Pinnacle Wins Partial Settlement over Katrina Damage to Mississppi Property

California-based law firm Irell & Manella reports it has won a partial summary judgment on behalf of national gaming operator Pinnacle Entertainment Inc., in an insurance coverage case arising out of Hurricane Katrina.

The case is pending before Judge Brian E. Sandoval of the U.S. District Court in Nevada and is one of many high-profile insurance coverage suits stemming from the 2005 hurricane.

In August 2005, Pinnacle’s facility in Biloxi, Miss., sustained property damage and business interruption loss.

According to Irell & Manella, two of Pinnacle’s insurers, Allianz Global Risks U.S. Insurance Co. and RSUI Indemnity Co. (together providing more than $100 million of excess coverage), took the position that coverage for all storm surge damage falling within their policy layers was precluded by flood exclusions contained within their policies.

After filing suit in August 2006 Irell & Manella moved for partial summary judgment on this issue in April 2007, with cross-motions subsequently filed by the insurers.

After a two-hour oral argument on the motion, Judge Sandoval took the motion and cross-motions under submission. On March 26, he issued his ruling in Pinnacle’s favor.

According to Irell & Manella partner Marc Maister, who served as Pinnacle’s lead counsel, the order granting Pinnacle partial summary judgment (and denying the insurers’ cross-motions) was based on the language of the policies at issue and eliminates the insurers’ primary coverage defense.

The victory on the motion comes on the heels of a settlement with another of Pinnacle’s excess insurers, Arch Specialty Insurance Co., who paid Pinnacle $36,750,000 on March 14, bringing its total insurance recovery thus far to $141,750,000. In addition to the contractual claim under the policies, Pinnacle is pursuing a bad faith claim against Allianz and RSUI.

Source: Irell & Manella LLP