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 premise that the insurance coverage insurance policies are ruled by Georgia legislation, not North Carolina legislation, 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 legislation.

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 underneath all-risk insurance policies, which insured in opposition to “all dangers of direct bodily lack of or injury to property described” within the insurance policies and ensuing enterprise interruption loss.

Following the COVID-19 outbreak, governmental entities within the numerous states wherein Tanger operates retailers issued orders limiting enterprise actions. Because of this, 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 injury 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., wherein it held that an all-risk insurance coverage coverage with no virus exclusion supplied protection for virus-related shutdowns because of 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 gentle of the North State determination.

Thereafter, the insurers moved to dismiss Tanger’s claims.

The Motions to Dismiss

The Breach of Contract Declare

The insurers’ movement to dismiss targeted on whether or not North Carolina legislation utilized to the interpretation of the insurance policies. The court docket defined that North Carolina courts constantly apply the precept of lex loci contractus in addressing battle of legislation points. The precept mandates the applying of the substantive legislation 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 applying of Georgia legislation.

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 legislation should apply to the dispute.  The statute supplies 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 functions for that are taken throughout 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 a detailed 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 a detailed connection.

The court docket articulated after which analyzed the components important to figuring out whether or not the requisite shut connection exists.  These components embrace:

1. the extent of the insured’s operations/contacts in North Carolina;
2. whether or not the coverage is a industrial coverage;
3. the insurer’s consciousness that it’s insuring a North Carolina firm;
4. whether or not the insurance coverage coverage incorporates a alternative of legislation provision; and
5. 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 situated in Greensboro, North Carolina weighed closely in favor of discovering shut contacts. Moreover, Tanger is organized underneath the legal guidelines of North Carolina, operated two retailers within the state, and served over 1,300,000 clients in North Carolina through the coverage interval. Because of this, the court docket discovered that Tanger certainly had a detailed connection to the state.

The court docket additionally discovered that the remaining components to weigh in favor of Tanger. The insurance policies had been industrial insurance policies, the insurers had been conscious that Tanger’s headquarters is situated in North Carolina, there was no alternative of legislation 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 of 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 may 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 determination was issued.

The court docket discovered that the declare may proceed as a result of the insurers failed to indicate that case legislation clearly established that North Carolina didn’t allow a UDTPA declare underneath the circumstances.  The court docket additionally pointed to 2 North Carolina federal courts that denied Rule 12 motions in circumstances alleging a breach of N.C.G.S. § 58-63-15(11) the place the plaintiff alleged the insurer did not revise its earlier place primarily based on new data. Thus, the UPTPA declare may additionally proceed.

Takeaways

Whereas the choice isn’t a surprise in gentle of North State Deli, the choice underscores the numerous function that alternative of legislation has in an insurance coverage protection dispute.  It’s important, due to this fact, that policyholders consider their declare underneath all doubtlessly relevant states’ legal guidelines to assist in setting essentially the most advantageous technique ought to it turn into essential to struggle for protection.