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OFFICIAL COMMITTEE OF ASBESTOS CLAIMANTS v. HEYMAN

June 6, 2005.

OFFICIAL COMMITTEE OF ASBESTOS CLAIMANTS OF G-I HOLDING, INC., Plaintiff,
v.
SAMUEL J. HEYMAN, Defendant.



The opinion of the court was delivered by: ROBERT SWEET, Senior District Judge

OPINION

Plaintiffs the Official Committee of Asbestos Claimants of G-I Holdings, Inc. (the "Committee") and the Legal Representative of Present and Future Holders of Asbestos-Related Demands (the "Legal Representative") have moved to amend their complaint to add as defendants the Heyman Holdings Associates Limited Partnership ("HHA"), Heybldg Associates LLC ("Heybldg") and the Annette Heyman Foundation (the "Foundation") to their claims for avoidance of a fraudulent transfer, for recovery of the proceeds of the transfer pursuant to 11 U.S.C. § 550(a), and for breach of fiduciary duty, restitution, and unjust enrichment. The defendant Samuel J. Heyman ("Heyman") has opposed the motion on the grounds that it violates the scheduling orders of the court, is without good cause, and would prejudice him. For the reasons set forth below, the motion is granted, and a pretrial conference will be held to determine the schedule for further proceedings.

Prior Proceedings

  The Committee filed this action in September 2001 as the authorized representative of the bankruptcy estate of G-I Holdings, Inc., formerly known as GAF Corporation ("G-I" or the "Debtor").

  On July 24, 2002, this Court entered a scheduling order, setting forth a schedule that had been negotiated and agreed to by the parties. On September 16, 2002, the last date established by that order for adding parties or amending pleadings, the Committee filed a motion for leave to amend its original complaint for the purpose, inter alia, of adding HHA, Heybldg, and Heyman Joint Ventures ("HJV") as defendants. Shortly after this motion to amend was filed, the Third Circuit issued a decision holding that a creditors committee was not authorized to pursue a fraudulent conveyance action on behalf of a debtor estate. See Official Comm. of Unsecured Creditors of Cybergenics Corp. v. Chinery, 304 F.3d 316 (3d Cir. 2002) ("Cybergenics I").

  In light of Cybergenics I, the Committee withdrew its motion to amend and entered into a tolling agreement on November 7, 2002 with Heyman, HJV, HHA, Heybldg and certain other Heyman affiliates.

  On November 19, 2002, two months after issuance of the Cybergenics I decision, the Third Circuit vacated the decision pending en banc review. See Official Comm. of Unsecured Creditors of Cybergenics Corp. v. Chinery, 310 F.3d 785 (3d Cir. 2002). The Third Circuit subsequently issued an en banc opinion on May 29, 2003, reversing Cybergenics I. See Official Comm. of Unsecured Creditors of Cybergenics Corp. v. Chinery, 330 F.3d 548 (3d Cir.), cert. denied sub nom., Chinery v. Official Comm. of Unsecured Creditors of Cybergenics Corp., 540 U.S. 1002 (2003). On April 18, 2003, counsel for the Committee advised Heyman that it had come to the Committee's attention that the Foundation had received shares of a GAF subsidiary, International Specialty Products ("ISP"), that had initially been distributed in the 1997 transactions. On May 14, 2003, the Committee and the Foundation entered into a tolling agreement. This tolling agreement was terminable at will by either party.

  On June 17, 2003, the Legal Representative moved to intervene in this action. This motion was granted on November 25, 2003.

  On September 19, 2003, Heyman filed a motion to transfer this action to the District of New Jersey. This motion was denied on March 23, 2004.

  On May 17, 2004, the Court entered an amended scheduling order that was negotiated and agreed to by the parties.

  The instant motion by the plaintiffs to amend the complaint was filed on November 15, 2004, and it was heard and marked fully submitted on February 16, 2005. The Proposed First Amended Complaint

  The Proposed First Amended Complaint ("PFAC") includes: four new fraudulent conveyance claims against HHA under section 544(b) of New York's Debtors and Creditors Law based on HHA's initial receipt of ISP shares in the 1997 transactions; claims under 11 U.S.C. § 550(a)(2) alleging that Heyman and the Heyman entities were subsequent transferees of ISP stock distributed in the 1997 transactions; and new causes of action based on theories of unjust enrichment and restitution against each of the Connecticut entities.

  Counts I-IV of the PFAC set forth the same intentional and constructive transfer theories as are pleaded in the original complaint. Counts VI and VII replead two claims for common law restitution based on unjust enrichment and breach of fiduciary duty without making any substantive changes to the nature or specific allegations of those claims. Plaintiffs seek to add HHA as a defendant to Counts I-IV and HHA, Heybldg and the Foundation to Counts VI and VII.

  The original pleading included, in the prayer for relief, a demand for recovery of the ISP shares pursuant to 11 U.S.C. § 550(a). The proposed amendment asserts this demand as a distinct count (Count V). Additional sources of derivative standing added in the PFAC, the IRS, the New Jersey Department of Environmental Protection, and the environmental authorities of other states, and the Port Authority of ...


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