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Establishing Transparency in Bankruptcy Trust Claims

North Carolina’s legal climate has improved dramatically over the last several years. However, there are still commonsense reforms yet to be implemented that would foster greater predictability and clarity in our legal system. Senate Bill 470: Personal Injury Bankruptcy Trust Claims is one such measure. By amending Rule 26 of North Carolina Rules of Civil Procedures regarding civil discovery in asbestos personal injury cases, Senate Bill 470 would require disclosures critical to conducting fair trials. As result, the legislation would establish transparency and fairness in North Carolina’s costly civil liability and bankruptcy trust system.

Simply stated, Senate Bill 470 is a disclosure bill. The legislation merely necessitates that trust claims be filed prior to trial instead of after and would make the claims admissible evidence. Further, this bill addresses the harmful practice of “double dipping,” which occurs when a plaintiff receives the needed payment from a tort system defendant to make them whole and subsequently files trust claims to obtain additional damages for the same harm after the trial. Under Senate Bill 470, plaintiff attorneys would have to conduct a reasonable inquiry into a client’s asbestos exposure in order to represent them in a state lawsuit, certifying the claim is valid and warranted by existing law. This would both mitigate “double dipping” and any unethical legal practices similar to those unearthed during the Garlock bankruptcy case. Additionally, the bill would only allow plaintiffs to file claims against company trusts responsible for their exposure and limit stays of proceedings, eliminating the threat of a stay once the claim is filed.

For too long, bad actors have attempted to game the system in asbestos trust claims, which is why establishing transparency is critical. This legislation does not take away from a plaintiff’s ability to file claims or recover damages but it does ensure North Carolina juries are afforded the opportunity to consider all evidence of claimed asbestos exposures – a necessary measure as we look to further strengthen North Carolina’s legal climate. The NC Chamber supports Senate Bill 470 and urges our state’s leaders to do the same. We thank Senator Michael Lee for his leadership on this bill and as the Senate continues to consider the legislation, we will update you with any unfolding developments.

Gary J. Salamido
Vice President, Government Affairs
North Carolina Chamber