Verdict favors World Trade Center leaseholder

From Phil Hirschkorn

CNN





Larry Silverstein signed a 99-year lease on the World Trade Center in July 2001. YOUR E-MAIL ALERTS Manhattan (New York) Acts of terror September 11 attacks Real Estate or or Create your own Manage alerts | What is this?

NEW YORK (CNN) -- Real estate developer Larry Silverstein, who envisions replacing all the commercial office space destroyed in the September 11, 2001, terrorist attack on the World Trade Center, won a court victory Monday that may help him do so.

A jury in Manhattan federal court agreed with his argument that he should be compensated for the destruction of the two 110-story twin towers as two separate events.

After a six-week trial and 10 days of deliberations, a jury determined that nine insurers sued by Silverstein owe him the maximum payout per catastrophic occurrence for each tower.

The skyscrapers were brought down by the structural damage and fires caused by the impact of hijacked 767 passenger jets crashing 16 minutes apart.

The insurers are collectively responsible for a maximum of $1.1 billion insurance per occurrence. The issue before the court was whether the insurers were obligated to pay for one occurrence or two.

If the verdict is upheld it means the insurers would be obligated to pay up to $2.2 billion to Silverstein, which he would devote to construction at Ground Zero.

A trial that ended in May resulted in an unfavorable result for Silverstein.

Then, a jury decided that 10 of 13 other insurers sued were bound by insurance policies that more narrowly defined "an occurrence."

In those policies insurers could treat the terror attack on the Trade Center as a single occurrence.

Those 10 firms are responsible for a combined payout exceeding $2 billion. The three other firms from that trial were grouped with six insurers in the second trial.

In the next phase of the litigation, a three-person court-appointed panel will evaluate the Trade Center property loss.

Silverstein signed a 99-year lease taking control of the Trade Center in July 2001, six weeks before the attacks that killed 2,749 people and toppled 10 million square feet of commercial space in the twin towers and five other buildings.

His insurance policies were not finalized at the time, leading to the legal disputes over which "per occurrence" policies applied.

The government agency overseeing rebuilding on the 16-acre site, the Lower Manhattan Development Corporation, has tapped Silverstein to develop Freedom Tower.

The Freedom Tower will have 2 million square feet and reach 1,776 feet to become the world's tallest skyscraper when completed in 2009. Its cornerstone was laid July 4.

Silverstein has already topped out the steel frame of a 52-story office tower where the 7 World Trade Center building stood until it collapsed September 11. The building is scheduled to be ready for occupancy next year.

He plans four other buildings at the Trade Center site.

"I am thrilled with today's victory. But this is a win for all New Yorkers. Today's decision means an additional billion dollars of insurance proceeds will be available," Silverstein said in a written 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," he said.

President of the Lower Manhattan Development group, Kevin M. Rampe, said, "The additional funds will be used to rebuild the World Trade Center site even more expeditiously and replace the economic engine we lost that fateful day."

Keith Owens, a spokesman for one of the nine insurers, Zurich American Insurance, said, "We are obviously disappointed with the outcome of the trial. We continue to believe the correctness of our position that this was one occurrence, and we are looking at all of our post-trial options."