Epstein v. Official Comm. of Unsecured Creditors of the Estate of Piper Aircraft Corp. (In re Piper Aircraft Corp.) - 58 F.3d 1573 (11th Cir. 1995)

Rule:

An individual has a claim under 11 U.S.C.S. § 101(5) of the Bankruptcy Code, against a debtor manufacturer if (i) events occurring before confirmation create a relationship, such as contact, exposure, impact, or privity, between the claimant and the debtor's product; and (ii) the basis for liability is the debtor's pre-petition conduct in designing, manufacturing and selling the allegedly defective or dangerous product. The debtor's pre-petition conduct gives rise to a claim to be administered in a case only if there is a relationship established before confirmation between an identifiable claimant or group of claimants and that pre-petition conduct.

Facts:

Appellee Piper Aircraft Corporation filed a voluntary petition under Chapter 11 of the Bankruptcy Code, and a letter of intent required appellee to seek the appointment of a legal representative to represent the interests of future claimants by arranging a set-aside of monies generated by the sale to pay off future product liability claims. Appellant David G. Epstein was named as the legal representative of the future claimants. Appellant filed a proof of claim on behalf of the future claimants and appellee argued that the class did not hold claims against appellee under 11 U.S.C.S. § 101(5) of the Bankruptcy Code. The bankruptcy court agreed with appellee and entered judgment against appellant, which the lower court affirmed. Appellant challenged the decision.

Issue:

Did the future claimants hold claims against the appellee’s estate within the meaning of 11 U.S.C.S. § 101(5) of the Bankruptcy Code?

Answer:

No.

Conclusion:

The appellate court affirmed the lower court's decision and adopted what it called the "Piper test." The court stated that an individual had a § 101(5) claim against a debtor manufacturer if events occurring before confirmation created a relationship between the claimant and the debtor's product and the basis for liability was the debtor's pre-petition conduct in designing, manufacturing, and selling the alleged defective product.