Feb. 20 (Bloomberg) -- World Trade Center Properties LLC asked a federal judge to rule in its favor and reject a defense asserted by AMR Corp.’s American Airlines that it was the victim of an “act of war” in the Sept. 11, 2001, terrorist attacks.
WTC Properties, leaseholder of the lower Manhattan twin skyscrapers destroyed in the attacks, sued parties including United Continental Holdings Inc. and American Airlines in 2008, claiming their negligence caused the towers’ collapse.
Terrorists hijacked airliners and flew them into the two towers and the Pentagon and crashed a fourth in a field in Pennsylvania, killing about 3,000 people. World Trade Center Properties is an affiliate of Silverstein Properties, which is developing towers at the site.
The airline defendants “repeatedly and explicitly promised Congress, regulators and the American people that they would not use act of war to avoid paying claims,” lawyers for Silverstein said in court papers filed yesterday and today in federal court in Manhattan.
“Those promises, widely praised at the time but since broken, led to a massive federal bailout of the aviation industry and a huge taxpayer-funded financial windfall for the defendants’ insurers,” Silverstein said.
The Silverstein Properties Inc. unit, named for Larry Silverstein, asked for a partial summary judgment, or a ruling ahead of trial, claiming that in the wake of the attacks the airlines’ insurers promised U.S. officials they wouldn’t use the act-of-war defense to avoid paying claims for the attacks.
“This motion by the Silverstein interests has no factual or legal support,” Sean Collins, a spokesman for American Airlines, said by e-mail. “American Airlines has defended itself with all defenses available at law against the baseless attempt by the Silverstein entities to hold American responsible for the terrorist attacks of Sept. 11.”
Silverstein said in court papers that, after the attacks, American and other aviation defendants obtained a liability cap that limited the amount of the airlines’ insurance coverage and created a victims’ compensation fund using taxpayer money to pay claims for deaths and injuries.
The airlines also received benefits including loan guarantees, insurance reimbursement and tax relief, which Silverstein argues “totaled in the tens of billions of dollars.”
“Defendants are engaged in a shameful display of duplicity,” Silverstein’s lawyers wrote, saying the defendants should be prevented “from reneging on the promises their insurers made shortly after 9/11 in order to achieve the massive bailout and windfall that came their way as a result of those promises.”
When the towers collapsed, debris was thrown against nearby buildings, causing fires and eventually the collapse of skyscrapers including 7 World Trade Center.
World Trade Center Properties includes five properties on the site, including the twin towers and 7 World Trade Center.
AMR and United Continental in September lost a bid to avoid a trial over negligence claims tied to the hijacking of the jetliners. U.S. District Judge Alvin K. Hellerstein ruled a trial was required.
The lease owners sued insurers after the attacks,, eventually settling for $4.09 billion, Hellerstein has said in a prior ruling. World Trade Center Properties sued the airlines seeking $8.4 billion, the estimated cost of replacing the two towers, as well as claims of negligence. Hellerstein previously rejected the airlines’ bid for summary judgment.
The judge also rejected the air carriers’ argument that since the buildings’ lease owners recovered $4.09 billion from insurance, World Trade Center Properties couldn’t also recover the $2.8 billion sought for the lease.
The case is In Re September 11 Litigation, 21-MC-101, U.S. District Court, Southern District of New York (Manhattan).
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