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Law360 (March 2, 2021, 6:19 PM EST) -- The owner of Motor City Casino Hotel has gone all in with a lawsuit in Michigan state court alleging its Zurich affiliate insurer owes it $270 million for COVID-19-related losses after the casino had to shut down and change its cleaning operations.
Detroit Entertainment LLC, in a complaint in Wayne County Circuit Court on Thursday, said the coronavirus has caused a direct physical loss of or damage to property to its casino business, triggering the potential limits of $750 million under a commercial property insurance policy issued by American Guarantee and Liability Insurance Co.
The presence of coronavirus made certain areas like the buffet and banquet hall unsafe, the casino owner said, "just as if asbestos, cat urine, ammonia, fumes or a salmonella outbreak was in the air or on surfaces."
The owner said it paid for deep cleaning of gaming tables, slot machines, chips, dice and more that should be covered by the policy. And it lost money not only from the casino closure, but also because it had to cancel events in light of government shutdown orders.
Detroit Entertainment said about 100 employees tested positive for the virus, which spread either through the air or on surfaces, according to the suit. The company has laid off more than 1,100 employees, according to the suit.
At a time when it was needed, Motor City said, the insurer abandoned its obligations despite marketing its product as having higher limits with broader coverage. Instead, the Zurich unit gave the casino owner a one-time payment of $100,000 — less than one-tenth of 1% of the casino's losses — as part of a communicable diseases provision of the policy.
The insurer's chief financial officer, George Quinn, said in a May teleconference that the majority of Zurich policies exclude losses for viruses, Detroit Entertainment noted.
"Zurich has waged a public relations campaign to discourage and deter policyholders from bringing business interruption claims," the casino owner said.
The insurance company tried to tack on a virus exception to the policy in December 2019 after the policy was written and after the first COVID-19 case was identified, the casino owner said.
Motor City President Bruce Dall said in a statement Tuesday that the company has implemented health and safety protocols to protect its employees and patrons.
"Thus far, our insurance carrier has failed to honor our business insurance claims, necessitating this action," Dall said. "Our hope remains for an amicable resolution."
Detroit Entertainment isn't the first casino owner to push for pandemic coverage. Mohawk Gaming Enterprises LLC, which is behind Akwesasne Mohawk Casino Resort, is fighting its insurer Affiliated FM Insurance Co. in New York federal court on the effects of a virus exclusion to its coverage. Affiliated is also defending against Treasure Island LLC's Nevada federal court suit with a contamination exclusion.
Representatives for American Guarantee didn't respond to messages for comment.
Detroit Entertainment is represented by J. Michael Huget, Andrea Hansen and Adam M. Wenner of Honigman LLP and Joseph D. Jean, Scott D. Greenspan, Benjamin D. Tievsky and Janine M. Stanisz of Pillsbury Winthrop Shaw Pittman LLP.
Counsel information wasn't available for American Guarantee.
The case is Detroit Entertainment LLC v. American Guarantee and Liability Insurance Co., case number unknown, in the Circuit Court for the County of Wayne.
--Additional reporting by Daphne Zhang and Jeff Sistrunk. Editing by Marygrace Murphy.
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