By Shawn Rice

Law360 (April 6, 2021, 5:31 PM EDT) -- Treasure Island LLC is attempting to force production of "phantom" documents in its coverage suit for pandemic-related losses, Affiliated FM Insurance Co. told a Nevada federal court on Monday, saying the Las Vegas casino and resort was trying to divert attention from the likelihood that its case won't survive an upcoming ruling.

The time, money and effort to locate and produce documents and communications with in-house and outside counsel is disproportionate to Treasure Island's needs, Affiliated FM said in a partially redacted response. Affiliated asked the District of Nevada to reject the casino's third motion to compel the information.

"Like its prior motions, Treasure Island broadly asserts it is entitled to invasive and expensive searches for phantom documents it speculates must exist, despite clear evidence to the contrary," the insurer said.

Treasure Island sued Affiliated FM in May seeking coverage of losses from closing its 2.1 million-square-foot casino and resort under government orders to stop the spread of the coronavirus. The policy covers up to $850 million in property damage and $327 million in business losses, according to the suit.

Affiliated FM moved for judgment on the pleadings in November, arguing that the pandemic-related losses are capped to the policy's $200,000 communicable disease provision. The majority of the casino's losses are precluded under exclusions for contamination and loss of use, according to the insurer.

In March, Treasure Island requested documents on Affiliated FM's claims investigation and research about COVID-19. While Affiliated FM said nothing else exists, the casino said the insurer's "word is simply not enough" for the casino, who "has already been the victim" of the insurer's alleged bad faith.

In Friday's response, Affiliated FM said the entire claim file had been produced. The insurer called Treasure Island's motion an "obsession" with the possibility that there are emails not included in the record. But Treasure Island "is once again over-reaching" in its recent efforts, Affiliated FM said.

Treasure Island's bid for documents on how COVID-19 spreads or if it causes physical loss or damage is immaterial, Affiliated FM argued, saying there is no disagreement on those issues. Affiliated FM said Treasure Island "manufactured an issue," as it has yet to show the presence of COVID-19 at its property.

The insurer called the motion "another example of over broad discovery with no purpose other than to harass and distract from the fact that this action is unlikely to survive the pending motion for judgment on the pleadings."

In other COVID-19 litigation, Affiliated FM has been accused  by the owner of Planet Fitness gyms of issuing "talking points" to its employees instructing them on how to deny coverage of business losses due to the pandemic. The gym owner said Affiliated FM told employees to rely on a contamination exclusion.

Representatives for the parties did not respond to requests for comment on Tuesday.

Treasure Island is represented by Renee M. Finch of Messner Reeves LLP; and Michael S. Levine, Harry L. Manion III, Christopher Cunio and Katharine A. Dennis of Hunton Andrews Kurth LLP.

Affiliated FM is represented by Mark J. Connot of Fox Rothschild LLP; and Joyce C. Wang and Colin C. Munro of Carlson Calladine & Peterson LLP.

The case is Treasure Island LLC v. Affiliated FM Insurance Co., case number 2:20-cv-00965, in the U.S. District Court for the District of Nevada.

--Additional reporting by Daphne Zhang and Matthew Santoni. Editing by Peter Rozovsky.

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