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Markovsky v. Crown Cork & Seal Co.

Superior Court of Pennsylvania

December 22, 2014

JAMES C. MARKOVSKY, EXECUTOR OF THE ESTATE OF JAMES MARKOVSKY, DECEASED, Appellant
v.
CROWN CORK & SEAL CO., PENN CENTRAL CORPORATION AND CONSOLIDATED RAIL CORPORATION, Appellee

Argued June 25, 2014

Page 750

Appeal from the Order of the Court of Common Pleas, Philadelphia County, Civil Division, No. 0451. Before NEW, J.

Robert E. Paul, Philadelphia, for appellant.

Thomas A. Leonard, Philadelphia, for appellees.

BEFORE: GANTMAN, P.J., PANELLA, and STABILE, JJ.

OPINION

Page 751

STABILE, J.

Appellant James C. Markovsky, Executor of the Estate of James Markovsky, deceased, appeals from the September 11, 2013 order of the Court of Common Pleas

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of Philadelphia County, which granted summary judgment in favor of Appellee Crown Cork & Seal Co.[1] For the reasons set forth below, we affirm.

I. BACKGROUND

On October 6, 2011, Appellant James Markovsky, now deceased, filed a complaint against, inter alia, Appellee alleging he contracted mesothelioma " caused by exposure to the asbestos products of Mundet," Appellee's predecessor-in-interest. Complaint, 10/06/11, at ¶ ¶ 10ad, 13. Specifically, Appellant alleged " he was exposed to asbestos fiber or asbestos products manufactured, sold, distributed, or otherwise placed into the stream of commerce by [Appellee]." Id. at ¶ 11.

On June 25, 2013, Appellee moved for summary judgment against Appellant on the basis of, inter alia, 15 Pa.C.S.A. § 1929.1 (Section 1929.1), Act of December 17, 2001, P.L. 904, No. 101 (Act 101 of 2001 or Act 101), which in part provides:

(a) Limitation on successor asbestos-related liabilities.
(1) Except as further limited in paragraph (2), the cumulative successor asbestos-related liabilities of a domestic business corporation that was incorporated in this Commonwealth prior to May 1, 2001, shall be limited to the fair market value of the total assets of the transferor determined as of the time of the merger or consolidation, and such corporation shall have no responsibility for successor asbestos-related liabilities in excess of such limitation.
(2) If the transferor had assumed or incurred successor asbestos-related liabilities in connection with a prior merger or consolidation with a prior transferor, then the fair market value of the total assets of the prior transferor, determined as of the time of such earlier merger or consolidation, shall be substituted for the limitation set forth in paragraph (1) for purposes of determining the limitation of liability of a domestic business corporation.
. . . .
(d) Application.--
(1) The limitations set forth in subsections (a) and (b) shall apply to mergers or consolidations effected under the laws of this Commonwealth or another jurisdiction consummated prior to May 1, 2001.
(2) The limitations set forth in subsections (a) and (b) shall apply to all asbestos claims, including existing asbestos claims, and all litigation, including existing litigation, and shall apply to successors of a domestic business corporation to which this section applies.
(3) The limitations set forth in subsections (a) and (b) shall not apply to workers' compensation benefits paid by or on behalf of an employer to an employee pursuant to the act of June 2, 1915 (P.L. 736, No. 338), known as the Workers' Compensation Act, or comparable workers' compensation law of another jurisdiction.
(4) The limitations set forth in subsections (a) and (b) shall not apply to any claim against a domestic business corporation that does not constitute a successor asbestos-related liability.
(5) This section shall not apply to an insurance corporation as defined in section 3102 (relating to definitions).
(6) The limitations set forth in subsections (a) and (b) shall not apply to any

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obligations arising under the National Labor Relations Act (49 Stat. 449, 29 U.S.C. § 151 et seq.) or under any collective bargaining agreement.
(e) Definitions.

As used in this section, the following words and phrases shall have the meanings given to them in this subsection:

. . . .
" Successor asbestos-related liabilities." Any liabilities, whether known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated or due or to become due, related in any way to asbestos claims, that were assumed or incurred by a domestic business corporation or foreign business corporation as a result of or in connection with a merger or consolidation, or the plan of merger or consolidation related thereto, with or into another domestic business corporation or foreign business corporation effected under the laws of this Commonwealth or another jurisdiction or which are related in any way to asbestos claims based on the exercise of control or the ownership of stock of such corporation prior to such merger or consolidation. The term shall also include liabilities which, after the time of the merger or consolidation as to which the fair market value of total assets is determined for purposes of subsections (a) and (b), were or are paid or otherwise discharged, or committed to be paid or otherwise discharged, by or on behalf of the corporation, or by or on behalf of a transferor, in connection with settlements, judgments or other discharges in this Commonwealth or another jurisdiction.
" Transferor." A domestic business corporation or foreign business corporation from which successor asbestos-related liabilities are assumed or incurred.

15 Pa.C.S.A. § 1929.1(a),(d) and (e).

In Johnson v. Am. Standard, 2009 PA Super 22, 966 A.2d 573 (Pa. Super. 2009), in explaining the purpose of Section 1929.1, this Court remarked:

[Section 1929.1] limits the asbestos-related liability of Pennsylvania corporations when that liability arises from a merger or consolidation. In general, [Section 1929.1] caps the successor corporation's asbestos-related liability at the fair market value of the prior company as of the time of the merger or consolidation. . . .

Id. at 576 (cited only for background purposes), rev'd on other grounds, 607 Pa. 492, 8 A.3d 318 (Pa. 2010).

On July 12, 2013, Appellant filed a response to Appellee's summary judgment motion. In its response, Appellant argued, inter alia, that Section 1929.1 was unconstitutional because it violated Article III, Section 32 of the Pennsylvania Constitution, the dormant Commerce Clause under the United States Constitution, and the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution.[2] Additionally, Appellant argued the manner in which legislation containing Section 1929.1 was enacted was constitutionally flawed. Specifically, Appellant challenged the legislation on the basis of Article III, Sections 1 (original purpose) and 3 (single subject) of the Pennsylvania Constitution.

On July 17, 2013, Appellee filed a reply to Appellant's response to the summary judgment motion, specifically contesting

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Appellant's constitutional arguments. On September 11, 2013, the trial court issued an order granting Appellee's summary judgment motion as a matter of law. Appellant filed a timely appeal to this Court. Although the trial court did not order Appellant to file a Pa.R.A.P. 1925(b) statement of errors complained of on appeal, it issued an opinion on January 8, 2014 in support of its order granting Appellee's summary judgment motion. In its opinion, the trial court dismissed Appellant's constitutional arguments as unpersuasive.[3] Before addressing the constitutional arguments, however, the trial court noted it granted summary judgment in favor of Appellee on the basis that Appellee was protected from liability under Section 1929.1. Specifically, the trial court found " [Appellant] acknowledges [Section 1929.1], on its face, would bar [its] claims against [Appellee]. There is no dispute [Appellee] has paid hundreds of millions of dollars on asbestos claims pertaining to Mundet products, and there is no dispute this amount far exceeds Mundet's value at the time it merged into [Appellee]." Trial Court Opinion, 1/8/14, at 2.

Addressing Appellant's dormant Commerce Clause argument, the trial court concluded that Appellant " has failed to show [Section 1929.1] violates the dormant aspect of the United States Constitution's Commerce Clause." Id. at 4. The trial court further concluded " there is no apparent discrimination against interstate commerce. [Section 1929.1] merely protects Pennsylvania corporations from excessive liabilities. There is no indication this will encourage intrastate rather than interstate commerce." Id. at 6.

The trial court next addressed Appellant's argument under the Fourteenth Amendment to the United Stated Constitution. Relying upon legislative history, the trial court found:

[Section 1929.1] was meant to advance the Commonwealth's basic governmental interest to make sure our corporate merger laws do not unfairly expose innocent companies to ruin solely because of a merger. [Section 1929.1] combats the unprecedented avalanche of asbestos-related claims threatening to destroy corporations like Crown [(Appellee)], which are exposed to liability based solely on their predecessors' actions. [Section 1929.1] protects such corporations, which provide jobs to Pennsylvania residents and are integral to the Commonwealth's economy. [Section 1929.1] only affects plaintiffs' tort recoveries to the extent necessary to protect corporations exposed to excessive successor liabilities, noting the asbestos plaintiffs would still be adequately compensated by the plethora of other defendants.

Id. at 7-8 (internal citation and quotation marks omitted). The trial court thus concluded that " [Section 1929.1] is rationally related to a legitimate purpose." Id. at 8.

Addressing Appellant's contention that Section 1929.1 violated Article III, Section 32 of the Pennsylvania Constitution by creating a one-member class, the trial court found:

[Appellant] has not established the [s]tatute was intended to benefit [Appellee] alone. The [s]tatute's legislative history reflects its sponsors used [Appellee] as an example of the [s]tatute's purpose, all the while emphasizing the potential

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benefit to other similarly situated corporations throughout the Commonwealth.
More importantly, [Appellant] has not shown it is impossible or highly unlikely for other corporations to enjoy the [s]tatute's protections.

Id. at 10 (internal record citations omitted). Accordingly, the trial court concluded that the statute was not unconstitutional under Article III, Section 32.

The trial court lastly addressed Appellant's challenge to the propriety of the underlying legislation giving rise to Section 1929.1. Specifically, the trial court addressed Appellant's challenge to the legislation, i.e., Act 101 of 2001, under Article III, Sections 1 (original purpose) and 3 (single subject) of the Pennsylvania Constitution. With respect to Article III, Section 1, the trial court found that the Act 101's original purpose was " the regulation of asbestos-related liability." Id. at 12. In so finding, the trial court disagreed with Appellant's contention that Act 101's original purpose had to be construed narrowly. Id. at 11-12. Based on this finding, the trial court concluded the legislation did not violate the constitution, because the legislation's " purpose remained intact when [it] was altered to limit successor liability and provide for certain judicial costs." Id. at 12.

Regarding the constitutionality of the legislation under Section 3 of Article III, the trial court found that the legislation's " single subject is the same as its original purpose, the regulation of asbestos-related liability." Id. In so doing, the trial court rejected Appellant's argument that Act 101's limitations and successor liability were separate subjects. Id. The trial court thus concluded that the legislation was not violative of Article III, Section 3, because its " provisions pertaining to the statute of limitations and successor liability in asbestos cases are ...


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