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Pinnacle Entertainment Sues Insurance Companies

Pinnacle entertainment has sued three insurance carriers over damages sustained by its former Casino Magic property in Biloxi, Miss. due to hurricane Katrina.

Pinnacle claimed that the three insurance companies improperly blamed the casino's losses on flooding instead of a weather catastrophe that was included in their policies.

"Defendants were fully aware that hurricanes cause storm surge and flood," the plaintiff said in a 13-page lawsuit filed Tuesday in U.S. District Court in Las Vegas. The lawsuit bears the accusation that the insurance companies were fabricating arguments to limit or wholly eliminate their responsibility to pay.

Allianz Global Risks U.S. Insurance Co. in Chicago and Arch Specialty Insurance Co. in New York, two of the defendants, did not immediately respond to requests for comment while Dave Leonard, executive vice president at RSUI Indemnity Co. of Atlanta, declined comment. Pinnacle is also suing the three companies for breach of contract and fraud and is seeking damages of $346.5 million.

Pinnacle also disagrees with the insurers' argument that the damages were not covered for business interruption loss. Pinnacle has agreed to sell the Casino Magic Property to Harrah's Entertainment Inc. in May. Pinnacle shares closed Wednesday at $26.32, up $1.32 or 5.3 percent, on the New York Stock Exchange.