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Insurer Says Casino’s Pollution Policy Does Not Cover Viruses

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Law360 (May 3, 2021, 6:07 p.m. EDT) – An insurer at Parx Casino and Racing has told a federal court that the Philadelphia-area gaming giant cannot seek to cover its losses during the coronavirus pandemic because the virus was not a “pollution event” that actually contaminated any of the casino’s facilities or required cleaning.

Steadfast Insurance Co. on Friday urged U.S. District Judge Gerald Pappert to dismiss a lawsuit brought by Greenwood Racing and its affiliates on the grounds that the casino and racetrack operator’s environmental liability insurance did not cover closures and cleanings where no actual COVID-19 virus contamination had been reasonably claimed.

“As demonstrated by Greenwood’s difficulties in the complaint to plausibly allege that his claims fall within the scope of coverage, he did not identify a pollution event at any covered location and his losses are not the types of losses. that are covered by Steadfast, ”Steadfast’s motion to reject said. “Greenwood is relying on widespread statements and speculative claims regarding the prevalence of COVID-19 in society to argue that the virus must have been present at its facilities.”

Like virtually all insurers sued for coverage since the start of the pandemic, Steadfast said it owed Greenwood nothing for its losses or additional expenses incurred as a result of the virus and associated government orders temporarily shutting down businesses to slow the downturn. spread of the virus.

The Greenwood companies initially filed a lawsuit in Bucks County, Pa., In March, and the insurer referred the case to federal court in April because the parties were headquartered in different states.

Greenwood requested coverage for clean-up costs, emergency expenses and the suspension of operations from its environmental liability insurance, saying it must temporarily shut down and institute additional clean-up procedures at Parx Casino in Pennsylvania, at Parx Racetrack, at the now-defunct Oaks Race & Sportsbook and favorites of the off-piste betting center Egg Harbor Township in New Jersey.

But Steadfast responded on Friday, saying that even though the casino operator claimed the virus was so contagious and pervasive that it must have entered the facilities via infected guests or staff, there had been no substantial allegations. that the virus itself was actually present in order to require additional cleanup efforts. He also noted that Steadfast did not have a policy for the subsidiary operating the New Jersey site.

Greenwood’s environmental responsibility policy was narrower than the trade policies cited by many other companies claiming pandemic-related losses, and it focused on losses and clean-up actions due to a “pollution event,” a declared the insurer. Although Greenwood claimed the pandemic was such an event, Steadfast said the virus and the casino’s complaint did not meet specific criteria set out in the policy.

“Federal courts have consistently found that speculative claims about the presence of the COVID-19 virus are wholly insufficient to plausibly declare a business interruption claim under standard commercial property policies, which offer broader coverage. that is the specialized policy involved here, ”Steadfast’s motion said. “It also includes claims similar to those made by Greenwood regarding the likelihood of the virus being present due to its pervasiveness in society.”

And while the government may have ordered the shutdown of non-essential businesses in the first weeks and months of the pandemic, it had not ordered the mitigation and clean-up measures the casino said it needed to take.

“Greenwood was required to restrict its activities even though it had not reported cases of customers or employees with COVID-19 at its premises,” the insurer’s motion reads. “If Greenwood’s interpretation of the environmental responsibility policy were upheld, all non-essential companies in the state of Pennsylvania could claim to have been required to perform clean-up activities as a result of a ‘pollution event’ . Such an interpretation would render the wording of the policy essentially meaningless. “

The clean-up and mitigation measures were also not the kind of “emergency” envisioned in the insurance policy, Steadfast said, since the virus did not make the casino and racetracks “uninhabitable.”

“The courts in this district and this circuit have almost uniformly found that the mere presence of the COVID-19 virus on the property – which does not even exist here – does not present a substantial danger to public health or the environment because it does not make the premises uninhabitable and can be eliminated by routine cleaning and disinfection, ”the motion indicates.

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

“The availability of this cover … depends on the suspension of operations caused by a government-mandated clean-up and Steadfast is responsible for those clean-up costs,” the motion reads. “Because Greenwood has not plausibly claimed the right to coverage for ‘cleaning costs’ or ’emergency expenses’ … its request to suspend operations coverage necessarily fails.”

Lawyers for Steadfast and Greenwood both declined to comment on 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 United States District Court for the Eastern District of Pennsylvania.

– Edited by Stephen Berg.

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