Detroit Entertainment LLC, owners of MotorCity Casino Hotel in Detroit, filed a lawsuit in Wayne County Circuit Court in Michigan against American Guarantee and Liability Insurance Company a subsidiary of the Swiss Zurich Insurance Group Ltd., after the commercial property insurer denied the casino’s claim for more than $270 million in Covid-19-related losses.
In its 55-page complaint, the casino states its policy covering the “physical loss of or damage” to its property requires a payout. MotorCity’s attorney J. Michael Huget wrote, “Coronavirus and Covid-19 caused direct physical loss of or damage to property at MotorCity. Coronavirus and Covid-19 also rendered MotorCity’s property unfit and unsafe for its normal usages, depriving Detroit Entertainment of its property.”
Huget also noted about 100 employees tested positive for Covid-19 last year, making the facility “uninhabitable, unsafe and unfit for their normal and intended uses–just as if asbestos, cat urine, ammonia, fumes or a salmonella outbreak was in the air or on surfaces of the premises.”
MotorCity President Brian Hall added, “The Coronavirus pandemic significantly impacted us, our employees and our community. Indeed, a very small percentage of our total workforce reportedly contracted Covid-19 since the pandemic first began,” He noted the casino has since implemented new protocols, contact tracing and quarantining policies. “Thus far, our insurance carrier has failed to honor our business insurance claims, necessitating this action. Our hope remains for an amicable resolution,” Hall stated.
MotorCity’s policy covers up to $750 million. Zurich officials stated they had identified minimal coverage totaling $100,000. According to the lawsuit, Zurich officials told MotorCity the policy includes exclusions for “interruption by communicable disease.” But Huget argues the policy does not exclude coverage in case of virus, communicable disease or pandemic and explicitly provides coverage in cases of civil or military authority, interruption by communicable diseases and other cases.
Huget said a virus deletion endorsement “removes, among other things, viruses and disease or illness causing agents from the Contamination Exclusion.” He also noted the insurer did not send an adjuster or any other representative to the casino.
MotorCity seeks recovery on lost earnings as well as extra expenses like personal protective equipment, plexiglass barriers and other mitigation efforts taken for the safety of employees and customers.
Governor Gretchen Whitmer closed Michigan casinos in mid-March through early August, when they could reopen at 15 percent capacity. They were shut once again on November 17 as Covid-19 cases increased statewide. MotorCity reopened on December 23 at 12.4 percent capacity. About 2,600 workers were furloughed; about 1,100 still are on leave as the theater, spa and other areas remain closed.
MotorCity revenue dropped year-over-year by 54.9 percent to $222.7 million in 2020, according to the Michigan Gaming Control Board. As of June 2020, MotorCity had paid $5.6 million in tax revenue to the city, a decrease of 93 percent from 2019, and $40.3 million to the state, a 57 percent drop, according to the lawsuit.
