Travelers Indem. Co. v. Bailey

557 U.S. 137, 129 S. Ct. 2195 (2009)

 

RULE:

Where the plain terms of a court order unambiguously apply, they are entitled to their effect.

FACTS:

As part of a reorganization plan of an asbestos supplier, the bankruptcy court approved a settlement providing that the debtor’s insurers, including petitioner indemnity company, would contribute to the corpus of the settlement trust, and enjoining any policy claims related to it. The settlement agreement and reorganization plan were approved. A decade later, respondents began filing direct actions against petitioner invoking its own alleged violation of state consumer-protection statutes or of common law duties. Petitioner contended that the injunction applied to bar the respondents' lawsuits. The bankruptcy court issued a clarifying order providing that the injunction barred the pending direct actions and various other claims. Respondents appealed. The district court affirmed, but the circuit court reversed. The Supreme Court of the United States reversed the judgement of the circuit court, and the case was remanded for further proceedings.

ISSUE:

Did the bankruptcy court’s order enjoining claims against the debtor corporation, which was indemnified by petitioner insurer, also enjoin actions instituted directly against petitioner?

ANSWER:

Yes.

CONCLUSION:

The terms of the injunction barred the direct actions against petitioner insurer, and the finality of the bankruptcy court's order generally stood in the way of challenging their enforceability. The direct actions were policy claims enjoined as against petitioner by the injunction order, which covered, among other things, claims and allegations relating to petitioner's insurance coverage of the debtor corporation, and there was no language limiting the injunction to suits based upon only on the debtor’s liability. Further, since the injunction order became final on direct review, jurisdiction to issue the injunction was not subject to collateral challenge.

Click here to view the full text case and earn your Daily Research Points.