World Trade Center Properties, L.L.C. v. Hartford Fire Ins. Co., 092503 FED2, 02-9279

Docket Nº:02-9279
Party Name:World Trade Center Properties L.L.C. v. Hartford Fire Ins. Co.
Case Date:September 25, 2003
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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WORLD TRADE CENTER PROPERTIES, L.L.C., SILVERSTEIN PROPERTIES, INC., SILVERSTEIN WTC MANAGEMENT CO., L.L.C., 1 WORLD TRADE CENTER, L.L.C., 2 WORLD TRADE CENTER, L.L.C., 4 WORLD TRADE CENTER, L.L.C., 5 WORLD TRADE CENTER, L.L.C., WESTFIELD WTC, L.L.C., WESTFIELD CORPORATION, INC., WESTFIELD AMERICA, INC., and THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY, Defendants-Counter-Claimants-Counter-Defendants- Appellants-Cross-Appellees,

UBS WARBURG REAL ESTATE INVESTMENTS INC., WELLS FARGO BANK MINNESOTA, N.A., As Trustee for the registered holders of GMAC Commercial Mortgage Securities, Inc. Mortgage-Backed Pass-Through Certificates, Series 2001-WTC, and GMAC COMMERCIAL MORTGAGE CORPORATION, Defendants-Counter-Claimants-Counter-Defendants-Cross-Appellees,

v.

HARTFORD FIRE INSURANCE COMPANY and ROYAL INDEMNITY COMPANY, Counter-Defendants-Appellees,

ST. PAUL FIRE & MARINE INSURANCE CO., Counter-Defendant-Appellee-Cross-Appellant,

SR INTERNATIONAL BUSINESS INSURANCE CO., LTD., Plaintiff-Counter-Defendant-Intervenor,

ALLIANZ INSURANCE COMPANY, COPENHAGEN REINSURANCE CO., EMPLOYERS INSURANCE OF WAUSAU, FEDERAL INSURANCE COMPANY, GREAT LAKES REINSURANCE (UK) PLC., GULF INSURANCE COMPANY, HOUSTON CASUALTY CO., INDUSTRIAL RISK INSURERS, LEXINGTON INSURANCE CO., CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON, QBE INTERNATIONAL INSURANCE LIMITED, SWISS REINSURANCE CO. UK LTD., TIG INSURANCE CO., TOKIO MARINE AND FIRE INSURANCE CO., TRAVELERS INDEMNITY COMPANY, TWIN CITY FIRE INSURANCE CO., WÜRTTEMBERGISCHE VERSICHERUNG AG and ZURICH AMERICAN INSURANCE CO., Counter-Defendants.

SR INTERNATIONAL BUSINESS INSURANCE CO., LTD., Plaintiff-Counter-Defendant,

WORLD TRADE CENTER PROPERTIES, L.L.C., SILVERSTEIN PROPERTIES, INC., SILVERSTEIN WTC MANAGEMENT CO. L.L.C., 1 WORLD TRADE CENTER, L.L.C., 2 WORLD TRADE CENTER, L.L.C., 4 WORLD TRADE CENTER, L.L.C., 5 WORLD TRADE CENTER, L.L.C., WESTFIELD WTC, L.L.C., WESTFIELD CORPORATION, INC., WESTFIELD AMERICA, INC., and THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY, Defendants-Counter-Claimants-Appellants,

UBS WARBURG REAL ESTATE INVESTMENTS INC., WELLS FARGO BANK MINNESOTA, N.A., As Trustee for the registered holders of GMAC Commercial Mortgage Securities, Inc. Mortgage-Backed Pass-Through Certificates, Series 2001-WTC, and GMAC COMMERCIAL MORTGAGE CORPORATION, Defendants-Counter-Claimants,

v.

THE TRAVELERS INDEMNITY COMPANY, Counter-Defendant-Appellee,

ALLIANZ INSURANCE COMPANY, COPENHAGEN REINSURANCE CO., EMPLOYERS INSURANCE OF WAUSAU, FEDERAL INSURANCE COMPANY, GREAT LAKES REINSURANCE (UK) PLC, GULF INSURANCE COMPANY, HARTFORD FIRE INSURANCE COMPANY, HOUSTON CASUALTY CO., INDUSTRIAL RISK INSURERS, LEXINGTON INSURANCE CO., CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON, QBE INTERNATIONAL INSURANCE LIMITED, ROYAL INDEMNITY COMPANY, ST. PAUL FIRE & MARINE INSURANCE COMPANY, SWISS REINSURANCE CO. UK LTD., TIG INSURANCE CO., TOKIO MARINE AND FIRE INSURANCE CO., TWIN CITY FIRE INSURANCE CO., WÜRTTEMBERGISCHE VERSICHERUNG AG, and ZURICH AMERICAN INSURANCE CO., Counter-Defendants.

Nos.: 02-9279(L), 02-9280(CON), 02-9281(CON), 02-9349(CON), 02-9350(CON), 02-9351(CON), 02-9431(XAP), 02-9440 (TAN)

United States Court of Appeals, Second Circuit

September 25, 2003

Argued July 22, 2003

Appellants-insureds, holders of varying property interests in the World Trade Center, appeals judgments of the United States District Court for the Southern District of New York (John S. Martin, Jr., District Judge) granting summary judgment in favor of three appellee insurance companies and, pursuant to 28 U.S.C. § 1292(b), denying appellants' motion for summary judgment against another appellee insurer on the issue of whether the tragic events at the World Trade Center on September 11, 2001, constituted one or two "occurrences" under the terms of the applicable insurance contracts. Affirmed.

HERBERT M. WACHTELL, Wachtell, Lipton, Rosen & Katz (Proskauer Rose LLP (John H. Gross and Seth B. Schafler), and Wachtell, Lipton, Rosen & Katz (Eric M. Roth, Marc Wolinsky, Barbara Robbins, Ben M. Germana, Elaine P. Golin, Jed I. Bergman, Edward J.W. Blatnik, Ian Boczko, and Kenneth K. Lee), on the brief), New York, NY, for Defendants-Counter-Claimants- Counter-Defendants-Appellants-Cross-Appellees World Trade Center Properties, L.L.C., Silverstein Properties, Inc., Silverstein WTC Management Co., L.L.C., 1 World Trade Center, L.L.C., 2 World Trade Center, L.L.C., 4 World Trade Center, L.L.C. and 5 World Trade Center, L.L.C.

Skadden, Arps, Slate, Meagher & Flom LLP (Timothy G. Reynolds and Arthur F. Fama, Jr.) and Port Authority of New York and New Jersey (Milton H. Pachter, Megan Lee, and Timothy G. Stickelman), New York, NY, for Defendants-Counter-Claimants- Counter-Defendants-Appellants-Cross-Appellees Port Authority of New York and New Jersey

Mayer, Brown, Rowe & Maw (Philip Allen Lacovara, Ryan P. Farley, Peter K. Rosen, and David C. Bolstad), New York, NY & Los Angeles, CA, for Defendants-Counter-Claimants-Counter- Defendants-Appellants-Cross-Appellees Westfield WTC, L.L.C., Westfield Corporation, Inc., and Westfield America, Inc.

HARVEY KURZWEIL, Dewey Ballantine LLP (Alan R. Miller, Robins Kaplan Miller & Ciresi LLP, Boston, MA, Saul P. Morgenstern, Robert J. Morrow, Paul T. Olszowka, and Nora M. Puckett, Dewey Ballantine LLP, on the brief), New York, NY, for Counter-Defendant-Appellee Travelers Indemnity Company.

WILLIAM J. BOWMAN, Hogan & Hartson LLP (John G. Roberts, Jr., Patrick F. Hofer, Paula P. Skalaban, and Joshua D. Weinberg, on the brief), Washington, DC, for Counter-Defendant- Appellee Hartford Fire Insurance Company

MICHAEL H. BARR, Sonnenschein Nath & Rosenthal (Sandra D. Hauser, Michael S. Gugig, Steven L. Brodsky, Stephen C. McDougall, on the brief), New York, NY, for Counter-Defendant-Appellee Royal Indemnity Company

CHARLES FRIED (Shaw Pittman LLP, Lon A. Berk, Walter J. Andrews, Michael S. Levine, Mary K. Martin, McLean, VA, on the brief), Cambridge, MA, for Counter-Defendant-Appellee-Cross- Appellant St. Paul Fire & Marine Insurance Co.

Heller Ehrman White & McAuliffe LLP (Nancy Sher Cohen, Stephen N. Goldberg, and John C. Ulin, on the brief), New York, NY, for Defendants-Counter-Claimants-Counter-Defendants- Cross-Appellees GMAC Commercial Mortgage Corporation and Wells Fargo Bank Minnesota, N.A.

Covington & Burling (Mitchell F. Dolin, Neil K. Roman, Richard A. Beckmann, on the brief), Washington, DC, for Defendants- Counter-Claimants-Counter-Defendants-Cross-Appellees UBS Warburg Real Estate Investments Inc.

BARRY R. OSTRAGER, Simpson Thacher & Bartlett (Mary Kay Vyskocil, Michael J. Garvey, Tyler B. Robinson, and Michael C. Ledley, on the brief), New York, NY, for Plaintiff-Counter- Defendant-Intervenor SR International Business Insurance Co., Ltd.

Boies, Schiller & Flexner LLP (David Boies, Edward Normand), Armonk, NY; Ropes& Gray (Kenneth W. Erickson, Robert A. Skinner, John C. Demers; Paul B. Galvani), Boston, MA Cotton, Wollan and New York, NY; Cozen O'Connor (Stephen A. Cozen, Jay M. Levin), Philadelphia, PA; Mound, Cotton, Wollan & Greengrass (Stuart Cotton), New York, NY; Robinson & Cole LLP (Gregory J. Ligelis), Stamford, CT; Budd, Larner, Gross, Rosenbaum, Greenberg & Sade P.C. (Christopher S. Finazzo), Short Hills, NJ; Mendes & Mount LLP (Leo W. Fraser III), New York, NY, for Amici Curiae Certain Counterclaim Defendants in Support of Affirmance and in Support of Travelers Indemnity Company

Eliot Spitzer, Attorney General of the State of New York (Caitlin J. Halligan, Solicitor General, Michelle Aronowitz, Deputy Solicitor General, Deon J. Nossel, Assistant Solicitor General, of counsel), New York, NY, for Amicus Curiae The Attorney General of the State of New York in Support of Appellants

Before : WALKER, Chief Judge, CABRANES and POOLER, Circuit Judges.

JOHN M. WALKER, JR., Chief Judge:

This case arises out of the devastating tragedy that occurred at the World Trade Center ("WTC") in lower Manhattan, New York, on the morning of September 11, 2001. At issue in this case is the amount of insurance that is recoverable for the total destruction of the WTC that occurred after the buildings were struck by two fuel-laden aircraft that had been hijacked by terrorists. The appellants are numerous entities that have varying property interests in the WTC, including the Port Authority of New York and New Jersey (the "Port Authority"), which owns the property in fee simple, and Silverstein Properties, Inc. and several related entities ("Silverstein Properties"). In the spring of 2001, Silverstein Properties was the successful bidder on a 99-year lease for the property from the Port Authority. In July 2001, Silverstein Properties obtained primary and excess insurance coverage for the WTC complex from about two dozen insurers (most of which constitute the appellees and other counter-defendants in this case) in the total amount of approximately $3.5 billion "per occurrence." Because Silverstein Properties is the party that actually obtained the insurance coverage at issue in this case and was the primary insured, for ease of reference all appellants will hereafter be referred to collectively as the "Silverstein Parties."

The parties do not dispute that the destruction of the WTC resulted in a loss that greatly exceeded $3.5 billion. The broad question presented in this case is whether the events of September 11, 2001 constituted one or two "occurrences." The answer will determine whether the Silverstein Parties can recover once, up to $3.5 billion, or twice, up to $7 billion, under the insurance coverage. Complicating the resolution of this question is the fact that as of September 11, 2001, only one of the many insurers that bound coverage on the WTC had issued a final policy, necessitating an...

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