2 insurers deny blocking rebuilding of ground zero

Real Estate Weekly, Sept 3, 2003 by Barbara Nelson

Insurer, Allianz, has defended its refusal to hand over the estimated $850 million Deutsche Bank claims it is due for having to rebuild its 130 Liberty Street property.

In court last week, the insurer denied it was holding up the rebuilding of ground zero and accused Deutsche Bank of exploiting the Sept. 11 attacks for its own gain.

Last month, Deutsche Bank, filed a lawsuit against two insurance carriers, Allianz and AXA. Deutsche wanted to demolish the building that was damaged in the attacks, saying it was too contaminated to be re-occupied.

In it's August 11 court complaint, the bank accused the two insurance companies of holding up the development of the World Trade Center by not agreeing to pay half of the $1.7 billion that the bank is seeking in damages. Two other insurers have already paid $1 billion.

Allianz denied the bank's claims in court August 25.

"Deutsche Bank's motion for an early trial setting is an attempt to mislead both the court and the public into believing that Allianz is standing in the way of progress in the ground zero redevelopment project," said Brant A. Sorenson, senior vice president of claims for Allianz Insurance Company, in a prepared statement dated August 26. "Nothing could be further from the truth."

Allianz claims that the building can be sold without a resolution to the insurance settlement. The building could be sold at market value if the state used its eminent domain powers or a negotiated deal, in which it could then buy the property.

"Allianz does not have the power or the desire to impede in any way the redevelopment of ground zero or the inclusion of 130 Liberty Street in that redevelopment project," said Sorenson's statement.

"If it is important to include this property in the World Trade Center site, there is no reason why the demolition of the 130 Liberty Street must await the outcome of the insurance settlement."

The insurer also claims Deutsche Bank is seeking an "inflated settlement" and that the building can be reoccupied and renovated. The court papers said that the bank "repeatedly mis-characterizes the nature of the dispute with A.I.C. and AXA in a cynical attempt to leverage the lingering image of Sept. 11 into more dollars from its insurers."

Allianz also, asked the court to set aside the Deutsche Bank's request for an expedited trial because the insurers have invoked a clause in their contracts that permits disputes over value of damage to be settled through an appraisal conducted by a three-member panel.

"Allianz believes that an independent appraisal of the evidence by a panel of three industry experts will expedite the resolution of the dispute," said the statement. "If Deutsche Bank is truly interested in resolving the dispute quickly, it should promptly select a third party appraiser."

Deutsche Bank representatives refused to comment, but pointed to paragraphs in its complaint.

"Plaintiff's investigation of the structural and contamination damage to the Building--which involved teams of engineers, environmental scientists and other consultants,--has cost approximately $33 million to date and generated enormous volumes of information documenting the contamination and physical damage sustained," states the complaint.

"All of this data pointed to one conclusion, and the Plaintiff's experts' ultimate recommendation was unequivocal: the damage to the building resulting from the events of September 11 is of such magnitude and extent that the only reasonably feasible solution is to stabilize, surgically tear down, demolish and replace the building."