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World Trade Ctr. Props., L.L.C. v. Hartford Fire Ins. Co.

United States Court of Appeals for the Second Circuit

July 22, 2003, Argued ; September 26, 2003, Decided

Docket Nos.: 02-9279(L), 02-9280(CON), 02-9281(CON), 02-9349(CON), 02-9350(CON), 02-9351(CON), 02-9431(XAP), 02-9440 (TAN)

Opinion

 [*158]  JOHN M. WALKER, JR., Chief Judge:

This case arises out of the devastating tragedy that occurred at the World Trade Center ("WTC") in lower Manhattan, New York, on the morning of September 11, 2001. At [**5]  issue in this case is the amount of insurance that is recoverable for the total destruction of the WTC that occurred after the buildings were struck by two fuel-laden aircraft that had been hijacked by terrorists. The appellants are numerous entities that have varying property interests in the WTC, including the Port Authority of New York and New Jersey (the "Port Authority"), which owns the property in fee simple, and Silverstein Properties, Inc. and several related entities ("Silverstein Properties"). In the spring of 2001, Silverstein Properties was the successful bidder on a 99-year lease for the property from the Port Authority. In July 2001, Silverstein Properties obtained primary and excess insurance coverage for the WTC complex from about two dozen insurers (most of which constitute the appellees and other counter-defendants in this case) in the total amount of approximately $ 3.5 billion "per occurrence." Because Silverstein Properties is the party that actually obtained the insurance coverage at issue in this case and was the primary insured, for ease of reference all appellants will hereafter be referred to collectively as the "Silverstein Parties."

The parties do not [**6]  dispute that the destruction of the WTC resulted in a loss that greatly exceeded $ 3.5 billion. The broad question presented in this case is whether the events of September 11, 2001 constituted one or two "occurrences." The answer will determine whether the Silverstein Parties can recover once, up to $ 3.5 billion, or twice, up to $ 7 billion, under the insurance coverage. Complicating the resolution of this question is the fact that as of September 11, 2001, only one of the many insurers that bound coverage on the WTC had issued a final policy, necessitating an individualized inquiry to determine the terms of the insurance binders issued by each insurer.

This litigation began on October 22, 2001 when one of the WTC insurers, plaintiff-counter-defendant-intervenor SR International Business Insurance ("SR International"), filed suit against the Silverstein Parties "seeking a judicial declaration of its rights and obligations to all of the insureds under the policy" and a "declaration that the damage to the World Trade Center is one insurance loss." The Silverstein Parties subsequently filed counterclaims against the other WTC insurers, seeking a declaration "that the events of September [**7]  11th constituted more than one occurrence under the coverage that the counterclaim-defendant[s] agreed to provide  [*159]  to the Silverstein Parties." 1 After an initial assignment to another judge, the action was assigned to District Judge John S. Martin Jr. of the United States District Court for the Southern District of New York for all purposes.

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345 F.3d 154 *; 2003 U.S. App. LEXIS 19944 **

WORLD TRADE CENTER PROPERTIES, L.L.C., SILVERSTEIN PROPERTIES, INC., SILVERSTEIN WTC MANAGEMENT CO., L.L.C., 1 WORLD TRADE CENTER, L.L.C., 2 WORLD TRADE CENTER, L.L.C., 4 WORLD TRADE CENTER, L.L.C., 5 WORLD TRADE CENTER, L.L.C., WESTFIELD WTC, L.L.C., WESTFIELD CORPORATION, INC., WESTFIELD AMERICA, INC., and THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY, Defendants-Counter-Claimants-Counter-Defendants-Appellants-Cross-Appellees, UBS WARBURG REAL ESTATE INVESTMENTS INC., WELLS FARGO BANK MINNESOTA, N.A., As Trustee for the registered holders of GMAC Commercial Mortgage Securities, Inc. Mortgage-Backed Pass-Through Certificates, Series 2001-WTC, and GMAC COMMERCIAL MORTGAGE CORPORATION, Defendants-Counter-Claimants-Counter-Defendants-Cross-Appellees, v. HARTFORD FIRE INSURANCE COMPANY and ROYAL INDEMNITY COMPANY, Counter-Defendants-Appellees, ST. PAUL FIRE & MARINE INSURANCE CO., Counter-Defendant-Appellee-Cross-Appellant, SR INTERNATIONAL BUSINESS INSURANCE CO., LTD., Plaintiff-Counter-Defendant-Intervenor, ALLIANZ INSURANCE COMPANY, COPENHAGEN REINSURANCE CO., EMPLOYERS INSURANCE OF WAUSAU, FEDERAL INSURANCE COMPANY, GREAT LAKES REINSURANCE (UK ) PLC., GULF INSURANCE COMPANY, HOUSTON CASUALTY CO., INDUSTRIAL RISK INSURERS, LEXINGTON INSURANCE CO., CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON, QBE INTERNATIONAL INSURANCE LIMITED, SWISS REINSURANCE CO. UK LTD., TIG INSURANCE CO., TOKIO MARINE AND FIRE INSURANCE CO., TRAVELERS INDEMNITY COMPANY, TWIN CITY FIRE INSURANCE CO., WURTTEMBERGISCHE VERSICHERUNG AG and ZURICH AMERICAN INSURANCE CO., Counter-Defendants. SR INTERNATIONAL BUSINESS INSURANCE CO., LTD., Plaintiff-Counter-Defendant, WORLD TRADE CENTER PROPERTIES, L.L.C., SILVERSTEIN PROPERTIES, INC., SILVERSTEIN WTC MANAGEMENT CO. L.L.C., 1 WORLD TRADE CENTER, L.L.C., 2 WORLD TRADE CENTER, L.L.C., 4 WORLD TRADE CENTER, L.L.C., 5 WORLD TRADE CENTER, L.L.C., WESTFIELD WTC, L.L.C., WESTFIELD CORPORATION, INC., WESTFIELD AMERICA, INC., and THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY, Defendants-Counter-Claimants-Appellants, UBS WARBURG REAL ESTATE INVESTMENTS INC., WELLS FARGO BANK MINNESOTA, N.A., As Trustee for the registered holders of GMAC Commercial Mortgage Securities, Inc. Mortgage-Backed Pass-Through Certificates, Series 2001-WTC, and GMAC COMMERCIAL MORTGAGE CORPORATION, Defendants-Counter-Claimants, v. THE TRAVELERS INDEMNITY COMPANY, Counter-Defendant-Appellee, ALLIANZ INSURANCE COMPANY, COPENHAGEN REINSURANCE CO., EMPLOYERS INSURANCE OF WAUSAU, FEDERAL INSURANCE COMPANY, GREAT LAKES REINSURANCE (UK) PLC, GULF INSURANCE COMPANY, HARTFORD FIRE INSURANCE COMPANY, HOUSTON CASUALTY CO., INDUSTRIAL RISK INSURERS, LEXINGTON INSURANCE CO., CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON, QBE INTERNATIONAL 2 INSURANCE LIMITED, ROYAL INDEMNITY COMPANY, ST. PAUL FIRE & MARINE INSURANCE COMPANY, SWISS REINSURANCE CO. UK LTD., TIG INSURANCE CO., TOKIO MARINE AND FIRE INSURANCE CO., TWIN CITY FIRE INSURANCE CO., WURTTEMBERGISCHE VERSICHERUNG AG, and ZURICH AMERICAN INSURANCE CO., Counter-Defendants.

Subsequent History: Motion granted by Sr Int'l Bus. Ins. Co. v. World Trade Ctr. Props., 2004 U.S. Dist. LEXIS 25642 (S.D.N.Y., Dec. 1, 2004)

Prior History:  [**1]  Appellants-insureds, holders of varying property interests in the World Trade Center, appeals judgments of the United States District Court for the Southern District of New York (John S. Martin, Jr., District Judge) granting summary judgment in favor of three appellee insurance companies and, pursuant to 28 U.S.C. § 1292(b), denying appellants' motion for summary judgment against another appellee insurer on the issue of whether the tragic events at the World Trade Center on September 11, 2001, constituted one or two "occurrences" under the terms of the applicable insurance contracts. Affirmed.

SR Int'l Bus. Ins. Co. v. World Trade Ctr. Props. LLC, 222 F. Supp. 2d 385, 2002 U.S. Dist. LEXIS 17900 (S.D.N.Y., 2002)

Disposition: Affirmed.

CORE TERMS

binder, Parties, occurrence, insurer, coverage, terms, district court, negotiations, e-mail, ambiguous, Underwriting, port authority, authorization, manuscript, summary judgment, wording, extrinsic evidence, changes, losses, insurance policy, purposes, following form, first-party, third-party, deposition, courts, layer, primary policy, matter of law, diversity

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