Penalties Issued to Zurich American, Law Firms in 9/11 Insurance Claims

U.S. District Judge Alvin K. Hellerstein in New York imposed a $1.25 million penalty against Morristown, NJ firm Coughlin Duffy, Washington D.C.'s Wiley Rein, and Zurich American Insurance Co. for their role in concealing a Zurich American insurance policy for the World Trade Center buildings. The policy was significant in determining how much Zurich would have to pay to New York real developer Larry Silverstein for destruction of the Twin Towers in the 9/11 attacks.  
 
The Port Authority of New York and New Jersey, owner and operator of the World Trade Center, in 2001 entered into lease agreements with Larry Silverstein for the leasing of the twin towers, and with Westfield Corporation, Inc. for the leasing of the retail space in the concourses and street levels of the towers.Silverstein formed World Trade Center Properties LLC (WTCP) to hold the individual leasing entities, and obtained binders from Zurich American Insurance Company for a primary Commercial General Liability Policy. The Zurich binder identified the “Named Insured” as Silverstein Properties, Inc./World Trade Center. Following the September 11, 2001 attacks, Zurich American Insurance Company claimed that neither Westfield Corporation Inc. nor the Port Authority was entitled to insurance coverage.  
 
During the trial the lead counsel for all the primary and excess insurers in the case claimed sufficient evidence to proving their contention. However, Zurich American Insurance withheld a copy of the 62-page policy – printed out on the day of the attack itself – indicating otherwise. On the same date an electronic version of the policy was deleted from the Document Library and replaced with what the company called the final corrected policy.  
 
In March of 2003, the company’s law firms Wiley Rein LLP and Coughlin Duffy obtained and copied the 9/11 document but kept it hidden for almost two years. The document did not surface again until 2005 after depositions had been completed.  
 
According to Judge Hellerstein, the version of the policy printed on September 11, 2001 indicated that the Port Authority of New York and New Jersey and WTC leaseholder Westfield Corporation Inc. were considered as “additional insured” under certain WTC policy endorsements. In his opinion, the judge said Zurich American Insurance culpability was established by its deletion of electronic version of the 9/11 document and its possession of the printed version of the 9/11 document which it failed to produce.