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EASTERN AIR LINES ANNOUNCES LAWSUIT AGAINST INSURERS TO RECOVER COSTS FOR CLEANUP AT MIAMI AIRPORT MAINTENANCE FACILITIES

EASTERN AIR LINES ANNOUNCES LAWSUIT AGAINST INSURERS TO RECOVER COSTS
 FOR CLEANUP AT MIAMI AIRPORT MAINTENANCE FACILITIES
 MIAMI, Oct. 14 /PRNewswire/ -- In his continuing effort to assemble all outstanding assets of Eastern Air Lines in order to maximize the payments to creditors (including to former employees and retirees), Martin R. Shugrue, the court-appointed trustee in bankruptcy for Eastern Air Lines, announced today the filing of a lawsuit seeking to recover from its casualty insurers the value of cash and property transferred to Dade County in settlement of claims exceeding $115 million.
 The claims at issue were brought by Dade County environmental and airport officials to enforce environmental cleanup of the former Eastern maintenance facilities adjacent to the Miami International Airport. The cash and properties transferred to the county by Eastern under the settlement will assure funding of future cleanups at the former Eastern site. In addition, Eastern expended significant sums in remediating the Miami Base, for which various Dade County agencies have praised Eastern's efforts, characterizing them as "a model for the Airport."
 The lawsuit, filed in Dade County Circuit Court, names as defendants more than 100 syndicates and insurance companies affiliated with Lloyd's of London, Associated Aviation Underwriters, and several French insurers. Eastern purchased aviation and comprehensive general liability insurance for ground operations from these insurers starting in 1949 (around the time it began operations at the Miami airport) and continuing until the closing of those operations on Jan. 19, 1991. In all, Eastern estimates that it paid hundreds of millions of dollars in premiums for this insurance, and that billions of dollars of previously unused coverage remains outstanding in the aggregate.
 The costs to be recovered were incurred by Eastern in cleaning up such events as fuel and solvent spills, as well as the decontamination of hazardous materials used in or generated during airplane maintenance procedures. Some contamination apparently occurred when flood waters caused by hurricanes or tropical storms carried contamination into the ground and groundwater. In particular, Eastern settled claims valued at more than $115 million brought against it in bankruptcy by the Metropolitan Dade County Department of Environmental Resources Management and the Dade County aviation department (which operates the Miami International Airport) through the transfer of cash and property. As noted above, this settlement will provide funding for future cleanups, and is in addition to the substantial sums already spent by Eastern in cleaning up and decontaminating the former base.
 In recent cases in Florida and other states, courts have rejected the insurance industry's assertions that the standardized language it used in its comprehensive liability policies did not provide coverage for property damage related to environmental contamination. In particular, in a decision issued in early September, the Florida Supreme Court made clear that the policies sold by the insurance companies provided coverage whether caused by an abrupt, instantaneous event or by gradual pollution occurring over time.
 In light of these and other decisions throughout the country, Eastern anticipates a successful result, while recognizing that the defendant insurance companies will invoke every available technicality and mobilize their overwhelmingly greater resources to avoid or delay a final resolution. Shugrue stated that Eastern is prepared for a long, drawn out legal battle, if that is the desire of the insurers. According to Shugrue, any funds recovered in this suit will become assets of the estate and, with Bankruptcy Court approval, would be used to pay, among other creditors, former employees and to fund retiree health benefits and pension obligations.
 John Sicilian, general counsel to Shugrue, will supervise the prosecution of the lawsuit. As its counsel in this case, Eastern has retained the law firm of Weil, Gotshal & Manges (with offices in Miami, Washington, D.C., New York City and eight other cities in the U.S. and Europe).
 -0- 10/14/92
 /CONTACT: John J. Sicilian of Eastern Air Lines, Inc., 305-873-3455/ CO: Eastern Air Lines, Inc. ST: Florida IN: AIR SU:


AW-JB -- FL014 -- 0044 10/14/92 16:12 EDT
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Publication:PR Newswire
Date:Oct 14, 1992
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