MANHATTAN (CN) – Gibson Guitars can take an insurance fight for flooding damages to its Nashville manufacturing warehouses to Tennessee, a federal judge ruled.
In May 2010, Gibson experienced severe flooding in its Nashville warehouses located at 641 and 643 Massman Drive, causing damages to the tune of $17 million.
Torrential rains at the beginning of the month created what the Army Corps of Engineers described as a 1,000-year flood event – because another like it will not happen this millennium – causing dozens of deaths and widespread property damage.
Throughout large portions of Tennessee, the Cumberland River rose to levels not seen since 1937.
Mitsui Sumitomo Insurance USA, which was Gibson’s insurer for “excess” losses above its primary policy, hoped to avoid paying by asking a Manhattan federal judge for declaratory judgment in January.
Gibson filed a state-court action against Mitsui shortly after in Tennessee.
On Thursday, U.S. District Judge Louis Stanton ruled that the insurance showdown will have to be resolved in Nashville.
“All the parties are before Tennessee state court,” Stanton wrote. “All the issues are before the Tennessee state court. All real estate which is the subject the litigation is in Nashville, Tennessee. A question in the litigation is the effect of the Tennessee law holding an insurance broker is an agent of the insurer, not the insured. No federal law is at issue.”
Gibson’s claim is currently pending in Chancery Court in Nashville, widely known as Music City.