The Second Circuit Court of Appeals has affirmed a series of rulings made by a district judge in approving a Settlement Agreement and Mutual Release of Claims in the case of In re September 11 Property Damage Litigation, 2011 WL 1331847 (2d Cir. Apr. 8, 2011).
The settlement was made by a group of Plaintiffs in that case, the “World Trade Center Properties Plaintiffs,” with what the Second Circuit called the “Aviation Defendants” for the Defendants’ asserted liabilities under the Air Transportation Safety and System Stabilization Act of 2001 or “ATSSSA.” The Defendants were allegedly liable for negligence and other statutory fault in connection with the destructive events of September 11, 2001 insofar as the terrorists who committed well-known atrocities on that date were able to use airplanes under the Defendants’ alleged control to commit their atrocities including destruction and damage at the World Trade Center in New York City.
In approving the Settlement Agreement and Mutual Release of Claims between the WTCP Plaintiffs and the Aviation Defendants, the trial court applied New York state law in connection with various issues under the Federal ATSSSA, and without discussing those specific issues further, the Second Circuit affirmed those rulings:
In sum, we agree with the district court that the settling parties entered into their settlement agreement in good faith. We therefore conclude that the district court did not abuse its discretion in approving the settlement agreement.
Id. at *7.
The issue of broader potential interest, however, concerned the Second Circuit’s affirmance of the district court’s ruling that the proposed settlement payments would be credited towards the Aviation Defendants’ limits of liability to pay damages under the ATSSSA. The Second Circuit affirmed that ruling by beginning with the observation “that ‘liability’ refers to a ‘financial or pecuniary obligation’ that can arise through the settlement of claims.” In addition, this interpretation of the term, “liability,” as used in the federal statute would have a similar meaning as “the common understanding of ‘liability insurance,’ which commonly provides for an insured’s claim to arise ‘once the insured’s [legal obligation] to a third party has been asserted.’” Id. at *8.
By appealing to the general and common understanding of what constitutes “liability insurance,” the Second Circuit added weight to its process of interpreting a specific statutory one-word term, “liability,” and affirmed the trial court’s ruling that payments toward the settlement agreement at bar would have the effect of reducing dollar-for-dollar the paying Defendants’ statutory “liability” under ATSSSA.