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Law360 (November 2, 2020, 5:32 PM EST) -- Mt. Hawley Insurance Co. has sued a Nashville bar run by country singer Dierks Bentley in Tennessee federal court, seeking a declaration that it's off the hook for the pub's COVID-19-related losses and that a pollution exclusion plainly bars coverage.
The carrier asked the court to hold that the bar failed to allege physical damage on or near its property, and the policy's pollution and "ordinance of law" exclusions precluded all losses in relation to the pandemic and government-mandated closures, according to the suit filed Oct. 29.
Whiskey Row Nashville LLC, an Arizona limited liability company doing business as Dierks Bentley's Whiskey Row, filed a separate suit against Mt. Hawley in Arizona state court in late July before the carrier removed the suit to Arizona federal court a month later.
The bar filed a loss claim in April and the carrier denied coverage in late May. In the Arizona federal court suit, Whiskey Row alleged Mt. Hawley wrongfully denied coverage without conducting a thorough investigation. The bar holds a commercial property policy with an $8 million coverage limit for business interruption, according to the suit.
Whiskey Row has maintained that it suffered devastating revenue loss after being forced to suspend operations in March, and that its very existence was at risk. The bar said Mt. Hawley "misrepresented" the Tennessee governor's executive orders as mere "guidelines" precluded by the policy's "enforcement of any ordinance or law" exclusion.
The bar has argued that since the governor's orders did not say the novel coronavirus was spreading on its property, Mt. Hawley cannot avoid paying claims by citing the policy's pollutant exclusion.
And nowhere did the orders state that pollutants or viruses were discharging or spreading from its properties' surface, Whiskey Row has said, so the exclusion was not triggered.
On Thursday, Mt. Hawley said the policy's "enforcement of any ordinance or law" and "pollution" exclusion strictly bars coverage, and it owes Whiskey Row no coverage. The carrier said the policy's civil authority provision does not apply since the pub cannot demonstrate that any government orders were issued due to property damage on or nearby its property.
The policy does not cover the pub's financial losses during the pandemic, Mt. Hawley said, and the bar was not able to show it experienced any direct physical loss or damage as defined by the policy.
Representatives from the parties could not be immediately reached for comment Monday.
Mt. Hawley is represented by Jonathan D. Stewart of Rainey Kizer Reviere & Bell PLC.
Counsel information for Whiskey Row was not available.
The case is Mt. Hawley Insurance Co. v. Whiskey Row Nashville LLC, case number 3:20-cv-00931, in the U.S. District for the Middle District of Tennessee.
--Editing by Marygrace Murphy.
For a reprint of this article, please contact reprints@law360.com.
