Lawyers Clash in Second World Trade Center Trial

Lawyers in the second World Trade Center insurance trial clashed during opening statements in federal court this past Monday over the relevance of a boilerplate policy that defines the 2001 terrorist attack as one event.

Bernard Nussbaum, a lawyer for trade center leaseholder Larry Silverstein, said none of the nine defendants in this case had signed onto the so-called Wilprop form.

In the first trial earlier this year, a jury ruled that 13 other insurance companies were bound by the form, which used language that defined the two planes hitting the two towers as one event.

“None of the nine companies in this case can claim its coverage was governed by the Wilprop form,” Nussbaum said.

But Harvey Kurzweil, a lawyer for Travelers Indemnity Co., told the jurors that the parties intended for the companies that insured the trade center in a complicated 12-layer system to provide consistent coverage even if the contract wording differed from one company to another.

“The evidence will show that this coverage had to be seamless or else you will have gaps in coverage,” he said.

Silverstein has argued that the trade center was destroyed by two events and he should get two insurance payouts of $3.5 billion each. He suffered a blow when the jury in the first trial ruled that it constituted one event under contract language that affected those 13 insurers.

If Silverstein’s lawyers can convince jurors in the second trial that two terrorism incidents occurred, he will stand to collect double the $1.1 billion of coverage provided by the nine defendants in this phase.

Silverstein has vowed to rebuild 10 million square feet of office space at ground zero regardless of how much money he collects from insurers. He and redevelopment officials plan to construct the 1,776-foot Freedom Tower, other skyscrapers and cultural buildings within the next decade.

Nussbaum told the jury that the evidence would show that two planes hitting two towers caused two separate fires and two separate building collapses.

“You will see that we suffered two distinct physical losses,” he said.

Kurzweil said that regardless of the sequence of events, the terrorism was part of a single, coordinated plot. And he said there was “a common industry understanding that ‘occurrence’ has a broad, aggregate meaning.”

The two sides gave different interpretations of a clause in the Allianz Insurance Co. policy that stipulated that losses from tornadoes, cyclones, other natural disasters and “vandalism and malicious mischief” should be construed as one occurrence if losses happened within a 72-hour period.

Nussbaum said the clause did not include airplane crashes or fires, but Allianz attorney John Massopust said insurance professionals including Silverstein’s broker, Willis Group Holdings Ltd., have defined “vandalism and malicious mischief” to include terrorism.

The first trial, which ended in May, focused on whether the 13 insurers that provided the bulk of the trade center’s coverage were bound by the Wilprop form. The current trial may include more evidence about what occurred on Sept. 11, 2001, though U.S. District Judge Michael Mukasey ruled in a pretrial hearing that Silverstein’s lawyers would not be permitted to show jurors photos from Sept. 11 or to put on “a sound and light show” to try to influence them.

Matthys Levy, a structural engineer, testified Monday that the buildings of the trade center complex were structurally independent and that the collapse of the south tower did not contribute to the collapse of the north tower.

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