The World Trade Center Captive Insurance Co. (WTCC) is seeking to dismiss a lawsuit filed last month that accuses the captive of misusing a $1 billion grant from the Federal Emergency Management Association (FEMA).

In a motion to dismiss filed in the United States District Court for the Southern District of New York, WTCC argues that most of the named defendants in the lawsuit are, under statute, granted immunity from personal liability. The captive also contends that it has no fiduciary duty to the plaintiffs " Ground Zero workers who were injured during the post-9/11 cleanup.

The lawsuit, John R. Walcott, Frank Maisano and Mary E. Bishop v. WTC Captive Insurance Company Inc., et al., was filed in the New York State Supreme Court in July by the law firm Worby Groner & Napoli Bern, LLP. It names New York City Mayor Michael Bloomberg, WTC Captive president and chief executive officer Christine LaSala, Marsh Management Services Inc., and others as defendants.

The suit charges that the captive has used public funds, intended to compensate Ground Zero workers for claims arising out of the debris removal process, for unauthorized and unlawful purposes. Specifically, Marc Jay Bern, an attorney with Worby Groner & Napoli Bern who is representing the plaintiffs, said in a statement that the captive has spent over $74 million dollars of the heroes [Ground Zero workers] money on so-called loss adjustment fees, including over $45 million in legal fees, to fight the Ground Zero workers claims, but they have not paid a single dollar to a Ground Zero worker who has become ill from exposure to toxic substances at the WTC and related sites.

Defense Claims Immunity

In its recent motion, WTCC states that the plaintiffs lawsuit is invalid because a section in the New York Insurance Law that pertains to the formation of the WTC Captive grants immunity from personal liability to virtually all of the named defendants, including WTCC board members and officers, and Bloomberg.

The motion states, In short, each and every defendant to this action, except for the WTCC, is immune from any personal liability resulting from their activities in support of the WTCCs purposes.

No Fiduciary Duty to Plaintiffs

Additionally, the motion argues that WTCC has no fiduciary duty to the plaintiffs, and instead has an obligation under its mandate from Congress to defend the city and its contractors.

According to the motion, the plaintiffs have asserted that Congress and FEMA funded the WTCC for the purpose of operating a claims processing facility to unconditionally pay plaintiffs claims.

However, the motion contends that in creating the WTCC, Congress and FEMA have actually established an insurance company with the ordinary duties of an insurance company to its insureds: the duties to defend and, if necessary, indemnify those insureds in connection with the very tort suits that plaintiffs assert.

In a statement released regarding its motion, WTCC maintained that Congress could resolve the dispute by establishing a special fund, similar to the Victims Compensation Fund, to compensate Ground Zero workers. WTCC said, As we have said on many occasions over the past year, it is within the Congressional prerogative to create a new, or to reopen the old, Victims Compensation Fund.If created, such a fund must protect the city and its contractors and make funds available on an appropriate and equitable basis to those involved in the post-9/11 rescue, recovery and debris removal process.

Arguments in Motion Without Merit

Responding to the motion to dismiss, Bern said the defendants arguments were without merit, and he disputed WTCCs interpretation of its responsibilities to the injured Ground Zero workers. Bern said, The legislators " the congressmen and the senators who are mainly responsible for setting up this $1 billion to go into the captive fundhave all said that the congressional intent was to pay these workers. Thats why they set this $1 billion aside.

Bern also questioned the defendants claim to immunity. He said, I dont think that [the defendants] are entitled to immunity at all. There are several arguments which preclude their ability to maintain a position of immunity in this instance.

Denise A. Rubin, an associate attorney at Worby Groner & Napoli Bern, LLP, said that the plaintiffs will also attempt to have the case moved back to state jurisdiction. She explained that the defense had the cased moved to federal jurisdiction based on language in the Air Transportation Safety and System Stabilization Act that calls for all 9/11-related lawsuits to be handled by the United States District court for the Southern District of New York.

But Rubin said, We believe that this case was properly brought in the state court. In support of her assertion, she noted that WTCC is governed by the New York State Insurance Department superintendent and the states insurance laws, and that the claims that have been filed are state law claims.