Verbal Blitzkrieg Surrounds Trade Center Talks

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By Gary Mogel

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NU Online News Service, Oct. 16, 2:39 p.m.EDT?Efforts by New York Gov. George Pataki to foster asettlement between insurers and the World Trade Center leaseholdermay hit a snag after a recent verbal salvo from a carrier, oneside's representative said.

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A weekend press release from Swiss Re containing a descriptionof Larry A Silverstein, the Trade Center leaseholder, was"derogatory and not conducive to a settlement," said GeraldMcKelvey of Rubenstein Associates in New York, the public relationsfirm representing Mr. Silverstein.

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Dueling press releases have provided a continuing backdrop tothe legal dispute over how much insurers should pay for thedestruction of the twin towers. The litigation serves as aroadblock to rebuilding at the site.

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Gov. Pataki announced in a statement last week that he wants toassist in the settlement process.Mr. McKelvey said Mr. Silversteinwelcomes the governor's intervention and attempt to mediate asettlement.

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Jacques E. Dubois, chairman and chief executive officer of SwissRe America, noted that "if anyone wants to talk settlement withinthe framework of the Willis property form [the Trade Centerproperty insurance policy], we would be willing to do that."

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Mr. Silverstein contends that the two airplanes that hit thetwin towers on Sept. 11, 2001, should be considered two separateevents, entitling him to recover $7 billion?twice the $3.5 billionproperty insurance policy limit. Insurers, led by New York-basedSwiss Re America, counter that the WTC attack was one event andthat one policy limit applies.

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On Sept. 26, Judge John M. Walker Jr. of the U.S. Second CircuitCourt of Appeals rejected Mr. Silverstein's argument that twoinsurance limits apply as a matter of law and ruled that a trial isneeded to decide the issue.

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At Gov. Pataki's request, Kevin Rampe, president of the LowerManhattan Development Corp., will spearhead the settlementtalks.

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"This is a contract dispute," Swiss Re's Mr. Dubois stressed."The insurers' obligation is up to the $3.5 million policy limitand nothing more. We're talking to lots of people all the timeabout this to make people know our position."

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"Insurers have met with nothing but delays from Mr. Silversteinin trying to get this resolved," Mr. Dubois continued. "We areready to go to trial and put this dispute before a jury of NewYorkers."

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"Resolving this dispute all depends on whether the insurers areprepared to negotiate a reasonable settlement that will lead to therebuilding of the World Trade Center," Mr. McKelvey responded.

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"Swiss Re on Saturday put out a rather uncomplimentary pressrelease about Mr. Silverstein," said Mr. McKelvey.

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The release called Mr. Silverstein "a private developer whowants to control Ground Zero." It went on to state that"Silverstein continues to erode the insurance proceeds available sothat he can pay lobbyists, lawyers and PR advisers who contributenothing to the rebuilding."

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In addition, the release said Mr. Silverstein "has successfullylobbied Congress for insulation from any potential liability to theSeptember 11 victims' families."

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"This release is very derogatory and not conducive tosettlement," said Mr. McKelvey.

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"This bears the earmarks of a foreign insurer desperate toprotect its pocket book to the detriment of New York," notedanother of Mr. Silverstein's spokespersons, Howard J. Rubenstein,in a statement.

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Mr. Silverstein's statement went on to note that Swiss Re haspaid only $49 million so far. The statement also pointed out thatthe contention that the Trade Center attack was two separate eventsis not an "outrageous" claim, as that position is supported by Gov.Pataki, among others.

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Mr. Rampe's office and Gov. Pataki's spokesperson MollyFullington did not return calls for comment.

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