Originally published on Mealeys.com on March 18, 2025
(March 18, 2025, 1:57 PM EDT) — COLUMBIA, S.C. — A bankrupt company tells a federal judge in South Carolina that a February ruling supports limiting precedent on federal jurisdiction to bankruptcy cases and instances where a removing entity was an actual party to the case, while urging the court to reject insurers’ attempts to remove an asbestos action against a receiver for Canadian-based Asbestos Corp. Ltd. (ACL).
(Charles Forman, et al. v. Asbestos Corporation Limited, et al., No. 24-7284, D. S.C.)
(CLMI’s response to supplemental authority available. Document #01-250326-037B. NSI’s notice of Ditech available. Document #01-250326-038B.)
Charles Forman, acting as the Chapter 7 trustee for National Service industries Inc. (NSI), filed the notice of supplemental authority on March 16.
In September 2023, Richland County Fifth Judicial Circuit Judge Jean H. Toal appointed Peter D. Protopapas as receiver over Quebec-based ACL. ACL appealed that decision, and the South Carolina Court of Appeals dismissed the appeal. Consolidated challenges to Protopapas’ appointment are currently pending before the South Carolina Supreme Court.
NSI Sues
Meanwhile, NSI sued Protopapas as the receiver for ACL. NSI sought to recover from ACL for asbestos-related damages it incurred. Potential ACL insurers Certain Underwriters at Lloyds’s London and Certain London Market Insurance Companies (collectively, CLMI) removed the case to the U.S.District Court for the District of South Carolina.
Forman moved for remand. In that Dec. 17 motion, Forman argues that precedent involving Protopapas himself establishes that federal courts lack jurisdiction over cases like this one because they are the exclusive jurisdiction of the receiver court. Nothing in 28 U.S. Code Section 1452, 28U.S.C. §1452, permits nonparties to remove cases, Forman says.
Protopapas moved Dec. 23 in support of remand. CLMI moved to intervene on Dec. 23.
On Jan. 2 CLMI opposed remand, citing Truck Ins. Exchange v. Kaiser Gypsum Co., 602 U.S. 268(2024). This case is no different than Truck Ins. Here, NSI through Forman seeks to recover amounts from ACL on behalf of the bankruptcy estate. But NSI isn’t truly targeting ACL, but rather ACL’s insurers. Under Truck Ins., NSI cannot on one hand contend that the proposed intervenors are not proper parties while on the other seeking compensation from them, CLMI argues.
Supplemental
On Jan. 17 NSI filed a notice of supplemental authority that the South Carolina Supreme Court rejected a writ of supersede as from Protopapas regarding an English court decision finding its appointment invalid. In rejecting the writ, the South Carolina Supreme Court found, “Any attempt by a foreign court to intervene in and threaten the participants in matters properly pending in the courts of South Carolina would be shocking and indefensible. The dispute giving rise to the English Court’s attempt to intervene in these matters involves the appropriate reach of the Receiver appointed by the South Carolina Circuit Court.” As a result, the Supreme Court found the writ necessary, NSI said.
The decision on the writ reiterates the validity of South Carolina law and the jurisdiction of South Carolina courts over this dispute, NSI said.
In a Jan. 22 response, CLMI says NSI’s notice of supplemental authority “grossly mischaracterizes” the ruling. The ruling in Tibbs v. 3M Company, et al., No. 2024-001499 (S.C. Jan. 16, 2024), addresses Protopapas’ role as receiver for an entirely different entity, Cape PLC, CLMI says.
The ruling does not decide any of the issues in this case, CLMI says. “The Order does not decide anything regarding the validity of the ACL receivership (or even the Cape receivership) or the subject matter jurisdiction of the South Carolina courts (or the federal courts). Rather, the Order states the South Carolina Supreme Court will be taking up the issues raised by the challenges to the Cape receivership ‘during its February term of court,’” CLMI argues.
CLMI also argues that the question of Protopapas’ appointment as receiver of ACL remains open, despite NSI’s contention to the contrary. Rather than being rejected, the appeal was certified for direct review and oral arguments were held in February, CLMI argues.
In its March 16 filing, NSI says In re Ditech Holding Corp., No. 19-10412, S.D.N.Y. Bkcy, further supports its reading of Truck Ins. as limited to Chapter 11 bankruptcies and only parties with direct financial interest in the bankruptcy.
Counsel
NSI is represented by Amy L.B. Hill, William C. Lewis and Terry Richardson of Richardson Thomas LLC, Matthew T. Richardson, Eric Amstutz, Lucy Dinkins and Brian Critzer of Wyche PA and Theile B.McVey of Kassel McVey, all in Columbia.
CLMI is represented by Theodore L. Manos of Robertson, Hollingsworth, Manos & Rahn LLC inCharleston, S.C.
(Additional documents available: NSI’s notice of supplemental authority. Document #01-250326-039B. Protopapas’ reply. Document #01-250326-046B. NSI’s reply. Document #01-250326-045B. CLMI’s response to remand. Document #01-250326-044B. CLMI’s motion to intervene. Document#01-250326-043M. Protopapas’ memorandum in support of remand. Document #01-250326-042B. NSI’s motion for remand. Document #01-250326-041M. Notice of removal. Document #01-250326-040B. Writ ruling in Tibbs. Document #01-250326-036Z.)
