SR Int'l Bus. Ins. Co. v. World Trade Ctr. Props., LLC, Docket Nos. 04-4500-cv(L), 05-6343-cv(CON), Docket Nos. 05-3167-cv(L), 05-3168-cv(CON), 05-3169-cv(CON), 05-3170-cv(CON), 05-3204-cv(CON), 05-3325-cv(CON), 05-3940-cv(CON), and 05-3942-cv(CON) , UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT, 467 F.3d 107; 2006 U.S. App. LEXIS 25879; 71 Fed. R. Evid. Serv. (Callaghan) 613, March 7, 2006, Argued , October 18, 2006, Decided , Motion granted by, in part, Motion denied by, in part SR Int'l Bus. Ins. Co. v. World Trade Ctr. Props. LLC, 2006 U.S. Dist. LEXIS 79326 (S.D.N.Y., Oct. 31, 2006)CASE SUMMARY PROCEDURAL POSTURE: Appellant insureds and appellant insurers sought review of adverse judgements that the United States District Court for the Southern District of New York entered following a two-phase jury trial concerning whether coordinated terrorist attacks, whereby two jetliners separately crashed into the twin towers of the World Trade Center, constituted one or two occurrences under the terms of more than 30 separate insurance contracts.OVERVIEW: At the time of the attacks, one insurer had issued a final policy and the other insurers had issued binders, which did not define "occurrence." During the first phase of trial, the jury determined that appellee insurance companies bound to a policy form that was prepared by the insureds' insurance broker.Under that form's definition of occurrence, the terrorist attacks constituted one occurrence. At the second phase of trial, the jury determined that appellant insurers, which did not bind to the insureds' broker's form, bound coverage to contracts that contemplated a two-occurrence treatment of the terrorist attacks. With respect to the insureds' appeal from the phase-one judgment, the court held that any error in excluding custom and usage evidence was harmless, and that the insurers' witnesses were properly permitted to testify as to which form they thought they had bound. With respect to the insurers' appeal from the phase-two judgment, the court held that the insureds' expert witness on property insurance was qualified based on experience and that the expert's testimony was sufficient to establish an industry custom of defining occurrence in terms of a physical cause of loss.OUTCOME: The court affirmed the district court's judgments.JUDGES: Before: WALKER, CABRANES and POOLER, Circuit Judges. OPINION BY: JOHN M. WALKER, JR. OPINION [*113] JOHN M. WALKER, JR., Circuit Judge: These are appeals from judgments following two separate phases of a jury trial to adjudicatewhether the coordinated terrorist attacks of September 11, 2001 - whereby two jetliners separately crashed into the twin towers of the World Trade [**5] Center ("WTC"), destroying both buildings - constituted one or two "occurrences" under the terms of multiple insurance contracts. The parties are entities with varying property interests in the WTC (the "Silverstein Parties") 1 and the insurance companies they retained to provide approximately $ 3.5 billion in multi-layered insurance on a "per occurrence" basis. At issue in the overall litigation is whether the Silverstein Parties can recover in the aggregate up to $ 3.5 billion, for one occurrence, or up to $ 7 billion, for two occurrences, under the terms of more than thirty separate insurance contracts that together provide the total coverage. The parties do not dispute that the destruction of the WTC resulted in a loss that greatly exceeds $ 3.5 billion.- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - - 1 The insureds include the Port Authority of New York and New Jersey, which owns the WTC property in fee simple, and Silverstein Properties, Inc. and several related entities. In 2001, Silverstein Properties was the successful bidderon a 99-year lease for the property from the Port Authority. Because Silverstein Properties is the party that actually obtained the insurance coverage at issue in this case and was the primary insured, for ease of reference we refer toall insureds as the "Silverstein Parties."- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [**6] The resolution of the broad question presented in these appeals - whether the coordinated attacks constituted one or two occurrences - is complicated by the fact that, as of September 11, 2001, the Silverstein Parties were still in the midst of negotiating final property insurance coverage for the WTC. Silverstein Properties had only recently entered into a long-term lease for the WTC and, with one exception, none of the many insurers that ithad retained to provide property insurance coverage had issued a final insurance policy. Instead, these insurers had issued HN1temporary binders or slips, which provide interim insurance coverage until a final policy is either issued or refused. Springer v. Allstate Life Ins.Co. , 94 N.Y.2d 645, 649, 731 N.E.2d 1106, 1108, 710 N.Y.S.2d 298 (2000). These fully enforceable, interim insurance contracts or binders are a product of necessity: They serve asa "quick and informal device to record the giving of protection pending the execution and delivery of a more conventionally detailed policy of insurance." Employers Commercial Union Ins. Co. v. Firemen's Fund Ins. Co. , 45 N.Y.2d 608, 613, 384 N.E.2d 668, 670, 412 N.Y.S.2d 121 (1978); see also [**7] Springer , 94 N.Y.2d at 650 (noting that a binder and a final policy are "two distinct agreements"). Because, in this case, the binders left the term "occurrence" undefined, the resolution of the broad question [*114] presented in these appeals required an individualized inquiry to determine what each pair of parties - the insured Silverstein Parties and each insurer - intended for the word "occurrence" to mean in each binder. In a previous opinion in this matter, we explained our understanding of the nature of this individualized inquiry: HN2In deciding which terms are to be implied in a binder, reliance may be placed on the extrinsic evidence of the parties' pre-binder negotiations. In particular, we believe that any policy form that was exchanged in the process of negotiating the binder, together with any express modifications to that form, is likely the most reliable manifestation of the terms by which the parties intended to be bound while the binder was in effect. In the absence of such a policy form underlying the negotiations or sufficient extrinsic evidence of the negotiations to determine the parties' intentions,
View Full Document
Unlocking...