New York City Wins $1.5 Million Asbestos Damage Ruling

NU Online News Service, June 8, 12:37 p.m. EDT

New York $1.5 million for asbestos damage to city schools, an arbitration panel has ruled, the New York law department said.

The panel awarded the funds from the Celotex Asbestos Settlement Trust for four final claims against Celotex that included other municipal buildings.

This latest award, the department said, brings the City's total recovery against Celotex to $60 million, or more than 23 percent of the total amount that the Celotex Trust paid for property damage.

It was noted that previously the U.S. 11^th Circuit Court of Appeals had upheld all of the city's claims except for the four remaining which were based on a Celotex patent.

The department said New York City is the largest single claimant in the 19-year-old Celotex bankruptcy proceeding and the city's total asbestos recoveries are expected to exceed $135 million by next year.

The city has recovered more money in the asbestos bankruptcies than any other entity in the nation, according to the department.

New York sued, the department explained, to recover monies to pay part of the large amounts it has spent and is spending to abate asbestos hazards in its schools and other buildings.

Its litigation goes back to 1984, when it commenced actions against asbestos companies in New York Supreme Court. In addition, the city also filed claims in the Celotex bankruptcy proceeding.

The bankruptcy began in 1990 when the Celotex Corp., a large manufacturer of building supplies, filed for bankruptcy protection because of claims arising from its manufacture and sale of asbestos fiber and building products.

New York City alone filed over 740 claims with the Celotex Trust. Almost 500 claims were allowed, but opposition to the payment of many of the claims by the Celotex trustees forced the City to litigate to secure the money it was owed, the department said.

That litigation culminated in an appeal to the Eleventh Circuit where the City prevailed on nearly all of the claims. The sole issue remaining was the validity of four of the City's claims based on a patent.

In its ruling the Eleventh Circuit said that the city must show that that Celotex's predecessor was capable of exercising control over the patented asbestos product that ended up in city buildings, imposing a higher standard than that employed when the claims were initially decided.

According to the city's lawyers nothing in the large litigation record or in published sources resolved the question posed by the Eleventh Circuit.

However, city attorneys uncovered evidence not previously presented in the long history of asbestos litigation by finding 70-year-old documentation in the National Archives.

The lawyers uncovered records of an F.B.I. and Justice Department antitrust investigation in the 1930s showing that Celotex's predecessor indeed had the power to exercise control over the patented asbestos product and in a May 29 decision, the arbitrator ruled in favor of the city's patent claims.