World Trade Center Developer Silverstein Properties Loses Bid To Sue Airlines Over 9/11 Damage

Larry Silverstein’s World Trade Center Properties will not be entitled to a $3.5 billion payout from the two airlines whose planes were hijacked by terrorists and flown into the Twin Towers on Sept. 11, 2001, a federal judge ruled Thursday.

The property developer behind the doomed towers (and a third skyscraper, the 47-story 7 World Trade Center, which also collapsed that day) had argued that the $4.1 billion it had received already from insurers should not stop it from seeking damages from United Continental Holdings (NYSE:UAL), American Airlines and the carrier’s parent company AMR Corp. (OTCMKTS:AAMRQ). Silverstein sued the companies for negligence in 2008, and U.S. District Judge Alvin K. Hellerstein, who has presided over the majority of the 9/11 legal cases, took up the issue in a non-jury Manhattan trail that began Monday.

“If this case were to go forward, the WTC companies would not be able to recover anything against the airlines,” Hellerstein ruled Thursday. The judge said Silverstein Properties’ multibillion-dollar insurance compensation prevented it from filing a suit against the airlines, citing New York state laws barring “windfalls and double recovery on the same loss.”

In the notorious Sept. 11 attack, terrorists hijacked American Airlines Flight 11 and United Airlines Flight 175, both out of Boston Logan, and flew them into the 110-story skyscrapers. Silverstein Properties believes the airline industry has not paid its share of damages as a result, while the airlines contend that they were not negligent in allowing the terrorists to board the flights, given regulations in force at the time.

“We did not believe that the plaintiff could be permitted any further compensation and we are pleased the judge ruled in our favor,” United Airlines said in an emailed statement. American Airlines also issued a statement saying it was “gratified” by the judge’s decision.

While ruling against Silverstein Properties, Hellerstein also commended the property developer for spearheading the recovery effort at the 16-acre site in Lower Manhattan and laboring “to create beauty out of the ashes of the destruction.” His kind words, however, were little consolation for the property developer, which said it was “deeply disappointed” by the outcome.

“While we respect Judge Hellerstein, we believe his ruling on this issue, and on prior issues, to be in error and intend to file an immediate appeal,” Bud Perrone, spokesman for Silverstein Properties, wrote in an email to International Business Times. “We will not rest until we have exhausted every option to assure that the aviation industry’s insurers pay their fair share toward the complete rebuilding of the World Trade Center.”

Perrone added that, regardless of the ultimate outcome of the case, the company remained 100 percent committed to realizing “a fully and spectacularly rebuilt World Trade Center.”

He said, “4 WTC is opening in the fall and construction on the other buildings has made significant progress. The new World Trade Center will serve as an unmistakable symbol of New York’s resilience and strength.”

American Airlines, meanwhile, still has at least one more high-profile case regarding negligence in the 9/11 attacks. Financial services firm Cantor Fitzgerald, which lost 658 employees in the World Trade Center, has sued the airline over lost business and destruction of its offices. Hellerstein will hear that trial in January 2014.