Jury Says WTC Attacks
Were Separate Events
Dec. 7, 2004 -- NEW YORK -- A federal jury ruled that the Sept. 11, 2001, attacks on the World Trade Center were two "occurrences," insurance language that means developer Larry Silverstein can collect as much as $1.1 billion more than the $3.55 face billion value of the insurance on the property.
The verdict is a vindication for Mr. Silverstein, who for more than three years has pursued his claim that two planes hitting two towers at two different moments entitled him to a double payout on the insurance he took out in the summer of 2001, when he bought a 99-year lease on the property from the Port Authority of New York & New Jersey.
The verdict also is a potential jumpstart for ambitious plans to build five office towers around Ground Zero, a program that could cost upward of $9 billion. Before yesterday's verdict, few observers believed Mr. Silverstein would have enough funds to build more than the iconic Freedom Tower, estimated to cost $1 billion to $1.3 billion, and perhaps one other tower.
The verdict keeps the broader office-rebuilding program alive for now and helps solidify Mr. Silverstein's financial position as lead developer at Ground Zero.
The courtroom was silent as U.S. District Judge Michael Mukasey read the verdict, but the faces on the legal teams told the story. Lawyers for the insurers grimly huddled together, hugging each other and wiping back tears, while Mr. Silverstein's legal team beamed with elation. "We're very pleased with the verdict," said Bernie Nussbaum, one of Mr. Silverstein's lawyers.
Mr. Silverstein said in a statement, "I strongly felt, and the jury agreed, that the destruction of the Twin Towers by two separate airplanes at two separate times was two separate occurrences and that these insurers have an obligation to pay their fair share to help make Lower Manhattan whole again."
Insurers had argued that the attacks were a single, highly coordinated terrorist attack on a single insured property, warranting a single payout.
A spokeswoman for St. Paul Travelers Cos., St. Paul, Minn., one of nine insurers in the case, said the impact of the decision will be "immaterial" to the company. A spokeswoman for another of the insurers, Allianz AG Holding, said: "We're disappointed that the jury failed to conclude that the Allianz policy didn't define the World Trade Center attack was one occurrence." She added that the company was considering an appeal. Others included Gulf Insurance Co.; TIG Insurance Co.; a unit of General Electric Co.; Tokio Marine & Fire Insurance Co., a unit of Millea Holdings Inc.; Zurich American Insurance Co.; Royal Indemnity Co.; and Twin City Fire Insurance Co.
The victory is Mr. Silverstein's first in three years of litigation. In March, a group of 13 insurers led by Swiss Reinsurance Co. won a resounding victory in their claim that they had signed up for coverage using forms that left no doubt that the attacks were defined as a single occurrence. In that trial, Mr. Silverstein lost to insurers that account for $2.4 billion of the policy.
Email your comments to rjeditor@dowjones.com.