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WTC update: Dramatic testimony; Silverstein barred from court

WTC leaseholder Silverstein Properties and insurers led by reinsurance giant Swiss Re are litigating over which contractual wordings the various parties used in placing the building’s insurance cover.

The trial, which began on 9 February, hinges on the various forms the participants used. The majority of insurers argue they were bound on the so-called “WilProp” forms, which the court has already found defines the attack as one insurable event. Silverstein, however, argues that the insurers are bound under wordings produced by Travelers, which does not define the word "occurrence” and so implies the attacks should be viewed as separate insurable events.

If Silverstein wins his case he stands to collect two payments of $3.55bn for two insurable losses. If the insurers win he will be entitled to only one payment.

Week Six: Both sides scent victory after dramatic testimonies

On 17 March the testimony of two separate witnesses allowed both sides in the WTC trial to claim partial victories.

First to take the stand was Wellington wording specialist Christopher Peacock. He told jurors he had been brought in by Wellington post-9/11 to review that company’s exposures to the WTC and that in the days after the attack it had been difficult to obtain a copy of the policy wordings from broker Willis. Because of this difficulty, he said, he had waited until 14 September to contact Willis’ wordings department, although before this he had also had about “a dozen conversations” with Wellington's underwriter, Neil Chapman, about the policy in his London office. He told the court that Chapman had made it clear that Wellington was bound under the terms of the WilProp form.

But his testimony took a dramatic turn when he was asked by Silverstein’s lawyer how he could have spoken to Chapman in London on 14 September when Chapman was in Houston at the time. To underline the fact, the court heard a tape-recorded deposition statement from Chapman in which he said he was in Houston on 11 September. It also heard Chapman’s testimony that he had never spoken to Peacock about the policy. A gob-smacked Peacock was left groping for words as this testimony was heard.

But the tide turned against Silverstein’s lawyers later in the day when Willis vice-chairman of risk solutions Alexander (Sandy) Vietor, who led an internal WTC task force, told the court about conversations with Willis brokers in the days following the 9/11 attacks. He said nobody had mentioned that the attacks could be considered two events – and that in meetings on 12 and 14 September the maximum payout was estimated at $3.5bn.

He said a Notice of Loss with the WilProp form attached was sent out by Silverstein’s team to some insurers but hastily recalled. Then, after Silverstein hired a new litigation team, a new Notice of Loss was sent out on 18 September, this time with the Travelers form attached, making it clear that they wanted the attack to be declared as two events.

Vietor’s testimony is significant because it backs the insurer’s argument that Silverstein’s two-event claim was fabricated after 9/11.

Silverstein barred from his own trial

On 18 March came the most dramatic of the trial’s many twists of fortune. This time it was Silverstein who felt the lash of fate when he was told by the presiding judge that he was barred from attending his own trial.

The reason was that he had apparently ignored a request for both sides in the case to limit their contact with the media.

At an event last week close to the WTC site Silverstein was quoted as saying: "We're trying to get [insurers] to fulfil the responsibilities that we paid for when we paid the premiums on the policies. Instead of getting insurance we've got ourselves a massive amount of litigation."

When questioned why he had made the statement in apparent defiance of the court’s wishes Silverstein said he believed the order restricting contact with the media had been lifted. "I understood that the court changed its position and permitted the opportunity to talk with the public or members of the press," he said.

Silverstein’s legal team argued unsuccessfully that the judge’s order had been ambiguous and that a finding of contempt would prejudice the outcome of the trial.

Presiding Judge, Michael Mukasey, said he would rule today (22 March, 2004) whether Silverstein’s comments put him in contempt of court.

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