Straight From The Annals Of “Only In Vegas”

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In the last few years, the Las Vegas Convention and Visitor’s authority has run a promotion that claims that what happens in Vegas stays in Vegas.  When they wrote that line, I guess the Convention Authority forgot the events of 20 years ago at the “Tailhook Convention”.  Not only did the shenanigans (and worse) that transpired at that event get huge airplay and result in significant political fallout, it also generated legal opinions.

For those of you who are too old or too young to remember what happened, the details of that event that took place at the Hilton Hotel, Las Vegas can be found HERE.

So how does this relate to insurance coverage?  It just so happens that when the victims of the aviators started filing suits in state and federal court they named not only Tailhook but they also named Hilton Hotel alleging lack of security.  As every good corporation does, Hilton asked the Tailhook Association’s carrier, Insurance Company of North America, (INA) to defend it against the suits.  The Hilton argued that it was an insured by definition under the Tailhook policy because it was Tailhook’s “real estate manager”.  Hilton argued that the term “real estate manager” was ambiguous and therefore, it should be entitled to be considered an insured under the INA policy.

INA filed a declaratory relief action in U.S. District Court asking that it sort out the rights and interests of the parties.  Ins. Co. of No. Amer. v. Hilton Hotels Corp., 908 F.Supp. 809 (D. Nev. 1995).  As would be expected, the Court looked to the underlying complaints and found (surprisingly enough) that no one even alleged that Hilton had failed to properly perform the activities of a “real estate manager”.  The Court granted Summary Judgment in favor of INA.

Not satisfied, Hilton appealed to the Ninth Circuit.  But their appeals were rebuffed.  Ins. Co. of No. Amer. v. Hilton, 110 F.3d 715 (9th Cir. 1997).

The coverage lesson learned is that when you are interpreting a policy, you must look not only at who is the Named Insured (Class I) but you must also consider all those who might be considered to be insureds by definition. (Class II)  See Tores v. Farmers Ins. Exch., 106 Nev. 340, 793 P.2d 839 (1990).  While attempts by the Hilton to garner coverage for itself under the INA policy were a stretch, whether a party claiming coverage is an insured is an issue that must always be considered when interpreting a policy.