Judge Rules Insurers Can Question Willis on WTC Coverage Form Dispute

June 20, 2002

U.S. District Judge John Martin has ruled in favor of a motion filed by Travelers Property Casualty Corp. in the Swiss Re/Silverstein Properties lawsuit over the extent of coverage on the World Trade Center.

The motion, made as part of the ongoing discovery proceedings, sought to compel testimony from the Willis brokers who placed the coverage, concerning any conversations they may have had with Silverstein’s lawyers at the firm of Wachtell, Lipton, Rosen & Katz. (See IJ Website, May 9-International, and May 17-East).

The firm claimed that Silverstein and Willis shared a ‘joint interest’ in the outcome of the legal proceedings, and therefore testimony from Willis was protected by the attorrney-client privilege.

Judge Martin ruled, however, ruled that the privilege did not apply, as Willis was not a client of the Wachtell firm. A report from Dow Jones Newswire quoted the decisions as stating, “The Willis employees who conferred with the Wachtell firm had no reason to believe that they were talking to lawyers who were representing their interest and who would hold inviolate (their) confidences and secrets.”

He added that Willis wasn’t a party to the litigation, and has no stake in the outcome of the case. At issue is whether the destruction of the twin towers constituted one occurrence, as Swiss Re and the other insurers maintain, or two occurrences, as Silverstein has asserted.

As the lead broker Willis’ version of events could be critical. While Silverstein maintains that the binders the parties executed referenced the “Traveler’s form,” which can be interpreted to define an “occurrence” as being more than one event, Swiss Re contends that the parties had signed binders that referenced another form – “the WilProp form” – which refers to all losses from a single occurrence or series of occurrences as being one loss, i.e. one single event.

Barry Ostrager, an attorney for Swiss Re, said that “No one questioned that the WilProp form was the one referenced in the binders until a week or so after the event.” Judge Martin’s ruling will require brokers from Willis to give testimony concerning not only the forms used, but also any conversations they may have had with the Wachtell firm concerning those forms.

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