Insurer Says Casino's Pollution Policy Doesn't Cover Virus

By Matthew Santoni
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Law360 (May 3, 2021, 6:07 PM EDT) -- An insurer for Parx Casino and Racing told a federal court that the Philadelphia-area gambling giant can't seek coverage for its losses during the coronavirus pandemic because the virus wasn't a "pollution event" shown to have actually contaminated any of the casino's facilities or required cleaning up.

Steadfast Insurance Co. on Friday urged U.S. District Judge Gerald Pappert to dismiss a lawsuit by Greenwood Racing and its affiliated companies on the grounds that the casino and racetrack operator's environmental liability insurance didn't cover closures and cleanups where no actual contamination by the COVID-19 virus had been reasonably claimed.

"As demonstrated by Greenwood's struggles in the complaint to plausibly allege that its claims fit within the scope of coverage, it has not identified a pollution event at any covered location and its losses are not the types of losses that are covered by Steadfast," Steadfast's motion to dismiss said. "Greenwood relies upon generalized statements and speculative assertions concerning the prevalence of COVID-19 in society to argue that the virus must have been present at its facilities."

Like virtually every insurer sued for coverage since the outset of the pandemic, Steadfast said it did not owe Greenwood anything for its losses or additional expenses incurred as a result of the virus and the associated government orders temporarily closing businesses to slow the virus' spread.

The Greenwood companies initially sued in the Bucks County, Pennsylvania, state court in March, and the insurer removed the case to federal court in April because the parties were headquartered in different states.

Greenwood sought coverage under the cleanup costs, emergency expenses and suspension of operations sections of its environmental liability insurance, saying it had to temporarily shut down and institute extra cleanup procedures at Pennsylvania's Parx Casino, Parx Racetrack, the now-defunct Oaks Race & Sportsbook and the Favorites at Egg Harbor Township off-track betting facility in New Jersey.

But Steadfast countered Friday by saying that even as the casino operator claimed the virus was so contagious and ubiquitous that it must have entered the facilities via infected guests or staff, there had not been any substantial allegations that the virus itself was actually present in order to require additional cleanup efforts. It also noted that Steadfast did not have a policy for the subsidiary running the New Jersey location.

Greenwood's environmental liability policy was narrower than the business policies being cited by many other companies claiming pandemic-related losses, and it was focused on losses and cleanup measures due to a "pollution event," the insurer said. Although Greenwood claimed the pandemic was such an event, Steadfast said the virus and the casino's complaint hadn't met the specific criteria outlined in the policy.

"Federal courts have consistently found that speculative allegations about the presence of the COVID-19 virus are wholly insufficient to plausibly state a claim for business interruption losses under standard commercial property policies, which provide broader coverage than the specialized policy at issue here," Steadfast's motion said. "This also includes allegations similar to those asserted by Greenwood concerning the likelihood that the virus was present due to its ubiquity in society."

And although the government might have ordered nonessential businesses to close during the early weeks and months of the pandemic, it hadn't ordered the mitigation and cleanup measures the casino claimed it had to take.

"Greenwood was required to restrict its businesses even if it had no reported cases of customers or employees with COVID-19 on its premises," the insurer's motion said. "If Greenwood's interpretation of the environmental liability policy was upheld, every nonessential business in the state of Pennsylvania could claim to have been required to perform cleanup activities as a result of a 'pollution event.' Such an interpretation would render the policy wording essentially meaningless."

Nor were the cleanup and mitigation measures the kind of "emergency" contemplated in the insurance policy, Steadfast said, since the virus did not render the casino and racetrack facilities "uninhabitable."

"Courts in this district and this circuit have almost uniformly found that the mere presence of the COVID-19 virus on property — which does not even exist here — does not present a substantial danger to the public health or the environment because it does not render premises uninhabitable and can be eliminated by routine cleaning and disinfecting," the motion said.

Without cleanup costs that were actually government mandated or stemming from an actual emergency, Steadfast said, Greenwood could not make any claims for its suspension of operations during the pandemic.

"The availability of this coverage ... is contingent upon the suspension of operations being caused by a government-mandated cleanup and Steadfast being responsible for those cleanup costs," the motion said. "Because Greenwood has failed to plausibly allege entitlement to coverage for 'cleanup costs' or 'emergency expenses' ... its claim for suspension of operations coverage necessarily fails."

Counsel for Steadfast and Greenwood both declined to comment Monday.

Steadfast is represented by William D. Wilson and Craig R. Rygiel of Mound Cotton Wollan & Greengrass LLP.

Greenwood Racing Inc., Greenwood Gaming & Entertainment Inc., City Turf Op Co., Turf Club Op Co. and ACRA Turf Club LLC are represented by Michael A. Iannucci and Justin F. Lavella of Blank Rome LLP.

The case is Greenwood Racing et al. v. American Guarantee and Liability Insurance Co. et al., case number 2:21-cv-01682, in the U.S. District Court for the Eastern District of Pennsylvania.

--Editing by Stephen Berg.

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Case Information

Case Title

Greenwood Racing Inc. et al v. American Guarantee and Liability Insurance Company et al

Case Number



Pennsylvania Eastern

Nature of Suit

Contract: Insurance



Date Filed

April 09, 2021

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