Opinion

IN THE UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF TENNESSEE

WESTERN DIVISION

)

)

MEMPHIS IN MAY INTERNATIONAL )

FESTIVAL, INC., )

)

)

Plaintiff,

v. ) No. 2:24-cv-02327-SHM-tmp

)

ARCH INSURANCE COMPANY, )

)

)

Defendant. )

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION

FOR SUMMARY JUDGMENT

Before the Court is Defendant Arch Insurance Company’s

(“Arch”) Motion for Summary Judgment. (ECF No. 33.) For the

reasons below, the Court GRANTS IN PART and DENIES IN PART

Defendant’s motion.

I. Background

The following factual background is undisputed unless

otherwise noted. Plaintiff Memphis in May International

Festival, Inc. (“MIM”) has owned and operated the Beale Street

Music Festival (“Festival”) and World Champion Barbecue

Competition (“Competition”) (collectively “Events”) in Memphis,

Tennessee, since the 1970s. (ECF No. 36 ¶ 1.) MIM contracted

with the Memphis River Parks Partnership (“MRPP”) for a venue to

hold the 2023 Festival and Competition. (Id. at ¶ 2.) The parties

executed the Tom Lee Park Rental Agreement (“Park Agreement”) on

March 3, 2023, which designated Tom Lee Park, Ashburn-Coppock

Park, and surrounding staircases as the places MIM would use to

host the Events (collectively referred to as “the Park”). (Id.

at ¶¶ 2-3.) The Park Agreement included a section allocating

responsibility to pay for damage to the Park that might arise

during the period MIM would use the Park.1 (Id. at ¶ 6.) The City

of Memphis would pay the first $350,000 in damages. (Id.) MIM

agreed to place money into an escrow account to pay for the next

$250,000 in damages. (Id.) If damages exceeded $600,000, the

City of Memphis would pay an additional $150,000 in damages.

(Id.) MIM agreed to be responsible for all damages exceeding

$750,000. (Id.) The Park Agreement also required MIM to obtain

1 Plaintiff MIM appears to dispute this characterization of the Park

Agreement, but does not state specifically what part of the

characterization it disputes and does not dispute the existence or

language of the Agreement. (ECF No. 36 ¶ 6.) MIM responds similarly

to the description of the Park Agreement and the Arch Policy

throughout its response to Arch’s statement of facts. (See generally

ECF No. 36.) Therefore, the facts of the existence and language of

the Park Agreement are undisputed and the characterization in this

factual background is limited to this section and is not a legal

conclusion.

comprehensive general liability insurance and deliver it to MRPP.

(Id. at ¶ 10 and ECF No. 33-10 at 21.)

MIM obtained a comprehensive general liability insurance

(“CGL”) policy (“the Policy”) from Defendant Arch covering the

May 2023 Events. (ECF No. 36 at ¶ 11.) The CGL Policy is the

subject of this case.

On September 8, 2023, after MIM had hosted the Events, MRPP

sued MIM in Tennessee state court for breach of contract. MRPP

alleged that MIM had failed to pay for the damage to the Park

required by the Park Agreement. (See ECF No. 33-10 at 2-10 and

ECF No 36 at ¶ 19.) MRPP alleged $1,425,366 in damages, so that

MIM would owe an additional $675,366. (See ECF No. 33-10 at 2-

10 and ECF No 36 at ¶¶ 21-22.) MRPP’s complaint seeks $675,366

plus interest and attorneys’ fees. (ECF No. 33-10 at 2-10.) The

state court case is ongoing. See generally Ct. Docket, Riverfront

Development v. Memphis in May, CT-3703-23 (Tenn. Cir. Ct. Div.

9, filed September 8, 2023) https://circuitdata.shelbycountytn

.gov/crweb/ck_public_qry_doct.cp_dktrpt_frames?backto=D&case_id

=CT-3703-23&begin_date=&end_date=.

In August 2023, relying on the Arch Policy, MIM asserted

policy coverage for and defense against the damages MRPP sought

in its state case. (ECF No. 36, ¶¶ 25, 27.) Arch denied coverage

on October 13, 2023. (Id. at ¶ 26.) On April 2, 2024, Plaintiff

MIM filed suit against Defendant Arch in Tennessee court seeking

(1) a declaratory judgement that the Policy covers the damages

MRPP seeks from MIM in its state case, (2) breach of contract,

(3) promissory estoppel, and (4) statutory bad faith under Tenn.

Code Ann. § 56-7-105. (Id. ¶ 28.) Arch removed MIM’s suit to

this Court on May 16, 2024, and brought the instant motion for

summary judgment on all claims on June 12, 2025. (ECF No. 33.)

II. Jurisdiction and Choice of Law

The Court has diversity jurisdiction under 28 U.S.C.

§ 1332. A federal district court has original jurisdiction of

all civil actions between citizens of different states “where

the matter in controversy exceeds the sum or value of $75,000,

exclusive of interest and costs.” 28 U.S.C. § 1332(a)(1).

For purposes of jurisdiction, MIM is a citizen of the State

of Tennessee, with its principal place of business in Memphis,

Tennessee. (ECF No. 1 ¶ 4.) Arch is a foreign corporation

organized under Missouri law with its principal place of business

in Jersey City, New Jersey, making it a citizen of Missouri and

New Jersey. (Id. at ¶¶ 5-6.) The parties are completely diverse.

The amount in controversy exceeds $75,000. In its

complaint, MIM seeks damages “in no event less than the total

sum of any damages that may be awarded to MRPP in the MRPP

Litigation and the total sum of all costs and fees incurred by

Plaintiff in defending itself in connection with said

Litigation.” (ECF No. 1-3 at 15.) MRPP seeks $675,366 in damages

from MIM in the state court case. (ECF No 33-10. at 8.) Even if

MIM is successful in defending the state court case, it will

seek attorneys’ fees from Arch for defending that case.

Plaintiff also alleges statutory bad faith under Tenn. Code Ann.

§ 56-7-105, which carries with it attorneys’ fees in this case.

(ECF No. 1-3. at 14.) Given the possibility that MIM will lose

its state court case and the attorneys’ fees at issue in both

cases, it is more likely than not that the amount in controversy

exceeds $75,000. The amount in controversy requirement is

satisfied. Williamson v. Aetna Life Ins. Co., 481 F.3d 369, 377

(6th Cir. 2007) (holding that jurisdiction under § 1332 is proper

where the amount in controversy “more likely than not” exceeds

$75,000).

Federal courts sitting in diversity apply the choice-of-law

rules of the forum state. See Performance Contracting Inc. v.

DynaSteel Corp., 750 F.3d 608, 611 (6th Cir. 2014); Mountain

Laurel Assurance Co. v. Wortham, No. 217CV02660TLPTMP, 2018 WL

5269829, at *3 (W.D. Tenn. Oct. 23, 2018). Where insurance

contracts lack a choice-of-law provision, “Tennessee courts

apply the substantive law of the state in which the policy was

issued and delivered.” Standard Fire Ins. Co. v. Chester–

O’Donley & Assocs., Inc., 972 S.W.2d 1, 5 (Tenn. Ct. App. 1998);

see also Tenn. Code Ann. § 56–7–102 (“[E]very contract [issued

by any insurance company doing business in Tennessee] shall be

held as made in [Tennessee] and construed solely according to

the laws of [Tennessee]”).

The Policy does not have an explicit choice of law

provision. It was issued in Tennessee to MIM. (ECF No. 33-8 at

5-7.) Neither party disputes the application of Tennessee law,

and both parties argue citing Tennessee law. The Court applies

Tennessee law.

III. Standard of Review

Under Federal Rule of Civil Procedure 56(a), a court must

grant a party’s motion for summary judgment “if the movant shows

that there is no genuine dispute as to any material fact and the

movant is entitled to judgment as a matter of law.” Fed. R. Civ.

P. 56(a). The moving party must show that the nonmoving party,

having had sufficient opportunity for discovery, lacks evidence

to support an essential element of its case. See Fed. R. Civ. P.

56(c)(1); Peeples v. City of Detroit, 891 F.3d 622, 630 (6th

Cir. 2018). All facts, evidence, and inferences drawn therefrom

must be “viewed in the light most favorable to the non-moving

party.” Brown v. Bd. of Educ. of Shelby Cnty. Sch., 47 F. Supp.

3d 665, 695 (W.D. Tenn. 2014).

The Court “is not required to speculate on which portion of

the record the nonmoving party relies, nor is it obligated to

wade through and search the entire record for some specific facts

that might support the nonmoving party's claim.” InterRoyal Corp.

v. Sponseller, 889 F.2d 108, 111 (6th Cir. 1989). Although

summary judgment must be used carefully, it “is ‘an integral

part of the Federal Rules as a whole, which are designed to

secure the just, speedy, and inexpensive determination of every

action’ rather than a ‘disfavored procedural shortcut.’”

F.D.I.C. v. Jeff Miller Stables, 573 F.3d 289, 294 (6th Cir.

2009) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 327

(1986)).

Questions of law are decided by the Court. Where, as here,

the Court has jurisdiction based on diversity of citizenship and

Tennessee law applies, the Court must “anticipate or predict how

the Tennessee Supreme Court would decide the issues based on all

of the available data.” Landmark Am. Ins. Co. v. HECO Realty,

LLC, No. 1:20-CV-02631-STA-JAY, 2024 WL 4920771, at *7 (W.D.

Tenn. Sept. 24, 2024) (citing Fox v. Amazon.com, Inc., 930 F.3d

415, 422 (6th Cir. 2019). That task includes considering the

published opinions of the Tennessee Court of Appeals. Lindenberg

v. Jackson Nat'l Life Ins. Co., 912 F.3d 348, 358 (6th Cir.

2018). Unpublished Tennessee Court of Appeals opinions are

considered persuasive, nonbinding authority, unless otherwise

noted. Tenn. Sup. Ct. R. 4(G)(1). Federal Courts must be

“extremely cautious about adopting substantive innovation in

state law.” Fox, 930 F.3d at 422.

IV. Analysis

The Tennessee Supreme Court has held that “[i]nsurance

policies are, at their core, contracts,” and “questions regarding

the extent of insurance coverage present issues of law involving

the interpretation of contractual language” in the policies.

Garrison v. Bickford, 377 S.W.3d 659, 663–64 (Tenn. 2012). Courts

interpret insurance policies using the same tenets applied to

other contracts. Id. at 664. The policy should be construed as

a whole, in a reasonable and logical manner with terms given

their ordinary meaning, with the primary purpose “to ascertain

and give effect to the intent of the parties.” Id., citing Clark

v. Sputniks, LLC, 368 S.W.3d 431, 441 (Tenn.2012)

Insurance contracts are “strictly construed in favor of the

insured, and if the disputed provision is susceptible to more

than one plausible meaning, the meaning favorable to the insured

controls.” Garrison, 377 S.W.3d at 664; citing Tata v. Nichols,

848 S.W.2d 649, 650 (Tenn.1993). A “strained construction may

not be placed on the language used to find ambiguity where none

exists.” Id., citing Farmers–Peoples Bank v. Clemmer, 519 S.W.2d

801, 805 (Tenn.1975).

Here, the parties disagree about the meaning of the Policy

and whether it applies to the damages MRPP seeks in the state

court litigation. This Court construes each relevant clause of

the Policy in accordance with the above principles stated above.

A. Duty to Defend vs. Duty to Indemnify

MIM asserts in its complaint that Arch owes MIM both the

“duty to defend” and the “duty to indemnify” in the state

litigation against MRPP. (ECF No. 1-3 at ¶¶ 55, 71-72.) The

parties appear to agree that the duty to defend is determinable

at the summary judgment stage, while disagreeing about whether

the duty to indemnify can be resolved at that stage. (Compare

ECF No. 33-2 at 4-5 with ECF No. 35 at 10-13.)

B. Duty to Defend

For the following reasons, Arch has a duty to defend MIM in

the state court proceeding. Determining an insurer’s duty to

defend is a matter of law that “may be resolved by summary

judgment where there are no genuine issues of material fact.”

Travelers Indem. Co. of Am. v. Moore & Assocs., Inc., 216 S.W.3d

302, 305 (Tenn. 2007). A duty to defend arises “solely” from

“the allegations contained in the underlying complaint.” Id.,

citing St. Paul Fire & Marine Ins. Co. v. Torpoco, 879 S.W.2d

831, 835 (Tenn.1994). “An insurer's duty to defend the insured

is triggered when the underlying complaint alleges damages that

are within the risk covered by the insurance contract and for

which there is a potential basis for recovery.” Forrest Const.,

Inc. v. Cincinnati Ins. Co., 703 F.3d 359, 363 (6th Cir. 2013)

(emphasis in original) (internal quotations omitted). An insurer

cannot “refuse to defend an action against its insured unless it

is plain from the face of the complaint that the allegations

fail to state facts that bring the case within or potentially

within the policy's coverage.” Drexel Chem. Co. v. Bituminous

Ins. Co., 933 S.W.2d 471, 480 (Tenn. Ct. App. 1996) (internal

quotations omitted).

The duty to defend arises if even one of the allegations in

the concurrent state court case is covered by the insurance

policy. Travelers, 216 S.W.3d at 305. Although the duty to

indemnify is based on facts found by the trier of fact, the duty

to defend is “based on the facts alleged.” Id. Doubt about

whether the claimant in the other case has stated a cause of

action that falls within the insurance policy’s coverage “is

resolved in favor of the insured.” Id.

The Court must determine whether MRPP’s allegations in the

state court case against MIM are “within or potentially within”

the Policy’s coverage. Drexel Chem. Co., 933 S.W.2d at 480.

Doing so requires the Court to interpret the Policy.2

1. The meaning of “occurrence”

Arch’s Policy provides that Arch “will pay those sums that

[MIM] becomes legally obligated to pay as damages because of

‘bodily injury’ or ‘property damage’ to which this insurance

applies.” (ECF No. 36 at ¶ 12) The Policy provides that the

insurance “applies to ‘bodily injury’ and ‘property damage’ only

if: (1) the ‘bodily injury’ or ‘property damage’ is caused by an

‘occurrence’ that takes place in the ‘coverage territory.’” (Id.

at ¶ 13) The Policy defines “occurrence” as “an accident,

2 MIM argues that the Court should examine the “entire factual

situation in determining whether the underlying suit alleges claims

that trigger the insurer’s duty to defend,” citing Main St. Am.

Assurance Co. v. Marble Sols., LLC, 557 F. Supp. 3d 844, 856 (W.D.

Tenn. 2021). (ECF No. 35 at 11.) The language from Marble Sols,

which is absent context, is unpersuasive. Under Tennessee law,

analysis of the duty to defend is limited to the underlying

complaint. In Marble Sols, the court did not look beyond the

underlying complaint. It considered the factual situation alleged

in the underlying complaint to determine whether the insurer had a

duty to defend. See Marble Sols., 557 F. Supp. 3d at 855-858. The

quote MIM uses from Marble Sols cites Gassaway v. Travelers Ins.

Co., 439 S.W.2d 605, 607 (1969), which discussed the “entire factual

situation” in determining whether an insurer was liable for damages

resulting from an underlying lawsuit, not whether the insurer had a

duty to defend that lawsuit. Id. The court in Marble Sols used the

standard the Court uses here, examining “solely…the allegations

contained in the underlying complaint.” Marble Sols., 557 F. Supp.

3d at 851 (citing Travelers, 216 S.W.3d at 305).

including continuous or repeated exposure to substantially the

same general harmful conditions.” (Id.)

“The insuring agreement should be construed before the

exclusions.” Travelers, 216 S.W.3d at 306. Both parties agree

that, for purposes of summary judgment, the damage to Tom Lee

Park that MRPP alleges constitutes “property damage.” (Compare

ECF No. 33-2 at 7 with ECF No. 35 at 12.) The parties dispute

whether the damage to the Park was an “occurrence” as defined by

the Policy. (ECF No. 33-2 at 6 and ECF No. 35 at 10.) Where, as

here, the relevant factual record is undisputed, deciding whether

there was an “occurrence” under an insurance policy is proper

when deciding a motion for summary judgment. See Travelers, 216

S.W.3d at 304-08.

The Policy defines “occurrence” as “an accident, including

continuous or repeated exposure to substantially the same general

harmful conditions.” (ECF No. 36 at ¶ 13.) In Travelers, the

Tennessee Supreme Court concluded that “accident” in a CGL policy

means “an unforeseen or unexpected event.” 216 S.W.3d at 308.

That can include “negligent acts of the insured causing damage

which is undesigned and unexpected.” Id. The Tennessee Supreme

Court “consider[s] foreseeability from the perspective of the

insured.” Id. In general, this Court must construe the Policy

in favor of the insured. See Travelers, 216 S.W.3d at 305 (“Any

doubt as to whether the claimant has stated a cause of action

within the coverage of the policy is resolved in favor of the

insured”); see also Planet Rock, Inc. v. Regis Ins. Co., 6 S.W.3d

484, 491 (Tenn. Ct. App. 1999) (giving the underlying complaint

a “liberal construction” in finding for the insured); see also

Am. Justice Ins. Reciprocal v. Hutchison, 15 S.W.3d 811, 815

(Tenn. 2000) (“If the ambiguous language limits the coverage of

an insurance policy, that language must be construed against the

insurance company and in favor of the insured”).

Defendant Arch’s central argument is that Plaintiff MIM

expected the damage to the Park because of clauses in the Park

Agreement between MIM and MRPP. (ECF No. 33-2 at 6-10.) Those

clauses include the damages allocation clause described above,

the parties’ general plan to inspect the Park before and after

the Events, and other minor clauses that require MIM to make

reasonable efforts to minimize damage to the Park. (Id.) As

stated, the damages allocation clause allocated the first

$350,000 in damages to the Park to the City of Memphis, the next

$250,000 in damages to MIM, the next $150,000 in damages to the

City, and all additional damages to MIM. (ECF No. 36 at ¶ 6.)

Arch argues that this clause in the Park Agreement means that

MIM foresaw damages to the Park, even those in excess of

$750,000, making those damages expected and not based on an

“accident” or an “occurrence” under the Policy. (ECF No. 33-2 at

6-10.) Plaintiff MIM responds that the damages in excess of

$750,000, for which it is being sued in the concurrent state

court case, were unexpected and are based on an “occurrence”

under the Policy. (ECF No. 35 at 12-13.)

The alleged damages in excess of $750,000 are based on an

“occurrence” under the Policy. MRPP’s complaint in the state

court case does not specifically allege what caused the damage

to the Park.3 (ECF No. 33-10 at 2-10.) The complaint does allege

the dollar amount of damages, along with an attached exhibit

detailing some of the specifics of the alleged damages. (ECF No.

33-10 at 7.) The complaint also alleges that damages exceeded

the $750,000 the parties allocated in the Park Agreement.

One might argue that MIM expected some damage to the Park,

but one cannot know from the complaint how the damage was alleged

to have occurred, and one cannot conclude from the undisputed

record that MIM expected damages to the Park to exceed $750,000.

MIM’s failure to expect the amount of damage alleged is evidenced

by the fact that the Park Agreement required MIM to purchase CGL

insurance to cover “property damages,” presumably because MIM

would be liable for all damages to the Park in excess of $750,000.

(ECF No. 33-10 at 21.) The same provision required MIM to present

3 The most specific statement in the complaint is that the damages

resulted “from [MIM’s] 2023 festivals.” (ECF No. 33-10 at 3.) That

statement comes from the complaint’s introduction, not its set of

numbered factual allegations. (Id.)

the CGL policy it purchased to MRPP and prevented MIM from

canceling that policy without notifying MRPP. (Id.)

The before-and-after Park inspections and the contractual

requirements that MIM take steps to minimize damage to the Park

do not demonstrate that MIM expected damages in excess of

$750,000. Merely taking precautions for an event is not

conclusive evidence that the precaution taker expected the event.

One would not say that one “expects” a fire because one owns a

fire extinguisher. Arch’s logic would imply that purchasing

insurance to cover an event means that one expects the event,

making insurance contracts meaningless. See Crestbrook Ins. Co.

v. Crosby, No. 2:22-CV-2406-MSN-ATC, 2023 WL 3767085, at *6 (W.D.

Tenn. June 1, 2023) (“some outcomes that are foreseeable are

nevertheless ‘accidents’: Otherwise, a liability policy would be

rendered almost meaningless”) (citing Travelers, 216 S.W. 3d at

308-09).4

For purposes of determining the duty to defend, the damages

in excess of $750,000 that MRPP claims in the concurrent state

court case were based on an “occurrence” under the Policy. The

state court complaint does not specify the manner in which the

damages alleged occurred, and the undisputed record demonstrates

4 Although Crestbrook discusses this point in the context of whether

particular negligent acts are covered by an insurance policy, the

principle is the same as the principle here.

that MIM did not expect damage to the Park to exceed $750,000.

Because there was an occurrence, the state court claim, at this

stage of the analysis, alleges damages “within or potentially

within the policy's coverage.” Drexel Chem. Co., 933 S.W.2d at

480.5

2. Exclusion 2.j.(1), of Property “Rent, Owned, or

Occupied.”

After Tennessee courts interpret the insuring agreement,

they consider its exclusions. Travelers, 216 S.W.3d at 306. For

Arch to have a duty to defend, the MRPP state court allegations

must not fall under an exclusion and must come “within or

potentially within the policy's coverage.” Drexel Chem. Co.,

933 S.W.2d at 480.

5 MIM argues that this Court should decide that the damage MRPP

alleges to the Park is an “occurrence” based on a letter from Mark

Thompson of American Specialty, Arch’s authorized agent, to MIM.

(ECF No. 35 at 7, 12.) In that letter, Thompson says that the damage

to the Park constitutes an “occurrence,” but denies coverage on

different grounds. (ECF No. 33-8.) Inconsistent, out-of-court

positions taken by Arch and its agents are not relevant to defining

“occurrence” for purposes of the present analysis. An insurer may

give alternate or incorrect legal reasons for its denial of coverage

and not be estopped from correcting or offering different reasons

for denying coverage in court. See Richards Mfg. Co. v. Great Am.

Ins. Co., 773 S.W.2d 916, 919 (Tenn. Ct. App. 1988) (“if the insurer

gives proper notice of a reservation of rights it will not waive its

.

rights to rely on a breach of condition… It is not required that the

reason given for the insurer's position be legally correct. The

position taken may be correct, but for other legal reasons. It is

the insurer's conclusion regarding the existence or non-existence of

certain coverage that must be clearly and fairly communicated to the

insured, not its legal reasons therefor”)

Arch argues that the alleged damage to the Park is excluded

by 2.j.(1) of the Policy. (ECF No. 33-2 at 10-13.) That exclusion

provides that the insurance does not apply to “property damage

[to]…property you own, rent, or occupy.”6 (Id. at 11.) Arch

argues that MIM “rented” and/or “occupied” the Park, so that the

property damage alleged falls under the exclusion. (Id. at 11-

13.) Arch relies on the language of the Park Agreement between

MIM and MRPP, the property relationship between the two parties

established by that Agreement, and the meaning of the word

“rent”. (Id.)

MIM argues that it did not “rent” or “occupy” the Park, but

had a license to use the Park for the Events, so that the alleged

damage to the Park is not excluded by the 2.j.(1) exclusion.

(ECF No. 35 at 15-18.) In the alternative, MIM argues that there

is an exception to the exclusion that covers the damage alleged

in the state court case. Section 2.j. in relevant part, provides

that exclusion 2.j.(1) does “not apply to ‘property damage’…to

premises…rented to you for a period of seven or fewer consecutive

days.”7 (ECF No 35 at 15-17.) MIM argues that, even if it rented

the Park, the exception applies because any rental or occupation

did not exceed seven consecutive days, but lasted only during

6 “you” in this context refers to MIM, the insured party.

7 This exception to the 2.j.(1) exclusion does not include the terms

“occupy” or “own.”

the Events that took place during May 5-7, 2023, and May 17-20,

2023. (Id.)

MIM argues that “there are genuine and material factual

disputes as to whether MIM ‘rented’ the [Park] for the Events.”

(Id. at 17.) However, MIM disputes no facts relevant to this

issue. Instead, it argues that the Park Agreement between MIM

and MRPP is a license. That is, MIM disputes the legal

characterization of the contractual relationship between itself

and MRPP governing MIM’s use of the Park.

The Court need only interpret the Policy and the Park

Agreement to decide whether MIM “rented” or “occupied” the Park

for purposes of determining the duty to defend. Both are issues

of law, not fact. See Clark, 368 S.W.3d at 441 (Tenn. 2012)

(“[t]he question of the extent of insurance coverage is a

question of law involving the interpretation of contractual

language”) and Guiliano v. Cleo, Inc., 995 S.W.2d 88, 95 (Tenn.

1999) (“[t]he interpretation of a contract is a matter of law”).

It is for the Court to interpret the Park Agreement and to decide

whether MIM “rented” or “occupied” the Park during the relevant

time.8

8 The Parties do not dispute the existence or content of the Park

Agreement. (ECF No. 36 at ¶2.) They only disagree about its

meaning.

Insurance policy exclusions “must be construed against the

insurance company and in favor of the insured.” Martin v.

Powers, 505 S.W.3d 512, 517 (Tenn. 2016) (citing Travelers Ins.

Co. v. Aetna Cas. & Sur. Co., 491 S.W.2d 363, 367 (Tenn. 1973)).9

That standard is consistent with the standard that “contracts of

insurance are strictly construed in favor of the insured, and if

the disputed provision is susceptible to more than one plausible

meaning, the meaning favorable to the insured controls.” Martin,

505 S.W.3d at 517.

The Policy does not define “rent” or “occupy.” When a

policy does not define words, Tennessee courts give “those words

their usual, natural and ordinary meaning.” Marlin Fin. &

Leasing Corp. v. Nationwide Mut. Ins. Co., 157 S.W.3d 796, 809

(Tenn. Ct. App. 2004) (internal citations omitted). Black’s Law

Dictionary defines “rent” as “to pay for the use of another's

property.” RENT, Black's Law Dictionary (12th ed. 2024). The

parties cite no cases and the Court is aware of no cases decided

under Tennessee law that define the phrase “own, rent, or occupy”

9 Arch quotes language from a 1998 Tennessee Court of Appeals case

that says “[e]xclusions should not be construed broadly in favor of

the insurer, nor should they be construed so narrowly as to defeat

their intended purpose.” Standard Fire Ins. Co., 972 S.W.2d at 8.

That appears to be a slightly different standard for interpreting

insurance policy exclusions than the standard used by the Tennessee

Supreme Court in Martin in 2016. The Tennessee Supreme Court does

not appear to have cited language from Standard Fire since deciding

Martin. The Tennessee Supreme Court standard controls.

in the context of a CGL insurance policy, although that phrase

is relatively common in CGL policies. See 9 Couch on Ins. §

126:16 (“The two most common are exclusions related to property

in the insured's ‘care, custody, and control’ and to property

‘owned, rented, or occupied’ by the insured”).

Determining whether and for how long MIM rented or occupied

the Park initially appears straightforward. MIM signed the Park

Agreement with MRPP for use of the Park. (ECF No. 36 at ¶¶ 2-3.)

MIM was defined as a “renter” in that Agreement. (Id. at ¶ 4.)

The Agreement provided that MIM would “occupy and use the Park

from April 22,2023-May 27, 2023.” (Id.) That included necessary

set up and disassembly days surrounding the two Events. (Id.)

The period is longer than seven consecutive days, the exception

to the exclusion that MIM argues applies. MIM nowhere alleges

that it performed the Park Agreement on different dates or in a

way different than the Agreement provides. The Policy itself

refers to the Park as premises that MIM owns, rents, or occupies.

(ECF No. 33-5 at 15.) Based on the language of the Park Agreement

and the ordinary use of the words “rent” and “occupy,” it might

appear that MIM rented or occupied the Park for more than seven

consecutive days, so that the damage alleged by MRPP is excluded

by the Policy.

However, the inquiry does not end there. Tennessee courts

have not merely taken the language used in a contract conveying

a property interest to define the property interest at stake.

In Williams v. Starace, for instance, the Court of Appeals

concluded that a contract titled “Agreement of Purchase and Sale”

of a property was a lease of that property, not a sale. Williams

v. Starace, No. 85-162-II, 1985 WL 4074, at *1 (Tenn. Ct. App.

Oct. 29, 1985) (“This Court concludes that the ‘Agreement of

Purchase and Sale’ was, in effect a lease of the described

property”). The court analyzed the language of the contract

itself and the rights accorded the parties. Id. A federal court

applying Tennessee law took a similar approach in United States

v. Anderson Cnty., Tenn., 575 F. Supp. 574 (E.D. Tenn. 1983),

aff'd, 761 F.2d 1169 (6th Cir. 1985). There, the court examined

the property interest actually conveyed to a party (Union

Carbide) rather than the label the parties applied to the

property interest. The court reasoned that: “[i]n determining

what interest Union Carbide may have in [the property], however,

the Court is not bound by the terminology used by the parties to

the Contract.” Anderson Cnty., 575 F. Supp. at 576. This Court

must therefore consider the language and the rights accorded MIM

in the Park Agreement, and not merely characterize the Agreement

as a rental agreement based on its title and terminology.

MIM argues that, despite its title, the Park Agreement was

in fact a “license” to use the Park for the April 22 to May 27

period. (ECF No. 35 at 15-18.) MIM argues that, because the

Agreement was a mere license, it did not “rent” or “occupy” the

Park during that period, and that, if it did “rent” the Park, it

did so for fewer than seven consecutive days. (Id.) As stated,

this Court is aware of no cases decided under Tennessee law that

have collectively defined “own, rent, or occupy” or their

variations in a CGL contract. The only case of which the Court

is aware that speaks to this issue is Paktank Louisiana, Inc. v.

Marsh & McLennan, Inc., 688 F. Supp. 1087, 1092 (E.D. La. 1988).

In Paktank, decided under New York law, the court concluded that

an insurance policy’s exclusion of property damage to property

“owned or occupied by or rented to the insured” did not apply to

a dock the insured had a license to use. Id. at 1093.10 This

Court will apply that principle here. If MIM can show that it

had a license to use the Park during the term of the Agreement,

the damage to the property would not be excluded by exclusion

2.j.(1).

“A ‘license,’ with respect to real estate, is an authority

to do a particular act or series of acts on another's land

without possessing any estate therein.” Lange v. Sullivan, No.

W201801218COAR3CV, 2019 WL 2024581, at *2 (Tenn. Ct. App. May 8,

10 The Paktank court did find that the policy excluded the dock

damage because the insured “used” the property in accordance

with a different exclusion mandating that damage to “property

used by the insured” was excluded from coverage, an exclusion

not found in Arch’s Policy. Paktank, 688 F. Supp. at 1093.

2019) (citing Barksdale v. Marcum, 7 Tenn. App. 697, 708, perm.

app. denied (Tenn. July 14, 1928)). Licenses are “not

assignable, and [are] generally revocable at the will of the

licensor.” Anderson Cnty., 575 F. Supp. at 578, (citing

Barksdale, 7 Tenn. App. At 708). Licenses “generally do[] not

create an interest in land.” Lange, 2019 WL 2024581, at *2.

MIM cites Anderson Cnty., to demonstrate the difference

between a license and a lease.11 In that case, discussed above,

the court applied Tennessee law in deciding how to determine the

property relationship between the U.S. government, which owned

a piece of land, and Union Carbide, which used that land.

Anderson Cnty., 575 F. Supp. 574. In addition to the factors

cited above, the court wrote that, “[g]enerally, during the

existence of a lease, the tenant is the owner of the premises

and entitled to exclusive possession.” Id. at 577. The absence

of exclusive possession favored finding a license. Id. In

Anderson Cnty., stringent limitations on using and altering the

property weighed in favor of finding a license rather than a

lease. Id. at 578 (“control over the business of [Union Carbide]

11 Although the Policy uses the term “rent” rather than “lease,” the

two are largely synonymous. See LEASE, Black's Law Dictionary (12th

ed. 2024) “A contract by which a rightful possessor of real property

conveys the right to use and occupy the property in exchange for

consideration, usu. rent” (emphasis added). Even if the two are not

synonymous, the analysis in Anderson Cnty. is relevant in deciding

what a “license” is and is therefore relevant here.

and rights of entry and inspection retained by the owner of the

realty are so extensive as to negative any notion that a lease

of the realty was intended or effected”).

Summarizing the caselaw above, when determining whether a

party’s property rights constitute a license, Tennessee law

considers (1) whether there is specific authority to do a

particular act or series of acts on another's land without

possessing any estate therein; (2) whether the right is

assignable; (3) whether the rights are revocable at the will of

the licensor; (4) whether the user of property has exclusive

possession; and (5) the extent to which the use is limited and

regulated by the owner.

a. Authority to do particular acts

Factor (1) addresses the purpose of the agreement. “A

‘license,’ with respect to real estate, is an authority to do a

particular act or series of acts on another's land without

possessing any estate therein.” Lange, 2019 WL 2024581, at *2.

Section 1 of the Park Agreement provides that “[MRPP] hereby

grants permission to [MIM] to use the Park…for the Beale Street

Music Festival and World Championship Barbeque Cooking Contest.”

(ECF 33-10 at 11.) The Agreement later provides that “[MIM] will

use the Park for the Event (which includes the Beale Street Music

Festival and World Championship Barbeque Cooking Contest)…and

for no other purpose whatsoever without the prior written consent

of [MRPP].” (Id.) The language in the Agreement is clear that

MIM’s use of the Park is limited to a particular set of acts on

MRPP’s land during and surrounding the Events. It is not a

general grant of an interest in a property, but a specific grant

of the authority to do particular acts on a piece of property.

Factor (1) therefore favors finding that MIM’s interest is a

license.

b. Assignability

Factor (2) considers assignability of the potential

property interest. Section 24 of the Park Agreement’s terms and

conditions provides that “[MIM] shall not assign this Agreement.”

(ECF No. 33-10 at 22.) A license is not assignable. Barksdale,

7 Tenn. App. at 708. Factor (2) therefore favors finding a

license between MIM and MRPP.

c. Revocability

Factor (3) says that licenses are “generally revocable at

the will of the licensor.” Id. The Park Agreement does not

appear to be revocable at the will of the licensor, MRPP. No

clause in the agreement explicitly grants or denies revocability.

The third clause of the terms and conditions provides that

“[MRPP] shall have the right to immediately terminate this

Agreement upon the failure to comply with the Park Agreement,”

but later provides that MIM has a right to cure any such failure.

(ECF No. 33-10 at 15.) Therefore, this factor weighs against

finding a license for MIM to use the Park.

d. Exclusive Possession

Factor (4) addresses exclusive possession. Absence of a

right of exclusive possession suggests a license rather than a

lease. See Anderson Cnty., 575 F. Supp. at 577-78. The Park

Agreement provides that “[a]ny exclusive use of the Park by

Renter shall be limited to the places and times shown in this

Agreement (May 5 - 7, 2023 and May 17 - 20, 2023) or as otherwise

agreed in writing by Renter and Partnership.” (ECF No. 33-10 at

16.) Neither party has offered a written agreement altering this

section.

Section thirteen of the terms and conditions lays out

policies to maintain public access to the Park, even during the

“rental period.” (Id. at 19.) It provides that “[MIM] shall

ensure uninhibited public access from the Riverside Drive

pedestrian bridge across Ashburn-Coppock Park to Martyrs Park at

all times. To provide connected access to the riverfront

throughout the month of May, the Bluff Walk must remain open at

all times during the Event rental period unless closed at the

written direction of Memphis Police Department.” (Id.)

Section three of the terms and conditions provides that

“Representatives of [MRPP] shall be designated by [MRPP] prior

to the event and shall have the right to enter all portions of

the Park at any time and on any occasion, including entering the

portion of the Park rented to [MIM].” (Id. at 15.) Thus, the

owner retained a right to enter at all times throughout the

Agreement.

The Park Agreement does not grant a right of exclusive

possession to MIM. Factor (4) therefore weighs in favor of

finding that the Park Agreement grants a license.

e. Owner Regulation of Use

Factor (5) addresses the owner’s regulation of the

property’s use. In Anderson Cnty., the court found that “control

over the business of [the licensee] and rights of entry and

inspection retained by the owner of the realty are so extensive

as to negative any notion that a lease of the realty was intended

or effected.” The court therefore found a license rather than

a lease in the agreement to use the land. Anderson Cnty., 575

F. Supp. at 574. In the Park Agreement, MIM’s use of the Park

is also highly regulated by the terms and conditions. For

example, section five regulates the sale of alcohol by vendors

at the Park. (ECF No. 33-10 at 16.) Section eight mandates

approval by MRPP of any electrical, plumbing, carpentry, and

other services MIM requires during its use of the Park. (Id.)

Section eleven mandates how and when litter is to be removed and

limits the use of pyrotechnics at the Park. (Id. at 17.) Section

twelve prevents MIM from erecting fences at certain Park

locations. (Id. at 19.) Section fourteen bars MIM from driving

stakes into the ground at certain locations. (Id. at 20.) The

Operation Policy and Procedures detail the specific paths MIM’s

vendors, subcontractors, employees, and other associated persons

may use during the Events. (Id. at 23.)

In short, the Park Agreement’s regulations of MIM’s

activities are so extensive that characterizing MIM’s interest

in the Park as a leasehold or rental would be improper. Like

the agreement in Anderson Cnty., this factor favors finding a

license.

f. Conclusion

Factors (1), (2), (4), and (5) favor finding that MIM had

a license from MRPP to use the Park. Only factor (3) weighs

against that conclusion. Even if Factor (4), addressing

exclusive possession, were construed to weigh in favor of finding

a rental during the Event dates of May 5-7 and 17-20, 2023, that

period would fall under the exception to exclusion 2.j.(1).

Arch argues that this result would create a “moral hazard”

because other courts have held that the primary function of “own,

rent, or occupy” exclusions is to “prevent the insured from using

a liability insurance policy as if it provided property insurance

and insulate against the moral hazard problem where an insured

has less incentive to take precaution owing to the existence of

insurance.” Charter Oak Fire Ins. Co. v. Coleman, 273 F. Supp.

2d 903, 912 (W.D. Ky. 2003) (internal citations omitted). That

argument is unpersuasive for three reasons.

First, finding MIM had a license to use the Park accords

with the general principle stated in Charter Oak. “Tennessee

Courts have uniformly held that licenses create no interest in

real property.” Lange, 2019 WL 2024581 at *2.

Second, the Park Agreement itself mandates and incentivizes

MIM to take precautions to minimize damage to the Park. The

Park Agreement explicitly provides measures MIM must take to

protect the Park.12 The Park Agreement’s damage allocation

clauses also incentivize MIM to minimize damage to the Park.

(ECF No. 33-10 at 11-12.)

Third, the Policy provides some level of property insurance

in exception K(1), discussed below. That section provides an

exception to exclusion 2.j.(1). Exception K(1) provides that

12 Clause seven states that “[MIM] shall promote positive messages

about the Park and urge its vendors, volunteers, BBQ team members

and guests, and ticket buyers to respect the Park to avoid damaging

the Park property”. The Operation Policy and Procedures state that

“[MIM] agrees to survey all irrigation prior to laying out and set

up the festival to minimize damage done to the system” and states in

detail other precautionary measures MIM must take to protect the

Park. (ECF No. 33-10 at 12 and 23-24.)

exclusion 2.j.(1) “do[es] not apply to damages to premises while

rented to you, or temporarily occupied by you with permission of

the owner, caused by fire, lightning, explosion, smoke, aircraft

or vehicles, riot or civil commotion, vandalism, leakage from

fire extinguishing equipment or water damage.” (ECF No. 33-5 at

59.) The “moral hazard” principle, that the exclusion must be

read so as to “prevent the insured from using a liability

insurance policy as if it provided property insurance”, does not

clearly apply to the Policy at issue here, because the Policy

does provide some level of property insurance.

Because MIM did not “own, rent, or occupy” the Park, but

had a license, in the language of the Park Agreement, to “use

the Park for the Event[s],” (ECF No. 33-10 at 11.) the alleged

damage to the Park is not excluded by exclusion 2.j.(1) of the

Policy.

3. Exclusion 2.a., of damages “expected or intended”

The Policy includes a different exclusion that Arch argues

applies to MRPP’s Park damages claims. Section 2.a. excludes

“property damage expected or intended from the standpoint of the

insured.” (ECF No. 36 at ¶ 16.) Arch argues, for many of the

reasons considered above in the section analyzing the term

“occurrence,” that MIM “expected” the damages to the Park and

that the exclusion therefore applies. (ECF No. 33-10 at 17-18.)

“Expected or intended” clauses are common in insurance

policies. See generally 31 A.L.R.4th 957 (1984). The Supreme

Court of Tennessee has decided that, “in order to find that an

intended or expected acts exclusion applies, it must be

established that the insured intended the act and also intended

or expected that injury would result.” Tennessee Farmers Mut.

Ins. Co. v. Evans, 814 S.W.2d 49, 55 (Tenn. 1991) (emphasis in

original). Whether the insured expected and intended the acts

and consequences are “separate and distinct inquiries.” Id. The

“purpose of such exclusionary language is to prohibit the use of

insurance to provide indemnity for civil tort liability that

results from an insured's intentional wrongdoing.” Id. at 54.

Arch makes no argument and identifies nothing in MRPP’s

state court complaint alleging that MIM “intended” to damage the

Park. (ECF No. 33-2 at 17-18.) Arch also makes no argument that

MIM intentionally committed specific acts for which harm to the

Park was reasonably foreseeable. (Id.) If Arch were to contend

that the “act” was hosting the Events, the exclusion would be so

broad so as to swallow much of the Policy. It would be

inconsistent with the general purpose established by the Supreme

Court of Tennessee that such exclusions are to prevent liability

resulting “from an insured’s intentional wrongdoing.” Tennessee

Farmers Mut. Ins. Co., 814 S.W.2d at 54. Insurance policy

exclusions “must be construed against the insurance company and

in favor of the insured.” Martin, 505 S.W.3d at 517. Tennessee

Courts have typically held this exclusion to apply to instances

of specific, intentional, harmful acts. See Tennessee Farmers

Mut. Ins. Co., 814 S.W.2d at 56 (concluding that the exclusion

applied because a woman intended to injure someone by burning

money from a safety deposit box) and Metro. Prop. & Cas. Ins.

Co. v. Buckner, 302 S.W.3d 288, 297 (Tenn. Ct. App. 2009)

(applying the exclusion to acts by a pair of teenage brothers

who fired BB guns at the interstate). Exclusion 2.a. does not

exclude the damage to the Park that MRPP alleges in the state

court case.13

4. Vandalism

Section K(1) in the “excess policy” portion of the Policy

provides that the relevant exclusions, including exclusion

2.j.(1) discussed above, “do not apply to damages to premises

while rented to you, or temporarily occupied by you with

13 Arch cites language from Tennessee Farmers Mut. Ins. Co. that

“[i]t is immaterial that the actual harm was of a different

character or magnitude or nature than that intended.” 814 S.W.2d at

55. This principle governing the kind of harm “expected or

intended” from an action is limited to the analysis of “expected or

intended” exclusions, and not a general statement of the definition

of “expected” that would affect the analysis of “occurrence” above.

Id.

permission of the owner, caused by…riot or civil commotion, [or]

vandalism.” (ECF No. 33-5 at 59.) The parties appear to agree

that, if the damage to the Park were the result of vandalism,

this exception to the exclusions would apply and the Policy would

cover the alleged damage to the Park, triggering the duty to

defend. (Compare ECF no. 33-2 at 16-17 with ECF No. 35 at 18-

19.)

A duty to defend arises solely from “the allegations

contained in the underlying complaint.” Travelers, 216 S.W.3d

at 305. “The pleading test for determination of the duty to

defend is based exclusively on the facts as alleged rather than

on the facts as they actually are.” St. Paul, 879 S.W.2d at

835. Doubts about whether the claimant in the concurrent case

has stated a cause of action that falls within the insurance

policy’s coverage are “resolved in favor of the insured.”

Travelers, 216 S.W.3d at 305.

Section K(1) applies to premises “rented” to or “temporarily

occupied” by the Plaintiff. (ECF No. 33-5 at 59.) The Court has

concluded that, because MIM had a license to use the Park, it

did not “rent” or “occupy” the Park in the sense of the “own,

rent, or occupy” exclusion. That analysis applies to the term

“rent” here, but not necessarily to the term “temporarily

occupy.” Deciding whether MIM “temporarily occupied” the Park

at this stage, however, is unnecessary, because MRPP’s complaint

does not allege facts that trigger the clause.

MRPP’s complaint does not allege acts of civil commotion or

vandalism that might have damaged the Park. (ECF No. 33-10 at 2-

10.) The complaint does not allege or describe how the damage

occurred at all, beyond generally alleging that it occurred

“from” the Events. (Id.) MRPP’s complaint is insufficient to

trigger Arch’s duty to defend based on this exception to the

exclusions. Although it is possible that facts could emerge to

make this clause relevant in the course of litigation in this

case or in the state court case, the complaint does not allege

sufficient facts here. Therefore, this exception does not

require Arch to defend in the state court case.14

Because MIM had a license to use the Park, the damage to

the Park alleged by MRPP in the state court suit against MIM

falls within the Policy, triggering Arch’s duty to defend. The

Court DENIES Arch’s motion for summary judgment on MIM’s breach

of contract claim that Arch failed to fulfill its duty to defend.

14 This conclusion does not mean the exception will be irrelevant

when determining Arch’s duty to indemnify. Facts may arise in the

state case that may trigger this clause although those facts are not

alleged in the complaint.

C. The Duty to Indemnify

The duty to indemnify is distinct from the duty to defend.

“The duty to defend is based on the facts alleged, while the

duty to indemnify is based upon the facts found by the trier of

fact.” Travelers, 216 S.W.3d at 305.

Arch argues that it is entitled to summary judgment on its

duty to indemnify. (ECF No. 33-2 at 4-6.) Tennessee courts and

courts applying Tennessee law typically refrain from deciding

the duty to indemnify at the summary judgment stage, especially

when the underlying case has yet to be resolved. See Marble

Sols., 557 F. Supp. 3d at 859–60 (“Because the duty to indemnify

turns on the facts as determined by a trier of fact, courts have

held that this question is not amenable for determination at the

summary judgment stage”, collecting cases); see also St. Paul,

879 S.W.2d at 834 (holding that the duty to indemnify “issue is

not appropriate for summary judgment”); Policeman's Ben. Ass'n

of Nashville v. Nautilus Ins. Co., No. M2001-00611-COA-R3CV,

2002 WL 126311, at *8 (Tenn. Ct. App. Feb. 1, 2002) (“[b]ecause

an insured's duty to indemnify is dependent upon the outcome of

a case, any declaration as to the duty to indemnify is premature

unless there has been a resolution of the underlying claim”

(internal citations omitted)). MIM disputes facts that may or

may not emerge in the state court case, such as the causes of

the damage to the Park, which may affect this case. (ECF No. 35

at 19.) Summary judgment on this issue at this stage would be

premature.

The Court therefore DENIES Arch’s motion for summary

judgment on MIM’s claim of breach of contract for violation of

Arch’s duty to indemnify.

D. Promissory Estoppel

Arch also seeks summary judgment on MIM’s promissory

estoppel claim. (ECF No. 33-2 at 19.) MIM alleges that Arch is

promissorily estopped by representations of its agents that Arch

or its representatives would provide a policy that would cover

damage to the Park and delivered a policy that did not. (ECF No.

1-3 at 13-14.)

This claim depends on whether the Policy covers the damage

to the Park that MRPP alleges. The Court has concluded that the

Policy includes a duty to defend MIM in the state court case.

The Court has not determined whether the Policy includes a duty

to indemnify in that case. Therefore, it is unclear at this

stage whether Arch has failed to fulfill its promise to deliver

a policy that would cover the damage MRPP alleges, let alone

whether Arch is estopped. That precludes the Court at this stage

from determining whether Arch is promissorily estopped by the

representations of its representatives.

The Court DENIES Arch’s claim for summary judgment on MIM’s

promissory estoppel claim.

E. Statutory Bad Faith

Arch argues for summary judgment on MIM’s statutory bad

faith claim arising under Tenn. Code Ann. § 56-7-105. (ECF No.

33-2 at 20-21.) Arch argues that § 56-7-105 does not apply to

CGL policies, like the Policy in this case, (Id.), citing For

Senior Help, LLC v. Westchester Fire Ins. Co., 515 F. Supp. 3d

787, 800 (M.D. Tenn. 2021) and Tennessee Farmers Mut. Ins. Co.

v. Cherry, 213 Tenn. 391, 394, 374 S.W.2d 371, 372 (1964). MIM

concedes that those authorities preclude a bad faith claim on

the Policy at issue here. (ECF No. 35 at 22.)

The Court GRANTS Arch’s motion for summary judgment on

MIM’s statutory bad faith claim.

V. Conclusion

For the reasons above, the Court DENIES IN PART and GRANTS

IN PART Defendant’s motion for summary judgment. The Court

DENIES Defendant’s motion for summary judgment on Plaintiff’s

promissory estoppel claim and its breach of contract claims,

including its duty to defend claim. The Court GRANTS Defendant’s

motion for summary judgment on Plaintiff’s statutory bad faith

claim.

So ordered this 30th day of March, 2026.

/s/ Samuel H. Mays, Jr.

SAMUEL H. MAYS, JR.

UNITED STATES DISTRICT JUDGE