Published On: Fri, Jul 19th, 2013

World Trade Center Developer Can’t Sue Airlines Judge Rules

CEO Summit at NYU

Larry Silverstein / Getty


/By Alan Gallindoss /

As expected U.S. District Judge Alvin K. Hellerstein ruled yesterday in a case for compensation brought by New York World Trade Center developer Larry Silverstein, who was seeking to obtain $3.5 billion from the successor corporations to United Airlines and American Airlines, whose planes were hijacked by terrorists and flown into the World Trade Center’s twin towers on Sept. 11, 2001. The decision of the judge is that the suit should not be continued as it would have no chance of succeeding.

Silverstein, who had leased the skyscrapers for 99 years from the Port Authority of New York just two months before they were destroyed, and who has already collected $4.1 billion from insurers can’t collect any more under New York law, said the judge in a courtroom less than a mile and a half from the World Trade Center site itself.

The ruling from Manhattan Federal Judge Alvin Hellerstein came after a four-day trial where the destroyed skyscrapers’ owner Silverstein’s World Trade Center Properties sought to continue their suit for at least $3.5 billion as a result of the 9/11 terrorist attack. “If this case were to go forward, the WTC companies would not be able to recover anything against the airlines, ” Hellerstein ruled in the trial which he conducted without a jury.

World Trade Center Properties had launched suit originally in 2008 against United Continental Holdings Inc., American Airlines and its parent AMR Corp., claiming their negligence led to the destruction of the twin towers of the World Trade Center.

The company, which has already rebuilt the destroyed 7 World Trade Center around the corner from the main site and is rebuilding three more towers on the main portion of the World Trade Center site itself, one of which- 4 World trade Center- is already nearing completion, argued that the insurance accord didn’t bar it from seeking additional damages in civil cases because the payout didn’t correspond to specific types of economic losses, such as replacement costs for the buildings or lost rent from tenants. Hellerstein disagreed stating “There’s complete correspondence.” When such a link is made between an insurance payout and a specific type of loss, collecting twice on the same type of loss is barred under New York law, he said and ruled that Silverstein’s multibillion-dollar insurance compensation already received stopped him from filing a lawsuit against the airlines.

Silverstein, in a statement released after the judgement, promised an appeal.“We will not rest until we have exhausted every option to insure that the aviation industry’s insurers pay their fair share toward the complete rebuilding of the World Trade Center, ” the statement declared.The 2001 lease required Silverstein to insure the buildings and rebuild if the site was destroyed. He insured them for $3.5 billion “per occurrence, ” more than required, court papers showed. Silverstein in 2007 reached a $4.1 billion settlement with his own insurers after suing to collect more than $7 billion- twice the value of the policy.

The companies had reached the insurance accord after one jury accepted Silverstein’s claim that each tower’s destruction was a separate attack under some policies, while a jury in another case found some insurers were bound by a policy that defined that attack as a single event. We should all go and read our own insurance policies carefully, one might conclude, as their semantics and sentence construction are often crucial determinants of how money is paid out in the event of a claim. Trouble is so many such policies are written in 9 point type and they can be pretty hard to read at all, let alone interpret correctly.

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