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Insurers prevail in Greenbrier’s dispute over windstorm claim

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Insurers prevail in Greenbrier’s dispute over windstorm claim

Units of American International Group Inc., XL Group Ltd., Chubb Ltd. and Lloyd’s of London have prevailed in litigation with the Greenbrier resort in a dispute over business interruption losses and alleged bad faith stemming from a 2012 windstorm.

Sulphur Springs, West Virginia-based Greenbrier Hotel Corp.’s resort was hit a windstorm in June 2012, three days before a scheduled golf tournament, that caused widespread power outages and damage, according to Wednesday’s ruling by the U.S. District Court in Beckley, West Virginia, in Greenbrier Hotel Corp. et al. v. Lexington Insurance Co. et al.

Although the tournament went ahead as scheduled, Greenbrier said it suffered losses including physical damage to the hotel and facilities, extra work needed to prepare the golf course and facilities, extra salaries, wages and fringe benefits, adverse publicity and additional advertising and promotion expenses.

Litigation over the Greenbrier’s business interruption claim was filed against Lexington, a unit of American International Group Inc; XL Insurance America Inc., a unit of XL Group Ltd.; Ace American Insurance Co., a unit Ace Ltd., which became Chubb Ltd. after its merger with Chubb Corp.; Lloyd’s underwriters; Atlanta-based claims manager McLaren Young International Inc.; and Rocco M. Bianchi, who was assigned Greenbrier’s claims.

In an earlier ruling, the District Court ruled that appraisal was required under terms of Greenbrier’s policies. Each side selected an appraiser and then jointly selected an umpire.

Greenbrier claimed a $16.5 million business interruption loss and sought an additional $974,000 for extra expenses.

The insurers’ accounting firm calculated a $798,000 loss, which they paid. The umpire and the insurers’ appraiser primarily adopted the insurers’ accounting firm’s methodology.

Ruling on the validity of the appraisal award, the ruling said, “The appraisal decision is not erroneous on its face and the court will not re-analyze the facts and expert reports that the parties contracted to have assessed by an appraisal panel.”

“The Greenbrier’s challenge is precisely the type of claim courts are not to review, absent manifest error. Thus, the motion to vacate should be denied,” said the ruling.

The court also granted the insurers summary judgment. “The Greenbrier has not identified evidence either presently available or requiring discovery, that could permit a jury to find a breach of contract” or bad-faith damages, the court said.

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