Chapter 0109 - 502R - S Ver of HB2386

Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 12, chapter 5, Arizona Revised Statutes, is amended by adding article 4, to read:

ARTICLE 4. SUCCESSOR ASBESTOS‑RELATED LIABILITY

START_STATUTE12-559. Definitions

In this article, unless the context otherwise requires:

1. "Asbestos claim" means any claim, wherever or whenever made, for damages, losses, indemnification, contribution or other relief arising out of, based on or in any way related to asbestos including:

(a) The health effects of exposure to asbestos including a claim for:

(i) Personal injury or death.

(ii) Mental or emotional injury.

(iii) Risk of disease or other injury.

(iv) The costs of medical monitoring or surveillance.

(b) Any claim made by or on behalf of any person exposed to asbestos or a representative or a spouse, parent, child or other relative of the person.

2. "Corporation" means a corporation for profit, including a domestic corporation organized under the laws of this state or a foreign corporation organized under laws other than the laws of this state.

3. "Successor" means a corporation that assumes or incurs or has assumed or incurred successor asbestos-related liabilities, that is a successor and that became a successor before January 1, 1972 or is any of that successor corporation's successors.

4. "Successor asbestos-related liabilities" means any liabilities, whether known or unknown, asserted or unasserted, absolute or contingent, accrued or nonaccrued, liquidated or nonliquidated or due or to become due, that are related in any way to asbestos claims and that were assumed or incurred by a corporation as a result of or in connection with a merger or consolidation, or the plan of merger or consolidation related to the merger or consolidation with or into another corporation, or that are related in any way to asbestos claims based on the exercise of control or the ownership of stock of the corporation before the merger or consolidation. Successor asbestos-related liabilities includes liabilities that, after the time of the merger or consolidation for which the fair market value of total gross assets is determined pursuant to section 12-559.02, were or are paid or otherwise discharged, or committed to be paid or otherwise discharged, by or on behalf of the corporation, by a successor of the corporation or by or on behalf of a transferor, in connection with settlements, judgments or other discharges in this State or another jurisdiction.

5. "Transferor" means a corporation from which successor asbestos‑related liabilities are or were assumed or incurred. END_STATUTE

START_STATUTE12-559.01. Asbestos‑related actions; successor corporation liability; applicability

A. Except as provided in subsection B of this section, the cumulative successor asbestos-related liabilities of a successor corporation are limited to the fair market value of the total gross assets of the transferor determined as of the time of the merger or consolidation. The successor corporation does not have responsibility for successor asbestos-related liabilities in excess of this limitation.

B. If the transferor assumed or incurred successor asbestos-related liabilities in connection with a prior merger or consolidation with a prior transferor, the fair market value of the total assets of the prior transferor determined as of the time of the earlier merger or consolidation shall be substituted for the limitation under subsection A of this section to determine the limitation of liability of a successor corporation.

C. This section does not apply to any of the following:

1. Workers' compensation benefits paid by or on behalf of an employer to an employee pursuant to title 23, chapter 6 or a comparable workers' compensation law of another jurisdiction.

2. Any claim against a corporation that does not constitute a successor asbestos-related liability.

3. Any obligation under the National Labor Relations Act or under any collective bargaining agreement.

4. A successor that, after a merger or consolidation, continued in the business of mining asbestos or in the business of selling or distributing asbestos fibers or in the business of manufacturing, distributing, removing or installing asbestos-containing products that were the same or substantially the same as those products previously manufactured, distributed, removed or installed by the transferor. END_STATUTE

START_STATUTE12-559.02. Establishing the fair market value of total gross assets

A. To determine the limitation pursuant to section 12-559.01, A successor corporation may establish the fair market value of total gross assets through any method reasonable under the circumstances, including either of the following:

1. By reference to the going concern value of the assets or to the purchase price attributable to or paid for the assets in an arms length transaction.

2. In the absence of other readily available information from which the fair market value can be determined, by reference to the value of the assets recorded on a balance sheet.

B. Total gross assets include intangible assets.

C. To the extent total gross assets include any liability insurance that was issued to the transferor whose assets are being valued for the purposes of this section, the applicability, terms, conditions and limits of that insurance are not affected by this section, and this section does not affect the rights and obligations of an insurer, transferor or successor under any insurance contract and any related agreements including, preenactment settlements resolving coverage-related disputes, or the rights of an insurer to seek payment for applicable deductibles, retrospective premiums or self-insured retentions or to seek contribution from a successor for uninsured or self-insured periods or periods where insurance is uncollectible or otherwise unavailable. Notwithstanding this subsection, to the extent that total gross assets include liability insurance, a settlement of a dispute concerning that liability insurance coverage that is entered into by a transferor or successor with the insurers of the transferor before the effective date of this section determines the total coverage of that liability insurance to be included in the calculation of the transferor's total gross assets. END_STATUTE

START_STATUTE12-559.03. Adjustment of the fair market value of total gross assets

A. Except as provided in subsections B, C and D of this section, the fair market value of total gross assets at the time of the merger or consolidation shall increase annually at a rate equal to the sum of the following:

1. The prime rate as listed in the first edition of the Wall Street Journal published for each calendar year since the merger or consolidation, unless the prime rate is not published in that edition of the Wall Street Journal, in which case any reasonable determination of the prime rate on the first day of the year may be used.

2. One per cent.

B. The rate found in subsection A of this section shall not be compounded.

C. The adjustment of the fair market value of total gross assets shall continue as provided in subsection A of this section until the date the adjusted value is first exceeded by the cumulative amounts of successor asbestos-related liabilities that are paid or committed to be paid by or on behalf of the successor corporation or a predecessor or by or on behalf of a transferor after the time of the merger or consolidation for which the fair market value of total gross assets is determined.

D. No adjustment of the fair market value of total gross assets shall be applied to any liability insurance that may be included in the total gross assets pursuant to section 12-559.02, subsection C. END_STATUTE

Sec. 2. Applicability

A. The courts of this state shall liberally construe this act with regard to successors.

B. This act applies to all asbestos claims that are filed against a successor corporation on or after the effective date of this act and to any pending asbestos claims against a successor corporation in which trial has not commenced as of the effective date of this act, except that any provision of this act that would be unconstitutional if applied retroactively shall be applied prospectively.

Sec. 3. Findings

The Legislature finds the public interest as a whole is best served by addressing actions involving innocent successors who never sold, manufactured or distributed asbestos products so that they remain viable.

Sec. 4. Short title

This act may be cited as the "successor corporation asbestos-related liability fairness act".