By Joseph Ax

NEW YORK, Jan 8 (Reuters) - The Port Authority of New York and New Jersey does not need to pay $4.5 million to a woman injured in the 1993 bombing of the World Trade Center, a state appeals court held Thursday, citing a prior Court of Appeals decision that found the agency cannot be held liable for the attack.

In a 3-2 decision, the Appellate Division, First Department, ruled that a judgment for Linda Nash should not stand in light of the Court of Appeals' 2011 decision in Matter of World Trade Center Bombing Litigation.

"Since the judgment in plaintiff's favor was based on an order that has been reversed, the trial court properly vacated the judgment," the majority wrote in an unsigned opinion.

The ruling affirmed a decision from Manhattan Supreme Court Justice Milton Tingling.

In dissent, Justice Sallie Manzanet-Daniels said the Nash judgment should be upheld because its final adjudication occurred before the Court of Appeals ruling.

"Nash's judgment having become final, the Port Authority cannot avoid its enforcement," she wrote, joined by Justice Rolando Acosta.

In 1993, Nash and other plaintiffs filed a number of lawsuits against the Port Authority in connection with the bombing, which killed six people and injured more than 1,000. The lawsuits were eventually consolidated, and most plaintiffs were represented by a steering committee, although Nash and a handful of others retained separate counsel.

A jury found the Port Authority liable in 2005. The trial court denied the authority's motion to set aside the verdict, and the First Department affirmed that decision.

In a subsequent damages trial, a jury awarded Nash $4.5 million plus interest, a judgment that was affirmed by the First Department. The Port Authority did not appeal that ruling but appealed a separate judgment in the case of another plaintiff, Antonio Ruiz.

The Ruiz appeal resulted in the Court of Appeals' reversal of the 2005 jury verdict. The Court of Appeals held that the Port Authority had governmental immunity and could not be held liable for damages.

CASES 'IN THE PIPELINE'

The majority of the First Department on Tuesday said that under section 5015 of the state Civil Practice Law and Rules, a judgment that is based on an order that has been reversed, like that in Nash's case, should be vacated.

The dissent countered that the decision by the Port Authority not to appeal Nash's case meant it should be beyond review. Only cases that were still "in the pipeline" at the time of the Court of Appeals' ruling -- those that had not yet gone through the appeals process -- should be affected, Manzanet-Daniels wrote.

Nash's case appears to be the only one that was fully adjudicated prior to the Court of Appeals decision, according to Blair Fensterstock, the liaison counsel for the steering committee in the consolidated litigation.

"The Port Authority made a strategic decision not to appeal either the liability or the damages determination in Nash, instead prosecuting the Ruiz case," she wrote.

She noted that the Court of Appeals specifically said the Nash case was "beyond the scope" of its decision and that it had no jurisdiction over the case.

Louis Mangone, Nash's attorney, said he would appeal the ruling. Fensterstock said the decision was "not very well reasoned" and "undercuts basic principles of American law."

A spokesman for the Port Authority, Steve Coleman, and a lawyer for the agency, Howard Comet, both declined to comment.

The case is Nash v. Port Authority, Appellate Division, First Department, No. 8108.

For Nash: Louis Mangone.

For the Port Authority: Howard Comet of Weil, Gotshal & Manges.

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