Aegis Ins. Servs., Inc. v. 7 World Trade Co. (In re Sep. 11 Litig. )

• Decision Date: 23 September 2011
• Docket Number: Nos. 21 MC 101(AKH), 04 Civ. 7272.,s. 21 MC 101(AKH), 04 Civ. 7272.
• Citation: 865 F.Supp.2d 370
• Court: U.S. District Court — Southern District of New York
• Parties: In re September 11 Litigation. AEGIS INSURANCE SERVICES, INC.; Libery Insurance Underwriters, Inc. (As to the First through Tenth Causes of Action); National Union Insurance Company of Pittsburgh; Nuclear Electric Insurance Limited; Certain Underwriters at Lloyds, (Syndicate 1225); a/s/o Consolidated Edision Company of New York, Inc. and Consolidated Edison Company of New York, Inc., Plaintiffs, v. 7 WORLD TRADE COMPANY, L.P.; Silverstein Properties, Inc.; Citigroup, Inc.; Salomon Smith Barney Holdings, Inc.; Salomon Inc.; Swanke Hayden Connell Architects; Ambassador Construction Co., Inc.; Cosentini Associates Inc.; Cantor Seinuk Group, P.C.; Office of Irwin G. Cantor, P.C.; H.O. Penn Machinery Co., Inc.; Kaback Enterprises; Preferred Utilities Manufacturing Corp.; Electric Power Systems, Inc.; American Power Technologies, Inc.; G.C. Engineering & Associates, P.C.; Tishman Construction Corporation; Firecom Inc.; Grace Construction Products; Fiberlock Technologies, Inc.; Emery Roth & Son, P.C.; Syska & Hennessy Engineers; Skidmore Owings and Merrill, L.L.P.; Flack & Kurtz, Inc.; ABCO Peerless Sprinkler Corporation; AMEC PLC Formerly Known as Morse Diesel International, Inc.; Centifugal Associates, Inc; AMR Corporation; American Airlines, Inc.; UAL Corporation; United Airlines, Inc.; Colgan Air, Inc.; US Airways Group, Inc.; US Airways, Inc.; Huntleigh USA Corporation; ICTS International NV; Globe Aviation Services Corporation; Burns International Security Services Corporation; Pinkerton's Inc.; Securitas AB; Boeing Co., Defendants.

865 F.Supp.2d 370

In re September 11 Litigation.

AEGIS INSURANCE SERVICES, INC.; Libery Insurance Underwriters, Inc. (As to the First through Tenth Causes of Action); National Union Insurance Company of Pittsburgh; Nuclear Electric Insurance Limited; Certain Underwriters at Lloyds, (Syndicate 1225); a/s/o Consolidated Edision Company of New York, Inc. and Consolidated Edison Company of New York, Inc., Plaintiffs,

v.7 WORLD TRADE COMPANY, L.P.; Silverstein Properties, Inc.; Citigroup, Inc.; Salomon Smith Barney Holdings, Inc.; Salomon Inc.; Swanke Hayden Connell Architects; Ambassador Construction Co., Inc.; Cosentini Associates Inc.; Cantor Seinuk Group, P.C.; Office of Irwin G. Cantor, P.C.; H.O. Penn Machinery Co., Inc.; Kaback Enterprises; Preferred Utilities Manufacturing Corp.; Electric Power Systems, Inc.; American Power Technologies, Inc.; G.C. Engineering & Associates, P.C.; Tishman Construction Corporation; Firecom Inc.; Grace Construction Products; Fiberlock Technologies, Inc.; Emery Roth & Son, P.C.; Syska & Hennessy Engineers; Skidmore Owings and Merrill, L.L.P.; Flack & Kurtz, Inc.; ABCO Peerless Sprinkler Corporation; AMEC PLC Formerly Known as Morse Diesel International, Inc.; Centifugal Associates, Inc; AMR Corporation; American Airlines, Inc.; UAL Corporation; United Airlines, Inc.; Colgan Air, Inc.; US Airways Group, Inc.; US Airways, Inc.; Huntleigh USA Corporation; ICTS International NV; Globe Aviation Services Corporation; Burns International Security Services Corporation; Pinkerton's Inc.; Securitas AB; Boeing Co., Defendants.

Nos. 21 MC 101(AKH), 04 Civ. 7272.

United States District Court,

S.D. New York.

Sept. 23, 2011.

Franklin Michael Sachs, Greenbaum, Rowe, Smith & Davis LLP, Woodbridge, NJ, Mark Leigh Antin, Stanley Walter Kallmann, Gennet, Kallmann, Antin & Robinson, P.C., New York, NY, for Plaintiffs.

Beth D. Jacob, Donald Allen Klein, Schiff Hardin LLP, Jeffrey Ross Wang, Kent Kari Anker, Robert Scott Loigman, Eric Jonathan Seiler, Heather Jo Windt, Katherine Lindsay Pringle, Friedman Kaplan Seiler & Adelman LLP, Christopher P. Moore, Thomas J. Moloney, Cleary Gottlieb Steen & Hamilton, LLP, Stephen Paul Schreckinger, Gogick, Byrne & O'Neil, LLP, Jason Todd Katz, Lewis Johs Avallone Aviles, L.L.P., David Moore Lindsey, Chaffetz Lindsey LLP, James Milton Hosking, Clifford Chance U.S., LLP, Kenneth George Schwarz, Fischbein, Badillo, Wagner & Harding, Kevin G. Faley, Morris Duffy Alonso & Faley, Michael Thomas Rogers, Vashali Maria Aggarwal, Suzan Arden, Wasserman Grubin & Rogers LLP, Chad Everette Sjoquist, Zetlin & de Chiara, LLP, Thomas V. Giordano, Zeynel Karcioglu, Esq., Mark Joseph Weber, Mound Cotton Wollan & Greengrass, New York, NY, Eric Sean Hechler, Lieben, Whitted, Houghton, Slowiaczek & Cavanagh, P.C., L.L., Omaha, NE, Anita B. Weinstein, Cozen O'Connor, Philadelphia, PA, Daniel W. Morrison, III, Michael P. Benenati, Bleakley Platt & Schmidt, LLP, White Plains, NY, Christopher Kendric, Ahmuty, Demers & McManus, Albertson, NY, Francis M. Lynch, Richard B. Kirby, Keegan Werlin LLP, Boston, MA, Thomas Patrick Mohen, Mohen, Craig & Treacy LLP, Locust Valley, NY, for Defendants.

ORDER AND OPINION GRANTING MOTIONS FOR SUMMARY JUDGMENT BY DEFENDANTS 7 WORLD TRADE COMPANY AND CITIGROUP

ALVIN K. HELLERSTEIN, District Judge.

At 5:21pm, on September 11, 2001, Tower 7 of the World Trade Center collapsed. Forty-seven stories came crumpling down, smashing the Consolidated Edison (“Con Ed”) power station beneath. In this lawsuit, Con Edison filed claims against the builder and developer of the tower, the corporate nominee of Larry Silverstein, 7 World Trade Company, L.P. (“7WTCo.”), and Citigroup, Inc., as successor-in-interest to Salomon, Inc., the primary tenant. Con Edison's claim is that Defendants' negligence proximately caused Con Edison's loss.

By this Order and Opinion, Con Edison's claims are dismissed, putting an end to this entire lawsuit. The duty upon which this claim, or any such claim, must be based, determined as at the time that 7 World Trade Center was designed and built and its leases executed, is too farfetched and tenuous to sustain a claim of negligence. Con Edison, in order to succeed, must overcome the improbability of a long chain of events, one acting upon another—having reasonably to foresee that terrorists with weapons could pass through airport screening; that such terrorists could accomplish a hijacking of a giant, fuel-laden aircraft; that the terrorists could turn that aircraft around and fly it low to the ground, at only several hundred feet of elevation, and crash it into a 110–story tower of the World Trade Center; that a team of other terrorists also could pass through screening, hijack another aircraft and fly that aircraft into a second tower of the World Trade Center; that the damage from the impact and the intense fires caused by spilling aviation fuel would cause both towers to collapse; that debris from the collapse of the two towers could jump over a neighboring building and penetrate the façade of 7 World Trade Center, several hundreds of feet to the north; that intense, long-burning fires would result; that there would be no firemen to fight the fire and no water for firemen to use even if they were available to fight the fires in 7 World Trade Center; that there were no firemen available because 343 fireman had perished fighting the fires in Twin Towers, and the remaining firemen were totally engaged, physically and mentally, in searching through the debris of Towers One and Two for their lost comrades; and that there would be no water to fight the fires on 7 World Trade Center because the collapsing Twin Towers had crushed and destroyed the water system that could bring water to 7 World Trade Center; and that as a result of all these events, these links in an improbable chain, 7 World Trade Center collapsed, destroying the Con Edison substation below the collapsed debris. I hold that the chain was much too improbable to be consistent with any duty, and I dismiss Con Edison's claims on that basis.

I. Factsa. The Second Amended Complaint

Plaintiffs' Second Amended Complaint, filed July 11, 2008, alleged 17 claims against a large number of Defendants. Only two Defendants remain, and Con Edison has alleged 4 claims against them, Citigroup and 7WTCo.

Counts 1 and 2 allege negligence against 7WTCo. in the design and construction of 7 World Trade Center, for permitting its commercial tenants to install diesel-fueled-backup generators in the building, and generally, Second Am. Compl. ¶¶ 148(a), (b), and, in Count 2, a claim of negligence per se, for failing “to properly apply, interpret and enforce New York City and State fire and safety codes and regulations.” ¹Id. ¶ 152.

Counts 3 and 4 allege a claim of negligence against Citigroup, for having designed and constructed its floors with an emergency generator system “that was unreasonably dangerous because it utilized an unreasonable amount of diesel fuel and because a breach of the system could provide a prolonged and substantial quantity of fuel to areas of fire close to critical structural supports in the building,” Second Am. Compl. ¶¶ 158, 160(a)-(k), and, in Count Four, a claim of negligence per se similar to the claim against 7WTCo.

7WTCo. and Citigroup denied the allegations against them, and alleged as affirmative defenses that the events of September 11, 2001 were unforeseeable and intervening causes of the harm to the substation.

b. The World Trade Center Complex Before September 11, 2001

The World Trade Center, prior to September 11, 2001, formed a 16–acre development in downtown Manhattan. The Twin Towers, 1 World Trade Center and 2 World Trade Center, each 110 stories high, rose from the southern and the western sides of the complex, along Liberty Street and West Street, respectively, with 3 World Trade Center, a much lower building framing the southwest corner, between them. 6 World Trade Center, a building of 8 stories, rose to the north of 2 World Trade Center on West Street and extended to Vesey Street. Across Vesey Street and to the North, 7 World Trade Center stood 47 stories high. 4 World Trade Center and 5 World Trade Center, shorter buildings each 9 stories, filled out the complex, framing the northeast corner on Vesey and Church Streets, and the southeast corner on Church and Liberty Streets. The map below shows the complex.

Image 1 (5.81" X 4.51") Available for Offline Print

c. The Con Edison Substation

In 1962, the Port Authority of New York and New Jersey, a bi-state government agency formed in 1921 by compact between New York and New Jersey, was authorized by joint legislation to acquire and develop the tract that became the World Trade Center. In 1968, the Port Authority granted a fifty-year lease to Con Edison on a rhombus-shaped portion of land just to the north of the 16–acre tract, generally coinciding with the outline of what became 7 World Trade Center, and contracted with Con Edison to construct a power station on the leasehold to supply power to the entire complex. See In re September 11 Litig., 640 F.Supp.2d 323 (S.D.N.Y.2009). In Section 8(a) of the lease agreement, the Port Authority reserved the right to “construct wholly or partially on, above or about the Substation Building additional stories, structures, buildings or improvements of whatever design, size and purpose as the Port Authority ... determines.” Declaration of Jeffrey R. Wang (“Wang Decl.”), Ex. B.

d. 7 World Trade Center

In 1980, the Port Authority exercised its Section 8 rights under the Con Edison/Port Authority lease, contracting with 7WTCo. to build 7 World Trade Center above the substation. 7WTCo.'s agent, Silverstein Properties, contracted to design and build a forty-seven story office tower, which the Port Authority was to own and lease back to 7WTCo. for 99 years. Two features of the design and construction of 7 World Trade Center require special attention, for they...