A Manhattan jury dealt a severe blow to World Trade Center leaseholder Larry Silverstein yesterday, saying the largest Twin Towers insurer does not have to cough up a double payout.
The panel, which reached similar verdicts for other insurers last Thursday, had remained deadlocked on the case of Swiss Re, which wrote $877 million worth of insurance on the trade center weeks before it was destroyed.
But after debating Swiss Re’s coverage for almost a full day yesterday, the federal jury sided with the insurer and ruled the company had signed onto a policy form that defined the terror attack as a single insurable “occurrence.”
Silverstein has been arguing that his insurers were bound by a different form, under which two planes hitting two towers equaled two occurrences, which would merit a double payment close to $7 billion.
But after yesterday’s verdict, with other court rulings and settlements factored in, $2.4 billion of Silverstein’s $3.5 billion coverage has now been found to be exempt from the two-occurrence argument.
A second trial, scheduled for August, will decide whether insurers liable for $1.14 billion in coverage must pay double.
If Silverstein wins against all the insurers in that case, the largest total payment he could receive on his overall trade center policy is $4.68 billion.
The verdict is a blow both to the prospects for downtown rebuilding and Silverstein’s ability to remain in control of the massive project, with its estimated $9 billion-plus price tag.
The Port Authority, which owns Ground Zero and leased the property to Silverstein in July, 2001, is now expected to demand an accounting from the developer, asking him to show how he plans to pay for the rebuilding without the insurance windfall.
Silverstein issued a statement saying he was “disappointed,” but added that “a defeat in the courtroom is not a defeat for rebuilding.”
“Whatever happens in court, we are determined to rebuild the World Trade Center.”
Silverstein has received $1.9 billion in insurance proceeds so far, but about $1.6 billion of that has been spent on rent, taxes and legal fees, and to pay off mortgages on the Twin Towers and their underground shopping mall.
The PA said in a statement that it expected Silverstein to continue working with the agency on “critical infrastructure improvements” at the site. That’s seen as an indication the PA fears the developer may not have enough money to pick up his share of key WTC elements, such as truck ramps and security.