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In a strongly worded opinion, a federal judge last week restricted discovery in an ongoing dispute between World Trade Center leaseholders and their insurers in an attempt to speed up the adjudication of about 1,000 Sept. 11-related cases. In Re September 11th Liability Insurance Coverage Cases, 03 Civ. 0332, involves a mix of suits and cross suits between leaseholders of the World Trade Center, its owner the Port Authority of New York and New Jersey, and their insurance companies over who will bear the burden of paying the legal costs of personal injury and wrongful death claims arising from the terrorist attacks that destroyed the twin towers. Like the two rounds of litigation last year between Larry Silverstein, the real estate mogul who had leased the World Trade Center site from the Port Authority weeks before the Sept. 11, 2001, attacks, and his insurers over the scope of the property insurance coverage, this dispute also centers on unfinished contracts the parties were negotiating prior to Sept. 11. In the case before Southern District Judge Alvin Hellerstein, the contest between Silverstein and the insurers did not involve property coverage but how much the insurers would indemnify the leaseholders for the costs associated with the more than 1,000 lawsuits they face. Hellerstein’s decision was triggered by a dispute over the extent of discovery. With no finalized contracts in place, the litigation became bogged down in pretrial demands and deposition requests. Hellerstein sought to put an end to the delays in In Re September 11th by setting strict ground rules. Last week he limited discovery to inquiries on the language of the insurance binders used by the parties when negotiating the insurance policies, and he reduced the number of witnesses the parties could call during the initial stages of discovery. In denying one leaseholder’s request for permission to conduct more depositions, the judge said, “They argue for depositions almost without limit, without describing what they’ve learned, or identifying that which still is needed.” Zurich American Insurance Company, the leading insurer, opposed the discovery request. More than a dozen other insurers providing excess coverage did not take sides on the issue. “The discovery sought by counsel for the Silverstein … entities would take years to accomplish,” Hellerstein wrote, “wasting valuable resources of insurance monies, needlessly delaying and frustrating the recoveries sought by plaintiffs, the prospect of reasonable and early settlements and uselessly enriching counsel.” He continued, “Counsel have not shown a legitimate need to take such depositions, and my analysis of the issues suggests that much or all of it likely will be irrelevant.” The judge defined the scope of topics relevant to discovery, mostly focusing on the intent of the parties when negotiating the binders. He also instructed the leaseholders to justify their requests in accordance with these guidelines. The desire for a timely resolution of the volume of cases arising from the terror attacks undergirded the judge’s decision. “Counsel’s desire to take hundreds of depositions, inevitably consuming years of time and millions of dollars of expense, is inconsistent with the needs of the litigants in all other cases,” the judge wrote, referring to the personal injury, wrongful death and property damage claims awaiting the resolution of the insurance disputes. Among the law firms associated with the case were Heller, Ehrman, White & McAuliffe, representing GMAC; Mayer, Brown, Rowe & Maw representing Westfield WTC Holding, a retail leaseholder; and Dickstein, Shapiro, Morin & Oshinsky representing the Port Authority.

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