Source: http://openjurist.org/345/f3d/154/world-trade-center-properties--v-hartford-fire-insurance-company
Timestamp: 2013-12-20 19:07:58
Document Index: 221186628

Matched Legal Cases: ['§ 1292', '§ 1292', '§ 1292', '§ 1332', '§ 6407', '§ 6403', '§ 6405', '§ 7151', '§ 6459', '§ 32', '§ 408', '§ 201', '§ 408', '§ 408', '§ 408', '§ 1292', '§ 1292']

345 F3d 154 World Trade Center Properties v. Hartford Fire Insurance Company | OpenJurist
345 F. 3d 154 - World Trade Center Properties v. Hartford Fire Insurance Company	Home345 f3d 154 world trade center properties v. hartford fire insurance company
345 F3d 154 World Trade Center Properties v. Hartford Fire Insurance Company 345 F.3d 154
(Tan) WORLD TRADE CENTER PROPERTIES, L.L.C., Silverstein Properties, Inc., Silverstein WTC Management Co., L.L.C., 1 World Trade Center, L.L.C., 2 World Trade Center, L.L.C., 4 World Trade Center, L.L.C., 5 World Trade Center, L.L.C., Westfield WTC, L.L.C., Westfield Corporation, Inc., Westfield America, Inc., and the Port Authority of New York and New Jersey, Defendants-Counter-Claimants-Counter-Defendants-Appellants-Cross-Appellees,UBS Warburg Real Estate Investments Inc., Wells Fargo Bank Minnesota, N.A., As Trustee for the registered holders of GMAC Commercial Mortgage Securities, Inc. Mortgage-Backed Pass-Through Certificates, Series 2001-WTC, and GMAC Commercial Mortgage Corporation, Defendants-Counter-Claimants-Counter-Defendants-Cross-Appellees,v.HARTFORD FIRE INSURANCE COMPANY and Royal Indemnity Company, Counter-Defendants-Appellees,St. Paul Fire & Marine Insurance Co., Counter-Defendant-Appellee-Cross-Appellant,SR International Business Insurance Co., LTD., Plaintiff-Counter-Defendant-Intervenor,Allianz Insurance Company, Copenhagen Reinsurance Co., Employers Insurance of Wausau, Federal Insurance Company, Great Lakes Reinsurance (UK) PLC., Gulf Insurance Company, Houston Casualty Co., Industrial Risk Insurers, Lexington Insurance Co., Certain Underwriters at Lloyd's of London, QBE International Insurance Limited, Swiss Reinsurance Co. UK Ltd., TIG Insurance Co., Tokio Marine and Fire Insurance Co., Travelers Indemnity Company, Twin City Fire Insurance Co., Württembergische Versicherung AG and Zurich American Insurance Co., Counter-Defendants.SR International Business Insurance Co., Ltd., Plaintiff-Counter-Defendant,World Trade Center Properties, L.L.C., Silverstein Properties, Inc., Silverstein WTC Management Co. L.L.C., 1 World Trade Center, L.L.C., 2 World Trade Center, L.L.C., 4 World Trade Center, L.L.C., 5 World Trade Center, L.L.C., Westfield WTC, L.L.C., Westfield Corporation, Inc., Westfield America, Inc., and the Port Authority of New York and New Jersey, Defendants-Counter-Claimants-Appellants,UBS Warburg Real Estate Investments Inc., Wells Fargo Bank Minnesota, N.A., As Trustee for the registered holders of GMAC Commercial Mortgage Securities, Inc. Mortgage-Backed Pass-Through Certificates, Series 2001-WTC, and GMAC Commercial Mortgage Corporation, Defendants-Counter-Claimants,v.The Travelers Indemnity Company, Counter-Defendant-Appellee,Allianz Insurance Company, Copenhagen Reinsurance Co., Employers Insurance of Wausau, Federal Insurance Company, Great Lakes Reinsurance (UK) PLC, Gulf Insurance Company, Hartford Fire Insurance Company, Houston Casualty Co., Industrial Risk Insurers, Lexington Insurance Co.,Certain Underwriters at Lloyd's of London, QBE International Insurance Limited, Royal Indemnity Company, St. Paul Fire & Marine Insurance Company, Swiss Reinsurance Co. UK Ltd., TIG Insurance Co., Tokio Marine and Fire Insurance Co., Twin City Fire Insurance Co., Württembergische Versicherung AG, and Zurich American Insurance Co., Counter-Defendants.
Docket No. 02-9279(L).
Docket No. 02-9280(CON).
Docket No. 02-9281(CON).
Docket No. 02-9349(CON).
Docket No. 02-9350.
Docket No. 02-9351.
Docket No. 02-9431.
Docket No. 02-9440.
Argued: July 22, 2003.
Decided September 26, 2003.
Herbert M. Wachtell, Wachtell, Lipton, Rosen & Katz (Proskauer Rose LLP (John H. Gross and Seth B. Schafler), and Wachtell, Lipton, Rosen & Katz (Eric M. Roth, Marc Wolinsky, Barbara Robbins, Ben M. Germana, Elaine P. Golin, Jed I. Bergman, Edward J.W. Blatnik, Ian Boczko, and Kenneth K. Lee), on the brief), New York, NY, for Defendants-Counter-Claimants-Counter-Defendants-Appellants-Cross-Appellees World Trade Center Properties, L.L.C., Silverstein Properties, Inc., Silverstein WTC Management Co., L.L.C., 1 World Trade Center, L.L.C., 2 World Trade Center, L.L.C., 4 World Trade Center, L.L.C, and 5 World Trade Center, L.L.C.
Boies, Schiller & Flexner LLP (David Boies, Edward Normand), Armonk, NY; Ropes & Gray (Kenneth W. Erickson, Robert A. Skinner, John C. Demers; Paul B. Galvani), Boston, MA and New York, NY; Cozen O'Connor (Stephen A. Cozen, Jay M. Levin), Philadelphia, PA; Mound, Cotton, Wollan & Greengrass (Stuart Cotton), New York, NY; Robinson & Cole LLP (Gregory J. Ligelis), Stamford, CT; Budd, Larner, Gross, Rosenbaum, Greenberg & Sade P.C. (Christopher S. Finazzo), Short Hills, NJ; Mendes & Mount LLP (Leo W. Fraser III), New York, NY, for Amici Curiae Certain Counterclaim Defendants in Support of Affirmance and in Support of Travelers Indemnity Company.
This litigation began on October 22, 2001 when one of the WTC insurers, plaintiff-counter-defendant-intervenor SR International Business Insurance ("SR International"), filed suit against the Silverstein Parties "seek[ing] a judicial declaration of its rights and obligations to all of the insureds under the policy" and a "declaration that the damage to the World Trade Center is one insurance loss." The Silverstein Parties subsequently filed counterclaims against the other WTC insurers, seeking a declaration "that the events of September 11th constituted more than one occurrence under the coverage that the counterclaim-defendant[s] agreed to provide to the Silverstein Parties."1 After an initial assignment to another judge, the action was assigned to District Judge John S. Martin Jr. of the United States District Court for the Southern District of New York for all purposes.
In the first of these related appeals, the Silverstein Parties appeal from three judgments, made final and appealable pursuant to Fed.R.Civ.P. 54(b), granting summary judgment in favor of appellees Hartford Fire Insurance Company ("Hartford"), Royal Indemnity Company ("Royal"),2 and St. Paul Fire & Marine Insurance Company ("St.Paul"), respectively, in which the district court held that (a) the binders they issued were governed by the insurance policy form circulated by Silverstein Properties' insurance broker, and (b) under the definition of "occurrence" in that form, the destruction of the WTC was one occurrence as a matter of law. In the second appeal, the Silverstein Parties appeal an interlocutory order of the district court, certified to this court pursuant to 28 U.S.C. § 1292(b), denying the Silverstein Parties' motion seeking summary judgment against appellee Travelers Indemnity Company ("Travelers") based on the argument that the events of September 11, 2001, constituted two occurrences as a matter of law under the undefined term "occurrence" contained in Travelers' insurance policy. This court issued orders granting the Silverstein Parties' petition for leave to appeal under 28 U.S.C. § 1292(b) and their motion to have the § 1292(b) and Rule 54(b) appeals heard in tandem.
As a condition of its 99-year lease of the WTC, Silverstein Properties was required to obtain first-party property insurance on the property. Silverstein Properties engaged Willis of New York ("Willis"), an insurance broker, to set up a multi-layered insurance program, which consisted of a primary insurance layer and 11 excess insurance layers providing a total of approximately $3.5 billion insurance on a "per occurrence" basis. In soliciting insurers for the program, Willis circulated a Property Underwriting Submission (the "Underwriting Submission") containing information regarding the proposed placement, including descriptions of the property and the insureds, desired coverage terms and conditions, estimated property values, engineering information, and a property loss history. With respect to at least the four insurers involved in these appeals, the Underwriting Submission also included a specimen copy of Willis's own "broker" form (the "WilProp form").3 Section VIII of the Underwriting Submission states: Policy Form and Contract between Silverstein and the [Port Authority] are attached. DRAFT WilProp for Real Estate Risks is attached. We anticipate that this form will ultimately require amendment to comply with the Contract between Silverstein Properties, Inc. and the [Port Authority]. In the meantime, we provide this document as a starting point.
Of the four insurers in these appeals, Travelers was the only insurer to submit its own specimen policy form (the "Travelers form") during the course of negotiating the terms of coverage.4 Whereas the Travelers form did not define the term "occurrence," the WilProp form defined occurrence as follows:
The district court did not specifically address jurisdiction in its opinion denying summary judgment. It apparently was of the view, however, that the action against Travelers was separate from the SR International litigation and related counterclaims, and noted that Travelers is a Connecticut company with its principal place of business in Connecticut, while the entities comprising Silverstein Properties are all either Delaware or New York companies and have their principal places of business in New York. We need not decide if there was jurisdiction over the separate action initially filed by Silverstein Properties against Travelers, however, because in March 2002, prior to the district court's decision denying summary judgment, that action was withdrawn without prejudice by stipulation of the parties and Travelers was added as a counterclaim defendant to the action brought against the Silverstein Parties by SR International. See supra n. 1. Accordingly, we address only whether there exists federal jurisdiction over the latter action.
According to the Silverstein Parties, federal jurisdiction exists in this case because there is complete diversity between all of the defendants and plaintiff SR International and supplemental jurisdiction applies to defendants' counterclaims against Travelers and the other insurers. A review of the parties' citizenship5 appears to support this assertion. Plaintiff SR International is a foreign corporation (a citizen of the United Kingdom), but this does not preclude diversity because 28 U.S.C. § 1332(a)(2) provides federal jurisdiction over actions between "citizens of a State and citizens or subjects of a foreign state."
Defendant Port Authority presents a closer question on jurisdiction because it is a state-created body, thereby raising the possibility that it is a not a "citizen" of any state, the effect of which would be to destroy diversity. The Port Authority is a body "corporate and politic" established in 1921 pursuant to a bi-state compact between New York and New Jersey, see N.Y. Unconsol. Law § 6407 (McKinney 2000), and assented to by Congress, see 42 U.S. Stat. 174 (1921). The Port Authority's mission was, and remains, the development of public transportation, terminal, and other facilities of commerce within the statutorily defined Port Authority district, which includes the area in and around New York City harbor. See N.Y. Unconsol. Law § 6403. The Port Authority is governed by a board of commissioners, see id. §§ 6405-06, whose resolutions are essentially legislative acts of the bi-state entity that must be approved by the governors of both states. See id. §§ 7151-52.
Although whether the Port Authority is a "citizen" of New York for diversity purposes is apparently an issue of first impression in our circuit, case law has established that it is a political subdivision of the state and, therefore, is not entitled to sovereign immunity. See Feeney v. Port Auth. Trans-Hudson Corp., 873 F.2d 628, 631 (2d Cir.1989) (holding that Eleventh Amendment immunity was inapplicable to "PATH [in part because of] the fact that the compact between New York and New Jersey describes the Port Authority as a `municipal corporate instrumentality,' N.Y. Unconsol. Laws § 6459 (McKinney 1979) and N.J. Stat. Ann. § 32:1-33 (West 1963), language consistent with its being a political subdivision"); see also Japan Airlines Co. v. Port Auth., 178 F.3d 103, 110-12 (2d Cir.1999) (holding, after extensive analysis, "that the Port Authority was not entitled to [either sovereign or] governmental immunity [for case arising out of proprietary conduct], and the district court properly instructed the jury to treat the Port Authority as it would any private corporation"). In light of these rulings, we hold that, as is the case with political subdivisions in general, the Port Authority is not so closely aligned with the two state governments that created it to foreclose its being treated as a citizen of both New York and New Jersey for diversity purposes. See Illinois v. City of Milwaukee, 406 U.S. 91, 97, 92 S.Ct. 1385, 31 L.Ed.2d 712 (1972) ("It is well settled that for the purposes of diversity of citizenship, political subdivisions are citizens of their respective States."). Accordingly, we agree with the Silverstein Parties that complete diversity exists between plaintiff SR International and all of the defendants in this action.
The Silverstein Parties also assert that there is federal jurisdiction under the Air Transportation Safety and System Stabilization Act of 2001, Pub.L. No. 107-42, § 408(b)(3), 115 Stat. 230, 241 (Sept. 22, 2001), as amended by the Aviation and Transportation Security Act of 2001, Pub.L. No. 107-71, § 201, 115 Stat. 597, 645 (Nov. 19, 2001).6 That Act, originally passed by Congress to limit the liability of air carriers for any claims arising from the September 11th attacks, was later amended to extend its protection to, inter alia, any "person with a property interest in the World Trade Center." Id. at § 408(a)(1). The purpose of the Act is to cap the liability of various entities for damages and contribution claims to the limits of their liability insurance coverage. The Act also creates a federal cause of action for any damages claims arising out of the September 11th attacks. Id. at § 408(b)(1). In addition, the Act grants to the District Court for the Southern District of New York "original and exclusive jurisdiction over all actions brought for any claim (including any claim for loss of property, personal injury, or death) resulting from or relating to the terrorist-related aircraft crashes of September 11, 2001." Id. at § 408(b)(3).
Because, as discussed above, this federal action is supported by diversity and supplemental jurisdiction, we need not and do not decide whether there would also be jurisdiction under the Act and thereby avoid unnecessarily addressing these constitutional concerns. Cf. Edward J. DeBartolo Corp. v. Fla. Gulf Coast Bldg. & Constr. Trades Council, 485 U.S. 568, 575, 108 S.Ct. 1392, 99 L.Ed.2d 645 (1988) ("[W]here an otherwise acceptable construction of a statute would raise serious constitutional problems, the Court will construe the statute to avoid such problems unless such construction is plainly contrary to the intent of Congress."); United States v. Arrous, 320 F.3d 355, 360 (2d Cir.2003) ("[W]e avoid interpreting statutes in a way that may create constitutional problems. . . .").
This court has jurisdiction to hear the Silverstein Parties' appeal from the grant of summary judgment in favor of Hartford, Royal, and St. Paul, notwithstanding the lack of a final judgment disposing of all claims against all parties, because the district court entered judgment pursuant to Fed.R.Civ.P. 54(b).7 We also have jurisdiction over the Silverstein Parties' interlocutory appeal from the denial of their motion for summary judgment against Travelers because the district court certified its decision for interlocutory appeal under 28 U.S.C. § 1292(b).8 We granted the Silverstein Parties' petition for leave to appeal the denial of summary judgment against Travelers pursuant to 28 U.S.C. § 1292(b) and their motion to expedite and consolidate the appeal with the Silverstein Parties' Rule 54(b) appeal.
"We review the grant or denial of summary judgment de novo." Gibbs-Alfano v. Burton, 281 F.3d 12, 18 (2d Cir.2002) (quoting Republic Nat'l Bank v. Delta Air Lines, 263 F.3d 42, 46 (2d Cir.2001)). Summary judgment is appropriate only where "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Thus, even where facts are disputed, in order to defeat summary judgment, the non-moving party must offer enough evidence to enable a reasonable jury to return a verdict in that party's favor. See Anderson v. Liberty Lobby, 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). When ruling on a motion for summary judgment, a court is required to construe the evidence in the light most favorable to the non-moving party and to draw all reasonable inferences in its favor. See id. at 255; Maguire v. Citicorp Retail Servs., Inc., 147 F.3d 232, 235 (2d Cir.1998).
Springer v. Allstate Life Ins. Co., 94 N.Y.2d 645, 710 N.Y.S.2d 298, 731 N.E.2d 1106, 1108 (2000) (internal citations omitted). While not all of the terms of the insurance contract will be set forth in the binder, a binder is nevertheless a fully enforceable "present contract of insurance." Ell Dee Clothing Co. v. Marsh, 247 N.Y. 392, 160 N.E. 651, 652 (1928).
Appellants' Br., Dkt. No. 02-9279 ("Appellant's Rule 54(b) Br."), at 20 (internal citations