Mohawk Gaming Cites New Ruling In COVID Coverage Case

By Joyce Hanson
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Law360 (April 12, 2021, 6:59 PM EDT) -- Casino owner Mohawk Gaming Enterprises LLC has asked a New York federal judge overseeing its lawsuit for COVID-19 insurance coverage to take into account another district judge's recent ruling in a commercial landlord's suit seeking payment from its insurer for pandemic-related losses.

Mohawk Gaming, the owner of the Saint Regis Mohawk Tribe's Akwesasne Mohawk Casino Resort, pointed in a letter brief Friday to the March 31 Southern District of New York ruling in Thor Equities LLC v. Factory Mutual Insurance Co. , which denied the insurer an early win in commercial landlord Thor's pandemic rent loss suit.

U.S. District Judge Analisa Nadine Torres found in the Thor case that a contamination exclusion under Factory Mutual's commercial property policy is too ambiguous, holding that she cannot determine whether the exclusion bars coverage of Thor's COVID-19 related business losses.

Judge Torres said Factory Mutual's contamination exclusion, which bars pollution caused by a virus, is unclear on whether it allows coverage of contamination costs stemming from COVID-19. The judge said that it was inappropriate for her to favor Factory Mutual's argument that the exclusion bars coverage for Thor's alleged losses.

"The policy distinguishes between 'cost' and 'loss' elsewhere, but no such distinction is present here," the judge said, referring to the contamination exclusion.

Mohawk Gaming, meanwhile, has urged U.S. District Judge David N. Hurd of the Northern District of New York to reject Factory Mutual unit Affiliated FM Insurance Co.'s bid to toss the casino owner's suit seeking COVID-19-related coverage, arguing that the policy specifically defined a communicable disease as causing property damage despite a virus exclusion.

The gaming company argued Jan. 18 that the policy's virus exclusion does not apply to its communicable disease coverage. Affiliated is trying to rewrite its policy to avoid liability, according to Mohawk.

Affiliated described the communicable disease coverage as a "core coverage" in its policy, Mohawk said. Although the policy has a virus exclusion, it said, "no changes were made to the virus exclusion language to reference or even mention the communicable disease coverage" when Affiliated added the communicable disease coverage to the policy in 2016.

Mohawk is asking the court to hold that its policy's virus exclusion does not govern the communicable disease coverage, because "they were treated as separate provisions with no seeming interconnection." Since the policy defined communicable disease coverage as causing "physical damage," it should cover property damage caused by a virus such as COVID-19, the company contended.

According to the suit, Mohawk Gaming's Saint Regis Mohawk Tribe of Franklin County, New York, shut down its 150-room Akwesasne Mohawk Casino Resort last March in response to COVID-19 and government closure orders. The company claimed it had suffered significant income losses and sued Affiliated in June after the insurer denied coverage.

Affiliated has argued that COVID-19 was an excluded contaminant when Mohawk asserted a claim "outside of the communicable disease coverages." But on Jan. 18, Mohawk said the carrier is wrongly attempting to claim the policy's contamination exclusion applies to communicable diseases and could not cite any policy terms to support its reading.

Additionally, though courts around the country have held that virus exclusions bar coverage for COVID-19 and that the virus does not cause physical damage, none of the rulings "deal with a policy that provides communicable disease coverage" or a policy that specifically defined a communicable disease as causing physical damage, the casino owner argued.

Affiliated hopes to "piggyback onto case law that has applied virus exclusions to claims based on COVID-19. But those cases cannot save [the insurer] from the policy it wrote and the coverage it agreed to provide," Mohawk said.

In the Thor case, court filings say the commercial landlord bought its policy on March 13, 2020, and filed its claim of loss within two weeks. Factory Mutual replied in mid-April that the policy's $1 million communicable disease coverage could apply, but Thor maintained that its losses should be covered under the policy's general limit of $750 million rather than the communicable disease sub-limit.

Factory Mutual has argued that Thor was asking the court to rewrite the contamination exclusions to try to get "more than twenty times" the policy's $1 million sub-limit for communicable disease.

Representatives for the parties could not be immediately reached for comment Monday.

Mohawk Gaming Enterprises is represented by Lisa A. Coppola of The Coppola Firm and Marsha K. Schmidt of Marsha K. Schmidt, Attorney-at-Law.

Affiliated FM Insurance is represented by Robert B. Meola, Piel Lora and Robert Francis Cossolini of Finazzo Cossolini O'Leary Meola & Hager LLC.

The Mohawk case is Mohawk Gaming Enterprises LLC v. Affiliated FM Insurance Co., case number 8:20-cv-00701, in the U.S. District Court for the Northern District of New York.

The Thor case is Thor Equities LLC v. Factory Mutual Insurance Co., case number 1:20-cv-03380, in the U.S. District Court for the Southern District of New York.

--Additional reporting by Daphne Zhang. Editing by Peter Rozovsky.

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