s subject matter jurisdiction. 8 the bankruptcy court had jurisdiction to interpret the scope of 9 the 1986 Orders, the Clarifying Order became a Final Order 10 under the Agreements definition. 11 Travelers argues that: Once Bailey determined that (i) Bailey s remand to this court, 12 and (ii) this court s subsequent reversal of the district court 13 in Manville IV, indicate that the Clarifying Order never became 14 final. 15 Neither argument is persuasive. First, the Supreme Court in Bailey reversed Manville III s 16 vacatur of the 2004 Orders (for the bankruptcy court s purported 17 lack of jurisdiction). 18 Orders, including the Clarifying Order. 19 remand with respect to Chubb s due process argument had no 20 bearing on the Clarifying Order s finality. 21 remanded for a determination of whether Chubb failed to receive 22 constitutionally sufficient notice of the 1986 Orders and whether 23 Chubb was thus bound by them and the Clarifying Order. 24 at 155. 25 IV. This effectively reinstated the 2004 The Supreme Court s The case was 557 U.S. That issue was then decided by this court in Manville 23 1 Second, while Manville IV reversed as to Chubb, it did not 2 alter any aspect of the Clarifying Order, the meaning of which is 3 discussed in detail above. 4 the 1986 Orders does not, therefore, render the 1986 Orders any 5 less final. 6 Manville IV deprived the Clarifying Order of finality. 7 The fact that Chubb is not bound by In sum, neither Bailey nor this court s holding in As the Supreme Court recognized, the 1986 Orders became 8 final on direct review over two decades ago. 557 U.S. at 148. 9 It would defy logic to hold that the Clarifying Order, as an 10 extension of the 1986 Orders, is not final simply because Chubb 11 did not receive constitutionally adequate notice of the 1986 12 proceedings. 13 inapplicability of the orders to Chubb, it follows that the 14 Clarifying Order is just as final. 15 16 If the 1986 Orders are final despite the Therefore, the Clarifying Order became final, as that term is defined in the Agreements, once Bailey was issued. 17 2) Conditions Precedent Regarding Releases/Dismissals 18 We next consider the Agreements conditions precedent that 19 require either the escrowing of a certain number of releases or 20 the dismissal of claims with prejudice. 21 arguments in that regard are waived. 22 We hold that Travelers For Travelers payment obligation to mature under the Hawaii 23 Direct Action Settlement, plaintiffs must dismiss with prejudice 24 all claims against Travelers. 25 Settlement Agreement, at least 14,000 general releases must be Under the Common Law Direct Action 24 1 executed and delivered into escrow before Travelers is required 2 to pay into the settlement fund. 3 Travelers argues that these conditions precedent have not 4 been satisfied. 5 these arguments by failing to raise them properly before the 6 bankruptcy court in its papers in opposition to appellants 7 motions to compel. 8 9 Appellants assert that Travelers has waived The motions to compel by their very nature, and explicitly to boot, put the various issues regarding satisfaction of the 10 conditions precedent in play. 11 motions recognized this by claiming that the conditions precedent 12 regarding the breadth and finality of the Clarifying Order were 13 not satisfied. 14 noted explicitly, that Travelers raised no objection regarding 15 the release/dismissal conditions precedent. 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 Travelers opposition to the As a result, the bankruptcy court understood, and It stated: Pursuant to the Settlements, Travelers payment obligations are contingent upon the satisfaction of three conditions precedent. These conditions, stated in general terms, are as follows: (a) entry of an order by this Court that becomes a Final Order clarifying that the Direct Actions were, and had always been, barred by this Court s injunction contained in the 1986 Orders . . .; (b) entry of an order, that becomes a Final Order approving the proposed Settlements; and (c) the execution and delivery into escrow of a specified number of General Releases . . . . None of the Parties disputes that conditions (b) and (c) have been satisfied. Manville V, 440 B.R. at 608 (footnote omitted). 25 1 Once the bankruptcy court determined that the Clarifying 2 Order met the breadth and finality requirements, it ordered 3 briefing and held oral argument regarding the issue of whether 4 plaintiffs were entitled to interest on the settlement proceeds 5 based on Travelers breach. 6 Travelers sought to raise were that the motions to compel lacked 7 adequate supporting evidence that the release/dismissal 8 conditions had been met. 9 Id. at 615. The arguments that The bankruptcy court did not rule on the merits of those 10 arguments. 11 Travelers earlier concession that certain conditions precedent 12 had been satisfied: 13 Drang here, we had conditions which we ll label A, B and C. 14 I think Travelers certainly conceded that B and C were met and 15 claimed that A was not met. 16 where we stand. 17 At the oral argument, the bankruptcy court noted If I recall back in all of the Sturm [and] I opined otherwise. And And that s App. at 857. On appeal to the district court, Travelers argued again that 18 the release/dismissal conditions had not been satisfied. 19 district court did not reach these arguments, having found that 20 the conditions precedent regarding scope and finality had not 21 been fulfilled. 22 The See Manville VI, 845 F. Supp. 2d at 596. These arguments were available to Travelers in the 23 bankruptcy court, and Travelers has not offered any reason for 24 its failure to raise these issues in a timely manner in that 25 court. 26 where necessary to avoid manifest injustice, the circumstances Although we have discretion to consider a waived argument 26 1 normally do not militate in favor of an exercise of discretion to 2 address . . . new arguments on appeal where those arguments were 3 available to the [parties] below and they proffer no reason for 4 their failure to raise the arguments below. 5 Networks Corp. Sec. Litig., 539 F.3d 129, 133 (2d Cir. 2008) 6 (internal quotation marks omitted). 7 In re Nortel In its brief on appeal, Travelers notes only that it raised 8 these issues in the district court and does not claim to have 9 raised them in its opposition in the bankruptcy court to the 10 motions to compel. 11 to the bankruptcy court only that the condition precedent 12 regarding breadth and finality called for denial of the motions. 13 Clearly, a failure to satisfy other conditions precedent should 14 have been raised at that time. 15 the benefit of competent, imaginative, and meticulous counsel, 16 waited until the bankruptcy court disposed of the arguments 17 before it on the motions to compel and turned to the prejudgment 18 interest question. 19 to exercise our discretion to entertain Travelers untimely 20 arguments. 21 c) 22 In opposing those motions, Travelers argued Instead, Travelers, which has had Under these circumstances, we see no reason We, therefore, consider these arguments waived. Calculation of Prejudgment Interest Finally, we consider whether the bankruptcy court s award of 23 prejudgment interest was appropriate and, if so, whether the 24 court erred in determining the date from which the award was 25 calculated. 27 1 Travelers argues that the award is inappropriate because the 2 Agreements do not include an express provision regarding 3 prejudgment interest. 4 beneficiaries of the settlements are entitled to statutorily 5 prescribed interest: 6 awarded because of a breach of performance of a contract . . . . 7 N.Y. C.P.L.R. 5001(a). 8 court did not err in its decision to award such interest. 9 Under New York law, however, the Interest shall be recovered upon a sum We therefore hold that the bankruptcy Travelers argues further that the bankruptcy court erred in 10 determining the date interest began to accrue. 11 decision to award prejudgment interest running from a date 12 certain is a question of fact, see Ginett v. Computer Task Grp., 13 Inc., 962 F.2d 1085, 1101 (2d Cir. 1992), subject to reversal 14 only if clearly erroneous. 15 ascertainable date the cause of action existed. 16 5001(b). 17 payment obligations have been due and owing since June 18, 18 2009, when the Supreme Court upheld the Clarifying Order in 19 Bailey. 20 A court s Interest accrues from the earliest N.Y. C.P.L.R. The bankruptcy court correctly found that Travelers Manville V,440 B.R. at 615. Travelers asserts that no Final Order as defined by the 21 Agreements could have existed until the proceedings were 22 concluded, which, according to Travelers, was November 29, 2010, 23 when the Supreme Court denied Travelers petitions for certiorari 24 and mandamus with respect to Manville IV. 25 incorrectly that Chubb s due process claim had any bearing on the 26 finality of the Clarifying Order. 28 This argument assumes As discussed above, however, 1 that is not the case. The bankruptcy court did not err in its 2 assessment of prejudgment interest. 3 CONCLUSION 4 We have considered appellees remaining arguments and find 5 them to be without merit. For the foregoing reasons, the order 6 of the district court is vacated, and we remand with instructions 7 to reinstate the order of the bankruptcy court. 8 29