Atlantic City's Ocean Casino Resort loses coronavirus insurance relief lawsuit
Atlantic City's Ocean Casino Resort failed to obtain $50 million in property insurance. The property’s parent company claims it should be compensated for losses caused during the COVID-19 pandemic.
The New Jersey Supreme Court ruled this week that three property insurance companies are not liable to pay Ocean Casino for operating losses suffered during the coronavirus emergency. Ocean Casino is controlled by a company called AC Ocean Walk, LLC. The LLC is wholly owned by Luxor Capital Group and Ilitch Holdings.
Key to the case is determining whether Ocean Casino suffered "direct material loss" or "direct material damage" to its property as a result of the virus that penetrated the Boardwalk property. The New Jersey Supreme Court unanimously ruled that this was not the case.
No physical damage
New Jersey Supreme Court Justice Anne Patterson said attorneys for Ocean Casino Resort could not determine exactly how the presence of the virus caused physical harm.
"Ocean Walk must prove that its property was damaged or altered in a manner that rendered it unusable or uninhabitable," Patterson wrote in the unanimous court.
Patterson explained that Ocean's attorneys claimed that direct physical damage to the property was caused by the "actual presence and/or threatening presence of coronavirus particles." The judge said the charges "do not support a finding of 'direct bodily harm.'"
The center was allegedly forced to close to the public in March 2020 and reopened with limited or limited operations in July 2020 in accordance with government guidance," Patterson continued. "Without the appropriate orders , Ocean Walk could have used its property for casinos and other entertainment activities without having to cease operations. "
AIG Specialty Insurance, Americanguarantee & Liability Insurance and Interstate Fire & Casualty moved to dismiss a lawsuit over Ocean Casino Property coverage on the grounds that the policies contained a contamination exclusion. Lower state courts and Patterson agreed that the contamination exclusion did not apply because the situation primarily involved radioactive contamination, rather than contamination by "viruses," "pathogens," or "pathogenic organisms."
Viral contamination does not cause physical damage and therefore does not warrant property insurance coverage, Patterson said.
“The property insurance policies issued by Defendants contained the same basic form of coverage. Each policy provided that it covered “direct physical loss or damage from a covered cause of damage to the insured property at the insured location.” “This policy does not exclude "physical loss or damage" - "contamination and any costs incurred "due to contamination, including the inability to use or occupy the property, or to make the property safe or suitable for use or habitation," Patterson concluded.
Insurance companies are not responsible for damages caused by coronavirus
The New Jersey Supreme Court ruling is the latest victory for insurance companies, which have largely won property damage cases related to COVID-19.
Penn Law’s Covid Coverage Litigation Tracker shows that of the more than 1,000 lawsuits filed against insurance companies for non-payment of business interruption policies due to COVID-19, fewer than two dozen have ended in favor of the plaintiffs.
AIG, American Guaranty Co. and Interstate Fire Co. paid Ocean $850,000 under a "communicable disease disruption" claim under a separate property insurance policy.
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Source: www.casino.org
