On July 18th, federal U.S. District Court Judge Alvin Hellerstein ruled against Silverstein Properties Inc. (“Silverstein”) in its quest to recover damages from American Airlines and United Airlines as a result of the terrorist attacks of September 11th, 2001. Silverstein had previously received approximately $4.9 billion from property insurers in connection with the attacks, however Silverstein was seeking an additional $3.5 billion from the airlines, arguing that the insurance settlement did not cover the full extent of sustained damage, including the cost of rebuilding.
The court ruled that Silverstein “would not be able to recover anything against the airlines” as such recovery would be flatly prohibited by New York law. In particular, New York’s CPLR §4545(c) notes that “[i]n any action brought to recover damages for . . . injury to property . . . evidence shall be admissible for consideration by the court to establish that any such past or future cost or expense was or will, with reasonable certainty, be replaced or indemnified, in whole or in part, from any collateral source such as insurance . . . . “ In the court’s view, the loss to Silverstein was one loss, the “replacement of an asset-producing income” that was settled upon and paid out by insurers, whereas Silverstein argued that the actual damage sustained was over $8 billion, well beyond the insurance payout. The fact that Silverstein had an obligation to rebuild, in the court’s view, does not affect the amount to which Silverstein is entitled.