MGM Resorts International is suing an insurance company for coverage related to the Oct. 1, 2017, shooting.
The casino company filed the lawsuit Wednesday, alleging Illinois-based Zurich American Insurance Co. breached its contract when it failed to pay defense costs for lawsuits that were filed against MGM after the shooting.
“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,” MGM spokesman Brian Ahern said.
Brent Allen, president of Allen Financial Insurance Group in Phoenix, said the case with Zurich hinges on the issue of coverage policy interpretation.
“MGM is now faced with paying all their defense costs, and they don’t like it,” Allen said.
The Route 91 Harvest festival shooting resulted in the death of 58 victims. In Wednesday’s case filing, MGM said more than 4,000 people are seeking compensation for claims related to the shooting. MGM is disputing any liability and is “vigorously defending itself in all of the cases,” it said in the lawsuit.
Zurich had sold MGM a primary commercial general liability insurance policy, setting a $1 million limit for each occurrence between July 1, 2017, and July 1, 2018. According to MGM, the insurance company promised to defend MGM from claims and lawsuits alleging bodily injury or property damage.
Zurich did not return a request for comment.
Allen said because general liability insurance policies cover so many areas, most come with a long list of 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 said.
According to MGM, it has to pay up to $500,000 for the defense of shooting-related claims, and Zurich is in charge of paying the rest, up to the point its limit of liability is exhausted by paying settlements or judgments.
“The Zurich Policy is designed and intended … to provide broad coverage for the most serious claims that MGM could face,” MGM said in the case. “Zurich has not fulfilled all of its obligations … (and) has failed to pay for all reasonable defense costs.”
MGM said the defense costs left unpaid by Zurich are in the “many millions of dollars,” and it contended the insurance company is risking the loss of “crucial attorneys, witnesses, experts, consultants and evidence, and threatening imminent damage to MGM.”
In part, MGM is seeking for Zurich to pay MGM the damages suffered from its alleged breach of duty, including the costs to defend underlying litigation, and its attorneys’ fees and costs of court in excess of $75,000.
Allen said it’s up to MGM to show Zurich was in breach of contract and acted in bad faith.
“MGM has to show where, because it’s in a contract, where Zurich has knowingly violated the terms of the insurance agreement,” he said.
Also, it could be hard for a company with the money and resources of MGM to receive sympathy from the judge on this case, Allen said.
It’s difficult for an insurance customer “that big to cry foul,” he said.