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Leaseholder fights over insurance claim { February 7 2004 } Original Source Link: (May no longer be active)
http://www.detnews.com/2004/business/0402/09/business-57701.htmhttp://www.detnews.com/2004/business/0402/09/business-57701.htm
Saturday, February 7, 2004
One attack or two? Trade center developer, insurers ask jury to decide
By Amy Westfeldt / Associated Press
NEW YORK -- More than two years after terrorists brought down the World Trade Center, a federal jury will begin deciding a $3.5 billion question: Is the leaseholder entitled to collect insurance for one attack or for two?
Opening statements begin Monday in a trial pitting developer Larry Silverstein against 13 insurers.
The outcome will determine whether Silverstein gets $3.5 billion or $7 billion to rebuild at ground zero.
Silverstein contends that the destruction of the World Trade Center constituted two attacks, because the twin towers were hit by hijacked airliners a little over 15 minutes apart.
He and downtown development officials have been counting on the larger figure to build the 1,776-foot Freedom Tower, other skyscrapers and cultural buildings on the site within the next decade.
The smaller amount could mean years of construction delays at the site, according to the agency in charge of downtown redevelopment.
“Anyone who’s in New York knows that how much we recover from this lawsuit will have an impact on the rebuilding of this site,” Kevin M. Rampe, president of the Lower Manhattan Development Corp. The rebuilding costs have been estimated at between $7.45 billion and $7.86 billion, he said.
The proceedings could last months. A mediator’s intervention, settlement talks and efforts by Gov. George Pataki and others failed to keep the case from going to trial.
For the insurance industry, the high dollar amounts make the case “precedent-setting and very notorious,” said Don Griffin, assistant vice president of the industry group Property and Casualty Insurers Association of America.
Initial rulings have gone against Silverstein. A federal appeals court ruled in September that contracts for three of the insurers define the destruction of the buildings as one event, and lawyers will be allowed to tell jurors about the decision.
Insurers say the case cannot hinge on the public’s desire to rebuild at ground zero.
“It may be that Mr. Silverstein may not be able to be the person who will rebuild the World Trade Center,” said Barry Ostrager, a lawyer for Swiss Reinsurance Ltd., the insurer responsible for 22 percent of the coverage. “That doesn’t mean the World Trade Center won’t be rebuilt.”
In the first stage of the case, a jury must decide whether the 13 insurance companies issued their coverage using a broker’s form that would define Sept. 11 as one event.
Most of the insurers used either a form prepared by Willis Group Holdings Ltd., which a judge has ruled describes the trade center’s destruction as one event; or another form prepared by Travelers Property Casualty Corp., which Silverstein says defines it as two events.
The timing of the attack further complicates the arguments.
Silverstein signed a 99-year lease on the twin towers just months before the attack. While he took steps to obtain insurance in July 2001, the actual contracts had not been formally written when the towers fell.
If the jury decides any of the insurers are bound by a form that would allow the destruction to be defined as two events, a second proceeding will determine whether the attack really was two events. A separate jury would hear that second trial.
A third stage would determine how much each insurer should pay.
Griffin, who represents the 1,000-member national association of property insurers, said the case has prompted the industry to write clearer language about its policies, and to try to standardize brokers’ forms.
Property and casualty insurers have paid out more than $25 billion for property losses and damage stemming from Sept. 11, Griffin said, and estimate its total loss at up to $40 billion.
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