“The black net enshrouded 41-story shell of 130 Liberty Street,” Deutsche Bank added, “is a stark reminder of the death and destruction which took place on 9/11.”

But what really sets this lawsuit apart, according to one insurance lawyer, is that it's one of the first of its kind in property damage lawsuits to include environmental effects of 9/11-related contaminants.

“This is a novel approach in that the lawsuit [adds] asbestos, mold and other contamination to the property damage,” said Peter Gillon, an attorney and co-chair of national environmental practice at Greenberg Traurig LLP, headquartered in Miami.

“This is the first coverage case that I am aware of that asserts environmental and health effects of exposures from dust and debris from the World Trade Center collapse,” Mr. Gillon told National Underwriter.

In its complaint, Deutsche Bank also discusses at great length the environmental effects of dust from the collapsed WTC towers.

“The implosion of the South Tower generated tornado-force winds, which distributed fine dust from the destruction of the World Trade Center into every nook and cranny of 130 Liberty Street through the 15-story gash and approximately 1,700 broken windows,” Deutsche Bank said.

The plaintiff noted that the collapse of the WTC North Tower spewed more dust, and during months of cleanup work at Ground Zero, strong winds sent more dust and smoke from the WTC debris into the Deutsche Bank tower through the gash and broken windows.

The main reasoning behind Deutsche Bank's argument that its building is “beyond repair” is that such dust contains hazardous materialsincluding asbestos, lead, mercury, other heavy metals, PCBs and furans (toxic chemicals formed during combustion). The bank noted that these contaminants are widely spread inside the building at levels “up to thousands of times greater” than the average accepted rate at other New York office buildings.

Additionally, the WTC towers' collapse crushed emergency diesel generators and a fuel tank in the building's basement and ignited a fire. “This fire and the water which was poured onto it,” Deutsche Bank explained, “gave rise to additional contamination in the building, including dioxins.” Furthermore, the water from fighting the firecombined with broken pipes, the loss of HVAC systems and the building's exposure to the elementscreated extensive mold contamination, the bank argued.

Deutsche Bank also told the court that while it is prepared to start demolition of the building and incorporate the site into the overall Ground Zero redevelopment plan, it is not in a position to tear down the structure until the coverage issue is fully resolved.

Deutsche Bank pointed out that its insurance policies for the building should provide $1.715 billion of coverage, which is less than the $1.9 billion the company expects to lose, including costs of demolishing and rebuilding the site.

Further, Deutsche Bank noted that Zurich Financial Services and The Chubb Corporation, two insurers that provide the other half of the aggregate coverage for the building, have already settled. “Two of the four insurers on plaintiffs' policies, representing an aggregate of 50 percent of the coverage, have accepted plaintiff's offer,” Deutsche Bank said.

The bank told the court that the remaining two insurers in the lawsuit must pay their share of the cost for razing and replacing the building30 percent for Allianz and 20 percent for AXA, which would add up to some $858 million overall for two carriers.

“It sounds like there is a growing concern about environmental effects of exposure to dust and debris from the World Trade Center site,” said Mr. Gillon. “Because of this growing environmental concern, we are probably going to see more cases like this one against insurance companies in the future.”

A new study recently released by Mount Sinai School of Medicine in New York may also offer a glimpse into potential health effects of WTC contaminants. Published earlier this month, the study found that pregnant women who were in the WTC area on 9/11 or up to three weeks later were twice as likely as other women to bear smaller babies.

Allianz and AXA, on the other hand, have maintained that the entire building can still be cleaned and repaired for $500 million, which is all the insurers would be responsible for. Sabia Schwarzer, a spokeswoman for Allianz, told National Underwriter that there is no adequate proof of loss to show that the building is contaminated beyond repair.

AXA representatives could not be immediately reached for comments regarding the lawsuit, but AXA Chairman Henri de Castries told reporters in Paris last weekafter discussing the company's latest earnings resultsthat the lawsuit is “without merit.”

Ms. Schwarzer also noted: “We have been maintaining that all other surrounding buildings that were contaminated from the same sourcethe dust from the World Trade Center coming downhave been cleaned up and are now up and running and are populated.

“There is no conclusive data provided to say the building is beyond repair. In fact, the Environmental Protection Agency has also done some independent studies of lower Manhattanalthough not specifically of the Deutsche Bank buildingthat the dust can be cleaned up,” she added.

The main difference in position, Ms. Schwarzer noted, is that Deutsche Bank is saying the building is a total loss, while Allianz thinks the building can be cleaned up and repaired.

Ms. Schwarzer also complained that some in the media have been unfairly saying insurers are obstructing the demolition of the building, “which is simply not true.”

“As you can see in the complaint, Deutsche Bank is demanding a surgical demolition of the building,” she said. “That actually would take until the end of 2006, and the reconstruction wouldn't begin until 2007. So Deutsche Bank's plan would take much longer for that site to be cleared in order to become part of the WTC reconstruction effort.”

Also, Allianz has already paid about $100 million in claims for the substantiated property damage to the building, Ms. Schwarzer added. “Allianz has already paid for damages that were substantiated, but those that are not [substantiated], we would not pay.”

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, August 18, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.