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Federal Court to Consider World Trade Center Developer's Claims Against Airlines

Source: BestWeek- Jeff Jeffries

Posted on 17 Jul 2013 by Neilson

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World Trade Center suitLater this week, a federal judge in New York is set to decide whether the developer behind the World Trade Center should receive up to $3.5 billion from airlines whose planes were hijacked and used in the Sept. 11, 2001, terrorist attack in Manhattan.

On July 15, U.S. District Judge Alvin Hellerstein started a three-day trial to consider how much of the $4 billion Larry Silverstein received from a consortium of insurers should offset the damages he is seeking from the airlines. Silverstein's 2008 complaint, filed in the U.S. District Court for the Southern District of New York, names United Airlines, now United Continental Holdings Inc., American Airlines and American's parent, AMR Corp., as defendants.

The case hinges on allegations that lax security measures among both airline and security companies factored into the attacks that caused business-related and property damage losses. Hellerstein may decide the case as early as this week.

Lawyers representing the airlines argue in pleadings filed with the court that the payments made by the insurance companies were for the same category of losses that Silverstein has sought in his lawsuit against the airlines. Efforts to reach lawyers representing the airlines as well as Silverstein's lawyers were not immediately successful.

The lawsuit against the airlines is not the first case filed by Silverstein that relates to the attacks of 9/11. In August 2009, a federal court found that insurers who paid billions in claims for Sept. 11 could make subrogation claims against entities they considered liable for damage.

A mediator in February established the $1.2 billion settlement price in the property damages master case, discounting it sharply after deciding that contention and disagreement among the "scores of insurers" would prohibit a negotiated settlement. The allocation of the settlement proceeds and the defendants' available coverage limits have been sealed under court order jointly requested by those involved.

In 2010, Silverstein filed a challenge to a $1.2 billion settlement in a Sept. 11 property damages case involving dozens of insurers over concern that it could exhaust coverage limits before his own company's related claims are addressed.