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Judge Rules WTC Terror Is One Event
By E.E. Mazier
NU Online News Service, Sept. 25 3:06 p.m. EST—A federal trial
judge, in a final ruling, today agreed with three World Trade Center insurers
that the terrorists' destruction of the buildings constituted one attack
worth $3.5 billion, not a $7 billion multiple event as the landlord contended.
U.S. District Court Judge John S. Martin Jr., in Manhattan, granted summary
judgment to the insurers based on their "one-occurrence" argument.
The ruling is appealable.
In a statement, Silverstein Properties said in response, "Obviously,
we disagree with the ruling and will consider an appeal at the appropriate
time.
"However, these three insurers coverage amounts to a total of approximately
$112 million, so that limiting these insurers to a single occurrence does
not have a material effect on the overall amounts of $6.7 billion that
will be recovered in the litigation."
In their separate motions, Hartford Fire Insurance Co., Hartford, Conn.,
Royal Indemnity Co., Nashville, Tenn., and The St. Paul Fire and Marine
Insurance Co., St. Paul, Minn., had argued that in issuing coverage binders
to the WTC leaseholders just before the Sept. 11, 2001, terrorist attack,
they had agreed to be bound by the so-called WilProp form.
The WilProp form, provided by the Willis Group of New York Inc., which
brokered the deal for the Silverstein Properties and other leaseholders,
defined "occurrence" as a single occurrence in an unambiguous
manner, the three insurers argued.
In making that argument, the three insurers had sought a ruling to limit
their liability to their proportionate share of the approximately $3.5
billion in coverage purchased by the Silverstein parties.
In contrast, the Silverstein parties have maintained that the toppling
of the Twin Towers constituted two separate insurable events for a total
of about $7 billion. The Silverstein parties have refused to concede that
the WilProp definition of occurrence was incorporated in the insurance
binders.
Judge Martin Jr. found that the three insurers were bound by the WilProp
form and that "occurrence" was susceptible to only one reasonable
definition that rendered them liable for only one payment in the face
amount of the policy.
As explained by Judge Martin, the Silverstein parties had argued that
in signing binders, the three insurers as well as several others knew
that they would ultimately agree to be bound by the contract terms negotiated
by the insured and lead underwriter The Travelers Insurance Co., Hartford,
Conn.
To the Silverstein parties, this meant that all of those insurers were
bound to the terms to which The Travelers and the insureds had agreed
as of Sept. 11, Judge Martin wrote.
Judge Martin rejected the Silverstein parties' argument that the binders
were "binding preliminary commitments." He wrote that, under
the case law, binders are instead present contracts of insurance and that
binder terms are not subject to future negotiation.
The judge wrote that New York with respect to binders does not consider
the negotiations of the parties to determine what terms ultimately might
have been incorporated into a formal policy.
In fact, Judge Martin wrote, the state's highest court has made it clear
that once a binder is signed, the insurance contract is closed and the
binder effectively becomes the same as a regular insurance policy.
last updated:
September 26, 2002
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Diversified Risk Insurance Brokers
phone: 510/547-3203 fax: 510/547-5648
5900 Christie Ave
License # 0529776
Emeryville, California 94608
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