After an expansion to the Atlantic City Tropicana Casino collapsed during construction, the New Jersey government temporarily shut down various impacted structures, including the main entry street to the Tropicana, a pedestrian bridge, the bus terminal, an existing parking structure, and the west hotel tower. The Tropicana otherwise remained fully operational, but experienced a decrease in patronage of the hotel and casino. The hotel owner and operator, Aztar, filed claims for loss with its various insurance carriers, including the “Excess Carriers.” All of the carriers denied business interruption coverage and contingent business interruption coverage. One of the carriers accepted the civil authority and ingress/egress coverage claims, and the others denied these claims as well. Aztar sued the carriers, and Aztar and the Excess Carriers filed cross-motions for partial summary judgment. The trial court ruled in favor of the Excess Carriers, determining that “interruption of business, whether total or partial” did not include a loss from decreased patronage at the Tropicana because the Tropicana remained fully operational and was not damaged by the collapse. The trial court also ruled that contingent business interruption coverage was not available because the expansion was not a “contributing property” and the loss from the decreased patronage was not a business interruption. The trial court permitted the Excess Carriers to file an application for attorneys’ fees, even though the applications were not timely filed, and granted those applications. Aztar appealed, arguing that the trial court erred in denying its cross-motions for summary judgment and in granting summary judgment to the Excess Insurers, and in granting attorneys’ fees to the Excess Carriers.
The Arizona Appeals Court affirmed, but did so on alternative grounds. The Court held that the trial court erred in determining as a matter of law that Aztar’s claims could not fall within the business interruption coverage provision of the policies because the hotel and casino still had the same operational capacity because the term “interruption of business, whether total or partial” could include a decreased patronage in some circumstances. The Court found that the trial court did not err in granting summary judgment to the Excess Carriers on the issue of contingent business interruption coverage because the expansion was not yet a contributing property to the Tropicana. The Court found that the trial court erred in finding a factual issue regarding whether the expansion was a covered property on the date of collapse, but agreed with the trial court’s implicit ruling that the damaged property must be a covered property to trigger the coverage provisions. Reasoning that the language of the policy was clear that the expansion would become a covered property on April 1, 2004 (after the collapse occurred), the trial court reversed the trial court’s ruling on the issue. On the attorneys’ fees issue, the Appeals Court ruled that under ARCP 54(g), the trial court had the discretion to extend the time for filing claims for attorneys’ fees, thus it was not improper to allow the Excess Carrier’s untimely applications.
Judge Barker authored the opinion, Judges Portley and Swann concurred.
Posted By: Kristin L. Windtberg