WTC Jury Hears ?Forgetful' Witness' Notes

Mr. Silverstein is contending that the terrorist action, which wiped out the trade center, involves two insurable events or double the amount of coverage that insurers say was in place.

During the trial's first week, Trade Center risk manager Robert Strachan testified that, in what he said was an accident, he had twice faxed copies of the Willis Property form, which defines the Twin Center claim as a single event with a $3.5 billion limit, to let lenders and others know the extent of coverage.

Mr. Strachan said when he sent the faxes a day after the Sept. 11 attack he was "upset and confused" and he faxed that form because "it was the only policy I had in my office" at the time.

But this week, attorneys for the insurers were allowed to introduce notes, made on the day the faxes were sent, by Beth Ann Herrmann, director of insurance operations for GMAC, a major lender for WTC leaseholder Larry Silverstein.

Ms. Herrmann's notes described her conversations that day with one of the fax recipients, Peter Lefkowitz, a GMAC insurance representative who also spoke with Mr. Strachan on that day.

Her notes read in part, "Bob Strachan faxing manuscript form that it [the policy] was to be written on" and "Lloyd's [one of the insurers represented in the trial] accepted the policy form."

Those notes appear to support insurers' contention that they are bound to agreements based on the Willis Property form, also called the "Wilprop" form, rather than a Travelers property form.

The Travelers form would support Mr. Silverstein's contention that two airplanes crashing into the Twin Towers constitute two occurrences for insurance purposes. Final policy documents were not signed before the Sept. 11 terrorist attack.

Ms. Herrmann, on the witness stand a few weeks ago, said despite her extensive notes, she couldn't remember her Sept. 12, 2001 conversation with Mr. Lefkowitz or the contents of the meetings and discussions she participated in immediately after Sept. 11.

At the time of her testimony, her notes were not allowed in evidence. Judge Mukasey told the jury that the sole reason Ms. Herrmann's notes were now included as evidence was because "her mind had been messed with" by Mr. Silverstein's lawyers before she testified.

But Herbert Wachtell, the lead attorney for Mr. Silverstein, challenged the judge's characterization of Ms. Herrmann's testimony and argued that her memory lapse was caused by a "psychological phenomena" which happens when people take notes without listening to the content of the conversation.

In other action at the trial, Mr. Silverstein's attorneys continued to attack insurers' one-event argument.

During cross-examination of underwriters from Lloyd's syndicates, lawyers representing Mr. Silverstein noted that underwriters had waived their right to change the wording on the brokers slip with risk language and agreed "to abide by and accept decisions of the lead underwriter with respect to underwriting, policy administration and claims."

According to Mr. Silverstein's attorneys, Willis Group Holdings was allowed to pick the lead underwriter as it wanted.

"Is it your position that this provision designating an unspecified insurance company as the lead underwriter and Faraday [a Lloyds syndicate] agreeing to abide by and accept decisions of that lead underwriter was part of what Faraday bound to?" Mr. Silverstein's lawyer, Peter Hein, asked Nick Jones, a Faraday underwriter, who took the stand this week.

"There is no limitation at all in this provision as to who may be the lead underwriter, correct?" he continued.

"This is a draft form?it's clearly not finalized," Mr. Jones replied, adding that Wilprop was the only policy form he was ever shown.

Mr. Jones said that those waiver clauses only apply to the final policy document, which wasn't signed before the Sept. 11 terrorist attack. Mr. Jones also said that Willis wasn't free to change the wording or form that accompanied the binder.

"I believe the final wording would be based on the wording that I was shown in the underwriting submission. And therefore, if that had changed, I would have expected the broker to bring that back," Mr. Jones said.

Neil Chapman, the underwriting director with Wellington, a Lloyd's syndicate, also testified under a cross-examination from Mr. Hein that "we waived the agreement provided it did not alter materially from what was contained in the submission and the slip."