In re September 11 Litigation, 21 MC 101 (AKH).
| Decision Date | 27 July 2009 |
| Docket Number | No. 02 Civ. 7188 (AKH).,No. 21 MC 101 (AKH).,21 MC 101 (AKH).,02 Civ. 7188 (AKH). |
| Citation | 640 F.Supp.2d 323 |
| Parties | In re SEPTEMBER 11 LITIGATION. Consolidated Edison Company of New York, Inc., et al., Plaintiffs, v. The Port Authority of New York and New Jersey, Defendant. |
| Court | U.S. District Court — Southern District of New York |
Derek Todd Smith, Zafer Adem Akin, Akin & Smith, LLC, Mia Mary Meloni, Dale Christian Christensen, Jr., Seward & Kissel LLP, Douglas J. Pepe, Gregory P. Joseph, Gregory P. Joseph Law Offices LLC, David Jaroslawicz, Jaroslawicz & Jaros, LLC, Bruce M. Friedman, Paul Fredric Kovner, Rubin, Fiorella & Friedman, L.L.P., Frank H. Granito, Jr., Frank N. Granito, Speiser, Krause, Nolan and Granito, Charles Edward Joseph, Joseph And Herzfeld, Christopher Bruce Hitchcock, Hitchcock & Cummings LLC, Stephen Mortimer Marcusa, Bigham Englar Jones & Houston, Robert Joseph Tolchin, Marina Ann Spinner, Frank M. Nicoletti, Nicoletti, Gonson & Bielat, L.L.P., Alexander Fellows Powell, Andrew John Scholz, Gregg Herbert Kanter, Jason Todd Cohen, Thomas A. Egan, Flemming Zulack Williamson Zauderer LLP, New York, NY, Jemi Melanie Goulian, Franklin Michael Sachs, Greenbaum, Rowe, Smith & Davis LLP, Woodbridge, NJ, Kristopher E. Kuehn, Timothy W. Triplett, Jennifer E. Shafer, Warden, Triplett, Grier, Overland Park, KS, Robert J. Bates, Esq., Westwood, NJ, Thaniel James Beinert, The Law Office of Thaniel J. Beinert and Associates, Brooklyn, NY, Carol M. Rooney, Paul B. Butler, Butler Pappas Weihmuller Katz Craig, LLP, Scott S. Katz, Tampa, FL, Kimberly M. Collins, Robert A. Clifford, Timothy S. Tomasik, Clifford Law Offices, P.C., Chicago, IL, H. Jerome Gette, M. Anthony Parsons, II, Steven J. Badger, John B. Massopust, Zelle, Hofmann, Voelbel & Gette, Dallas, TX, James S. Reece, Zelle Hofmann Voelbel Mason & Gette LLP, Minneapolis, MN, Michael Joseph Kuckelman, Pleasantville, NY, Jane J. Felton, Greenbaum, Rowe, Smith, Ravin, Davis & Himmel LLP, Iselin, NJ, Mark Leigh Antin, Stanley Walter Kallmann, Gennet, Kallmann, Antin & Robinson, P.C., Parsippany, NJ, John F. Stoviak, Saul Ewing LLP, Philadelphia, PA, Jonathan Leonard Marshfield, Saul Ewing LLP, Princeton, NJ, for Plaintiffs.
Desmond Thomas Barry, Jr., Condon and Forsyth LLP, Brian V. Otero, Michelle R. Parker, Hunton & Williams, LLP, James Patrick Connors, Jones Hirsch Connors and Bull, P.C., Jon Paul Robbins, McLaughlin and Stern, LLP, Peter James Gallagher, Derek Adam McNally, Kennedy Johnson Gallagher, LLC, Jacqueline Keller, Rubin, Fiorella & Friedman, L.L.P., Kevin J. O'Neill, Gogick Byrne & O'Neill, L.L.P., Christopher H. Lunding, Cleary Gottlieb Steen & Hamilton, LLP, John J. McDonough, Cozen, O'Connor, Timothy Joseph Keane, Brian Patrick Sexton, Jeffrey J. Ellis, Loretta Anne Redmond, Quirk and Bakalor, P.C., Willard Mark Wood, John L. Altieri, Jr., O'Melveny & Myers LLP, Beth D. Jacob, Donald Allen Klein, Schiff Hardin LLP, M. Bradford Stein, Richard Arthur Williamson, Flemming Zulack Williamson Zauderer, LLP, Timothy Gerard Stickelman, The Port Authority of New York and New Jersey, H. Christopher Boehning, Robert A. Atkins, Douglas M. Pravda, Paul, Weiss, Rifkind, Wharton & Garrison LLP, Katherine Lindsay Pringle, Eric Jonathan Seiler, Heather Jo Windt, Friedman Kaplan Seiler & Adelman LLP, Melissa Tabako Billig, Robert Alan Banner, Ingram Yuzek Gainen Carroll & Bertolotti, LLP, Stephen Paul Schreckinger, Gogick, Byrne & O'Neill, LLP, David Moore Lindsey, James Milton Hosking, Clifford Chance U.S. LLP, Carol A. Sigmond, Dunnington, Bartholow & Miller, LLP, Kenneth George Schwarz, Fischbein, Badillo, Wagner & Harding, Michael T. Rogers, Vashali Maria Aggarwal, 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, David A. Harrison, L'Abbate, Balkan, Colavita & Contini, LLP, Garden City, NY, Daniel W. Morrison, III, Michael P. Benenati, Bleakley Platt & Schmidt, LLP, White Plains, NY, Sarah D. Youngblood, Schiff Hardin LLP, San Francisco, CA, Gary William Westerberg, Lord Bissell & Brook, Robert P. Conlon, Walker Wilcox Matousek LLP, Adam Randall Sorkin, Shiff Hardin LLP, Chicago, IL, Johnathan Jeffrey Ross, H. Lee Godfrey, Laurie Gallun, Max Tribble, Susman Godfrey LLP, Houston, TX, Bruce Richard Wildermuth, Alexis M. Dougherty, Edward James McMurrer, Ralph Vincent Pagano, Mendes & Mount, LLP, Newark, NJ, Dennis M. O'Hara, Jason A. Glusman, Robert C. Bauroth, Wicker, Smith, O'Hara, McCoy, Graham & Ford, P.A., Ft. Lauderdale, FL, Jeffrey W. Moryan, Connell Foley LLP, Roseland, NJ, Kathleen Marie Guilfoyle, Kurt Bernard Gerstner, Richard P. Campbell, Campbell Campbell Edwards & Conroy, P.C., Boston, MA, Mack H. Shultz, Jr., Steven C. Minson, Thomas Jeffrey McLaughlin, Todd W. Rosencrans, Perkins Coie LLP, Seattle, WA, Anita B. Weinstein, Cozen O'Connor, Philadelphia, PA, for Defendants.
In 1968, the Port Authority of New York and New Jersey ("the Port Authority") leased a parcel of land at Washington and Barclay Streets in lower Manhattan for fifty years to the Consolidated Edison Company of New York, Inc. ("Con Edison"). The Port Authority built an electrical power substation on the land for Con Edison to operate to supply electricity to the new World Trade Center complex and the surrounding area. In the 1980s, as anticipated by the lease, the Port Authority had an office tower built above the substation, 7 World Trade Center ("7WTC"), which it leased for ninety-nine years to developer Larry Silverstein.
On September 11, 2001, at 5:20 p.m., 7WTC collapsed, brought down by the raging fires created by the terrorist-related crashes of fuel-laden jumbo jets into Towers One and Two of the World Trade Center complex. The collapse of 7WTC utterly destroyed the Con Edison substation beneath it. Since then, Con Edison has built a new substation, as required by the 1968 lease, and Silverstein has built a new office tower above it.
In this case, Con Edison argues that the destruction of the substation triggered two contractual obligations of the Port Authority under the 1968 lease. First, Con Edison argues that the Port Authority, having insured the substation at Con Edison's expense, must now turn over to Con Edison the proceeds of that insurance coverage. Second, Con Edison argues that the Port Authority must pay Con Edison the cost of rebuilding the substation, over and above, and independently of, insurance coverage. Con Edison's argument is that the lease requires the Port Authority to "reimburse" Con Edison for any damage "caused by the acts or omissions of the Port Authority ... in connection with the construction or maintenance" of 7WTC. The Port Authority acknowledges that Con Edison is owed insurance proceeds, but denies Con Edison's claim to reimbursement.
Con Edison's current complaint, the Second Amended Complaint, also includes two tort claims. First, Con Edison argues that the Port Authority negligently designed, constructed, and maintained 7WTC, causing the tower to collapse and destroy the substation. Second, Con Edison argues that the same negligence was negligence per se, because the Port Authority violated New York State and New York City fire and safety standards in designing, constructing, and maintaining 7WTC. The Port Authority denies both claims.
After the bulk of discovery, Con Edison moved for summary judgment on its two contract claims, Counts Three and Four of the Second Amended Complaint. For the reasons stated in this Opinion and Order, I grant judgment to Con Edison on Count Three, the insurance claim, in the amount of $17,580,750, the balance remaining, plus pre-judgment interest in an amount to be determined, and dismiss the remainder of the Second Amended Complaint—Count Four, the reimbursement claim, and Counts One and Two, the tort claims.
In the late 1960s, the Port Authority, after conducting surveys and evaluating choices, engaged Con Edison to furnish electrical power to the planned World Trade Center complex. On May 29, 1968, the Port Authority and Con Edison entered into a lease and an electricity supply contract. The lease allowed Con Edison to occupy a trapezoidal parcel of land just north of the complex, known as the "keystone site," for fifty years. In 1970, the Port Authority built an electrical power substation on the land for Con Edison to operate, to perform the electricity supply contract.
The terms of the lease reflected the parties' entwined relationship. The Port Authority covenanted, in Section 17 of the lease, to "insure and keep insured the Substation Building to the extent of 100% of the replacement value thereof," and Con Edison covenanted to "pay the Port Authority annually an amount equal to the insurance premium or premiums paid by the Port Authority" for that coverage. In Section 18 of the lease, Con Edison covenanted to repair or rebuild the substation if it were ever damaged or destroyed, and the Port Authority covenanted to make the proceeds of the insurance coverage "available to [Con Edison] for such purpose." See In re Sept. 11 Prop. Damage & Bus. Loss Litig., 468 F.Supp.2d 508, 521 (S.D.N.Y.2006).
Sections 8 and 16 of the lease provided for the Port Authority's right to build above the substation, and limited its liability to Con Edison should its "acts or omissions ... in connection with the construction or maintenance" of the new structure or improvements cause "expense" to Con Edison, which, under Sections 15 and 18, was responsible for "maintaining, repairing, replacing, or rebuilding the Substation Building ... or Substation Equipment." In Section 8(a), Con Edison recognized and agreed that "the Port Authority may construct wholly or partially on, above or about the Substation Building additional stories,...
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