Insurers Back in Court Over World Trade Center Coverage

March 8, 2006

Insurance companies asked a federal appeals court in New York this week to reject a jury verdict that would enable developer Larry Silverstein to obtain an extra $1.1 billion to rebuild the World Trade Center complex.

Meanwhile, Silverstein’s lawyers asked the 2nd U.S. Circuit Court of Appeals to order a new trial so he can try to recover more money from the largest insurers of the trade center, which was destroyed by terrorists on Sept. 11, 2001.

Lawyers on both sides asked the appeals panel to take a fresh look at the outcomes of two trials stemming from disagreements over nearly two dozen insurance policies.

Before Sept. 11, 2001, Silverstein bought $3.5 billion in insurance, but he sought to recover double that amount, saying the trade center’s twin towers were victimized by two hijacked airplanes which amounted to two attacks.

In a trial that ended in April 2004, a federal jury found the majority of the insurers, holding more than $1.8 billion of the policy, were bound by a form that defined the destruction of the twin towers as one event.

In a second trial, which ended in December 2004, another jury concluded that nine insurance companies were bound by insurance form language that defined the destruction as two events. The verdict meant Silverstein will get another $1.1 billion to rebuild.

Fighting the verdict in the first trial, Silverstein attorney Herbert Wachtell said the developer would have won against more insurance companies if the jury had been allowed to hear evidence that was excluded.

Attorneys for some of the nine insurance companies that lost in the second trial argued that information about a California case was unfairly permitted to be put before the jury. In the California case, it was decided that four insurance events occurred when an arsonist set four fires, including a couple six minutes apart in courthouses 200 yards (meters) apart.

The three-judge appeals panel reserved decision in both cases this week, but the judges’ questioning showed a reluctance to disturb the decisions of Judge Michael Mukasey, the chief judge of U.S. District Court in Manhattan.

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