LOWER THE TIDE OF BILE SAYS JUDGE:

U.S. District Judge Michael B. Mukasey has had enough of the sniping between the insurers led by Swiss Re and Silverstein Properties over the recovery for the destruction of the WTC’s Twin Towers. He recently told all parties to do something to stem the puddles of bile “lapping at the top of my shoes.” Beginning with Swiss Re’s declaratory relief action in October 2001, the parties have been launching broadsides defending their respective positions and attacking the other side. Even with $3.5 billion at stake, the venom has been exceptionally nasty, running the gamut from charges of fraud, lying, false testimony, hiding documents, bad faith and various conspiracies. The charges have often been made in court, but both sides have also made widespread use of the media to broadcast their vituperative comments in an apparent attempt to sway public opinion. Their all too apparent dislike for one another has become a major obstacle preventing settlement of the case, which is now scheduled to begin trial on Feb. 9. It has backed both parties into a corner from which they can’t escape, and has made any out of court agreement highly unlikely. Judge Mukasey has split the lawsuit into three parts. The first would settle the question as to which binding forms determine coverage. The WilProp form, which includes the term “an occurrence or series of occurrences” in reference to losses, supports Swiss Re’s “one occurrence” theory. Silverstein relies on the Travelers form which doesn’t contain such language to support his “two occurrence” position. Each of the 19 insurance companies are entitled to a separate decision. Trial two would address the issue of whether the destruction of the WTC was one or two occurrences, as far as each insurer is concerned, based on the decisions of the first trial. Trial three would use those decisions to assess the amount of recovery Silverstein and the Port Authority should receive. Silverstein claims around $7 billion to fund reconstruction of the WTC. The insurers claim they are liable for half that amount. Any serious rebuilding efforts are stalled until a decision is reached. While the situation is legally defensible, from a political and economic standpoint it’s intolerable, with the prospect of unending legal appeals from both sides. Judge Mukasey’s warning is a timely, if somewhat overdue, reminder to both sides to stop attacking one another and try cooperating for a change.

Topics Legislation