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Aegis Ins. Services, Inc. v. 7 World Trade Co., L.P.

United States Court of Appeals, Second Circuit

December 4, 2013

AEGIS INSURANCE SERVICES, INC., Liberty Insurance Underwriters, Inc., National Union Insurance Company of Pittsburgh, Nuclear Electric Insurance Limited, Certain Underwriters at Lloyds, (Syndicates 1255 and 1511), as subrogor of Consolidated Edison Company of New York, Inc. and Consolidated Edison Company of New York, Inc., Plaintiffs-Appellants,
7 WORLD TRADE COMPANY, L.P., Defendant-Cross-Defendant-Cross-Claimant-Third Party-Plaintiff-Appellee, Silverstein Development Corp., Silverstein Properties, Inc., Defendants-Cross-Defendants-Cross-Claimants-Appellees, Tishman Construction Corporation, Defendant-Cross-Defendant-Appellee, Office of Irwin G. Cantor, P.C., Defendant-Cross-Defendant-Third Party Defendant-Appellee.

Argued: Sept. 12, 2012.

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[Copyrighted Material Omitted]

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Franklin M. Sachs, Greenbaum, Rowe, Smith & Davis, LLP, Woodbridge, NJ (Mark L. Antin, Gennet, Kallmann, Antin & Robinson, P.C., Parsippany, NJ, on the brief), for Plaintiffs-Appellants Aegis Insurance Services, Inc., Liberty Insurance

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Underwriters, Inc., National Union Insurance Company of Pittsburgh, Nuclear Electric Insurance Limited, Certain Underwriters at Lloyds (Syndicates 1225 and 1511), as subrogor of Consolidated Edison Company of New York, Inc., Consolidated Edison Company of New York, Inc.

Katherine L. Pringle, Friedman Kaplan Seiler & Adelman LLP, New York, N.Y. (Eric Seiler, Robert D. Kaplan, Kent K. Anker, Jeffrey R. Wang, Christopher M. Colorado, on the brief), for Defendants-Cross-Defendants-Appellees 7 World Trade Company, LP, Silverstein Development Corp and Silverstein Properties, Inc.

Anita B. Weinstein, Cozen O'Connor, New York, N.Y. (Kenneth G. Schwarz, on the brief), for Defendant-Cross-Defendant-Appellee Tishman Construction Corp.

Stephen P. Schreckinger, Gogick, Byrne & O'Neill, L.L.P., New York, NY, for Defendant-Cross-Defendant-Third-Party-Defendant-Appellee Office of Irwin G. Cantor, P. C.

Before: POOLER, PARKER, and WESLEY, Circuit Judges.

POOLER, Circuit Judge.

The 7 World Trade Center Building (" 7WTC" ) stood on the northern edge of the World Trade Center site. As the North Tower collapsed on September 11, 2001, it sent flaming debris spewing into the area around 7WTC. The fiery debris crashed into 7WTC, gouging chunks out of the building. Fires burned on multiple floors. Confident that the people inside had evacuated, grappling with the death of hundreds of firefighters and a non-existent supply of water, the New York City Fire Department made the decision to establish a collapse zone and walk away, rather than fight the fire. After burning for seven hours, 7WTC collapsed, destroying the electrical substation owned by Consolidated Edison Co. of New York, Inc. (" Con Ed" ) directly underneath the building.

Con Ed, along with its insurers, sued the defendants, who designed, built, operated and maintained 7WTC, alleging in relevant part that the defendants' negligence caused the building to collapse. The district court disposed of the claims against the defendants in two decisions at issue in this appeal. The first, on January 12, 2006, granted a motion to dismiss brought by a number of defendants involved in the construction of the building, including appellees Tishman Construction Corporation and the Office of Irwin G. Cantor, P.C. In re September 11 Prop. Damage & Bus. Loss Litig., 468 F.Supp.2d 508 (S.D.N.Y.2006). The second, issued September 23, 2011, granted summary judgment to appellees 7 World Trade Company, L.P., Silverstein Development Corp. and Silverstein Properties, Inc. (together, " 7WTCo." ), the building's developer and manager. Aegis Ins. Servs., Inc. v. 7 World Trade Co., 865 F.Supp.2d 370 (S.D.N.Y.2011).

We affirm the grants of summary judgment, albeit on different grounds than those relied on by the district court. We hold that even assuming arguendo negligence on the part of the defendants, any such negligence was not the cause in fact of the collapse of 7WTC.


I. 7 World Trade Center

The Con Ed substation in question was built in 1970 to provide electric power to the World Trade Center site, built on land owned by the Port Authority of New York and New Jersey. The agreement between the Port Authority and Con Ed allowed the Port Authority to build above the substation. In 1980, the Port Authority exercised

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that right by entering into an agreement with 7 World Trade Company, L.P. (" 7 World Trade" ) to build 7WTC. Pursuant to that agreement, the Port Authority would own 7WTC, which would be designed, constructed and operated by Silverstein Properties, Inc., 7 World Trade's agent. 7 World Trade held a 99-year lease on 7WTC.

The substation was built on a trapezoidal parcel of land, and 7WTC was designed as a trapezoid to mimic the shape of the parcel. To achieve its design goals, the building included two sets of support columns: 24 internal load-bearing columns that formed a rectangle at the center of the structure, and 19 external columns that were laid out along the building's trapezoidal perimeter. The trapezoidal shape also required that in the northeast corner of the building, the steel girders connecting two columns (Nos. 79 and 44) formed an oblique angle, rather than a right angle. The relevant building standards at the time 7WTC was constructed specified that:

Through accident or misuse, structures capable of supporting safely all conventional design loads may suffer local damage, that is, the loss of load resistance in an element or small portion of the structure. In recognition of this, buildings and structural systems shall possess general structural integrity, which is the quality of being able to sustain local damage with the structure as a whole remaining stable and not being damaged to an extent disproportionate to the original local damage.

American National Standard: Minimum Design Loads for Buildings and Other Structures, ยง 58.1, Section 1.3 (1982). Construction on 7WTC was completed in 1987.

II. Terrorism in Manhattan

In 1984, the Port Authority formed " The Office for Special Planning" (the " Office" ) to assess the vulnerability of the Authority's various facilities to terrorism. A report prepared by the Office examined the vulnerabilities of the World Trade Center Complex, noting a number of " Symbolic Bombing Incidents in New York City from 1980 to 1985," including:

• Three people injured in explosion at the Manhattan offices of the airline Aeroflot in 1980, with the Jewish Defense League claiming credit.
• A pipe bomb exploding the sub-basement of New York State Supreme Court in Manhattan in 1981 after warnings of a bomb blast by the Croatian Freedom Fighters.
• Four bombs at stock exchanges and banks in Manhattan in 1982, with Fuerzas Armadas de Liberacion Nacional (" FALN" ) claiming credit.
• A bomb at the Bankers Trust Company in Manhattan, also in 1982, with FALN again claiming credit.
• A bomb at 250 Broadway (apparently directed toward the New York City Police Benevolent Association) in 1985.

In 1993, a car bomb was detonated in the parking garage below One World Trade Center. See United States v. Yousef, 327 F.3d 56, 79 (2d Cir.2003). Ramzi Yousef, along with several co-conspirators, " drove a bomb-laden van onto the B-2 level of the parking garage below the World Trade Center. They then set the bomb's timer to detonate minutes later. At approximately 12:18 p.m. that day, the bomb exploded, killing six people, injuring more than a thousand others, and causing widespread fear and more than $500 million in property damage." Id. Testifying at Yousef's trial, a U.S. Secret Service agent told the jury that Yousef's intent

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was to cause One World Trade Center to topple, killing tens of thousands of people.

III. September 11, 2001

The horrific events of September 11, 2001 are well known and need not be repeated here in great detail. Al Qaeda terrorists hijacked four airliners. American Airlines Flight 11 and United Airlines Flight 175 were deliberately crashed into the Twin Towers of the World Trade Center. A third plane, American Airlines Flight 77, crashed into the Pentagon. United Airlines Flight 93 crashed into a field in Shanksville, Pennsylvania during a struggle between the passengers and the hijackers. The planes crashing into Towers One and Two ignited intense fires that burned until both towers collapsed. ...

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