Silverstein Denied Right to Seek $3.5 Billion From Airlines

Silverstein Denied Right to Seek $3.5 Billion From CarriersThe judge said ‘Lucky Larry’ couldn’t sue under New York State law, which means Silverstein is probably going to take his act on the road and sue in another state.

Bloomberg – by Eric Larson

Real estate developer Larry Silverstein can’t seek $3.5 billion from airlines whose planes were hijacked by terrorists and flown into the World Trade Center’s twin towers on Sept. 11, 2001, a judge ruled.

Silverstein, who leased the skyscrapers about two months before they were destroyed, already collected $4.1 billion from insurers and can’t collect twice under New York law, U.S. District Judge Alvin K. Hellerstein ruled yesterday in a courtroom less than a mile and a half from the World Trade Center site.  

“If this case were to go forward, the WTC companies would not be able to recover anything against the airlines,” said Hellerstein. The judge rejected any suggestion that Silverstein had sought a windfall, saying he was among the “heroes” who sought to “create beauty out of the destruction.”

Silverstein’s World Trade Center Properties LLC in 2008 sued United Continental Holdings Inc. (UAL:US), American Airlines and its parent AMR Corp. (AAMRQ:US), claiming their negligence led to the destruction of the towers.

The company, which rebuilt the destroyed 7 World Trade Center and is rebuilding three other towers on the site, argued that the insurance accord didn’t bar it from seeking additional damages in civil cases because the payout didn’t correspond to specific types of economic losses, such as replacement costs for the buildings or lost rent from tenants. Hellerstein disagreed.

Link Made

“There’s complete correspondence,” Hellerstein said. When such a link is made between an insurance payout and a specific type of loss, collecting on that same type of loss is barred under New York law, he said.

Islamic extremists flew an American Airlines jet into one of the twin towers and a United Airlines jet into the other, causing both to collapse. Two other planes were hijacked, one that hit the Pentagon near Washington and another that crashed in a field in Pennsylvania after passengers fought the terrorists. About 3,000 people died.

“We did not believe that the plaintiff could be permitted any further compensation and we are pleased the judge ruled in our favor,” United spokeswoman Christen David said in an e-mail.

“We are gratified by the judge’s decision,” Mike Trevino, American Airlines spokesman, said in a statement.

Tallest Building

Silverstein’s lawyer Richard Williamson had said in closing arguments yesterday that the airlines “dramatically understate” the developer’s actual economic losses from the attack, including by using an arbitrary 2007 cutoff date for calculating lost rents.

The developer said it will use proceeds from the case to build Norman Foster’s 2 World Trade Center adjacent to the centerpiece 1 World Trade Center — now the tallest building in North America — and continue revitalizing the area 12 years after the attack.

“In my opinion, no one is enjoying a windfall — everyone is suffering from 9/11,” the judge said. Talking about a windfall “is obnoxious in this case,” he said.

About two months before the attacks, Silverstein’s Silverstein Properties signed four 99-year leases on the towers and two smaller buildings in the complex.

Initial Payment

He also made a $491 million initial payment as part of the Port Authority of New York and New Jersey’s privatization of the World Trade Center site.

“We are deeply disappointed” in the decision, Bud Perrone, a spokesman for Silverstein Properties, said in a statement. “While we respect Judge Hellerstein, we believe his ruling on this issue, and on prior issues, to be in error and intend to file an immediate appeal. We will not rest until we have exhausted every option to assure that the aviation industry’s insurers pay their fair share toward the complete rebuilding of the World Trade Center.”

The 2001 lease required Silverstein to insure the buildings and rebuild if the site was destroyed. He insured them for $3.5 billion “per occurrence,” more than required, court papers show.

Silverstein in 2007 reached the $4.1 billion settlement with insurers after suing to collect more than $7 billion — twice the value of the policy.

Separate Attack

The companies reached the accord after a jury accepted Silverstein’s claim that each tower’s destruction was a separate attack under some policies, while a jury in another case found some insurers were bound by a policy that defined that attack as a single event.

Out of that settlement, about $2.5 billion was paid to the Port Authority under a 2006 redevelopment agreement calling for the agency, rather than Silverstein, to rebuild 1 World Trade Center.

The payment also covered rent on the property, which Silverstein was required to continue paying to the Port Authority after the site was destroyed.

In a 2008 ruling in favor of the airlines, Hellerstein lowered the limit of possible recovery in the case to the $2.8 billion market value of the leases and not the much higher cost of rebuilding.

The amount of potential damages was later increased to about $3.5 billion when the judge said the value of 7 World Trade Center, which was also destroyed and has been rebuilt, could be added to the claim.

Lost Bid

The leaseholder for the destroyed buildings in May lost its bid to prevent AMR from raising “act of war” as a defense to its alleged negligence in the terrorist attacks. The airlines promised Congress and the U.S. public they wouldn’t raise such a defense to avoid paying claims, lawyers for the leaseholder argued in a February court filing.

The Silverstein organization accused American of breaking promises to not use the defense. The guarantee coincided with a bailout of the aviation industry, the leaseholder argued.

“Regardless of the ultimate outcome of the case, we remain 100 percent committed to realizing a fully and spectacularly rebuilt World Trade Center,” Silverstein’s Perrone said. “4 WTC is opening in the fall, and construction on the other buildings has made significant progress. The new World Trade Center will serve as an unmistakable symbol of New York’s resilience and strength.”

The case is In Re September 11 Litigation, 21-mc-00101, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Erik Larson in federal court in New York at

To contact the editor responsible for this story: Andrew Dunn at

3 thoughts on “Silverstein Denied Right to Seek $3.5 Billion From Airlines

  1. Now THAT’S chutzpah!!!

    How about a brand new hemp rope instead, you murdering Zionist AshkeNAZI so-called ‘jew’ lowlife scumbag POS?

    I’m sure we can find one just your size. 🙂

  2. Actually, Silverstein operates a Venture Capital firm, same as Mitt Romney, all funds are provided by the Commodity Credit Corporation
    ( Department of Agriculture) using taxpayer guaranteed funds.
    The legislation, pasted below is based on the Food for Peace Act, lawyer speak for third world country disarmament. It has no application in the several states of the union, i.e. government competing with private enterprise.
    The Commodity Credit Corporation, is the Department of Defense, and the Armed Forces,. The definition of National Defense, according to the C.C.C., is as follows “To secure the production of oil and to secure the transportation thereof.
    Truth be told, the Corporation , acquired right to the “Towers’ through one of its shills, by providing the funds, destroyed the “Towers”, invaded the middle East, to secure the oil in Iraq, and the oil in the Caspian Sea Region. see “a carpet of gold, or a carpet of bombs”. (online)
    To obstruct any meaningful investigation, several oil executives were placed on the 9-11 Commission. A coup d’état.

    7 U.S.C.
    United States Code, 2011 Edition
    Title 7 – AGRICULTURE
    From the U.S. Government Printing Office,

    §2009cc. Definitions
    In this subchapter:
    (1) Articles
    The term “articles” means articles of incorporation for an incorporated body or the functional equivalent or other similar documents specified by the Secretary for other business entities.
    (2) Developmental venture capital The term “developmental venture capital” means capital in the form of equity capital investments in rural business investment companies with an objective of fostering economic development in rural areas.
    (4) Equity capital
    The term “equity capital” means common or preferred stock or a similar instrument, including subordinated debt with equity features.
    (5) Leverage
    The term “leverage” includes—
    (A) debentures purchased or guaranteed by the Secretary;
    (B) participating securities purchased or guaranteed by the Secretary; and
    (C) preferred securities outstanding as of May 13, 2002.
    (ii) similar plans not covered by this subchapter that have been established, and that are maintained, by the Federal Government or any State (including by a political subdivision, agency, or instrumentality of the Federal Government or a State) for the benefit of employees.
    §2009cc–1. Purposes
    The purposes of the Rural Business Investment Program established under this subchapter are—
    (1) to promote economic development and the creation of wealth and job opportunities in rural areas and among individuals living in those areas by encouraging developmental venture capital investments in smaller enterprises primarily located in rural areas; and
    (2) to establish a developmental venture capital program, with the mission of addressing the unmet equity investment needs of small enterprises located in rural areas, by authorizing the Secretary—
    (A) to enter into participation agreements with rural business investment companies;
    (B) to guarantee debentures of rural business investment companies to enable each rural business investment company to make developmental venture capital investments in smaller enterprises in rural areas; and
    (C) to make grants to rural business investment companies, and to other entities, for the purpose of providing operational assistance to smaller enterprises financed, or expected to be financed, by rural business investment companies.
    (Pub. L. 87–128, title III, §384B, as added Pub. L. 107–171, title VI, §6029, May 13, 2002, 116 Stat. 391.)
    §2009cc–2. Establishment
    In accordance with this subchapter, the Secretary shall establish a Rural Business Investment Program, under which the Secretary may—
    (1) enter into participation agreements with companies granted final approval under section 2009cc–3(e) of this title for the purposes set forth in section 2009cc–1 of this title;
    (2) guarantee the debentures issued by rural business investment companies as provided in section 2009cc–4 of this title; and
    (3) make grants to rural business investment companies, and to other entities, under section 2009cc–7 of this title.
    (Pub. L. 87–128, title III, §384C, as added Pub. L. 107–171, title VI, §6029, May 13, 2002, 116 Stat. 391.)
    (B) Leverage
    An applicant approved under subparagraph (A) shall not be eligible to receive leverage under this subchapter until the applicant satisfies the requirements of section 2009cc–8(c) of this title.
    (C) Grants
    An applicant approved under subparagraph (A) shall be eligible for grants under section 2009cc–7 of this title in proportion to the private capital of the applicant, as determined by the Secretary.
    (Pub. L. 87–128, title III, §384D, as added Pub. L. 107–171, title VI, §6029, May 13, 2002, 116 Stat. 391.)

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