The owner of the Playland Arcade on the Santa Monica Pier is suing an insurance company for allegedly failing to meet its obligation to pay for business losses the attraction incurred during periods it was shut down under government orders because of the coronavirus pandemic.

George Gordon Enterprises Inc. brought the Los Angeles Superior Court lawsuit on Monday against AGCS Marine Insurance Co. and insurance brokerage firm Worldwide Facilities LLC, seeking unspecified damages. The suit alleges breach of the duty to pay a covered insurance claim and breach of the duty of good faith and fair dealing against AGCS as well as negligence by Worldwide Facilities.

“As a result of AGCS’s wrongful claim denial, plaintiff was left to shoulder massive losses that threaten to wipe out its business,” the suit alleges.

An AGCS representative could not be immediately reached for comment.

The policy at issue was in effect from May 2, 2019, to May 2, 2020, and the plaintiff had paid the $10,830 premium, according to the suit. The arcade submitted a claim for business income loss to AGCS, and the insurer had a legal obligation to promptly conduct a fair, balanced and thorough investigation of the claim, the suit states.

In fact, AGCS made no investigation other than to research legal theories and court rulings that could possibly support denying the claim while ignoring those that supported paying it, the plaintiff alleges.

In its denial letter last June, AGCS said the executive shutdown orders were issued in response to the pandemic in order to stop the spread of the coronavirus and that any losses sustained by the arcade were not because of a “covered peril” under the policy, according to the plaintiff’s court papers.

Although the arcade owner believes coverage exists under its policy with AGCS, in the event the insurer’s position is upheld, George Gordon Enterprises says it plans to alternatively seek relief against Worldwide Facilities for its alleged negligent procurement of the policy on the arcade’s behalf.

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