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Law360 (May 25, 2021, 9:33 PM EDT ) A group of insurers must pay for a Florida casino's pandemic-related business losses because they failed to include virus exemptions in their policies, the casino has claimed in a suit filed in New York state court.
West Flagler Associates says four of its insurers conspired to deny coverage and only bothered to update their policies with contagion carveouts weeks after Florida forced its Magic City Casino and Flagler Dog Track to close.
"In reliance on the coverages in defendants' insurance policies, plaintiff paid millions of dollars in payroll to its employees while shut down by government orders and incurred great expenses to resume and maintain business operations," the casino said in its complaint, which was filed Monday. "Despite agreeing to cover exactly those kinds of losses, defendants have wrongfully denied coverage."
The city of Miami ordered the casino and track closed on March 18, 2020, while it was still covered under policies that expired April 29, 2020, and lacked a virus exemption, the complaint said.
"Tellingly, defendants changed their subsequent insurance policies with plaintiff by expressly excluding coverage of losses caused by viruses," the casino said. "That change demonstrates that the policies do not exclude such coverage or, at a minimum, are unclear as to such coverage, and such ambiguity must be resolved in favor of coverage for the insured."
West Flagler Associates has "layers" of insurance with nine different entities in which individual companines cover claims up to a certain amount and excess claims are handled by the insurer in the layer above.
The four defendant companies — Indian Harbor, Hallmark, Ategrity and Great Lakes — are supposed to cover various portions of losses up to $25 million, the complaint said. The suit was filed in New York because of forum-selection clauses in the policies.
The casino's seven-count complaint alleges, among other things, breach of contract, conspiracy, and tortious interference and violations of New York business law related to the alleged conspiracy. In support of the conspiracy claim, West Flagler Associates alleges the insurers' policies contained identical language and coordinated their claims denials.
The casino wants a judge to declare that the insurers are obligated to pay for their losses, and it is seeking a jury trial on other counts, according to the complaint.
Lawyers for the casino and representatives for the insurance companies did not immediately respond to a request for comment.
West Flagler Associates is represented by Seth M. Shapiro, Adam M. Moskowitz, Adam A. Schwartzbaum and Howard M. Bushman of The Moskowitz Law Firm PLLC; and William F. "Chip" Merlin, Jr. and Shane S. Smith of the Merlin Law Group.
Attorney information for Indian Harbor Insurance Company, Hallmark Specialty Insurance Company, Ategrity Specialty Insurance Company and Great Lakes Insurance was not immediately available.
The case is West Flagler Associates v. Indian Harbor Insurance Company et al., case number 653398/2021, in the Supreme Court of the State of New York, County of New York.
--Editing by Gemma Horowitz.
For a reprint of this article, please contact reprints@law360.com.
