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Attorneys for insurance companies said Thursday that the evidence in the multibillion-dollar dispute over the destruction of the World Trade Center showed clearly that Trade Center leaseholder Larry Silverstein underinsured the property. Barry Ostrager of Simpson Thacher & Bartlett, representing Swiss Reinsurance, told a jury that his client committed to an insurance form that limited its obligations to Silverstein to payments for a single “occurrence” almost two months before terrorists leveled the twin towers with hijacked planes. Silverstein is seeking to double the $3.55 billion owed him under a multi-layered insurance program that was still being negotiated on Sept. 11, 2001. He contends the two plane crashes constituted two “occurrences.” The obligation to pay double, he argues, is an open question because Swiss Re and other insurers fell into one of two categories — either the insurers had not agreed to a “form,” or set of standard insurance provisions provided by the insurance broker — or the insurers understood they would be adopting the form language of the alleged lead insurer in the case, Travelers Indemnity Co. Silverstein benefits whether there was no form or whether the Travelers language is used because both leave undefined the term “occurrence.” Ostrager and other attorneys for the insurance companies maintain that their clients were bound to the form offered by Silverstein’s insurance broker, Willis Group Holdings Ltd. Under the language of the “WilProp” form, a federal appeals court has already ruled, the attacks are considered one occurrence. Thursday, Ostrager began his closing argument before Judge Michael B. Mukasey by pointing to the actions and testimony of Robert Strachan, risk manager for Silverstein Properties. Ostrager reminded the jury that the day after Sept. 11, Strachan was asked by a lawyer for the Port Authority of New York and New Jersey, and others, “the same question you are being asked to decide in this case — what was the operative policy form?” Strachan testified that he faxed the Port Authority the Willis form, known as WilProp, on Sept. 12 and did not send any information relating to the Travelers form. The two sides have also disagreed over whether Travelers was the lead insurer for the Trade Center. For Herbert Wachtell of Wachtell, Lipton, Rosen & Katz, lead lawyer for Silverstein, Travelers was the lead insurer. And despite the fact the WilProp form was the basis for the start of negotiations on the insurance package, Wachtell has said, the insurance companies and the Willis brokers contemplated all along that there would be a switch to the form of the lead insurer. But Travelers was not the lead insurer, Ostrager argued to the jury, because the bulk of the coverage was provided by other companies and Travelers’ obligations to Silverstein would kick in only at the highest level of damage to the Trade Center. To prove his point, Ostrager reminded the jury of Strachan’s testimony. “There never was a lead insurer picked prior to Sept. 11,” Strachan testified. “This is a creation of all you guys.” During his closing Wednesday on Silvestein’s behalf, Wachtell said internal communications at Willis made it clear that Willis personnel were well aware that the WilProp form would not govern and believed that the terms ultimately adopted by the insurers would follow the Travelers form. Wachtell bristled at what he called implications by the insurance attorneys that the Silverstein litigation team, after Sept. 11, had helped engineer the Silverstein line that the insurance companies were switching from the WilProp form to the Travelers form — or no form at all. Ostrager disputed Wachtell’s interpretation. “We are not saying that the lawyers manufactured a story,” Ostrager said. “But make no mistake about it, we are saying that Willis is manufacturing a story.” Ostrager said the evidence shows that Swiss Re was obligated by a binder to provide coverage effective July 18, 2001. “The Willis people spent weeks deciding to use their proprietary form, the WilProp form, which is the form they believed guaranteed to the best terms and conditions” for the real estate interests they were representing, he said. “The idea that Willis would discard all this is a very fanciful idea.” In all, 13 insurance companies are trying to convince the jury that the terms of WilProp, including its definition of “occurrence,” govern the dispute. Should they fail, a second trial would be held to determine the definition of the term and the understanding of the parties. LONDON INSURERS Among those insurers are companies that provided coverage in a London-based syndicate. David Boies of Boies Schiller & Flexner, representing Lloyds, told the jury Thursday that it made “no sense” for Willis to claim that there was no form in place for many of the insurers when the Trade Center was destroyed. He said that Willis placed great importance on obtaining “concurrency” or conformity of language in the polices of a multi-insurer package. If Willis was so interested in concurrency, Boies asked, why would it insist that the insurers had agreed to no form when consistency could have been achieved merely by sticking with the Willis form — to which several insurers were already expressly bound? Moreover, Boies said, arguing that there was “no form” gives up the protection that Willis believed was provided to the Silverstein parties by the WilProp form. And keeping the London insurers on the WilProp during the binder period gave Silverstein coverage that was “at least as broad as Travelers” and much broader than “no form,” he said. On Wednesday, Wachtell insisted that after Sept. 11, “everybody’s got a story” about how they were attached to WilProp. Thursday, Boies projected onto a screen the images of 17 witnesses called during the trial who testified that they believed their companies were bound by the WilProp form and that they never agreed to either “no form” or that Travelers would dictate the terms of the policy. “The Silverstein people asked you to think that everyone of those 17 people came in here and told you something that wasn’t true,” Boies told the jury. Boies told the jury that the Silverstein parties considered Strachan’s fax of the WilProp form to the Port Authority to be a “mistake” — one of several that Wachtell would have the jury believe occurred in the wake of Sept. 11. Boies said that if the jury were to consider just one exhibit, it was Strachan’s fax. What really happened after Sept. 11, Boies said, was that Silverstein realized the Travelers form would provide him the best chance to double his recovery, and that policy had yet to be completed. The Silverstein camp was “scrambling to finish the policy,” he said.

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