More Notes Enter
WTC Insurance Trial

March 10, 2004 -- NEW YORK -- In the case that will determine whether World Trade Center lease-holder Larry Silverstein can collect double the insurance for the terrorist attacks on the Twin Towers, a federal court heard more evidence that an insurance policy form that viewed the attacks as a single event was in effect.

The evidence came in the form of notes taken on Sept. 12, 2001, by Beth Ann Herrmann, director of insurance operations for Mr. Silverstein's main lender, GMAC Commercial Mortgage Corp. Lawyers for Swiss Reinsurance Co. and a dozen other insurers that provided coverage on the complex have been vying to have the notes admitted into court for several weeks.

A jury must decide which insurance-policy form was in effect at the time the Twin Towers collapsed. The decision will ultimately determine how much insurance money Mr. Silverstein will receive to rebuild at Ground Zero. Mr. Silverstein contends the terrorist attacks were two separate events, entitling him to collect two payments of $3.55 billion. His insurers argue it was one event, limiting his payout to a single payment. The policy form will dictate if the tragedy is considered one event or two for insurance payment purposes.

After several weeks of consideration, Judge Michael Mukasey agreed to allow Ms. Herrmann's notes into evidence, and a lawyer for the insurers, David Boies, introduced some of the notes Wednesday.

The notes documented conversations Ms. Herrmann had with Peter Lefkowitz of the Harbor Group, which was GMAC's insurance adviser. On Sept. 12, Ms. Herrmann scrawled a note confirming that Mr. Silverstein's risk manager, Robert Strachan, had faxed the so-called WilProp form to Mr. Lefkowitz on Sept. 12. Language in the WilProp form, which was issued by the broker Willis Group Holdings Ltd., would define the plane attacks as a single "occurrence."

Mr. Strachan, during earlier testimony, confirmed he faxed the form, but said he did so accidentally at a time of confusion. He said his office was in "bedlam" in the wake of Sept. 11 and that he only faxed the form because it was on the floor closest to his desk at the time.

However, Ms. Herrmann's notes appear to suggest that Mr. Strachan's choice wasn't an accident. In her notes, Ms. Herrmann wrote, "Strachan faxed the manuscript form that would be written on" and that "Lloyds accepted the policy form." The notes appear to back up contentions by the London insurers and others that they signed binding agreements based on the WilProp form.

Mr. Silverstein has contended that the WilProp form was originally sent out to insurers when the broker was seeking coverage. However, he argues the form was changed in July to one issued by Travelers Insurance, which doesn't define the word "occurrence" and leaves the door open for the tragedy to be considered two events.

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