Owens Corning could be liable in proposed class action despite bankruptcy

The 3rd Circuit’s decision limits its earlier ruling in In re Grossman

The 3rd Circuit ruled Friday that fiberglass manufacturer Owens Corning Sales could be liable for reportedly defective roof shingles despite having filed for bankruptcy, in a decision that limited one of the court’s earlier bankruptcy rulings.

Owens Corning, which was forced to pay millions of dollars in several asbestos-related lawsuits, entered bankruptcy proceedings in 2000. As part of the bankruptcy reorganization, a court extinguished all claims arising before September 2006. 

In 2009, two Owens Corning customers sued the company for fraud, negligence, strict liability and breach of warranty after split shingles caused leaks in their roofs. At the time, the claims were valid under the 3rd Circuit’s 1984 ruling in Avellino v. Frenville, which held that claims arose when they surfaced, regardless of subsequent bankruptcy filings.

But in 2010, the court overturned that unpopular precedent in In re Grossman’s Inc.. The case centered on Mary Van Brunt, a New York woman who claimed that she had been exposed to asbestos in the 1970s while renovating her home with products from Grossman’s. Van Brunt ultimately contracted mesothelioma, but was not diagnosed until 2007—nearly 10 years after the building supply company had filed for bankruptcy. The 3rd Circuit ruled that the claim qualified for discharge, as the alleged exposure had occurred before Grossman’s bankruptcy filing.

The In re Grossman’s ruling would have invalidated the proposed class action suit against Owens Corning, until a three-judge panel of the 3rd Circuit ruled last week that the rule does not apply retroactively. Since the Owens Corning suit was filed before the Grossman ruling, it can proceed.

Read more on the case at Reuters.

Alanna Byrne

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