Developer, insurance company reach agreement in hotel suites

The developers of an unfinished downtown Bristol hotel and an insurance company have reached a settlement, but the future of the project remains uncertain.

The unfinished building, which is located between West State Street and Shelby Street in downtown Bristol, Tennessee, was intended to be a seven-story Holiday Inn Hotel with more than 100 rooms, a bar and a restaurant.

Work began at the site in 2018 and the building partially collapsed in September 2020. No one was injured but the collapse led to construction halting at the site.

In early 2022, developer Tenneva LLC and The Cincinnati Insurance Company filed dueling suits in U.S. District Court in Greeneville, Tennessee, over policy coverage.

Last month, a joint notice of settlement was filed in court announcing that a settlement had been reached. The two parties then voluntarily dismissed the suits with prejudice, according to court filings. Supporting a Stipulation of Dismissal, the parties reached agreement with respect to all matters between them, the filings state.

Neither the parties nor the court have disclosed the terms of the settlement.

However in the court's conclusion, U.S. District Judge Travis McDonough wrote, "the court will deny Tenneva's motion for summary judgment and will grant Cincinnati Insurance's motion for summary judgment.

"Tenneva's statutory-bad-faith claim and equitable-estoppel affirmative defense are dismissed. The policy's ensuing loss clause does not entitle an insured to recover on all direct physical loss stemming from an excluded peril. To the extent damage flows directly from the defective materials rather than some independent source, Cincinnati Insurance is not obligated to provide coverage under the policy, the judge wrote.

As a result of the settlement and dismissal, each party will bear its own attorneys' fees, court costs and discretionary costs.

Prior to dismissal, a trial had been set to begin in court on Dec. 4.

According to the initial complaint for declaratory judgement filed by Cincinnati Insurance, the partial collapse was caused by failed steel-bearing walls on the second floor.

Engineering firm Thornton Thomasetti was retained by the insurance firm to assess the damage.

Following its investigation, Thornton Tomasetti ultimately concluded that the partial collapse was "due to the failure of one or both of the cold formed steel bearing walls at the second floor of the property," which "were not adequate to support the code-required design loads," according to court documents.

It also noted that it "encountered multiple walls that were not designed for the code-required design loads … [for which it] recommends a full review of the design," the court document shows.

The investigation included the remaining, undamaged portion of the structure.

After walking through the non-collapsed portion of the Property, Thornton Tomasetti determined that any damage to that area was not caused by the collapse.

"[T]he collapse was isolated to the area between gridlines 11 and 17, and H and C[,] and did not cause significant movement to the overall superstructure. The observed damage directly associated with the collapse was isolated to the collapsed area and items directly adjacent to the collapsed area," according to the court document.

"The cracks observed at the ends of the plank at various locations throughout the building were not caused by the collapse. These cracks were observed in random areas throughout the building with no discernable correlation or trends associated with the collapsed area."

While the insurance company said in its complaint it has issued and "continues to issue" payments for what it deems to be covered damages under the policy, Tenneva was seeking more than $11 million in coverage, minus what had been paid, plus other monies, and demanded a jury trial in its counter suit, according to a response filed in May 2022.

[email protected]