- The Washington Times - Sunday, February 8, 2004

NEW YORK - More than two years after terrorists brought down the World Trade Center, a federal jury will begin deciding a $3.5 billion question: Is the leaseholder entitled to collect insurance for one attack or for two?

Opening statements start today in the three-stage trial, which pits developer Larry Silverstein against 13 insurers.

The outcome will determine whether Mr. Silverstein receives $3.5 billion or $7 billion to rebuild at ground zero.

Mr. Silverstein contends that the destruction of the World Trade Center constitutes two attacks because the Twin Towers were hit by hijacked airliners about 15 minutes apart.

He and downtown development officials have been counting on the larger figure to build the 1,776-foot Freedom Tower, other skyscrapers and cultural buildings on the site within the next decade.

The smaller amount could mean years of construction delays at the site, says the agency in charge of downtown redevelopment.

“Anyone who’s in New York knows that how much we recover from this lawsuit will have an impact on the rebuilding of this site,” said Kevin M. Rampe, president of the Lower Manhattan Development Corp. The reconstruction costs have been estimated at between $7.45 billion and $7.86 billion, he said.

The legal proceedings could last months. A mediator’s intervention, settlement talks and efforts by New York Gov. George E. Pataki and others failed to keep the case from going to trial.

For the insurance industry, the high dollar amounts make the case “precedent-setting and very notorious,” said Don Griffin, assistant vice president of the industry group Property and Casualty Insurers Association of America.

Initial rulings have gone against Mr. Silverstein. A federal appeals court ruled in September that contracts for three of the insurers define the destruction of the buildings as one event, and attorneys will be allowed to tell jurors about the decision.

Insurers say the case cannot hinge on the public’s desire to rebuild at ground zero.

“It may be that Mr. Silverstein may not be able to be the person who will rebuild the World Trade Center,” said Barry Ostrager, an attorney for Swiss Reinsurance Ltd., the company responsible for 22 percent of the coverage. “That doesn’t mean the World Trade Center won’t be rebuilt.”

In the first stage of the case, a jury must decide whether the 13 insurance companies issued their coverage using a broker form that would define September 11 as one event.

Most of the insurers used either a form prepared by Willis Group Holdings Ltd., which a judge has ruled describes the trade center’s destruction as one event; or another form prepared by Travelers Property Casualty Corp., which Mr. Silverstein says defines it as two.

The timing of the attack further complicates the arguments.

Mr. Silverstein signed a 99-year lease on the Twin Towers just months before the attack.

While he took steps to obtain insurance in July 2001, the contracts had not been formally written when the towers fell.

If the jury decides any of the insurers are bound by a form that would allow the destruction to be defined as two events, a second proceeding will determine whether the attack really was two events.

A separate jury would hear that stage.

A third stage would determine how much each insurer should pay.

Mr. Griffin, who represents the 1,000-member national association of property insurers, said the case has prompted the industry to word its policies more clearly, and to try to standardize broker forms.

Property and casualty insurers have paid out more than $25 billion for property losses and damage stemming from September 11, Mr. Griffin said, and estimate its total loss at up to $40 billion.

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