Catlin Syndicate Ltd. v. Imperial Palace of Mississippi, Inc.

Catlin Syndicate Ltd. (Catlin) (plaintiff) insured Imperial Palace of Mississippi, Inc. (Imperial Palace) (defendant) against business-interruption losses. The policy specified that, in measuring loss, due consideration would be paid to the insured’s actual preloss business and probable business thereafter had no loss occurred. A severe hurricane damaged several Mississippi casinos, including Imperial Palace’s casino, forcing them to shut down. In seeking indemnification for this interruption in its business, Imperial Palace claimed that its loss should be measured by the difference between its preloss casino revenue and actual postloss revenue, the trajectory of which was significantly higher because Imperial Palace was able to reopen sooner than its competitors and draw away their customers. Catlin sued for a declaratory judgment limiting its liability to the difference between Imperial Palace’s preloss revenue and likely revenue had the preloss revenue trajectory continued without interruption. The federal district court entered an interlocutory order ruling that Imperial Palace’s case should proceed in accordance with the Fifth Circuit’s Finger Furniture decision. Imperial Palace appealed from the interlocutory order to the Fifth Circuit, which acknowledged that Finger Furniture arose under Texas law and therefore did not control the outcome of Catlin’s case. However, the Fifth Circuit rejected Imperial Palace’s attempts to distinguish Finger Furniture and held that state law and policy language in the two cases were materially equivalent.