## Facts

- Silverstein-related entities acquired long-term leasehold interests in the World Trade Center complex in July 2001 and procured a multi-insurer property insurance program with limits stated on a “per occurrence” basis.
- When the September 11, 2001 attacks occurred, many insurers’ contracts were memorialized by temporary binders rather than fully executed final policies, and the operative policy forms varied across insurers.
- Two separate aircraft struck and destroyed two different towers, creating a high-stakes dispute over whether the losses constituted one occurrence or two occurrences under the “per occurrence” limits.
- Insurers sued for declaratory relief that the attacks constituted a single occurrence; the insureds counterclaimed, contending there were two occurrences and seeking potentially doubled limits.
- The district court managed the multi-insurer disputes through segmented insurer-group trials to determine (1) which policy form governed each insurer’s binder, and (2) how “occurrence” applied under that form.
- At trial, the court admitted testimony about witnesses’ subjective understandings of negotiations and draft terms, while instructing the jury that uncommunicated subjective intent could not alter the objective meaning of parties’ words and conduct.
- The jury returned verdicts that produced differing results across insurer groups, and the district court entered judgments accordingly.

## Issues

1. Whether the district court erred by admitting testimony about parties’ subjective understandings during contract negotiations in determining the governing policy form and related contract meaning.
2. Whether the district court’s limiting instruction sufficiently confined the jury’s use of subjective-intent evidence to prevent reliance on impermissible uncommunicated intent.
3. Whether any asserted evidentiary or instructional error required reversal of the judgments entered on the jury verdicts.

## Decision

- The Second Circuit affirmed the judgments.
- The court held it was not error to admit subjective-understanding testimony where the jury was properly instructed that uncommunicated subjective intent cannot change the objective meaning of communicated statements and acts.
- The court concluded the jury instructions, viewed as a whole, correctly conveyed New York’s objective approach to contract formation and interpretation and adequately limited the role of subjective testimony.
- Because the evidentiary rulings and instructions were not erroneous in context, the verdicts and resulting judgments were upheld.

## Legal Principles

- Under New York contract law, contractual meaning and assent turn on objective manifestations—expressed words and actions—rather than undisclosed intentions.
- A party’s uncommunicated subjective intent cannot determine or alter the meaning of contract terms.
- Testimony about subjective understanding may be admissible for limited purposes (e.g., explaining conduct during negotiations), but it cannot override the objective meaning of communications and agreed terms.
- Jury instructions are evaluated in context; reversal is unwarranted where, taken as a whole, they fairly and adequately state the governing law and prevent improper use of admitted evidence.

## Conclusion

The Second Circuit upheld trial rulings in the World Trade Center insurance litigation, approving admission of negotiation-related subjective-understanding testimony when accompanied by clear limiting instructions that preserved the objective standard for contract interpretation under New York law.


SR Int'l Bus. Ins. Co. v. World Trade Ctr. Props., LLC, 467 F.3d 107 (2d Cir. 2006)