Judge Clears Way For Zurich 9/11 Trial

National Underwriter News
May 18, 2006
Posted June 1, 2006

A federal judge has cleared the way for a trial to begin in the case between Zurich American Insurance Company and ABM Industries over the amount of payment for a business interruption loss resulting from the Sept. 11, 2001 terrorist attack on New York's World Trade Center.

At issue is how much ABM, which provided janitorial services to the World Trade Center, is owed under a business interruption policy. The law firm of Anderson Kill & Olick, representing ABM, said the payment could amount to more than $100 million.

In February, a federal appeals court reversed a lower court's decision, capping ABM's recovery ability at $10 million, under a policy sublimit for contingent time element. Judge Jed S. Rakoff, in U.S. District Court in Manhattan, ruled that because ABM did not have an office in the World Trade Center, the higher limit on the policy of $127 million was not available to it.

The 2nd U.S. Circuit Court of Appeals ruled that the World Trade Center itself was vital to ABM's business, and that the higher limits of the policy were available to it. The appeals court returned the case to Judge Rakoff to determine the amount of the claim.

In his May 10 ruling, Judge Rakoff determined that there are enough questions surrounding the case for the suit to go to trial. He set the trial date for Aug. 14.

Among the issues are the duration of payment. ABM argues the length of time should extend to when the World Trade Center is rebuilt. Judge Rakoff, however, noted that ABM's contract expired in January 2004, and the plaintiff would have to prove that it would have been rehired.

John Ellison, an attorney representing ABM, said in a statement: "The district court's decision recognizes the fundamental purpose of business interruption insurance to place the policyholder in the same position its business would have been in but for the damage to the property in which an insurable interest exists. For ABM's business, that cannot be replaced until the WTC is rebuilt."

A representative for Zurich said the company would have no comment because the matter is still under litigation.

Copyright © 2006 by National Underwriter News Company

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