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World Trade Center leaseholder Larry Silverstein’s bid to recover almost $7 billion in insurance money reached a critical phase Wednesday as his lead attorney said insurers were trying to avoid meeting their full obligations under policies still being negotiated when the towers were destroyed on Sept. 11, 2001. Attorney Herbert Wachtell told a jury that key witnesses for the insurance industry were less than credible when they claimed during trial that they always assumed a restrictive definition of the term “occurrence” was in place when the Trade Center was attacked by terrorists piloting hijacked planes. “The tragic events of 9/11 happened before there was a final policy in place,” Wachtell said in his closing argument in the 10-week trial. “These insurance companies are trying to exploit that.” The insurers claim that Silverstein is owed no more than $3.55 billion because the attacks on the Trade Center were one “occurrence.” Silverstein alleges that, for the bulk of the companies who made up the multi-layered insurance program that was being negotiated as he made final his 99-year lease for the center, the attacks were two occurrences. If he prevails at this stage, a second trial will be held on whether he can recover almost double the amount, or roughly $6.8 billion. At the center of the dispute is which “form,” or set of standard insurance provisions, was in force while the insurance package was being constructed through negotiations. Silverstein’s insurance broker, Willis Group Holdings Ltd., has its own form, called the WilProp form. But Silverstein maintains that various insurers insisted on using their own or a standard industry form, a common practice. The WilProp form, it is now undisputed, makes it clear that the attacks constituted one occurrence. Some smaller players in the insurance package that was being assembled have already settled with Silverstein based on their clear adherence to the WilProp form and its single-occurrence definition. The 2nd U.S. Circuit Court of Appeals has also ruled that three other companies, also with relatively small obligations, were governed by the Wilprop form. For the bulk of the insurance companies battling with Silverstein before Southern District Judge Michael B. Mukasey, the task is to convince the jury that Silverstein underinsured the property and is trying to realize a windfall by claiming that the companies not only contemplated, but insisted upon, using either the form of the lead insurer or standard industry forms — neither of which has a definition of the term “occurrence.” Wachtell spent five hours dissecting the e-mail and other correspondence between the insurers and Willis, as well as internal insurance company communications. These exchanges, he said, show the companies did not want WilProp because its terms were generally viewed as favorable to the insured. “These insurers don’t want their own form, they don’t want the Travelers form or the standard industry form because these forms do not define the term occurrence,” Wachtell said. “All they want is WilProp, because if WilProp governs here, it’s one occurrence.” A victory for Wachtell would set up the second trial, one on the meaning of the undefined term “occurrence” in both the Travelers form and the industry forms. A jury’s understanding of the intention of the parties on the word “occurrence” would ultimately determine how much Silverstein is to recover for the Trade Center. Wrapping up an argument that highlighted numerous discrepancies between the deposition and trial testimony of the insurance witnesses, Wachtell insisted that the witnesses were either less than credible or lying. On a video monitor facing the jury, he showed photographs of the insurance company witnesses next to written comparisons between their deposition and trial testimony. Wachtell reminded the jury that the burden of proof rests with the insurance companies, which are obligated to convince the panel that the WilProp form governed. Wachtell, a partner at Wachtell, Lipton, Rosen & Katz, said Silverstein should prevail on the “indisputable documentary evidence and the admissions of their own witnesses.” The evidence, he said, showed that no company wanted WilProp in the summer of 2001 but that “everybody’s got a story” about why they were attached to it after Sept. 11. Wachtell ticked off a list of eight insurance companies that all had different reasons why they believe they were bound to the WilProp form. He showed a series of documents on communications or correspondence, with key phrases highlighted — one for each insurance company. Wachtell argued that the highlighted portions proved that each company had no intention of adhering to the Willis form. After a short explanation, Wachtell remained silent as he slowly let each document appear on the screen. Then a moment would pass before a rectangular stamp reading “No WilProp” appeared and descended onto the document. WHAT IS AT STAKE Silverstein has presented his case as critical to the future of the Trade Center site. Attorneys for the lead insurers, including Barry Ostrager of Simpson, Thacher & Bartlett for Swiss Reinsurance Co., insist that it will have no impact on what is eventually built on the site. Ostrager and other attorneys representing the insurance companies have argued that Silverstein invented his claim that the insurance companies were moving away from Wilprop and toward the Travelers form as Sept. 11 neared.

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