SW Legal studies in Business

Injury Claim against Employer Fails Because Not Filed Before Bankruptcy Discharged
Description Washington high court held that a personal injury claim by a worker against his former employer failed. He was aware of the injury before bankruptcy proceedings began but failed to notify the employer of his possible claim. As an unknown creditor, his claim was discharged by the proceedings.
Topic Bankruptcy Law
Key Words Claims; Unknown Creditor; Notice; Discharge
C A S E   S U M M A R Y
Facts Herring worked in ship building for years and was exposed to asbestos. For much of that time he worked at Todd Shipyards. In 1986, lung problems were diagnosed. In 1989, asbestosis was diagnosed and he sued asbestos makers. In 2002, he was diagnosed with mesothelioma. He sued Todd in 2002. In 1987, Todd filed for Chapter 11 bankruptcy. As part of the proceedings, the court ordered all potential claimants be notified. Todd emerged from bankruptcy in 1989. The trial court dismissed the suit because Herring’s claim was discharged in bankruptcy proceedings. Herring appealed.
Decision

Affirmed. All of the elements of a personal injury must occur before a claim accrues for purposes of a bankruptcy proceeding, including a reasonable awareness of the damages. Herring was diagnosed with lung problems before bankruptcy proceedings began, so he accrued a claim for purposes of the proceedings. His claim could have been handled at that time, but he failed to sue or give notice to Todd of the potential claim. Todd was not on notice of Herring’s problem, even though it was aware of asbestos problems and litigation, so it was unaware of a potential claim. Herring was an unknown creditor, but his rights were not violated because the fact of the bankruptcy was public and there was published notice of the proceedings and that claimants must come forward. Herrings claim must fail.

Citation Herring v. Texaco, Inc., 165 P.3d 4 (Sup. Ct., Wash., 2007)

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