Second World Trade Center Trial Begins
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A lawyer for World Trade Center leaseholder Larry Silverstein told a U.S. District Court jury that nine insurers, including Allianz AG and St. Paul Travelers Cos., should pay him twice the value of their $1.1 billion in policies because the terrorist assault was two separate events.
“These companies promised to pay up to $1.1 billion for each occurrence of property loss that the Silverstein parties suffered,” Silverstein Properties lawyer Bernard Nussbaum said in opening arguments today. “You will see from the evidence that there were two distinct physical losses each resulting from a direct physical cause: separate planes each striking separate tower, at separate times, causing separate collapses.”
The court is hearing Mr. Silverstein’s second bid to collect more than the $3.55 billion of insurance he bought from a syndicate of 23 carriers two months before the trade center was destroyed. In the first phase of the trial, which ended in May, another jury found that Swiss Reinsurance Co. and nine other insurers had policy language under which the attacks by two hijacked planes could be defined only as a single occurrence, preventing Mr. Silverstein from claiming an extra $2.1 billion.
None of the nine insurers in this phase had such restrictive language in their coverage agreements. That allows Mr. Silverstein to argue that each hijacked jet constituted a distinct attack requiring separate total loss payments.
Attorney Harvey Kurzweil, representing Travelers, told the jury that a single terrorist plot destroyed the towers. He said that even without the explicit language used in the policies at issue in the first trial, Mr. Silverstein knew that a single plot would be treated as a single event, even if multiple weapons were used.
“The evidence will show that the towers were destroyed not because two planes just happened to fly into two buildings,” he said. “The World Trade Center was destroyed because of an obscene conscious decision to take those two planes and turn them into guided missiles.”
The only issue the jury must resolve is whether the destruction of the towers was one occurrence or two, U.S. District Court Judge Michael Mukasey told the 10-woman, two-man jury. Mr. Mukasey has said the current phase of the case should last four to six weeks.
Mr. Silverstein, 72, has to prove to the Port Authority of New York and New Jersey, which leased the trade center to his partnership six weeks before the attack, that he has the financial means to rebuild all 10 million square feet of offices lost that day at a cost he has put at about $7.5 billion.
If the jury finds any of the insurers liable for two payouts, they will go to a third phase in which damages will be determined.
The first phase of the trial took 12 weeks. Swiss Re was Mr. Silverstein’s largest individual insurer, with $877.5 million, or 25%, of his coverage.
Mr. Nussbaum, who has the burden of proof in the case, said he will show using an engineering expert that, had there been just one jet, the first collapse wouldn’t have crippled the second tower. That expert is to present a computer simulation of the collapses to show that the falling beams from the south tower caused only slight damage to the north one.
He also said the policies contained an “hours clause” that included a “laundry list” of perils, such as hurricanes, earthquakes, volcanic eruptions, and riots, that treat all building damage over 72 hours as a single event. Terrorism wasn’t on the list, he said.
“The insurance companies knew there could be terrorist acts,” Mr. Nussbaum said. “They knew there could be more than one terrorist act. They knew what they were doing – this is their business.”