Aspen Specialty Insurance Company v. The Quarters Condominium Owners Association, Inc.
3:23-cv-01201
M.D. Tenn.Jun 18, 2024Background
- This case concerns a dispute over insurance coverage for The Quarters Condominium Owners Association, Inc. (“Quarters”) after its Nashville property was damaged in the Christmas Day Bombing of December 25, 2020.
- Aspen Specialty Insurance Company ("Aspen") issued a condominium insurance policy covering the Quarters, with $4.3 million already paid out following the bombing.
- The core dispute is whether the "Guaranteed Replacement Cost" (GRC) endorsement applies, or if an exclusion for “buildings designated as historic structures or landmarks” precludes further payment.
- The property is a “contributing property” within an historic district on the National Register of Historic Places (NRHP), but it has never been individually designated as a historic structure or landmark.
- Quarters moved for judgment on the pleadings, seeking a judicial declaration that the exclusion does not bar coverage, while Aspen argued the exclusion applied because of the property’s status as part of a historic district.
- The court treated Quarters’ motion as one for partial judgment on the pleadings.
Issues
| Issue | Plaintiff's Argument (Aspen) | Defendant's Argument (Quarters) | Held |
|---|---|---|---|
| Does the GRC exclusion bar additional coverage for the property? | Property’s status as a "contributing property" in an NRHP district triggers exclusion for historic structures. | Only applies to properties individually designated as historic structures/landmarks, not merely contributing within a district. | Exclusion does not apply; coverage under GRC endorsement available. |
| Is "designated by any...agency as an historic structure or landmark" ambiguous? | Not ambiguous; property fits exclusion due to district status. | Not ambiguous; individual designation is required, which did not occur here. | Not ambiguous; requires individual, formal designation. |
| Does local historic zoning overlay amount to individual designation? | Inclusion in historic overlay suffices for exclusion. | Overlay applies to area, not to individual property designation as historic structure/landmark. | Individual designation required; overlay is insufficient. |
| Should coverage disputes be resolved in favor of the insured? | Policy is clear; insurer’s interpretation should govern. | Any ambiguity should be construed against insurer and for coverage. | Ambiguity (if present) construed in favor of the insured. |
Key Cases Cited
- Garrison v. Bickford, 377 S.W.3d 659 (Tenn. 2012) (ambiguities in insurance contracts are construed in favor of the insured)
- Travelers Indem. Co. of Am. v. Moore & Assocs., 216 S.W.3d 302 (Tenn. 2007) (general rules for interpreting insurance contracts)
- Allstate Ins. Co. v. Watson, 195 S.W.3d 609 (Tenn. 2006) (ambiguity means literal meaning does not control; interpret in favor of insured)
- Allstate Ins. Co. v. Watts, 811 S.W.2d 883 (Tenn. 1991) (exclusions and limitations construed against insurer)
- S.M.R. Enters., Inc. v. S. Haircutters, Inc., 662 S.W.2d 944 (Tenn. Ct. App. 1983) (expressio unius est exclusio alterius maxim in contract interpretation)