Deutsche Bank, Insurers Settle Dispute Over Fate OfBuilding

Michael Ha

As the legal wrangling between the World Trade Center'sleaseholder and his insurers over the Twin Towers destructioncontinues in court, another insurance dispute involving the Sept.11, 2001, tragedy has come to a close, as Deutsche Bank AG reacheda settlement to demolish its tower just south of the former WTCsite.

Deutsche Bank reached a deal with its insurers, constructionofficials and other municipal authorities to demolish its tower at130 Liberty Street in Manhattanthe last standing structure severelydamaged by the Sept. 11 terrorist attack.

Under terms of the agreement, two insurers–Allianz AG andAXA–will together pay Deutsche Bank $140 million, while the LowerManhattan Development Corp. (a state entity created to overseedowntown redevelopment) will buy the property from Deutsche Bankfor $90 million and take over a $45 million contract to demolishthe 40-story building. The two insurers said they would pay anyadditional demolition costs that go beyond the contract figure.

Together, Allianz and AXA were responsible for half of theaggregate coverage. Deutsche Bank's other two insurers–Zurich andChubb Corp–settled with the bank last year. Terms of the settlementwere not disclosed.

The point of contention has been whether the badly damaged towercould have been salvaged. Deutsche Bank has been arguing that thebuilding needed to be demolished for environmental reasons, whilethe insurers contended that the tower was still salvageable.

Last August, Deutsche Bank filed a lawsuit against Allianz andAXA, discussing the environmental effects of dust from thecollapsed WTC towers.

“The implosion of the South Tower generated tornado-force winds,which distributed fine dust from the destruction of the WTC intoevery nook and cranny of 130 Liberty Street through the 15-storygash and approximately 1,700 broken windows,” Deutsche Bank said inits complaint. The bank argued that such dust contains hazardousmaterialsincluding asbestos, lead, mercury, other heavy metals andPCBs.

Peter Gillon, an attorney and co-chair of national environmentalpractice at Greenberg Traurig LLP, headquartered in Miami, toldNational Underwriter that Deutsche Bank's complaint wasunique in that it was one of the first of its kind inproperty-damage lawsuits to include environmental effects of Sept.11-related contaminants.

Mr. Gillon said this was the first case that he was aware ofthat asserts environmental and health effects of exposures fromdust and debris from the World Trade Center collapse.

Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, March 5, 2004.Copyright 2004 by The National Underwriter Company in the serialpublication. All rights reserved. Copyright in this article as anindependent work may be held by the author.