World Trade Center Properties LLC v. Am. Airlines, Inc. (In re Sept. 11 Litig.), Nos. 13–3619–cv

CourtU.S. Court of Appeals — Second Circuit
Writing for the CourtDEBRA ANN LIVINGSTON, Circuit Judge
Citation802 F.3d 314
Decision Date17 September 2015
Docket Number13–3782–cv.,Nos. 13–3619–cv
PartiesIN RE SEPTEMBER 11 LITIGATION World Trade Center Properties LLC, 1 World Trade Center L.L.C., 3 World Trade Center L.L.C., 7 World Trade Center Company, L.P., Plaintiffs–Appellants, World Trade Farmers Market, Inc., Adem Arici, Lauren Peters, Omer Ipek, Mayore Estates, L.L.C., 80 Lafayette Associates, L.L.C., Serko & Simon, LLP, Certain Underwriters at Lloyd's Comprising Syndicates No. 33,1003,2003,1208,1243,0376, Great Lakes Reinsurance (UK) PLC, Barcley Dwyer Co., Inc., Karoon Capital Management, Inc., N.S. Windows, LLC, Tower Computer Services, Inc., Wall Street Realty Capital, Inc., MVN Associates, Inc., Marsha Van Name, Floyd Van Name, Daniel D'Aquila, Koudis International, Inc., American Alternative Insurance Corporation, The Princeton Excess & Surplus Lines Insurance Company, Certain Underwriters At Lloyd's London as Members of Syndicates Numbered 1212, 1241, 79, 506, And 2791, QBE International Insurance Ltd., Industrial Risk Insurers, Allianz Global Risks U.S. Insurance Company, Allianz Insurance Company of Canada, Allianz Suisse VersicherungsGesellschaft, Allianz Versicherungs–Aktiengesellschaft, Assurances Generales De France, Assurances Generales De Franci Iart, Fireman's Fund Insurance Company, Woburn Insurance, Ltd., Greater New York Mutual Insurance Company, Insurance Company of Greater New York, Munich–American Risk Partners, Underwriters at Lloyd's, Subscribing to Syndicate No. 1225, as Subrogees Of Silverstein Properties, Inc., American Re–Insurance Company, Axa Art Insurance Corporation, Axa Cessions, Axa Corporate Solutions Assurance, Axa Corporate Solutions Services UK, Ltd., Axa Corporate Solutions Assurance Canadian Branch, Axa Re, Axa Re Madeira Branch, Axa Re Asia Pacific PTE. Ltd., Axa Reinsurance UK, PLC, Axa Verischerung AG, Axa Corporate Solutions, Compagnie Generale De Reassurance De Monte Carlo, SPS Reassurance, Aegis Insurance Services, Inc., Liberty Insurance Underwriters, Inc., National Union Insurance Company Of Pittsburgh, Nuclear Electric Insurance Limited, Certain Underwriters at Lloyds, (Syndicates 122 and 1511), As Subrogor of Consolidated Edison Company of New York, Inc., Muenchener Rueckversicherungs–Gesellschaft, Munich Reinsurance Company UK General Branch, Axa Corporate Solutions Assurance UK Branch, Axa Corporate Solutions Reinsurance Company, Axa Global Risks UK, Ltd., Axa Re Canadian Branch, Co2e.Com, LLC, Cantor Fitzgerald & Co., Cantor Fitzgerald Associates, L.P., Cantor Fitzgerald Brokerage, L.P., Cantor Fitzgerald Europe, Cantor Fitzgerald International, Cantor Fitzgerald Partners, Cantor Fitzgerald Securities, Cantor Fitzgerald L.P., Cantor Index Limited, Espeed, Inc., Tradespark, L.P., Espeed Government Securities, Inc., Espeed Securities, Inc., Consolidated Edison Company of New York, Inc., 2 World Trade Center LLC, 4 World Trade Center LLC, Mary Bavis, Michael Keating, Gary Michael Low, Plaintiffs, v. American Airlines, Inc., AMR Corporation, United Airlines, Inc., UAL Corporation, Massachusetts Port Authority, Continental Airlines, Inc., Colgan Air, Inc., U.S. Airways Group, Inc., Huntleigh USA Corporation, Globe Aviation Services Corporation, Burns International Security Services Corporation, Burns International Services Corporation, Pinkerton's Inc., Securitas A.B., U.S. Airways, Inc., Defendants–Appellees, Emery Roth & Partners L.L.C., Emery Roth & Sons, P.C., Globe Airport Security Services, Inc., Huntleigh USA Corporation, Leslie E. Robertson Associates, R.L.L.P., Minoru Yamasaki Associates, Inc., Skilling Ward Magnusson Barkshire Inc., Tishman Realty & Construction Company, Colgan Airways Corporation, Silverstein Properties, Inc., 7 World Trade Company, L.P., Citigroup Inc., Citigroup Global Markets Holdings Inc., Salomon Smith Barney Holding, Inc., Salomon Inc., Swanke Hayden Connell Architects, Ambassador Construction Co., Inc., Cosentini Associates Inc., Cantor Seinuk Group, 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., Rosewach Tank Co., Inc., All Fire Systems, Inc., Syska Hennessy Group, Inc., Skidmore Owings And Merrill, L.L.P., Flack & Kurtz, Inc., Abco Peerless Sprinkler Corporation, Amec, PLC, Office Of Irwin G. Cantor, P.C., Security Services, Inc., Centrifugal Associates, Inc., Riggs Bank, N.A., A Wholly Owned Subsidiary of Riggs National Corporation, Riggs National Corporation, Irwin G. Cantor, P.C., Johnson Controls World Services, Inc., Tishman Construction Corporation of New York, Tishman Interiors Corporation, Delta Airlines, Inc., Midway Airlines Corporation, ICTS International, N.V., The Boeing Company, Defendants.

802 F.3d 314

IN RE SEPTEMBER 11 LITIGATION
World Trade Center Properties LLC, 1 World Trade Center L.L.C., 3 World Trade Center L.L.C., 7 World Trade Center Company, L.P., Plaintiffs–Appellants
World Trade Farmers Market, Inc., Adem Arici, Lauren Peters, Omer Ipek, Mayore Estates, L.L.C., 80 Lafayette Associates, L.L.C., Serko & Simon, LLP, Certain Underwriters at Lloyd's Comprising Syndicates No. 33,1003,2003,1208,1243,0376, Great Lakes Reinsurance (UK) PLC, Barcley Dwyer Co., Inc., Karoon Capital Management, Inc., N.S. Windows, LLC, Tower Computer Services, Inc., Wall Street Realty Capital, Inc., MVN Associates, Inc., Marsha Van Name, Floyd Van Name, Daniel D'Aquila, Koudis International, Inc., American Alternative Insurance Corporation, The Princeton Excess & Surplus Lines Insurance Company, Certain Underwriters At Lloyd's London as Members of Syndicates Numbered 1212, 1241, 79, 506, And 2791, QBE International Insurance Ltd., Industrial Risk Insurers, Allianz Global Risks U.S. Insurance Company, Allianz Insurance Company of Canada, Allianz Suisse VersicherungsGesellschaft, Allianz Versicherungs–Aktiengesellschaft, Assurances Generales De France, Assurances Generales De Franci Iart, Fireman's Fund Insurance Company, Woburn Insurance, Ltd., Greater New York Mutual Insurance Company, Insurance Company of Greater New York, Munich–American Risk Partners, Underwriters at Lloyd's, Subscribing to Syndicate No. 1225, as Subrogees Of Silverstein Properties, Inc., American Re–Insurance Company, Axa Art Insurance Corporation, Axa Cessions, Axa Corporate Solutions Assurance, Axa Corporate Solutions Services UK, Ltd., Axa Corporate Solutions Assurance Canadian Branch, Axa Re, Axa Re Madeira Branch, Axa Re Asia Pacific PTE. Ltd., Axa Reinsurance UK, PLC, Axa Verischerung AG, Axa Corporate Solutions, Compagnie Generale De Reassurance De Monte Carlo, SPS Reassurance, Aegis Insurance Services, Inc., Liberty Insurance Underwriters, Inc., National Union Insurance Company Of Pittsburgh, Nuclear Electric Insurance Limited, Certain Underwriters at Lloyds, (Syndicates 122 and 1511), As Subrogor of Consolidated Edison Company of New York, Inc., Muenchener Rueckversicherungs–Gesellschaft, Munich Reinsurance Company UK General Branch, Axa Corporate Solutions Assurance UK Branch, Axa Corporate Solutions Reinsurance Company, Axa Global Risks UK, Ltd., Axa Re Canadian Branch, Co2e.Com, LLC, Cantor Fitzgerald & Co., Cantor Fitzgerald Associates, L.P., Cantor Fitzgerald Brokerage, L.P., Cantor Fitzgerald Europe, Cantor Fitzgerald International, Cantor Fitzgerald Partners, Cantor Fitzgerald Securities, Cantor Fitzgerald L.P., Cantor Index Limited, Espeed, Inc., Tradespark, L.P., Espeed Government Securities, Inc., Espeed Securities, Inc., Consolidated Edison Company of New York, Inc., 2 World Trade Center LLC, 4 World Trade Center LLC, Mary Bavis, Michael Keating, Gary Michael Low, Plaintiffs
v.
American Airlines, Inc., AMR Corporation, United Airlines, Inc., UAL Corporation, Massachusetts Port Authority, Continental Airlines, Inc., Colgan Air, Inc., U.S. Airways Group, Inc., Huntleigh USA Corporation, Globe Aviation Services Corporation, Burns International Security Services Corporation, Burns International Services Corporation, Pinkerton's Inc., Securitas A.B., U.S. Airways, Inc., Defendants–Appellees
Emery Roth & Partners L.L.C., Emery Roth & Sons, P.C., Globe Airport Security Services, Inc., Huntleigh USA Corporation, Leslie E. Robertson Associates, R.L.L.P., Minoru Yamasaki Associates, Inc., Skilling Ward Magnusson Barkshire Inc., Tishman Realty & Construction Company, Colgan Airways Corporation, Silverstein Properties, Inc., 7 World Trade Company, L.P., Citigroup Inc., Citigroup Global Markets Holdings Inc., Salomon Smith Barney Holding, Inc., Salomon Inc., Swanke Hayden Connell Architects, Ambassador Construction Co., Inc., Cosentini Associates Inc., Cantor Seinuk Group, 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., Rosewach Tank Co., Inc., All Fire Systems, Inc., Syska Hennessy Group, Inc., Skidmore Owings And Merrill, L.L.P., Flack & Kurtz, Inc., Abco Peerless Sprinkler Corporation, Amec, PLC, Office Of Irwin G. Cantor, P.C., Security Services, Inc., Centrifugal Associates, Inc., Riggs Bank, N.A., A Wholly Owned Subsidiary of Riggs National Corporation, Riggs National Corporation, Irwin G. Cantor, P.C., Johnson Controls World Services, Inc., Tishman Construction Corporation of New York, Tishman Interiors Corporation, Delta Airlines, Inc., Midway Airlines Corporation, ICTS International, N.V., The Boeing Company, Defendants.

Nos. 13–3619–cv
13–3782–cv.

United States Court of Appeals, Second Circuit.

Argued: Jan. 14, 2015.
Decided: Sept. 17, 2015.


802 F.3d 320

Seth P. Waxman, Randolph D. Moss, Joshua M. Salzman, Wilmer Cutler Pickering Hale and Dorr LLP, Washington, D.C., Michael Gottesman, Carleen M. Zubrzycki, New York, N.Y., Richard A. Williamson, Jason T. Cohen, Megan P. Davis, Cathi Baglin, Flemming Zulack Williamson Zauderer LLP, New York, N.Y., for Plaintiffs–Appellants.

Roger E. Podesta, Maura K. Monaghan, Erica S. Weisgerber, Johanna N. Skrzypczyk, Debevoise & Plimpton LLP, Desmond T. Barry Jr., Condon & Forsyth LLP, New York, N.Y., for Defendants–Appellees.

Before: CABRANES, STRAUB, and LIVINGSTON, Circuit Judges.

Opinion

Judge STRAUB concurs in part and dissents in part in a separate opinion.

802 F.3d 321

DEBRA ANN LIVINGSTON, Circuit Judge:

This case concerns the tremendous property damage caused by the terrorist attacks of September 11, 2001. Just months before the attacks, in April 2001, World Trade Center Properties LLC and affiliated companies (“WTCP”)1 obtained 99–year leases for 1, 2, 4, and 5 World Trade Center (the “Main Site Buildings”) from the Port Authority of New York and New Jersey (“Port Authority”). A separate corporation, 7 World Trade Company, L.P. (“7WTCo.”), held a long-term lease for 7 World Trade Center, which stood adjacent to the Main Site Buildings. The terrorist attacks destroyed all five of the buildings (collectively, the “Leased Buildings”), leaving WTCP and 7WTCo. (“Plaintiffs”) saddled with significant losses. In March 2005, Plaintiffs brought suit in the United States District Court for the Southern District of New York (Hellerstein, J. ) against a group of airlines and security contractors (“Defendants”),2 seeking to recover for these losses. They alleged that, because the Defendants were negligent in overseeing airport security systems, the terrorists were able to hijack American Airlines Flight 11 and United Airlines Flight 175 and to fly those planes into the Twin Towers.

After a series of summary judgment decisions and a limited bench trial, Judge Hellerstein, who has presided over these matters with exemplary care and thoughtfulness, entered judgment for Defendants. The court decided that, if Plaintiffs could prove liability, they would be entitled to compensation for the amount of value that their leasehold interests lost due to the attacks, but not for reconstruction costs or other claimed consequential damages related to the cost of retenanting the Leased Buildings, replacing tenant property, hiring attorneys, and paying mortgage carrying costs. The court then found that the value of WTCP's leasehold interests declined by, at most, $2.805 billion, while the value of 7WTCo's interests fell by $737 million. Both Plaintiffs, however, received insurance payments for their property damage that exceeded those figures and compensated Plaintiffs for the same economic loss as the potential tort award. Because New York Civil Practice Law and Rules § 4545 (“CPLR”) requires courts to reduce damage awards to reflect corresponding insurance payments, the district court concluded that, even if Plaintiffs could prove liability, they could not receive a damages award, and that judgment for Defendants was therefore appropriate. Separately, the district court dismissed 7WTCo.'s claims against United Airlines, Inc. and its parent company, United Continental Holdings, Inc. (collectively, “United”), on the grounds that the airline had no connection to American Airlines Flight 11, which destroyed 7 World Trade Center.

On appeal, we agree with the district court's conclusion that Plaintiffs are entitled to compensation only for the amount of value that their leasehold interests lost due to the terrorist attacks, that they cannot recover their claimed consequential

802 F.3d 322

damages, and that, pursuant to CPLR § 4545, their insurance recoveries correspond to, and offset, their potential tort award. We also agree that United had no duty to supervise the security checkpoints or detect the hijackers who boarded American Airlines Flight 11.

However, the district court erred in two respects. First, the court used an incorrect methodology when calculating the value by which Plaintiffs' leasehold interests declined. Second, it wrongly decided that prejudgment interest accrues at the federal funds rate on the diminution in value of Plaintiffs' leasehold estates. Instead, the court should have calculated prejudgment interest using New York's statutory...

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17 practice notes
  • Boelter v. Hearst Commc'ns, Inc., 15 Civ. 3934 (AT), 15 Civ. 9279 (AT)
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • June 17, 2016
    ...rights are enforced,’ not "the rules of decision by which the court will adjudicate those rights.' " In re Sept. 11 Litig. , 802 F.3d 314, 340 (2d Cir. 2015) (quoting Shady Grove , 559 U.S. at 407, 130 S.Ct. 1431 (plurality opinion)). However, the "federal rule ... cannot gov......
  • Rosenfeld v. Lenich, 17-CV-7299 (NGG) (PK)
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
    • March 1, 2019
    ...legal consequences of wrongs to a controllable degree and to protect against crushing exposure to liability." In re Sept. 11 Litig., 802 F.3d 314, 345 (2d Cir. 2015) (internal quotation marks and citations omitted). "[D]uty is not something derived or discerned from an algebraic f......
  • Moody v. CSX Transp., Inc., 07–CV–6398P
    • United States
    • United States District Courts. 2nd Circuit. United States District Court of Western District of New York
    • September 21, 2017
    ...by Federal Rule of Civil Procedure 42(b) and are typically well within the discretion of district courts." In re Sept. 11 Litig ., 802 F.3d 314, 339 (2d Cir. 2015). Under Rule 42(b), bifurcation may be ordered "[f]or convenience, to avoid prejudice, or to expedite and economize.&q......
  • Ellis v. U.S. Bank Nat'Lass'N (In re Ellis), Case No.: 16-30870 (AMN)
    • United States
    • United States Bankruptcy Courts. Second Circuit
    • August 28, 2017
    ...having reasonable knowledge of relevant facts." World Trade Center Props. LLC v. American Airlines, Inc. (In re September 11 Litig.), 802 F.3d 314, 335 (2d Cir. 2015) (citing United States v. Cartwright, 411 U.S. 546 (1973)). In light of the recognized subjectivity inherent in evaluati......
  • Request a trial to view additional results
17 cases
  • Boelter v. Hearst Commc'ns, Inc., 15 Civ. 3934 (AT), 15 Civ. 9279 (AT)
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • June 17, 2016
    ...rights are enforced,’ not "the rules of decision by which the court will adjudicate those rights.' " In re Sept. 11 Litig. , 802 F.3d 314, 340 (2d Cir. 2015) (quoting Shady Grove , 559 U.S. at 407, 130 S.Ct. 1431 (plurality opinion)). However, the "federal rule ... cannot gov......
  • Rosenfeld v. Lenich, 17-CV-7299 (NGG) (PK)
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
    • March 1, 2019
    ...legal consequences of wrongs to a controllable degree and to protect against crushing exposure to liability." In re Sept. 11 Litig., 802 F.3d 314, 345 (2d Cir. 2015) (internal quotation marks and citations omitted). "[D]uty is not something derived or discerned from an algebraic f......
  • Moody v. CSX Transp., Inc., 07–CV–6398P
    • United States
    • United States District Courts. 2nd Circuit. United States District Court of Western District of New York
    • September 21, 2017
    ...by Federal Rule of Civil Procedure 42(b) and are typically well within the discretion of district courts." In re Sept. 11 Litig ., 802 F.3d 314, 339 (2d Cir. 2015). Under Rule 42(b), bifurcation may be ordered "[f]or convenience, to avoid prejudice, or to expedite and economize.&q......
  • Ellis v. U.S. Bank Nat'Lass'N (In re Ellis), Case No.: 16-30870 (AMN)
    • United States
    • United States Bankruptcy Courts. Second Circuit
    • August 28, 2017
    ...having reasonable knowledge of relevant facts." World Trade Center Props. LLC v. American Airlines, Inc. (In re September 11 Litig.), 802 F.3d 314, 335 (2d Cir. 2015) (citing United States v. Cartwright, 411 U.S. 546 (1973)). In light of the recognized subjectivity inherent in evaluati......
  • Request a trial to view additional results

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