World Trade Center developer Larry Silverstein cannot force insurance companies to pay his legal fees related to litigation stemming from the Sept. 11 attacks, a Manhattan federal judge ruled yesterday.
U.S. District Judge Alvin Hellerstein said forcing companies to pay Mr. Silverstein's legal defense costs was unjust when all but one of more than a dozen companies had made it clear in their policies that they would not cover such costs.
The judge said the evidence was "overwhelming" that the lead insurer, Zurich American Insurance Co., had "refused, in the absence of adequate loss history data, to issue a policy that included defense cost coverage."
Judge Hellerstein dismissed Mr. Silverstein's contention that the insurance binders contravened the stated intent of the parties. "Clearly, Silverstein may have sought defense cost coverage, but desire alone is insufficient to create a contractual obligation," he wrote.
Those insurers who failed specifically to decline defense cost obligations did not demonstrate that they assumed a willingness to defend, the judge asserted.
"Thus, it is clear that the excess insurers were unwilling to provide for defense cost coverage," the judge wrote. "Silverstein is not entitled to a windfall, rewriting to his advantage that which the insurers were unwilling to provide in the binders they used."
Mr. Silverstein has faced a wave of litigation from World Trade Center victims alleging the Port Authority or its leaseholders were negligent in failing to prevent the attacks.
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