TRENTON — An Atlantic City casino that was seeking as much as $50 million from its insurers to cover COVID-19 shutdown costs is leaving empty-handed after a ruling from the state Supreme Court.
The high court on Wednesday unanimously opposed a lawsuit filed by by AC Ocean Walk LLC in March 2021. The company has operated Ocean Casino Resort on the Boardwalk since 2018.
The Supreme Court ruling returns the lawsuit to its trial judge in Atlantic County Superior Court, with direction to dismiss the case with prejudice.
Princeton attorney Stephen M. Orlofsky, who represents the casino, declined comment on the decision.
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The suit named four defendants – American Guarantee and Liability Insurance Co., AIG Specialty Insurance Co., Interstate Fire & Casualty Co., and National Fire & Marine Insurance Co.
Ocean Walk’s complaint said it had bought expensive, overlapping, “best in class” coverages from them.
The road to the high court started with the insurers losing a bid to have the case dismissed in Superior Court. However, an appeals court reversed the lower court and that bucked the issue to the high court.
The ruling says Ocean Walk closed its facilities in March 2020 per an executive order from Gov. Phil Murphy. Until then, the casino claims, it had eight months of double-digit growth versus the prior year.
Ocean Walk facilities reopened July 2, 2020, though on a limited basis, again responding to a Murphy executive order.
The casino’s chances at forcing insurance payouts first rested on persuading the justices that it had suffered the kind of “direct physical loss of or damage” its insurance policies were designed to cover.
The casino also had to get the court to agree to a second argument.
The policies were written with “contamination exclusion” provisions. Basically, under them, the casino could not collect on costs incurred due to “contamination,” which was defined to include pathogens and viruses.
Ocean Walk argued COVID was not a contaminant, at least as its policies defined them.
The Supreme Court rejected both arguments, supporting the Appellate Division reasoning.
AGLIC, AIG, and IFCC all wrote commercial insurance policies for Ocean Walk and the base policies were identical as far as defining physical damages, the ruling states.
The casino claimed the policies from those three firms, combined with a policy from National Fire, could provide it with up to $50 million in payouts.
The casino filed its claims with AGLIC, AIG, and IFCC on March 23, 2020. In February 2021, the three companies rejected the claims. National Fire made similar arguments in not paying the casino.
Ocean Walk then filed a complaint in court.
Ocean Walk did secure a small payout from three companies on another policy point.
The AGLIC, AIG, and IFCC policies additionally had covered the cost of interruptions of business by a “communicable disease,” with a sublimit of $1 million. AGLIC, AIG, and IFCC agreed to collectively pay $850,000 to settle that claim.
Joe Smith is a N.E. Philly native transplanted to South Jersey 36 years ago, keeping an eye now on government in South Jersey. He is a former editor and current senior staff writer for The Daily Journal in Vineland, Courier-Post in Cherry Hill, and the Burlington County Times.
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Clinton Mora is a reporter for Trending Insurance News. He has previously worked for the Forbes. As a contributor to Trending Insurance News, Clinton covers emerging a wide range of property and casualty insurance related stories.