Jamul Indian Village Development Corporation, the owner and operator of Jamul Casino in California, has filed a lawsuit against Lexington Insurance Company (Lexington), a wholly-owned subsidiary of American International Group (AIG).
The complaint, served on August 6, 2020, was filed due to Lexington’s denial of coverage for Jamul’s losses related to COVID-19. Jamul had three active “all risk” policies (policy) with Lexington when the Casino closed during the initial outbreak of the virus. Jamul’s lawsuit, case number CVJ-2020-0003-GC, filed in the Intertribal Court of Southern California alleges causes of action for Declaratory Relief, Breach of Contract, and Breach of the Implied Covenant of Good Faith and Fair Dealing (Bad Faith). Jamul has requested a jury trial.
“Jamul believes that Lexington didn’t interpret our policy correctly and has wrongly denied coverage,” said Erica M. Pinto, Chairwoman of the Jamul Indian Village Development Corporation Board of Directors. “We have an ‘all risk’ policy, which was intended to cover any and all risks. We believe that includes losses related to the pandemic.”
As mandated by tribal declaration and order, and consistent with local, state, and federal emergency declarations and orders related to COVID-19 at the time, Jamul Casino closed operations effective March 20, 2020, and remained closed for approximately two (2) months. Jamul’s lawsuit alleges that Lexington has now wrongly required “physical” damage or destruction of property to trigger coverage under the “Interruption by Civil Authority” provision of the policy, despite the fact that the word “physical” does not appear in this provision.
Additionally, Jamul asserts that Lexington is unreasonably relying on a “pollution exclusion” of the policy, which does not specifically exclude coverage for losses related to contagious diseases such as viral or bacterial infections. These types of communicable disease exclusions were included in many policies after the SARS outbreak of 2003, but there was no such language in the Jamul policy with Lexington.
Chairwoman Pinto added, “There are no virus or other remotely related exclusions in our policy. In fact, Lexington added language when our policy renewed this July for ‘communicable diseases,’ so, clearly, they know they are wrong but still don’t want to compensate us for our losses. It’s not fair or right, so we will hold them accountable to live up to the terms of our policy.” She continued, “We look forward to a quick resolution and payment of our claim so we can continue to help our people recover from this difficult situation.”
Jamul is seeking payment for its COVID-related losses, including business interruption damages, cleaning and disinfection expenses, and attorney’s fees and costs. The lawsuit notes that Jamul distributes revenues earned from the Casino’s operations to the Tribe, which uses those revenues to support governmental programs for elders, youth, health, safety, housing, and education. The Casino also provides significant financial support to the San Diego County Fire Department.