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Pinnacle Casino Owner Sues Insurance Companies

Pinnacle Entertainment's owner has sued three insurance companies. The Las Vegas-based Pinnacle claimed that the three companies carry over Hurricane Katrina damage at its former Casino Magic property in Biloxi, Miss. The insurers have blamed losses on flooding instead of a weather catastrophe of the kind specified in their policies.

In a 13-page lawsuit filed Tuesday, August 1, in the U.S. District Court in Las Vegas, by Pinnacle, said "Defendant were fully aware that hurricanes cause storm surge and flood." The Pinnacle accuses the insurance company carriers of fabricating arguments to dismiss their responsibility to pay.

Allianz Global Risks U.S. Insurance Co in Chicago and Arch Specialty Insurance Co in New York did not immediately respond to the comments. While the executive vice president at RSUI Indemnity Co. of Atlanta, David Leonard declined a comment.

A breach of contract and fraud is claimed by Pinnacle and seeks damages of $346.5 million. Pinnacle remained closed after the August 29th hurricane. The casino disputes the contentions by the insurance companies that it was not covered for business interruption loss at the damaged floating casino.

The court was asked by the lawsuit to declare Pinnacle's River City Casino and Hotel project in St. Louis County, Mo., for a replacement for Casino Magic Biloxi. The Pinnacle is entitled to collect full amount of its business interruption loss despite the pending sale.

In May, Pinnacle agreed to sell the Casino Magic property to Las Vegas-based Harrah's Entertainment.