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World Trade Center leaseholder Larry Silverstein’s attempt to win at least $2 billion more from insurers on the theory that the two airplane attacks on Sept. 11, 2001, were two separate occurrences has been rebuffed. The 2d U.S. Circuit Court of Appeals upheld a Southern District of New York jury verdict that the bulk of insurance policies covering the World Trade Center treated the terror attacks as a single occurrence. However, the court also upheld a victory awarded Silverstein by the jury in the second phase of trial, agreeing that temporary insurance policies in effect when terrorists leveled the buildings required treatment of the attack as two occurrences. That meant that nine insurance companies will have to pay double the roughly $1 billion coverage under their policies. Judges John M. Walker Jr., Jose Cabranes and Rosemary Pooler decided the appeals in SR International Business Insurance Co. v. World Trade Center Properties, No. 04-4500-cv. The ruling is most likely the final resolution of a massive insurance dispute that began shortly after the terror attacks. Silverstein originally sought more than $7 billion. He has been awarded about $4.5 billion. Silverstein had agreed on a 99-year lease for the World Trade Center buildings in the spring of 2001, and spent the summer negotiating a multilayer insurance program that provided for $3.54 billion in coverage on a “per occurrence” basis. But for all but one of the insurers, final insurance contracts had not been signed when the hijackers steered two planes into the North and South towers at 8:48 a.m. and 9:03 a.m. on Sept. 11. In one of the largest, and certainly the most emotional, insurance fights in history, Judge John Martin of New York’s southern district held that three insurers were governed by the so-called “WilProp” form-the form Silverstein’s insurance broker used during negotiations. It treated the destruction by the two planes as one occurrence. Martin also denied summary judgment to Silverstein on his claim that the undefined term “occurrence” in the policy of Travelers Indemnity Co., one of the companies in the litigation, meant that as a matter of law, the attacks were two occurrences. The 2d Circuit affirmed. Due to Martin’s retirement from the bench, the case was reassigned to Chief Judge Michael Mukasey, who proceeded to hold a two-phase trial. In the first phase, a jury found that nine of 12 participating insurers and 20 Lloyd’s of London syndicates were bound by the WilProp form-leaving Silverstein with only a single-occurrence recovery. But three insurers were found not to be governed by the form, and they were joined in the second phase of the trial by six insurers that conceded the same. The jury in the second phase found that all nine insurers were subject to payments on a two-occurrence basis. The 2d Circuit rejected Silverstein’s arguments on phase one, and did the same for the losing insurers’ arguments in phase two. Both sides had argued that they should have prevailed as a matter of law and the issues never should have reached a jury. The circuit also disagreed with both sides’ claims that the verdicts were marred by evidentiary errors and flawed jury instructions. “Not surprisingly, however, neither side admits that any errors contributed to the judgments in their favor,” Walker wrote. Of the nine insurers that lost the second phase of the trial, eight appealed. One settled with Silverstein. The circuit rejected their claims that expert testimony as to custom and usage in the insurance industry should not have been allowed and that evidence of custom and usage in the industry was insufficient to send the matter to the jury.

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