A Doorbuster Deal for Policyholders: NC Enterprise Courtroom Finds Policyholder-Pleasant State Legislation Applies to COVID-19 Protection Dispute
The North Carolina enterprise court docket not too long ago handed a win to policyholders in a COVID-19 enterprise interruption lawsuit arising from the pandemic-related closure of Tanger outlet facilities throughout the nation. Tanger Props. Ltd. P’ship v. ACE Am. Ins. Co., 2025 NCBC 66 (Oct. 27, 2025). Tanger’s insurers moved to dismiss the lawsuit on the idea that the insurance coverage insurance policies are ruled by Georgia regulation, not North Carolina regulation, the place the Supreme Courtroom has held that all-risk insurance policies should cowl loss ensuing from COVID-19 interruptions. Unpersuaded by the insurers, the court docket denied the movement discovering that Tanger established a sufficiently shut connection to North Carolina regulation.
Background
Tanger Retailers owns and function thirty-nine outlet facilities all through twenty states and is headquartered in North Carolina. Tanger obtained protection for its operations beneath all-risk insurance policies, which insured in opposition to “all dangers of direct bodily lack of or harm to property described” within the insurance policies and ensuing enterprise interruption loss.
Following the COVID-19 outbreak, governmental entities within the varied states by which Tanger operates retailers issued orders proscribing enterprise actions. Consequently, Tanger took motion, together with bodily modifying its properties, quickly shutting down areas and suspending enterprise actions. Tanger supplied discover of this loss to its insurers in April 2020. Its insurers denied protection contending that Tanger didn’t maintain any direct bodily lack of or harm to the property.
The North State Deli Determination
In late 2024, the Supreme Courtroom of North Carolina issued an opinion in N. State Deli, LLC v. Cincinnati Insurance coverage Co., by which it held that an all-risk insurance coverage coverage with no virus exclusion supplied protection for virus-related shutdowns resulting from authorities orders.
Following the choice, Tanger filed the protection motion in opposition to its insurers difficult their protection denial. Tanger additionally despatched a renewed demand letter to its insurers requesting reconsideration in mild of the North State resolution.
Thereafter, the insurers moved to dismiss Tanger’s claims.
The Motions to Dismiss
The Breach of Contract Declare
The insurers’ movement to dismiss centered on whether or not North Carolina regulation utilized to the interpretation of the insurance policies. The court docket defined that North Carolina courts persistently apply the precept of lex loci contractus in addressing battle of regulation points. The precept mandates the appliance of the substantive regulation of the state the place the final act to make a binding contract occurred. The insurers argued that this act occurred in Georgia when Tanger’s dealer obtained the insurance policies and accordingly, mandated the appliance of Georgia regulation.
Tanger disagreed, arguing that N.C.G.S. § 58-3-1 mandated that the insurance coverage contracting occurred in North Carolina and, thus, North Carolina regulation should apply to the dispute. The statute offers in pertinent half:
All contracts of insurance coverage on property, lives, or curiosity on this State shall be deemed to be made therein, and all contracts of insurance coverage the purposes for that are taken inside the State shall be deemed to have been made inside this State and are topic to the legal guidelines thereof.
The court docket famous that software of N.C.G.S. § 58-3-1 requires an in depth connection between North Carolina and the curiosity insured. The insurers argued that as a result of solely two of the thirty-nine retailers owned by Tanger are in North Carolina, there was not an in depth connection.
The court docket articulated after which analyzed the components important to figuring out whether or not the requisite shut connection exists. These components embody:
- the extent of the insured’s operations/contacts in North Carolina;
- whether or not the coverage is a business coverage;
- the insurer’s consciousness that it’s insuring a North Carolina firm;
- whether or not the insurance coverage coverage incorporates a selection of regulation provision; and
- whether or not the insurer is registered to do enterprise in North Carolina.
The court docket defined that the best weight is positioned on the primary issue. Thus. the truth that Tanger’s headquarters is positioned in Greensboro, North Carolina weighed closely in favor of discovering shut contacts. Moreover, Tanger is organized beneath the legal guidelines of North Carolina, operated two retailers within the state, and served over 1,300,000 clients in North Carolina throughout the coverage interval. Consequently, the court docket discovered that Tanger certainly had an in depth connection to the state.
The court docket additionally discovered that the remaining components to weigh in favor of Tanger. The insurance policies had been business insurance policies, the insurers had been conscious that Tanger’s headquarters is positioned in North Carolina, there was no selection of regulation provision within the insurance policies, and ACE and Liberty Mutual are licensed to do enterprise in North Carolina.
Accordingly, with all the components weighing in favor of Tanger, the court docket denied the insurers’ motions to dismiss the claims for breach of contract and declaratory judgment.
The UDTPA Declare
The court docket additionally individually thought-about whether or not Tanger’s claims for violations of North Carolina’s Unfair and Misleading Commerce Practices act primarily based on the insurers’ alleged violation of North Carolina’s Unfair Claims Settlement Act might proceed. Tanger alleged that the insurers violated seven subparts of N.C.G.S. § 58-63-15(11), which stemmed from the insurers’ refusal to rethink their preliminary denial after the North State Deli resolution was issued.
The court docket discovered that the declare might proceed as a result of the insurers failed to point out that case regulation clearly established that North Carolina didn’t allow a UDTPA declare beneath the circumstances. The court docket additionally pointed to 2 North Carolina federal courts that denied Rule 12 motions in instances alleging a breach of N.C.G.S. § 58-63-15(11) the place the plaintiff alleged the insurer didn’t revise its earlier place primarily based on new data. Thus, the UPTPA declare might additionally proceed.
Takeaways
Whereas the choice is no surprise in mild of North State Deli, the choice underscores the numerous function that selection of regulation has in an insurance coverage protection dispute. It’s important, due to this fact, that policyholders consider their declare beneath all doubtlessly relevant states’ legal guidelines to assist in setting essentially the most advantageous technique ought to it turn into essential to battle for protection.