Books : After : Excerpts

From After: How America Confronted The September 12 Era

Lawyers usually discover smoking guns only on television. But one of the lawyers working for Barry Ostrager in defending Swiss Re against Larry Silverstein's claim that the destruction of the Trade Center had been two events actually found one in a box of files late last week. It was a simple cover note to a fax, and this morning Ostrager got to question its author in one of those pretrial depositions that Ostrager had fought in court to get the time to conduct.

The witness was Robert Strachan, who was in charge of insurance at Silverstein's company. The cover note was dated September 12 and was attached to the insurance form from Silverstein's own broker -- the one with occurrence defined broadly as including any series of related events. What it revealed was that on September 12, Silverstein's man Strachan had faxed the financial institution that was the lead lender in the Silverstein Trade Center deal the section of the policy form that defined occurrence as a series of related events. On the cover note he had written, "FYI, the 'occurrence' definition and the insuring agreement...that we are working with." Again, the date was September 12.

All Strachan could say at his deposition today was that "I don't recall" the circumstances of his having sent that fax, that "I think you're reading a lot into a brief quick note," and that "I had to send her [the woman from the lending institution] something, and I sent her what was available."

That was not the only killer document Ostrager's team had found in going through all the Silverstein insurance files. A week later, Ostrager would cross-examine Strachan about a note he had doodled to himself at a meeting on September 13, saying the Trade Center had been "underinsured....Did we bite off more than we can chew?"

Asked what he had meant by that, Silverstein's insurance manager was forced to concede, "My initial concern was that the loss limit we had bought...was not sufficient to cover the disaster."

That notion of not having bought enough insurance was solidified by two more memos that Ostrager's associates found in the Silverstein broker's files. One put the cost of a total loss of the Trade Center at $5.05 billion, meaning that buying only $3.55 billion to insure against a total loss was, indeed, underinsuring. The other revealed that when Silverstein had gotten a price quote back on $5 billion worth of insurance, he had rejected it because it had cost too much. So, the memo explained, he had settled on $3.55 billion and only even that much because his lenders had insisted he have that much protection. When asked about all that, Strachan and other Silverstein witnesses could only say that the amount they had bought constituted the largest property insurance policy ever purchased.

Ostrager, of course, could use all of this to claim that Silverstein had decided to buy only $3.55 billion worth of insurance for a total loss, but was now trying to collect $7.1 billion for it.

When the insurance company lawyers had trolled other files they'd found still more -- including notes of that conference call held on September 12 between some of Silverstein's brokers who were stuck at a meeting in Nashville and others from their firm in London. The lead broker on the Trade Center account -- the man who had negotiated and bought the insurance for Silverstein -- was quoted in the notes as saying during the conference call that he thought the attacks had been one occurrence because of the form that had been used.

As significant as this evidence was for the insurers, the simple fact that these documents still existed and were handed over by Silverstein's lawyers to Ostrager may be more significant to the larger picture of assessing how America worked in the September 12 era. Those who don't understand the American legal system, or who think it's all bad, might not appreciate how this process called pretrial discovery operates: Lawyers are duty-bound to give the other side every relevant document in their client's files, no matter how damaging. Sure, there are exceptions involving crooked or overreaching lawyers. But most lawyers honor the rules. That they did so here as a matter of routine -- no one even discussed hiding or destroying them -- in a case involving billions of dollars and humongous egos, and where the documents were so destructive to their side, should not go unnoticed, even if the lawyers involved didn't think turning over the documents was anything special. Indeed, the fact that they thought their conduct was routine is what makes it so noteworthy.