Arguments Close
In Silverstein Case
April 16, 2004 -- NEW YORK -- Larry Silverstein and his insurance team "manufactured a story" to try to win double payment of a $3.55 billion World Trade Center insurance policy because the developer realized he had underinsured the complex, a lawyer for the trade center's insurers asserted, as closing arguments wrapped up the high-stakes insurance trial.
Barry Ostrager, lawyer for Swiss Reinsurance Co., the trade-center insurer with the biggest risk in the case, said the evidence showed overwhelmingly that his client and other insurers committed to coverage based on a policy form pushed by the Silverstein team that clearly defined the Sept. 11, 2001, attacks as a single "occurrence," insurance language that would doom Mr. Silverstein's case.
In his closing on Wednesday, Mr. Silverstein's lead lawyer, Herbert Wachtell, countered that the insurers were trying to "exploit" confusion stemming from the attacks to deny the fact that during negotiations in the summer of 2001 they had agreed either to switch to a second insurance form with a broader occurrence definition or agreed to coverage with no form at all, leaving open the possibility of a double payment.
Mr. Wachtell added that evidence in the trial had "totally blown out of the water" the "conspiracy theories" pushed by the insurers that Mr. Silverstein, his broker, Willis Group Holdings, and his lawyers, including Mr. Wachtell himself, had invented their double-occurrence arguments after the attacks. "We heard a lot [of] Mr. Ostrager's innuendoes," Mr. Wachtell said.
The case, in U.S. District Court in Manhattan, could go to the jury as early as Monday. Mr. Wachtell's remarks reflected lingering bitterness from this grueling eight-week trial, which painstakingly reconstructed events of the summer of 2001 when Mr. Silverstein and Willis hurriedly assembled a massive insurance policy in advance of the July 24 closing of Mr. Silverstein's purchase of the World Trade Center office leases.
The ambiguity over the insurance stems from the fact that the insurers had committed to provide coverage but, as was typical in the insurance industry then, hadn't finalized the policies by the time of the attacks. Both sides agree that Willis approached the market in June 2001 with an in-house form known as WilProp that defines "occurrence" as a "series of similar causes," explicit language that provides for a single payment. Swiss Re argues that it and most insurers committed to coverage by July 18, having seen nothing but WilProp.
Mr. Silverstein argues that Willis requested -- and Swiss Re and others agreed -- to switch to a form written by Travelers Property Casualty Corp. in July 2001.
The case has wide implications for the future of Lower Manhattan. If Mr. Silverstein loses, planning and reconstruction could be set back years. Most insurers would be required to make a single payment, leaving the developer far short of the amount he would need to rebuild 10 million square feet of office space, as required by his lease with the Port Authority of New York and New Jersey, which owns the 16-acre site.
If Mr. Silverstein wins, the trial moves to a second phase with a new jury to determine whether the Sept. 11 attacks were one occurrence or two. The maximum amount he could win, $6.6 billion, would provide a big boost to Ground Zero reconstruction.
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