New York, Tuesday, April 29, 2004
Silverstein Loses Insurance Battle
By AMY WESTFELDT,
Associated Press Writer
YORK - World Trade Center
leaseholder Larry Silverstein suffered a
court defeat Thursday that means he won't get his
$3.5 billion insurance policy paid twice over. In a
partial verdict, a federal jury found that the
majority of the insurers, who hold more than $1
billion of the policy, are bound by a form that
defined the Sept. 11 terrorism as one
It was the first of at least two trials that
will ultimately decide how much insurance money
will be available to rebuild ground zero.
Development officials have said the amount
recovered could control the pace of rebuilding.
Silverstein still could recover as much as $5.5
billion if he prevails in a future trial to decide
whether -- apart from the form binding many of the
insurers -- the destruction of the twin towers was
two events for insurance purposes.
The verdict came just after the jury said in a
note that it had reached a decision days ago on all
except Swiss Re International Business Insurance
Co., the insurer with the largest stake in the
policy, about $877 million.
Judge Michael Mukasey decided to accept
the findings and to send the jury back to resume
deliberating the Swiss Re issue.
The jury found in Silverstein's favor regarding
three insurance companies that provided about $176
million of the insurance for the trade center.
If jurors find against Swiss Re, it will join
those three companies and other insurers that
provided nearly $1 billion in coverage in a second
trial to determine whether they owe two payouts,
one for each tower. A third phase would determine
how much the insurers must pay.
for several insurers that successfully argued they
needed to issue only one payout said they were
pleased by the verdict.
"We had a very clear and plausible story to
tell," said Ken Erickson, who represented
Lloyd's of London and other London insurers that
carried about $719 million of the policy.
"This is a partial verdict," Silverstein
spokesman Howard Rubenstein said. "We are
awaiting the decision with respect to Swiss Re, the
largest insurer in the World Trade Center coverage.
We will have no further comment while the jury
continues to deliberate."
The jury was scheduled to resume its
deliberations Monday, but Mukasey dismissed one of
the 11 jurors Thursday, saying she had requested to
be excused because of a personal problem. Mukasey
didn't disclose what the problem was or whether the
juror was the same one who asked a courtroom aide
to leave the trial earlier this week.
The partial verdict came after a 2 1/2-month
trial that focused on which insurance policies
applied at the trade center when the towers
collapsed on Sept. 11, 2001.
Although the policy of
the 13 insurers in this trial had not been
finalized on Sept. 11, the insurers said they
had signed temporary binders based on the terms
of a form issued by Silverstein's broker, Willis
Group Holdings Ltd.
An appeals court ruled last September that that
form, known as a Wilprop, would define the Sept. 11
destruction of the trade center as one occurrence
for insurance purposes.
In closing arguments last week, Silverstein
attorney Herbert Wachtell argued that the
Willis brokers had switched the 13 insurers over to
another policy form issued by Travelers Property
Casualty Corp. in July 2001.
Wachtell said that Willis broker Timothy
Boyd, who obtained insurance for Silverstein,
either told representatives
for the insurers they were switching to
Travelers, or were not obligated to because some
insurers waived the ultimate wording of the
But insurers' attorneys, led by Barry
Ostrager of Swiss Re, said that the Willis
brokers could produce no e-mails or written notice
to the insurers that a switch was being made.
The insurers also referred to a Sept. 12, 2001,
fax by Silverstein's insurance manager of the
Wilprop form to site owner Port Authority of New
York and New Jersey and a leading Silverstein
lender as evidence that that was the insurance that
applied at the time. Silverstein attorneys argued
that the manager was
distraught the day after the
attacks and mistakenly didn't receive an
e-mail attachment of the Travelers form, so he just
faxed what he had in his office.
One Willis broker testified he had e-mailed the
Travelers form to a Swiss Re underwriter. The
underwriter testified that he received it, but
didn't read it carefully because such a form had
never been discussed with him.
11, 2001: Larry Silverstein's coveted deal went
down in dust. Vows to rebuild twin towers.
Jewish Magnate had just signed $3.2 billion deal
on WTC towers
insurance giants sue Twin Towers' Silverstein:
Attack was one insurable event, not two |
for interesting USA Today display of Sept.11
Can't Double-Dip Insurance
Trade Center Developer Larry Silverstein Suffers