SR International Business Insurance Co. v. World Trade Center Properties, LLC

World Trade Center Properties, LLC; Silverstein Properties, Inc.; and other companies (Silverstein Parties) (defendants) were entities with property interests in the World Trade Center (WTC). The Silverstein Parties purchased property insurance from SR International Business Insurance Company, Ltd. and other insurance companies (plaintiffs) and were negotiating the final insurance policies when the terrorist attacks of September 11, 2001 occurred. Those attacks involved two jetliners crashing into the two towers of the WTC, which destroyed both buildings. The insurance companies had issued temporary binders that provided the terms of the interim insurance coverage while the full policies were being negotiated. The temporary binders provided coverage on a per-occurrence basis, but the binders did not define what constituted an occurrence. The Silverstein Parties were entitled to receive up to $3.5 billion for each occurrence. The insurance companies filed a lawsuit, seeking a determination that the terrorist attacks were one occurrence under the temporary binders. Separate motions and trials ensued in district court, resulting in judgments for some of the insurance companies but against some of the other insurance companies. During one of the trials, witnesses were permitted to testify regarding their subjective intent during the contract negotiations. The jury for that trial was given a limiting instruction stating that the testimony of a party’s uncommunicated understanding could not change the meaning of statements and acts communicated to the other party. Several appeals, including a claim that the jury instruction was in error, were filed and consolidated in the United States Court of Appeals for the Second Circuit.