Travelers Underwriter
Deals Blow in WTC Case

NEW YORK -- A Travelers Insurance Co. underwriter said he never insisted other World Trade Center insurers switch to his form nor was he ever told that his company was considered the "lead insurer" in the coverage during the binder period, a federal court heard Tuesday.

The comments came as James Coyle took the stand in the federal trial between World Trade Center leaseholder and more than a dozen insurers. His comments appear to damage Silverstein's case that Travelers was the lead insurer and that all of the insurers were switched over to the Travelers form at Travelers' insistence.

A seven-man, five-woman jury must decide which policy form was in effect when the Twin Towers were destroyed. All sides agree that the broker at Willis Group Holdings, Timothy Boyd, sent out a form issued by Willis, called the WilProp form, when he was first shopping for insurers. The WilProp form specifically defines the word occurrence and views the terrorist attacks as a single event.

However, Larry Silverstein's team contends the form was changed to one issued by Travelers Insurance prior to Sept. 11, and this form doesn't define the word occurrence, thereby leaving open the possibility that the attacks could be considered two events, entitling Silverstein to two payments of $3.55 billion.

Silverstein's team has contended that Travelers refused to use the WilProp form and had insisted its own form be used instead. Boyd, in testimony last month, said Travelers had insisted its form be used by all insurers. He backtracked this week though and said the decision to switch all of the insurers to the Travelers form was made by Willis and Silverstein for "concurrency" reasons so that all insurers would be following the same form. He and other Silverstein witnesses have said they considered Travelers to be the "lead" insurer in the consortium and therefore all of the other insurers would be switched to the Travelers form.

Coyle's testimony appeared to dispute this statement. Coyle said he requested the Travelers form be used for his own's company's coverage - nobody else's. Indeed, at one point, Coyle even hinted that he might have considered using the WilProp form if Willis had made certain modifications to it.

"We were prepared to follow the WilProp in the excess (layers) position, potentially with modifications," said Coyle.

Still, Coyle did confirm that Boyd had mentioned to him that he planned to circulate the Travelers form to the other insurers so that all might be bound on the same form. "His (Boyd's) answer was 'well, that's the plan. That's what we're trying to do,' " said Coyle.

However, prior to Sept. 11, Coyle said he was never told which insurers - if any - had switched to the Travelers form. And he said it made no difference to him if others switched or not.

Coyle also testified that he had never been told that Travelers would be the lead insurer during the binder period, and that he assumed Boyd was only concerned about the final policy - not the binder - when he was talking about "concurrency."

This prompted Silverstein's lawyer, Herbert Wachtell, to jump up and angrily ask how he knew Boyd only cared about the final policy - and not the binder.

"Sir, I don't know what Mr. Boyd cared about," replied Coyle.

At this point, Wachtell screamed back, "So when you said you understood that he was looking for concurrency in the future, you didn't know what you were talking about, is that correct?"

Judge Michael Mukasey then interrupted, ordered his question removed from the record and demand Wachtell sit down.

Silverstein's team did score a win during another witness' testimony though. Steve Rattigan, an underwriter from Tokyo Marine, told the court that Boyd had told him that he was planning to change the policy form to the Travelers one prior to Sept. 11.

But overall, it wasn't a stellar day for Silverstein's case. Earlier in the day, broker Timothy Boyd wrapped up his fifth day of testimony. (He previously spent five other days on the stand last month when the insurers were presenting their case). Boyd's testimony has often been contradictory and evasive, which has not helped Larry Silverstein's case.

During Tuesday's hearing, Boyd said he never considered the "one occurrence versus two" argument to be an issue in the days immediately following Sept. 11.

Yet, despite his comment, evidence showed Boyd was indeed discussing the issue with other Willis Group Holdings executives as early as Sept. 11.

Boyd admitted he discussed the "occurrence" issue with Suzanne Douglass, the managing director of property insurance at Willis, the day the Twin Towers collapsed, and the court saw e-mails from another executive requesting information on how the "occurrence" definition in the WilProp form differed from that in the Travelers form.

The court also heard that on Sept. 24 Boyd attempted to get ACE Bermuda Insurance Ltd. and XL (Bermuda) Insurance Ltd. to change to the Travelers form even though the two had signed binders that specifically named the WilProp form prior to Sept. 11 and neither had ever laid eyes on the Travelers form. Boyd said the Travelers form offered more attractive clauses for insurers and he thought they'd happily sign on.

But if the definition of occurrence had become a central issue, and the Travelers form doesn't define the word, "did you still believe they would happily switch to the Travelers form?" asked David Boies, the attorney for the London insurers.

"I'm not sure," said Boyd. "I have to think about that," he said, as he stared off into space for about 30 seconds. He then replied, "no."

"That is, you no longer believed they would happily switch to the Travelers form, correct?" asked Boies.

"That is correct," replied Boyd.

As it happened, ACE and XL both rejected the request to switch forms, and their cases were settled prior to this trial beginning.

Broker Timothy Boyd's testimony has often been contradictory and evasive, which has not helped Larry Silverstein's case.

At one point, Boyd told the court he did not believe he needed to inform the insurers that the form had been changed as long as it met the terms and conditions set out in the original binder agreement.

However, he said he discovered after Sept. 11 that an insurer would continue to be bound by the WilProp form unless told of the form switch. When asked how he learned this, he said he "learned it from reading."

Boies then pulled out Boyd's deposition testimony where he said he learned it "through discussions with folks." Boyd then revised his answer and said he read about it, but also consulted with an instructor.

"So it was a folk, not folks?" asked Boies sarcastically.

"That is correct," said Boyd.

"What was the instructor's name?" asked Boies.

"Jim Smith. That's his real name. I know it sounds ...." said Boyd.

"No comment," replied Boies, as the courtroom erupted into laughter.

Another attorney joined in.

Stuart Cotton, the attorney for Lexington Insurance Co., chided, "So we are talking about a single folk and his name is Smith, is that right?"

Boyd, with a deep sigh and rolling his eyes, replied "yes."

The contradictory testimony raises questions about Boyd's contention that he told most of the insurers of the form switch by telephone, but didn't have time to formally document it with a follow-up e-mail or other method.

The trial resumes Wednesday.

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