Pinnacle Entertainment Files Lawsuit Against Three Insurance Companies
Related to Casino Magic Biloxi
LAS VEGAS, NV, August 3, 2006. Pinnacle Entertainment, Inc. announced that, on August 1, 2006, it filed suit in the United States District Court for the District of Nevada against three of its excess insurance carriers. The suit relates to the loss incurred by Pinnacle as a result of Hurricane Katrina at its Casino Magic property in Biloxi, Mississippi. Collectively, the three insurers provide $300 million of coverage, in excess of $100 million of coverage provided to Pinnacle by other insurers. In total, Pinnacle's policies applicable to the Hurricane Katrina loss provide an aggregate of up to $400 million of coverage for loss caused by a weather catastrophe occurrence (as defined by the policies) and up to $100 million of inclusive coverage for loss caused by a flood occurrence. The three insurers are Allianz Global Risks US Insurance Company, Arch Specialty Insurance Company and RSUI Indemnity Company.
The suit alleges, among other things, that the defendants have improperly asserted that Pinnacle's losses were due to a flood occurrence as opposed to a weather catastrophe occurrence; that, after the close of the proposed sale of certain Casino Magic Biloxi assets to Harrah's Entertainment, Inc., Pinnacle is not covered for any continued business interruption loss at Casino Magic Biloxi incurred after that sale; and that Pinnacle is not entitled to designate its St. Louis County project as a replacement for Casino Magic Biloxi.
The suit seeks damages equal to the outstanding amount of Pinnacle's claim (totaling $346.5 million, less $100 million previously paid or anticipated to be paid in the near future). It also seeks declarations that Pinnacle's St. Louis County project constitutes a permissible replacement property under the applicable policies and that Pinnacle is entitled to receive the full amount of its Casino Magic Biloxi business interruption loss arising out of Hurricane Katrina, even though it is in the process of selling the Casino Magic Biloxi site and certain related assets to Harrah's. Finally, the suit also seeks unspecified punitive damages for the improper actions of the defendants in connection with Pinnacle's claim.
As previously reported, on April 11, 2006, Pinnacle filed an insurance claim with its insurers totaling $346.5 million for losses sustained at Casino Magic Biloxi due to Hurricane Katrina.
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