Circuit Denies Insurers' Claims for 9/11 Destruction of 7 WTC

, New York Law Journal

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7 World Trade Center after the terrorist attack in 2001.
7 World Trade Center after the terrorist attack in 2001.

A divided U.S. Court of Appeals for the Second Circuit upheld a finding of summary judgment against Con Edison insurers in their bid to collect damages from World Trade center leaseholder Larry Silverstein for the destruction of the Con Ed substation at 7 World Trade after fire commanders determined late in the day of Sept. 11, 2001, that the building could not be saved.

The circuit also affirmed the dismissal of claims against other defendants involved in the construction and design of the building.

"It is simply incompatible with common sense and experience to hold that defendants were required to design and construct a building that would survive the events of Sept. 11, 2001," a two-judge majority said in Aegis Insurance Services v. 7 World Trade Center, 11-4403-cv.

The ruling upholds a grant of summary judgment by Southern District Judge Alvin Hellerstein (See Profile) in favor of developer Larry Silverstein's 7 World Trade Company in 2011 and Hellerstein's granting of motions to dismiss in 2006 for defendants involved in the construction of the building: Tishman Construction Corp. and the Office of Irwin Cantor.

In dismissing the case against Tishman and Cantor, Hellerstein said the two owed a duty of care to those "entitled to receive the benefit of their work or services or products" but not to third parties such as ConEd.

In granting summary judgment to 7 World, Hellerstein had ruled that, while there was a duty to protect the substation from risk of harm, that duty did not "encompass the long chain of events on September 11, 2001," as the events of that day were not foreseeable.

On Wednesday, Judges Rosemary Pooler (See Profile) and Barrington Parker Jr. (See Profile) affirmed, albeit on different grounds.

"[E]ven assuming negligence on the part of the defendants, any such negligence was not the cause-in-fact of the collapse of 7 WTC," Pooler said for the court.

She said plaintiffs' experts' reports on how the building could have been designed differently to avoid collapse were "too speculative to avoid summary judgment."

Judge Richard Wesley (See Profile) dissented, saying a trial was merited, as the plaintiffs had identified a standard of care—"high rise buildings must be built to withstand a fire that cannot be extinguished by the efforts of firefighters" and alleged a "deviation from that standard" in the case of 7 WTC.

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