Two insurers can't avoid Tanger Outlets' lawsuit seeking coverage for more than $50 million in pandemic losses, North Carolina's business court ruled, finding the retail outlet chain sufficiently connected its insured interests to its operations in North Carolina.

The decision from Judge Mark A. Davis is a setback for Ace American Insurance Co. and Liberty Mutual Fire Insurance Co., which had argued that because most of Tanger's outlets were located outside of North Carolina, that state's law should not be applicable. But Judge Davis held that North Carolina law should apply because Tanger adequately alleged a close connection between the state and the interests insured by Tanger's policies.

The venue is notable because North Carolina's top court handed policyholders a rare win last year when it found that the insuring phrase "direct physical loss" included the loss of use of property due to COVID-19 public health orders, a key issue in the Tanger suit.

"The choice of law issue is of great importance here because — as defendants assert and Tanger does not dispute — North Carolina is the only jurisdiction across the country whose courts have interpreted similar policy provisions as providing coverage for the type of claims asserted by Tanger in this case," Judge Davis wrote in a 26-page decision.

In reaching his finding, Judge Davis noted that Tanger is headquartered in Greensboro, North Carolina — a detail that was represented in the chain's insurance policies — and served over 1.3 million customers in North Carolina during the relevant policy periods. Two of Tanger's outlets that suffered losses were also located within North Carolina, Judge Davis added.

The insurers also didn't include choice-of-law provision language in the policies specifying a forum for litigation, another key factor in the judge's determination.

"Had defendants desired the application of a particular state's substantive law, they could have included a choice of law provision in the policies, but they did not do so," Judge Davis said.

In a September hearing, attorneys for the insurers said that the court should look to Georgia state law, where the insurers said the policy was delivered to Tanger's broker. Applying North Carolina state law would also violate the insurers' due process rights, as it conflicts not only with Georgia law but with the law of nearly every other state housing Tanger locations, the insurance companies further argued at the hearing.

Tanger sued its insurers in March 2025, alleging the carriers had breached their contracts by failing to provide the "all risk" coverage they promised after the pandemic and related government shutdown orders halted business.

Notably, North Carolina is one of two states, the other being New Hampshire, where top courts have made rulings more conducive to pandemic coverage suits surviving the dismissal stage. In 2024, the North Carolina Supreme Court ruled in North State Deli v. Cincinnati Insurance that the presence of COVID-19 and related government orders can cause "physical loss or damage" to property and trigger insurance coverage.

Policyholders did not get a full win despite North State Deli, however, as the state high court unanimously ruled in a separate "companion case" that a contamination exclusion applied to bar coverage for clothing retailer Cato Corp.'s claims against its insurer.

Representatives of the parties didn't immediately respond to comment requests.

Tanger Properties Limited Partnership is represented by Robert Gilbert and Sam Barrows of Latham & Watkins LLP and Benjamin DeCelle, Richard Worf and Robert Harrington of Robinson Bradshaw & Hinson PA.

Ace American Insurance Co. is represented by Richard Goetz, Andrew Levine, and Zoheb Noorani of O'Melveny & Myers LLP and Jennifer Van Zant, Agustin Martinez and Gabrielle Supak of Brooks Pierce McLendon Humphrey & Leonard LLP.

Liberty Mutual Fire Insurance Co. is represented by Melissa D'Alelio and Sandra Badin of Robins Kaplan LLP and Nicholas Goanos of Butler Weihmuller Katz Craig LLP.

The case is Tanger Properties Limited Partnership v. Ace American Insurance Co. et al., case number 25CV005614-400, in the North Carolina Business Court.