All in the numbers: a judge has determined that the World Trade Center dispute must go to trial. (Property/Casualty: Loss/Risk Management Insight).

The World Trade Center shadow may be gone from Manhattan, but this shadow continues to loom over the insurance world. The major issue is the number of occurrences: Did the attack on the World Trade Center represent one occurrence or two? This issue is, in the court's words, "of vital interest," because it will control the number of limits that apply--one or two.

To address the issue of occurrences, as well as the other coverage issues that may apply, the policyholder sued in the Southern District of New York. The case is known as World Trade Center Properties LLC vs. Travelers Indemnity Co.

The court on June 3 issued the first major decision in this case and denied the policyholder's motion for summary judgment on the number-of-occurrences issue. The court found that this issue involves a triable fact. Just as the World Trade Center was enormous, so, too, is this decision, because there is $3.5 billion in coverage with one carrier providing $210 million in coverage per occurrence.

The court framed the issue succinctly: Which of the two following statements best describes what caused the destruction of the World Trade Center on Sept. 11, 2001?

* In a single, coordinated attack, terrorists flew hijacked planes into the two towers of the World Trade Center.

* At 8:46 a.m. on Sept. 11, a hijacked airliner crashed into the North Tower of the World Trade Center, and 16 minutes later, a second hijacked plane struck the South Tower.

If the court were to accept the first statement, there would be, at most, one occurrence and one limit. If the court were to accept the latter statement, there would be two occurrences and two limits. Groucho Marx used to thrill audiences by saying, "this is the $64,000 question." In the World Trade Center coverage litigation, this is the $210 million question. Arguably, the answer to this question may be worth much more than $210 million.

Number-of-occurrences questions are often difficult. Most courts follow the "cause" test and determine the number of occurrences by determining the number of causes. Courts look at whether there was a continuous chain of events, as well as differences in time and space. Here, there are differences, including two planes, two buildings and 16 minutes. But are these differences sufficient to constitute two occurrences? Moreover, it appears that both the planes and the hijackers originated from one source--Al Qaeda. The question is complex and critical.

Some have alleged that the problem was caused by the policyholder having underinsured the building, and the two-occurrences argument is simply an effort to avoid the effect of not buying enough insurance to replace the property.

The answer to the number-of-occurrences question is complicated by the fact that the policy does not define the term "occurrence." Instead, the insurer reportedly agreed to be bound by the meaning given this term under New York law. Coverage was negotiated in New York. Consequently, the court needed to address whether it should consider evidence beyond the policy language, itself, to determine the number of occurrences; that is, should the court go beyond the policy and review other writings between the parties.

Many states, including New York, have strong laws that do not allow the parties to look beyond the contract--in this instance, the insurance policy--to determine the agreement between the parties. But the judge in the World Trade Center case noted that if the agreement is "ambiguous," courts should look at evidence beyond the agreement to determine the parties' intent. The judge found that he was not convinced that the agreement was "unambiguous" and, therefore, he would consider "extrinsic evidence;' that is, evidence beyond the policies themselves. The insured's request for a summary judgment, a decision by the judge without trial, was denied.

In reaching this ruling, the judge recognized the importance of resolving the insurance issues quickly so that the World Trade Center site can be redeveloped. But despite the importance of redevelopment, the judge ruled that this issue required further consideration. A trial is needed.

As one of my partners said, "bring your popcorn."

Alan S Rulkin, a Best's Review columnist, is a partner in Rivkin Radler LLP, Uniondale, NY He can be reached at [e-mail].