Recently, the firm secured significant victories for G-I Holdings Inc. before the Bankruptcy Court for the District of New Jersey and the Court of Appeals for the Third Circuit, stemming from a $500+ million claim made by the New York City Housing Authority (NYCHA) in G-I’s bankruptcy proceeding.
Before the Bankruptcy Court, the firm obtained complete summary judgment and disallowance of NYCHA’s claim, which asserted, under various tort and equitable theories, that G-I was responsible for the damage to NYCHA buildings caused by the presence of asbestos-containing materials allegedly sold by certain of G-I’s predecessors and installed in NYCHA buildings between approximately 1930 and 1981, and therefore also responsible for any removal costs. Initially, Quinn Emanuel persuaded the Court to dismiss all of NYCHA’s tort claims as time-barred, since NYCHA was, or at least should have been, aware of its asbestos-related claims no later than the mid-1980s. The firm then sought and obtained discovery revealing that not even NYCHA treats the presence of asbestos-containing materials as an immediate hazard to its tenants—which is consistent with EPA guidelines—and therefore the hazards NYCHA asserted in support of its claims for equitable indemnity and restitution were simply not present. The Court’s 106-page opinion agreed, and further agreed that no statute or common law imposed a duty upon G-I to remove asbestos-containing materials from NYCHA’s buildings.
That victory came directly on the heels of the previous month’s win before the Third Circuit, which affirmed dismissal of NYCHA’s related adversary complaint that, in the words of the Third Circuit, had “creatively tried to repackage” the ongoing $500+ million claim. NYCHA had filed the adversary proceeding to circumvent G-I’s Plan of Reorganization, arguing that, because it was a regulator seeking equitable relief, its claim was not discharged under the Bankruptcy Code or the Plan. In obtaining dismissal, the firm persuaded the Bankruptcy Court, District Court, and finally the Third Circuit that, because NYCHA is not an environmental regulator and does not otherwise possess police powers, was not seeking to remedy ongoing or imminent pollution, and could be adequately compensated by monetary relief, its adversary complaint did not fall into the narrow discharge exception potentially available for claims that fulfill those requirements.
These successive victories remove the specter of hundreds of millions in liability from the client.