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Court weighs WTC insurance claim.

In a legal battle at the U.S. Court of Appeals, seven attorneys argued their points as to whether the World Trade Center attacks could be considered one or two occurrences.

The decision, now in the hands of three judges, will determine if Silverstein Properties will be paid $7.1 or $3.55 million in insurance claims.

If the judges determine that the attacks were one occurrence, Larry Silverstein would be paid the lesser amount. Since Silverstein signed a 99year lease on the World Trade Center just weeks before the attacks, an insurance policy was never finalized.

"There's more than the word occurrence," said U.S. Appellate Court Judge Jose A. Cabranes on July 22. "There's the word occurrence under New York law."

There were originally 22 companies involved in the Silverstein lawsuit that began in January 2002. Since then, Silverstein has settled with some of them.

Last year a lower court ruled against Silverstein, but his lawyers won an appeal, which was heard last week by U.S. Court of Appeals judges John M. Walker Jr., Jose A. Cabranes and Rosemary S. Pooler.

In June 2002, U.S. District Court Judge John S. Martin Jr. determined that under the binding contract written by a proprietary insurance policy, known as the "Wilprop," written by the London-based Willis Group Holdings Inc. the attacks were considered one occurrence. He also found that three insurers, Hartford Fire, Royal Indemnity and St. Paul Fire and Marine had agreed to be bound by the Wilprop.

To win, Silverstein's attorney Herbert M. Wachtell must convince the three judges that Silverstein was in the process of negotiating a contract with Travelers Indemnity Company, which he claims would have had no clear definition of occurrence and could have been used to make multiple chins.

Although an attorney for Travelers, Harvey Kurzweil, told the judges that it didn't matter what form was in place because "the Travelers policy would operate the same as Wilprop."

Wachtell contends that Silverstein never agreed to the Wilprop form and was ironing out a contact with Travelers.

"People are not bound by a contract that they have not assented to," Wachtell said.

Under case law, binders are considered contracts of insurance and binder terms are not subject to future negotiation. The lower court ruled that once a binder is signed the insurance contract is closed and the binder is the same as the regular contract. The lower court also dismissed Silverstein's argument that the binders were mere preliminary commitments.

Lawyers for the insurance companies stressed the lower courts ruling and argued that a verbal intent to negotiate an insurance contract does not negate the one already in place.

"The mere fact that Travelers was mentioned does not mean that Wilprop was off the table," said Michael Barr of Royal.

A decision may not come for some time, according to Andrew L. Noga, assistant general counsel for The Hartford insurance company.

"It could take months or up to year," Noga said after the proceedings. "It's really hard to determine."

Silverstein hopes the decision will come before the trial this fall.
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Author:Nelson, Barbara
Publication:Real Estate Weekly
Geographic Code:1U2NY
Date:Jul 30, 2003
Words:515
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