Lawyers want Freedom lawsuits in state court
CHARLESTON, W.Va. -- Attorneys want some lawsuits transferred back to state court since they no longer are pursuing claims against Freedom Industries, the company at the heart of January's chemical leak.
In the last few months, about 62 lawsuits have been transferred to bankruptcy court. In one of the notices, attorneys said removal to bankruptcy court is appropriate if the outcome affects the estate.
The document says most of Freedom's unsecured claims are unliquidated, depending on the outcome of state and federal court actions stemming from the leak.
And these pending state and federal court actions have "at the minimum" the chance of altering Freedom's liabilities and how it handles the bankruptcy estate, according to the documents.
Many lawsuits have been filed against the company since the Jan. 9 leak that contaminated water in nine counties. In January alone, 31 lawsuits were filed against Freedom and other parties related to the leak.
Monday, attorneys filed five motions seeking to remand certain cases back to state court.
All five cases with similarly worded motions sought to only proceed against the water company and had dismissed claims against Freedom last month citing the bankruptcy filing.
The motions included lawsuits filed by businesses, families, a person who couldn't get a kidney transplant surgery because of the water ban and a woman alleging she got chemically induced pneumonia from the water.
One of the motions had mentioned a pending motion to refer these cases to the West Virginia Mass Litigation Panel, which was pending when the case was removed.
The motion argues that if the water company does file a cross claim against freedom, then it still wouldn't affect suits' need to be remanded back to state court.
Attorneys said the water company didn't explain how removing the case to bankruptcy court would lift the stay and allow it to pursue contribution claims against Freedom, which the motion argues the water company is unlikely to see.
"Freedom officials have testified in this bankruptcy that there is only $3 million in insurance for the claims arising out of the spill," the motion states. "Given the limited funds available, it is likely that these claims will be settled soon rather than litigated because the insurance policy limits are eroded by litigation expenses. Once that settlement occurs, (the water company's) contribution claim will be extinguished."
The next bankruptcy hearing will take place at 10 a.m. March 18. In last week's order, the bankruptcy court denied Freedom's motion to expedite a hearing to hire an expert to wind down operations.
Instead, the court will hear this motion in its next hearing along with several others, including the final financing motion.
In its motion, Freedom seeks to appoint Mark Welch of MorrisAnderson & Associates as its chief restructuring officer.
As previously reported, as chief restructuring officer, Welch will manage the wind down process, assist in settlement or litigation of disputed claims, manage the sales process of Freedom's assets and serve as Freedom's representative before bankruptcy court, the motion states.
Welch also will approve all environmental work and help to prepare a Chapter 11 plan of liquidation, according to the motion.