Over 4,000 people through Las Vegas-based MGM Resorts International are suing Illinois-based Zurich American Insurance Company for compensation relating to the October 1, 2017 mass shooting incident in Mandalay Bay Resort. The MGM owned hotel left 58 people dead. In its lawsuit, the giant casino claims that the insurance company has failed to honor their end of the bargain by failing to provide the defense costs they had earlier promised.
Brian Ahern, MGM Spokesman said, ‘This dispute does not relate to coverage for a potential settlement and is limited to Zurich’s obligation to pay defense costs in this matter.’
The 2017 incident saw a lone shooter open fire in the Mandalay Bay Hotel from the 32nd Floor to the country music lovers who were attending the Route 91 Harvest festival. The incident saw more than 850 people injured. In the lawsuit presented at the US District Court in Las Vegas by MGM Resorts, the resort is suing Zurich American Insurance Company for; ‘breach of contract, declaratory relief, tortious breach of the implied covenant of good faith and fair dealing (bad faith) and violation of Nevada’s Unfair Claims Settlement Practices Act’.
MGM claims are that more than 4,000 people are seeking compensation as a result of the incident. Brian Ahern has however categorically stated that the lawsuit is about defense costs and not a settlement with the victims.
Commercial general liability
Zurich Insurance Company sold a commercial general liability to MGM Resorts that would cover them over the period between July 1, 2017 to July 1, 2018. The policy terms state that MGM is liable to pay defense costs of $500,000. Zurich American Insurance Company is on the other hand supposed to take care of the other defense costs which include the supplementary payments to a time the company exhausts its liability limits after payment of settlements.
The defense costs in the picture will range from; summonses, medical fees, attorney fees, investigative services, court fees, dispute resolution and process serving. This is what MGM Resorts is suing Zurich Insurance Company for.
Brent Allen, president of Allen Financial Insurance Group in Phoenix, claims that the outcome expected will solely hinge on the interpretation of the policy by the judge. He quotes, ‘MGM is now faced with paying all their defense costs, and they don’t like it’.
MGM claim that the unpaid costs amount to ‘many millions of dollars’. The resorts had earlier stated that the costs will go up to $800 million. In addition, MGM wants Zurich to pay for the attorney fees, court fees and litigation defense costs that are amounting to figure above $75,000. What is being expected is a heavy battle in court as Brent Allen anticipates. He says that many of the general liability policies that cover many areas are bound to have many standard exclusions. ‘With all insurance policies, you probably have more pages that are limitations and restrictions and definitions than you have in terms of coverage,’ he quotes.
He goes on to claim that MGM will have to prove how Zurich breached the contract and how they acted in bad faith. He says that MGM should expect no sympathy from the judge considering the resources and money the resort boasts.