Hanover American Insurance Company v. Tattooed Millionaire Entertainment, LLC; Christopher C. Brown

RECOMMENDED FOR PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 25a0263p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
HANOVER AMERICAN INSURANCE COMPANY,
Plaintiff-Appellant/Cross-Appellee,
v.
TATTOOED MILLIONAIRE ENTERTAINMENT, LLC;
CHRISTOPHER C. BROWN,
Defendants-Appellees/Cross-Appellants,
JOHN FALLS,
Defendant-Appellee (24-5452).
┐
│
│
│
│
│
│
│
│
│
│
│
│
┘
Nos. 24-5452/5453
Appeal from the United States District Court for the Western District of Tennessee at Memphis.
No. 2:20-cv-02834—Jon Phipps McCalla, District Judge.
Argued: January 30, 2025
Decided and Filed: September 25, 2025
Before: CLAY, GIBBONS, and STRANCH, Circuit Judges.
_________________
COUNSEL
ARGUED: Jeremy T. Grabill, PHELPS DUNBAR LLP, New Orleans, Louisiana, for Hanover
American Insurance Company. Malcolm B. Futhey, III, FUTHEY LAW FIRM PLC, Memphis,
Tennessee, for John Falls. ON BRIEF: Jeremy T. Grabill, Mark C. Dodart, PHELPS
DUNBAR LLP, New Orleans, Louisiana, for Hanover American Insurance Company. Malcolm
B. Futhey, III, FUTHEY LAW FIRM PLC, Memphis, Tennessee, for John Falls. John W.
Christopher, CHRISTOPHER LAW OFFICE, PLLC, Jackson, Mississippi, Charles E. Waldman,
Memphis, Tennessee, for Tattooed Millionaire Entertainment and Christopher C. Brown.
>

-- 1 of 27 --

Nos. 24-5452/5453 Hanover Am. Ins. Co. v. Tattooed
Millionaire Ent. et al.
Page 2
_________________
OPINION
_________________
JULIA SMITH GIBBONS, Circuit Judge. This appeal concerns the allocation among
different parties of an insurance payout resulting from a 2018 trial in the Western District of
Tennessee. In that first case, the jury verdict included a $2.5 million award to John Falls, a
Memphis musician and music businessman, under an insurance policy issued by Hanover
American Insurance Company. Hanover moved under Rule 50(b) to set aside the verdict, and
the district court granted its motion. On appeal, this court reversed and ordered the district court
to reinstate the jury verdict. We held in that case that because Hanover had failed to make an
initial 50(a) motion, it was therefore barred from making its Rule 50(b) motion.
The $2.5 million payout then became the subject of an interpleader action (and a parallel
state action between two of the three parties in this appeal). The district court initially enjoined
the state action, but this court reversed. Then, the district court, on summary judgment, held that,
applying principles of res judicata, the first trial and decision by this court precluded Hanover
from making certain arguments against Falls as to the distribution of funds. After a bench trial,
the district court found facts as to the value of the interests at stake and divided the funds, with
the majority going to John Falls and the remainder to Christopher C. Brown, who owned the
equipment insured by the policy. Hanover and Tattooed Millionaire Entertainment appeal.
We affirm the district court’s decision. First, Hanover may not challenge Falls’s
recovery, directly or indirectly, based on grounds and arguments it could have brought in the first
case. Although the district court erred by interpreting the wrong lease for the purposes of its
later analysis, we find this error harmless, because in the circumstances of this case it was correct
to allocate the funds based on the value of the leasehold. Finally, the district court’s
determination of the value of the leasehold and its resulting allocation was not clearly erroneous.
We affirm the district court’s judgment.

-- 2 of 27 --

Nos. 24-5452/5453 Hanover Am. Ins. Co. v. Tattooed
Millionaire Ent. et al.
Page 3
I.
A.
In 2014, musician and producer Christopher C. Brown, through his company Tattooed
Millionaire Entertainment (TME), bought the House of Blues music studio in Memphis,
Tennessee. Hanover Am. Ins. Co. v. Tattooed Millionaire Ent., LLC, 974 F.3d 767, 771 (6th Cir.
2020) (“Hanover I”). Brown, through TME, also purchased an insurance policy on the studio
and the music equipment it contained from Hanover American Insurance Company. Id. Brown
insured the studio premises for $4.65 million, the music instruments and recording studio
equipment inside for $5.5 million, and the studio’s business income for $600,000. Id. The
instruments and equipment were termed Business Personal Property (“BPP”). Id.1 The House of
Blues building contained three studios: Studios A, B, and C. Id. Brown operated Studio A,
leased Studio B to John Falls, and leased Studio C to Daniel Mott. Id. at 771–72. Brown and
Falls, the lead singer of the band Egypt Central, had once been “cordial rivals,” but by 2014 built
a strong working relationship around launching a record label and producing music. Id. at 771.
Falls separately leased Studio B for his own independent music production operations. Id. Falls
also obtained insurance from Hanover for the specific BPP in Studio B and for lost business
income. Id.2
Falls’s lease agreements with Brown and the BPP insurance policy he obtained from
Hanover for the Studio B equipment are central to this case. Falls leased the studio space for
$500 a month, with automatic renewals, and the equipment for $1000 a month, with an option to
renew. Id.3 Falls’s policy from Hanover had a limit of $2.5 million for the BPP in Studio B and
$500,000 for business income. Id.
1We use the terms “BPP” and “gear” interchangeably.
2To be clear, this BPP was insured both by Brown (through his own policy) and by Falls (through the
policy at stake in this case). This fact is relevant to our determination that the district court did not err in its
allocation. See infra Section III.C.2.
3Falls and Brown had created an arrangement that was highly advantageous to Falls, who was paying a far-
below-market rate to lease high-end recording equipment owned by Brown; he had an automatically renewing lease
to the Studio B space in which the equipment was housed, and he had the option to renew the equipment lease at
terms to be agreed. The insurance on the BPP in studio B was a policy protecting the parties’ respective interests,

-- 3 of 27 --

Nos. 24-5452/5453 Hanover Am. Ins. Co. v. Tattooed
Millionaire Ent. et al.
Page 4
In 2015, the studio suffered a break-in and a fire determined to be arson; the building was
damaged, and a great deal of the equipment was damaged or stolen. Id. at 772. Together,
Brown, Mott, and Falls compiled their insurance claims into one document with the help of a
public adjustor, but separately signed proofs of loss, with each claiming losses up to their policy
limit—eventually totaling $10.5 million in BPP alone. Id. Hanover made an advance payment
of around $2.7 million: Falls and Mott each received $250,000, and Brown received the
remaining $2.2 million. Id. But problems soon arose. Hanover discovered that Brown had
forged the receipts detailing his underlying purchases of the lost equipment. Id. at 773. And
Brown had recently suffered two other suspicious insurance losses, including a “remarkably
similar loss to arson” in the previous calendar year. Id. Hanover sued, seeking recovery of its
advance payments and a declaratory judgment that it did not owe any remaining payments to
either Brown, TME, or Mott. Id. Brown, Falls, and Mott counter-sued, seeking the remainder of
their claims under breach of contract. Id.
The five-day trial in the Western District of Tennessee involved testimony from Brown
and Falls, among others. Id. Brown’s testimony gave an impression of untrustworthiness, even
beyond the forgery of the receipts, to which he admitted. Id. In the words of the court in
Hanover I, the falsifying of the receipts constituted “forgery . . . on a grand scale,” because “the
receipts were not just recreations of lost originals, but forged representations of transactions that
had never occurred.” Id. Falls, on the other hand, appeared more credible: he demonstrated “a
detailed grasp of the production business that indicated both that there were legitimate reasons
for him to have control of Studio B and that he had in fact been hard and productively at work
there until the fire.” Id. Although Falls lacked documentation to substantiate his claims, an
independent appraiser testified to the “high professional quality of the studio” and assisted Falls
in preparing valuations for the insurance claim. Id. at 774. The jury also heard testimony that
Falls had not been involved in the initial purchase of the equipment and that Falls had played no
part in Brown’s forgery. Id.
with Falls’s advantageous leasehold protected and Brown/TME listed as a loss payee due to be paid “jointly” in the
event of a loss “as interests may appear.” DE 153, Pretrial Order, Page ID 4317–18.

-- 4 of 27 --

Nos. 24-5452/5453 Hanover Am. Ins. Co. v. Tattooed
Millionaire Ent. et al.
Page 5
The verdict form was structured so that each question that the jury answered would cover
claims between Hanover and only one of the three insured parties. Id. Answering the nineteen
questions divided among the three parties, the jury found the following facts:
• No defendant had made a material misrepresentation in his initial application for
insurance when describing and valuing the studio and equipment; material
misrepresentations and unlawful insurance acts were made only as to the value of
the equipment lost in the fire.
• Brown and TME were indistinguishable; TME’s actions could be attributed to
Brown.4
• Brown had made material misrepresentations after the fire with intent to deceive
Hanover as to the amount of loss suffered in the fire and had “committed an
unlawful insurance act” in making his claim.5
• Falls, however, had not committed material misrepresentations with intent to
deceive, nor any unlawful insurance acts.
• Hanover owed $2.5 million in BPP coverage and $250,000 in business income
coverage to Falls.
Id.; see also No. 2:16-CV-02817, DE 312, Verdict Form, Page ID 7688–91 (W.D. Tenn. Nov.
20, 2018).
After the verdict, Hanover filed a motion for judgment as a matter of law under Federal
Rule of Civil Procedure 50(b), arguing for the reversal of the verdict as to Falls. Crucially,
although the motion was styled as a “renewed” motion for judgment as a matter of law, Hanover
had never actually made an initial Rule 50(a) motion for judgment as a matter of law against
Falls before the case was submitted to the jury. Hanover I, 974 F.3d at 782–83. The district
court granted the motion nonetheless. Falls, Brown, and TME appealed.
B.
The Hanover I opinion focused on the propriety of this grant of Hanover’s 50(b) motion
by the district court. This court determined that Hanover forfeited its Rule 50(b) motion by not
4Based on this conclusion, this opinion refers to “Brown/TME,” following the district court’s lead.
5Brown has since pled guilty to a federal mail fraud charge connected to his insurance claims against the
Hanover policy. See No. 2:20-CR-20245, DE 2; 63; 96 (W.D. Tenn. Sept. 20, 2023 and Oct. 17, 2024). Docket
numbers are indicated for materials from dockets other than the case on appeal. A DE citation without a docket
number refers to the case on appeal, W.D. Tenn. docket number 2:20-cv-02834.

-- 5 of 27 --

Nos. 24-5452/5453 Hanover Am. Ins. Co. v. Tattooed
Millionaire Ent. et al.
Page 6
making a 50(a) motion as to Falls.6 Id. at 779–90. Accordingly, the court did not consider the
merits of Hanover’s Rule 50(b) motion and remanded with instructions for the district court to
reinstate the jury verdict as to Falls. Id. at 790–91. This court’s reasoning flowed from the
relationship between Rule 50(a) and Rule 50(b). The necessity of a Rule 50(a) pre-verdict
motion before a Rule 50(b) post-verdict motion is based on basic concepts of notice and fairness:
the Rule 50(a) motion raises arguments to the court and opposing parties before a case goes to
the jury, and so it follows that a party may not wait to see how the jury decides something before
seeking relief. See id. at 780–81.
The court briefly analyzed alternative grounds for potentially affirming the district court,
rejected them, and went on to make comments about the future course of litigation in the case.
This appeal focuses on the scope and potential preclusive effect of this portion of the Hanover I
opinion. The parties aim portions of their preclusion arguments at almost every sentence in this
final section of Hanover I. For clarity, we reproduce it here:
C. Tennessee Public Policy
The jury awarded Falls $2,500,000 as the amount of insurance he was owed, up to
his policy limit, for Business Personal Property coverage and $250,000 as the
balance of the Business Income insurance he was owed. (Along with the
$250,000 he was already advanced and under the verdict would not have to pay
back, this amount brought the BI payout up to his policy maximum of $500,000.)
The BPP payment covers the loss of the gear in Falls’s studio. However, Brown
is the ultimate owner of the lost gear, on which Falls had a perpetually renewable
leasehold.
Therefore, Hanover argues, payment of the $2,500,000 would violate public
policy, because Brown would ultimately benefit from his own wrongdoing. It is
an “ancient equity maxim that no one should benefit from his own wrongdoing.”
K&T Enters., Inc. v. Zurich Ins. Co., 97 F.3d 171, 178 (6th Cir. 1996). The
Supreme Court of Tennessee recognized the application of this principle in
insurance cases in Box v. Lanier, 112 Tenn. 393, 79 S.W. 1042, 1045 (1904).
“No one shall be permitted to profit by his own fraud, or to take advantage of his
6In Hanover I, we recognized that the trial judge had made ambiguous comments conceivably inviting the
parties to forgo filing Rule 50(a) motions. Hanover I, 974 F.3d at 781–83. But we also noted that these comments
did not deter Hanover from making an explicit Rule 50(a) motion with respect to Brown. Id. at 784. So, the 50(b)
motion as to Falls was deemed forfeited.

-- 6 of 27 --

Nos. 24-5452/5453 Hanover Am. Ins. Co. v. Tattooed
Millionaire Ent. et al.
Page 7
own wrong, or to found any claim upon his own iniquity, or to acquire property
by his own crime.” Ibid.
The public-policy argument, however, even if accepted, does not mean that Falls
takes nothing of the $2,500,000 BPP award. Falls had a property interest in the
“gear,” in the form of his leasehold with unlimited renewal options.7 Leaseholds
have been held to be insurable interests. More to the point, Hanover clearly
accepted at trial that Falls had at least an arguable property interest: Barkman
testified at trial that the payment for BPP under the Falls policy would go to Falls
and Brown jointly. Thus, Barkman said, it would have to be endorsed by Brown
to be cashed by Falls. As Falls’s counsel explained to us at oral argument, the
proceeds will become the subject of an interpleader action between Falls, Brown,
Hanover, and Brown’s other creditors.
This was the district court’s plan for how to handle the issue: Falls and TME
would “sue each other” in the event of a win, but not fight it out during the main
trial. Though Falls and Hanover both make interesting legal arguments as to the
disposition of the funds, we see no reason to short-circuit that plan. Such
arguments can be made in whatever subsequent proceedings arise over this
payment.
CONCLUSION
For the foregoing reasons, we DENY Hanover’s motion to dismiss these appeals
and AFFIRM the judgments of the court below as to Brown/TME, Nos. 19-5550
& 19-5551, and Mott, 19-5562. But we REVERSE as to Falls, No. 19-5483, and
REMAND with instructions to reinstate the jury verdict on the grounds that
Hanover had forfeited its Rule 50(b) motion by not bringing a Rule 50(a) motion.
Id. at 790–91.
Proceedings then diverged. Falls sued Brown and TME in Tennessee state court (without
adding Hanover as a party), and Hanover filed this interpleader action and sought an injunction
against the state-court proceeding in the federal district court. Hanover Am. Ins. Co. v. Tattooed
Millionaire Ent., LLC, 38 F.4th 501, 503 (6th Cir. 2022). The district court initially enjoined the
state court proceedings, but this court then reversed that decision, holding that the exception to
the federal Anti-Injunction Act covering injunctions necessary to protect the district court’s
jurisdiction did not apply. Id. at 508–12.
7Hanover I footnote 15: “As Falls stated at trial: ‘[T]here’s the unresolved matter of the fact that I had a
lease for equipment and a space. That equipment had monetary value to me that I have been out now for three
years.’ Cf. State of Tenn. ex rel. Dept. of Trans. v. Gee, 565 S.W.2d 498, 501–02 (Tenn. Ct. App. 1977) (discussing,
in the context of a takings case, the proper calculation of the property value of a leasehold).”

-- 7 of 27 --

Nos. 24-5452/5453 Hanover Am. Ins. Co. v. Tattooed
Millionaire Ent. et al.
Page 8
The state court proceedings resulted in an allocation of the payout between Falls and
TME. Hanover argued that this state court decision does not bind it because it was not a party to
the state court case, and the district court agreed with that argument. Falls does not appeal this
portion of the district court’s decision.
C.
After this court reversed the injunction, proceedings continued in the district court. The
district court had initially denied Falls’s motion to dismiss Hanover’s arguments against Falls as
precluded by Hanover I and allowed Hanover to brief its arguments against Falls. But then on
summary judgment, the district court changed course, held that Hanover was precluded from
arguing against Falls’ recovery and granted summary judgment to Falls on his claims against
Hanover. The district court then held a one-day bench trial. The court heard testimony from
Brown, Falls, Nathan Evers (a Hanover representative), Pete Matthews (an audio engineer who
testified to the rental value of Studio B and its recording equipment), and Robert Vance (an
accounting expert who testified to the value of Falls’s leasehold interest). The district court
accepted Vance’s valuation, awarded $2,066,217.30 to Falls, and held that Brown was barred by
Tennessee public policy from receiving or crediting the remaining $433,782.70 of the $2.5
million he would otherwise be due. Hanover then appealed, and Brown cross-appealed.
II.
Reviewing a case on appeal from a bench trial, we review the district court’s legal
conclusions de novo and its factual determinations for clear error. Fox v. Washington, 949 F.3d
270, 276 (6th Cir. 2020). A factual finding is clearly erroneous if “although there is evidence to
support it, the reviewing court on the entire evidence is left with the definite and firm conviction
that a mistake has been committed.” Osborn v. Griffin, 865 F.3d 417, 436 (6th Cir. 2017)
(citation modified). And a level of deference on factual questions is proper: “if ‘the district
court’s account of the evidence is plausible in light of the record viewed in its entirety, the court
of appeals may not reverse it even though convinced that had it been sitting as the trier of fact, it
would have weighed the evidence differently.’” Id. (citation modified).

-- 8 of 27 --

Nos. 24-5452/5453 Hanover Am. Ins. Co. v. Tattooed
Millionaire Ent. et al.
Page 9
III.
The district court was correct to hold that Hanover was precluded from contesting the
amount of its payment to Falls. Nevertheless, Brown adopts Hanover’s arguments. Brown is
permitted to make arguments regarding the construction of the policy, and so we analyze those
arguments. On the merits, however, those arguments do not require the district court’s order to
be vacated or reversed. Under Tennessee law, the fact that TME is listed as a “loss payee” in the
policy means only that the value of Brown/TME’s ownership interest in the BPP (subject to the
leasehold) ought to be satisfied by the payout proceeds as well as the leasehold interest, not that
Brown/TME gets the entire payout. So the disposition of the case still depends on the legal
question of the parties’ obligations after the fire and the factual question of the values of the
underlying interests.
The district court’s decision determined that the lease had not terminated. The district
court then valued the leasehold based on the trial testimony, and allocated the funds based on
that valuation. Although the district court relied on the lease for the Studio B space rather than
the lease for the recording equipment at issue in this case, we hold that its error was harmless.
Under Tennessee law, when parties arrange for insurance coverage within a lease, a loss covered
by that insurance does not necessarily terminate the lease; instead, the parties’ rights and
obligations under the lease as expressed in the language of the instrument inform the allocation
of the insurance funds. Under the circumstances of the lease and strong working relationship
seen in this case, the intent of the parties was to insure both Falls’s valuable leasehold and
Brown’s ownership interest subject to that potentially renewing leasehold. So the district court
was correct to allocate the funds based on the value of the respective interests at stake. And the
values it reached were not clear error. Finally, Tennessee public policy prevents Brown from
recovering his allocated funds, because he admitted to misrepresenting the value of the BPP
under the policy.
A.
The judgment of a federal court sitting in diversity is given the same preclusive effect in a
later federal proceeding that it would be given in the state courts of the state in which the first

-- 9 of 27 --

Nos. 24-5452/5453 Hanover Am. Ins. Co. v. Tattooed
Millionaire Ent. et al.
Page 10
federal court sits. Semtek Int’l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 508 (2001). Thus,
the district court was correct to apply the Tennessee law of claim preclusion, alternatively termed
res judicata, to the federal judgment in Hanover I.
The doctrine of claim preclusion promotes finality in litigation and operates to bar “a
second suit between the same parties or their privies on the same claim with respect to all issues
which were, or could have been, litigated in the former suit.” Elvis Presley Enters., Inc. v. City
of Memphis, 620 S.W.3d 318, 323–24 (Tenn. 2021) (citation omitted). The party asserting the
defense of claim preclusion must show:
(1) that the underlying judgment was rendered by a court of competent
jurisdiction, (2) that the same parties or their privies were involved in both suits,
(3) that the same claim or cause of action was asserted in both suits, and (4) that
the underlying judgment was final and on the merits.
Id. at 324 (citation omitted). The Western District of Tennessee had jurisdiction over Hanover I.
Hanover, Falls, Brown, and TME were parties to both cases. But the third and fourth elements
are closer calls. The third element asks whether Hanover’s arguments about the proper
interpretation of the insurance agreement and the application of Tennessee public policy
principles were made, or could have been made, in Hanover I, and the fourth asks whether that
case was a final decision. We address these together. Falls argues that “[i]n defending Falls’s
counterclaim [in Hanover I], Hanover was obligated on pain of res judicata/claim preclusion to
raise all arguments as to why Falls would have been precluded from recovery of the BPP or
restricted to a lower amount.” CA6 R. 29, Falls Br., at 21.
The argument Hanover makes in this case was also made in its forfeited 50(b) motion.
Hanover argued that because TME/Brown was the sole owner and included as loss payee for the
BPP insured under Falls’s policy, “every penny of the $2,500,000 BPP award will be payable to
TME/Brown, the confessed ringleader of the fraudulent scheme,” which Tennessee public policy
does not permit. No. 2:16-CV-02817, DE 319-1, Hanover’s 50(b) Mot., Page ID 8769 (W.D.
Tenn. Dec. 17, 2018). Meanwhile, in its brief on this appeal, Hanover argues that “Falls is not
entitled to any portion of the BPP insurance proceeds because Brown/TME own all of the
insured gear and the Falls insurance policy identifies TME as the sole loss payee for “ALL

-- 10 of 27 --

Nos. 24-5452/5453 Hanover Am. Ins. Co. v. Tattooed
Millionaire Ent. et al.
Page 11
INSURED BPP.” CA6 R. 24, Hanover Opening Br., at 24. This case begins to taste like a
second bite at the apple.
Not so fast, Hanover says. As Hanover sees it, our decision in Hanover I “specifically
preserved the allocation issue” for a future interpleader case—therefore, the claim was either not
fully decided or was expressly preserved. Id. at 7 (emphasis omitted). There is some attraction
to this contention at first consideration. A judgment must be final for claim preclusion to apply,
and a decision that leaves a certain issue open for future adjudication is not accorded preclusive
effect as to that issue. See Restatement (Second) of Judgments, § 13(a) (calling this a “common
sense” principle). The Hanover I decision specifically states that Hanover’s “interesting legal
arguments as to the dispositions of the” insurance proceeds “can be made in whatever subsequent
proceedings arise over” the payment at issue here. 974 F.3d at 791.
Hanover I was primarily concerned with holding Hanover’s Rule 50(b) motion precluded
and reinstating the jury verdict that ordered the payment to Falls. The problem, however, lies in
determining which “arguments,” and against whom, the Hanover I court meant when it said this.
The best reading of the Hanover I opinion is that, while Hanover can advance its public policy
arguments against Brown, Hanover is barred by the reinstated verdict in Hanover I and by its
litigating positions in that case from contesting its obligation to pay Falls or the amount of the
payment to Falls. In short, this court preserved Hanover’s public policy arguments against
Brown, but not its arguments against Falls.
This conclusion is a necessary consequence of the way Hanover I was structured and
submitted to the jury: each party’s liability was tied to its own alleged insurance
misrepresentations. The jury was tasked with assessing Falls’s counterclaim for breach of
contract and was not asked to decide whether any acts at all by Brown/TME could prevent
recovery under the Falls policy.
This principle of separability was significant throughout the Hanover I opinion in this
court. The Hanover I opinion titles the section at issue “Tennessee Public Policy.” Id. at 790.
Hanover’s “public policy” argument was that because (1) general Tennessee principles of equity
prevent any party from profiting from its own fraud, (2) Brown had been found by the jury to

-- 11 of 27 --

Nos. 24-5452/5453 Hanover Am. Ins. Co. v. Tattooed
Millionaire Ent. et al.
Page 12
have committed wrongful insurance acts, and (3) the policy’s terms meant that Brown as owner
would get all, or at the very least some of the funds; therefore Hanover ought not to have to make
the payout at all. In short, because Brown—the ultimate owner of the lost BPP and the putative
sole payee under the policy—had been found by the jury to have committed wrongful insurance
acts, Hanover owed no money at all on this policy despite the verdict. Id.
The Hanover I opinion looked askance at this argument. “The public-policy argument,
however, even if accepted, does not mean that Falls takes nothing of the $2,500,000 BPP award.
Falls had a property interest in the ‘gear,’ in the form of his leasehold with unlimited renewal
options.” Id. This language shows that the Hanover I court viewed the argument as potentially
attacking or conflicting with the verdict and Hanover I judgment—if Falls had no insurable
interest, how could he recover under the policy, as the jury found he should?
Further, the court in Hanover I disapproved of Hanover’s “sandbagging” in an effort to
avoid paying Falls. The opinion faulted Hanover for seeking to change course after it had
allowed the case to be submitted to the jury under a theory of separate liability, under which
Brown’s misbehavior was adjudicated separately from Falls’s entitlement to recovery. Hanover
could have requested jury instructions on the effect of Brown’s actions on Falls’s policy, or
otherwise “could have requested that the verdict form be structured so as to tie the issues
together,” but had not done so. Id. at 788. “Thus, all parties sent the case to the jury with each
party’s own misrepresentations isolated from the others and tied to its own individual liability.”
Id. (emphasis in original); see No. 2:16-CV-02817, DE 312, Verdict Form, Page ID 7688–91
(W.D. Tenn. Nov. 20, 2018). But then, after the jury had found misconduct by Brown and not
by Falls, Hanover “turned around and argued the opposite” to try to avoid paying Falls based on
Brown’s fraud. Id.; see also id. at 784 (“the case went to the jury on a theory that was very
nearly the opposite of that on which Hanover prevailed after trial” by means of its 50(b) motion).
We stated that “behavior of this sort, sometimes called ‘lying in the weeds’ or ‘sandbagging,’
should be strongly discouraged.” Id.

-- 12 of 27 --

Nos. 24-5452/5453 Hanover Am. Ins. Co. v. Tattooed
Millionaire Ent. et al.
Page 13
To be fair to Hanover, this specific quoted “sandbagging” language probably applied to a
very similar but distinct argument on which Hanover had prevailed by 50(b) motion.8 But the
fact remains that if Tennessee public policy barred any payout under the Falls policy because of
Brown’s acts (as Hanover argues here) the verdict form could not have been structured the way it
was, with only Falls’s potential misrepresentations capable of barring his recovery. This court
held Hanover’s 50(b) motion to be forfeited. Such forfeiture would have little meaning if
Hanover could lie in the weeds even longer and then mount arguments against Falls on grounds
available in Hanover I. In this way, the arguments Hanover now seeks to make against Falls
ought to have been made as part of the Hanover I action before the case went to the jury.
Hanover argues in its reply brief that it “did try to address allocation of the BPP funds in
Hanover I.” CA6 R. 30, Hanover Reply Br., at 1. But it does not get credit for having done so in
the Rule 50(b) motion that this court held was forfeited.
In sum, this court in Hanover I preserved a “public-policy argument,” but it also upheld
and reinstated a verdict that (1) found no wrongdoing on the part of Falls and (2) awarded him
funds based on a principle of separability. See Hanover I, 974 F.3d at 788, 790. The district
court in the current case reconciled those two actions by holding that Hanover could still argue
against Brown that public policy barred recovery of whatever portion of the payout Brown was
owed, but that Hanover could not get a new chance to litigate allocation against Falls. This was
correct.
Res judicata does not bar consideration of these contractual issues as raised by Brown,
who had no incentive in Hanover I to attack his co-defendant’s interest (and whose ability to
pursue these arguments was more clearly anticipated both by the amended judgment in the
district court and the Hanover I opinion’s endorsement of the “sue each other” plan). Hanover I,
974 F.3d at 791; cf. United States v. Berman, 884 F.2d 916, 923 n.9 (6th Cir. 1989). Next, we
8This would have been the argument that Brown’s fraud directly voided Falls’s policy by the terms of its
plain language, which even Hanover admits was decided in Hanover I (Hanover suggests in arguing against
preclusion that the district court thought Hanover was asserting this argument again). The fact that this concededly
precluded argument mirrors the operation and structure of the argument Hanover seeks to make today (i.e., Brown’s
bad acts block recovery by Falls under the language of Falls’s policy) is further support for our holding that there is
no reason this argument could not have been raised in litigating Hanover I.

-- 13 of 27 --

Nos. 24-5452/5453 Hanover Am. Ins. Co. v. Tattooed
Millionaire Ent. et al.
Page 14
consider Hanover’s contractual arguments as raised by Brown, who incorporates them by
reference.9 Brown’s brief agrees with Hanover on all contract issues, and only differs in arguing
that Tennessee public policy does not actually bar Brown from benefiting from the allocated
funds. We address those arguments below. See infra Section III.F.
B.
Hanover’s first merits argument is that clauses in the Falls policy naming TME as the
“loss payee” are best interpreted such that any insurance payment under the policy simply goes
to TME. CA6 R. 24, Hanover’s Opening Br. at 24–34; CA6 R. 27, Brown/TME Br. at 11
(incorporating Hanover’s arguments by reference).
The parties disagree about the character of the ownership and leasehold interests in the
BPP, but they stipulated to the existence and relevance of certain contractual terms in the policy.
They agree that “Brown/TME is the sole owner of the gear insured by the Falls policy subject to
the leasehold interest held by Falls.” DE 153, Pretrial Order, Page ID 4317. They also agree that
the lease for the BPP “required Falls to insure the gear for ‘at least $2,500,000.’” Id. at Page ID
4318. They agree that TME is listed as a “Loss Payable” for “ALL INSURED BPP.” Id. And
they agree that additional “Loss Payable Provisions” are part of the policy and provide that “For
Covered Property in which both you and a Loss Payee . . . have an insurable interest, [Hanover]
will: a. Adjust losses with you; and b. Pay any claim for loss or damage jointly to you and the
Loss Payee, as interests may appear.” Id. Finally, they agree that Falls has not paid rent to
Brown or TME under the lease for the studio or the lease for the BPP since the fire. Id.
From there, they diverge. Brown incorporates Hanover’s arguments that a “loss payable”
clause requires that a named loss payee take priority over the claim of a named insured. Hanover
makes this argument by citing Union Planters National Bank v. American Home Assurance Co.,
No. W2001-021124-COA-R3-C, 2002 WL 1308344 (Tenn. Ct. App. Mar. 18, 2002). Falls
disagrees, pointing out that the stipulated Loss Payable Provisions specifically provide that
claims under the policy would be paid “jointly to you and the Loss Payee, as interests may
9For convenience and clarity, however, we still refer to them as Hanover’s arguments, as we are responding
to arguments in Hanover’s briefing.

-- 14 of 27 --

Nos. 24-5452/5453 Hanover Am. Ins. Co. v. Tattooed
Millionaire Ent. et al.
Page 15
appear” and distinguishing Union Planters.10 CA6 R. 29, Falls Br., at 28–32 (emphasis omitted).
Finally, Falls argues, even if the loss payable clause does give priority, it only does so up to the
extent of the interest itself.
Although the loss payable clause does protect TME/Brown’s ownership interest, Falls is
correct that any protection only goes to the extent of the interest itself, so the argument does not
make the difference Hanover thinks it does. Union Planters states that “[g]enerally, a ‘loss-
payable’ clause provides that proceeds of an insurance policy are to be paid first to the
designated loss payee rather than to the named insured.” 2002 WL 1308344, at *4. Loss
payable clauses most typically appear at the intersection of a mortgage and an insurance policy,
where, for example, a bank as mortgagee owns an interest in an insured piece of property and is
listed as a loss payee so that its “interest in property is protected should a loss occur.” Reeves v.
Granite State Ins. Co., 36 S.W.3d 58, 60 (Tenn. 2001).
But this amount need not be the entire value of the insurance policy. A loss payee’s
interest in proceeds is protected no more or less than the loss payee’s interest in the insured
property. If, in the mortgage context, the underlying note is partially satisfied (as in, for
example, when the mortgagor has paid off a portion of the debt), the mortgagee designated as
loss payee only recovers the remaining portion of their interest—where the debt is fully paid, this
may be none. See Benton Banking Co. v. Tenn. Farmers Mut. Ins. Co., 906 S.W.2d 436, 438,
440 (Tenn. 1995) (mortgagee “entitled to insurance proceeds to the extent of the mortgage
debt”); Hocking v. Va. Fire & Marine Ins. Co., 42 S.W. 451, 451 (Tenn. 1897) (a mortgagee
“made payable as his interest may appear is, in a large sense, an assignee to the extent of his
interest” (emphasis added) (citation omitted)).
So, some division of proceeds between the two parties is consistent with the joint loss
payee language in the Hanover policy, where both parties had insurable interests covered by the
policy. To be sure, Union Planters could possibly be read to require Brown’s interest to be
10Falls also argues that because Brown, not TME, owned the BPP at stake, TME as loss payee had no
insurable interest and may not recover as a matter of law. This argument would carry more weight if the parties had
not stipulated that “Brown/TME is the sole owner of the gear” and if the jury had not found that TME and Brown
were “indistinguishable such that Tattooed Millionaire Entertainment, LLC, may be disregarded.” No. 2:16-CV-
02817, DE 312, Verdict Form, Page ID 7689 (W.D. Tenn. Nov. 20, 2018); DE 153, Pretrial Order, Page ID 4317.

-- 15 of 27 --

Nos. 24-5452/5453 Hanover Am. Ins. Co. v. Tattooed
Millionaire Ent. et al.
Page 16
valued and satisfied first, with Falls getting the remainder (the reverse of what happened here,
where Falls’s interest was valued first and compensated in full).
But we hold that Union Planters does not control priority here. It is not clear that
Brown’s interest is required to be paid by the insurer first in a situation like this one, where
(1) the payment is to be made “jointly” and (2) the underlying relationship between the parties is
one of lessor and lessee, rather than mortgagor and mortgagee. We have not found a Tennessee
case applying similar language to give such strict priority in the joint payee, lessor-lessee
context. Cf. Charter Oak Fire Ins. Co. v. Lexington Ins. Co., No. M2002-01752-COA-R3-CV,
2004 WL 431488, at *1–2, *6 (Tenn. Ct. App. Mar. 2, 2004) (lessees purchased fire insurance as
required in lease; lessor named as “loss payee or additional insured”; insurance company paid
funds to lessors, after subtracting funds paid first to lessee “for loss of personal property” in the
fire based on lease language).11 And some cases from other jurisdictions, confronting situations
where lessors and lessees are both to be paid, do not give either party priority and simply carry
out a division of the proceeds according to the nature and value of the underlying interests. See,
e.g., Grand Forks Seed Co. v. Northland Greyhound Lines, Inc., 168 F. Supp. 882, 884 (D.N.D.
1959); Osborn v. Home Ins. Co., 914 S.W.2d 35, 38 (Mo. Ct. App. 1996); cf. Hartsell v. Integon
Indem. Corp., 493 S.E.2d 740 (N.C. 1997).
When property is condemned in eminent domain, Tennessee cases explicitly approve
valuing the leasehold first and giving the remainder of the condemned value to the lessor. State
v. Gee, 565 S.W.2d 498, 502 (Tenn. Ct. App. 1977) (in the eminent domain context, rejecting
lessor-first calculation as a matter of law). Osborn uses the eminent domain methodology in an
insurance payout division context. 914 S.W. 2d at 38. And Hanover does not challenge Falls’s
citation to eminent domain cases on appeal.
11In Hayes v. Ferguson, the Tennessee Supreme Court held that, where lessees had refused to use an
insurance payout to replace premises, the lessor was entitled to the money because lessee’s “interest in it and right to
it ceased.” 1885 WL 2862, at *12–13 (Tenn. 1885). The Hayes opinion declined to distribute insurance funds based
on the language of a loss payee clause that named the lessees. Rather, the lessees’ obligation to replace buildings at
their own expense in the event of fire meant that the funds, even if initially paid to them, were only to be used for
that purpose. The insurance policies in Hayes insured the interests of the lessors, “not the leasehold interest” of the
lessees. Id. at *10. In this case, by contrast, Hanover concedes that the Hanover I jury found that Falls had an
insurable interest in the BPP at stake here. We examine Tennessee law in construing the lease and its obligations
below. See infra Section III.C.2.

-- 16 of 27 --

Nos. 24-5452/5453 Hanover Am. Ins. Co. v. Tattooed
Millionaire Ent. et al.
Page 17
Although Hanover points to testimony from its corporate representative, Nathan Evers,
who testified at the bench trial in this case that the policy requires Hanover to pay TME only,
testimony as to how Hanover would interpret its own policy—which lines up well with its
current litigating position—does not control the application of law to loss payee provisions. See
Union Planters, 2002 WL 1308344, at *4 (“The interpretation of the policy . . . is a matter of
law, not of fact.”).
We hold that the district court was correct to treat the joint loss payable clause as
allowing a division of proceeds between Brown as lessor and Falls as lessee based simply on the
value of those two interests. So this question is ultimately the same as the question of how to
divide the proceeds between the two parties. And that, in turn, is governed by the terms of the
lease agreement between TME and Falls.
C.
1.
We next consider the leases. Hanover argues that Falls cannot recover as the district
court allowed him to because his lease terminated at one of three possible times: before the fire,
because (Hanover alleges) Falls failed to pay rent; at the time of the fire, because (Hanover
claims) a fire terminates a leasehold interest; or in 2017, at the time the lease contemplated
termination absent renewal. Hanover argues that it should, at most, only be liable to Falls for
payments reflecting the leasehold’s value through 2017.12
The district court found that the lease never terminated because (1) the record showed
that Falls was current on lease payments before the fire; and (2) the lease did not require a
written notice to exercise the option to renew, which meant that the lease “extend[ed]
automatically unless a notice of termination was provided.” DE 164, District Ct. Op., Page ID
4594, 4596. The first determination is not clear error where, as here, the trial testimonies of Falls
12Hanover further proposes reducing this figure by the amount of the lost business profits payout Falls has
already received. This suggestion is not well taken. This appeal concerns the payout for an interest in the BPP, not
the payout for lost profits. Hanover does not argue that as a matter of law Falls cannot recover both; it just argues
that the result Falls seeks is absurd.

-- 17 of 27 --

Nos. 24-5452/5453 Hanover Am. Ins. Co. v. Tattooed
Millionaire Ent. et al.
Page 18
and Brown as to whether Falls’ payments were current contradicted each other, and Falls’s was
clearer and more definite.13 But the latter determination was error. In determining that the lease
extended automatically, the district court referred to the retail lease for the Studio B space
instead of the lease for the Studio B equipment at issue in this case. The retail lease provides for
automatic renewal; the equipment lease only provides that Falls had an option to renew, on terms
to which the parties would agree at the time of renewal.
Although both parties discuss whether the lease terminated and cite Tennessee cases
involving the lease and insurance context, they focus their arguments on termination, rather than
how the intent of the parties as expressed in the lease should be interpreted to allocate
responsibility for repair and the resulting distribution of the insurance funds. We do not typically
answer such questions of intent in the first instance. But in the interest of judicial economy, we
do so today. Cf. Kerr v. Comm’r of Soc. Sec., 874 F.3d 926, 933 (6th Cir. 2017).
2.
Under Tennessee law, the owner of insured leased property does not always receive the
entire proceeds of any insurance policy when the property is destroyed by fire. Instead, the cases
contemplate that where the parties have contracted for one party’s purchase of insurance, and
allocated the cost and responsibility of repair, the choices made and expressed in their agreement
control the distribution of insurance proceeds. The question is how this principle is to be applied
today, ten years later, where the studio has not been rebuilt? We hold that the proceeds may be
divided as the district court undertook to do.
Tennessee cases regarding the disposition of fire insurance proceeds in a lessor-lessee
context hinge on the intent of the parties regarding repairs or replacement after fire loss, as
expressed in the lease terms or inferred from them. See First Am. Nat. Bank v. Chicken Sys. of
Am., Inc., 510 S.W.2d 906, 908 (Tenn. 1974) (“[T]he cardinal rule of construction” of written
instruments is “that the intention of the parties as ascertained from the language of the instrument
controls.”); St. Paul Surplus Lines Ins. Co. v. Bishops Gate Ins. Co., 725 S.W.2d 948, 951 (Tenn.
13See, e.g., DE 156, Trial Tr., Page ID 4386–88 (cross-examination of Brown) (“Q: Did you have a ledger
where you kept a ledger of Mr. Falls’s rent payments? A: We’re musicians, and that was never a thing.”).

-- 18 of 27 --

Nos. 24-5452/5453 Hanover Am. Ins. Co. v. Tattooed
Millionaire Ent. et al.
Page 19
Ct. App. 1986); Charter Oak, 2004 WL 431488, at *5; Hall v. Park Grill, LLC, No. E2020-
00993-COA-R3-CV, 2021 WL 2135952, at *2, *6 (Tenn. Ct. App. 2021). Specifically, where
the parties have contracted to require insurance, and include in the lease clauses that contemplate
potential repair or replacement of insured property, the structure of the lease relationship
survives in some form following loss by fire and these clauses control the distribution of the
insurance funds, which are typically understood to be used to replace the lost or damaged
property. See EVCO Corp v. Ross, 528 S.W.2d 20, 24 (Tenn. 1975) (“[W]e do not believe it was
the intention of the parties that there should be an automatic cancellation or termination” where
promises regarding repair and replacement were included in the lease in question); Taylor v.
White Stores, Inc., 707 S.W.2d 514, 516–17 (Tenn. Ct. App. 1985) (concluding that lease did not
terminate based on the “clear import” of the lease agreement).
The intent of the parties controls even where the language of the lease does not
necessarily require that the funds be used for replacement, and even where this means the lessor
does not completely recover for its leased and destroyed property. In Hall v. Park Grill, LLC,
the lessor had leased a building to Park Grill, “a company that had utilized the building primarily
as a storage facility for its restaurants” in Gatlinburg, Tennessee. No. E2020-00993-COA-R3-
CV, 2021 WL 2135952, at *1 (Tenn. Ct. App. May 26, 2021). The building was destroyed in the
Gatlinburg wildfires of 2016, and an insurance company paid the lessee, Park Grill, who had
insured the premises, around $130,000. Id. In 2019, the plaintiff, Faye Hall, representative of
the original lessor’s estate, sued based on the lease, seeking the value of the leased building or
the amount of the fire insurance proceeds. Id. at *2. Where Hall had argued that the lease’s
clear import required fire insurance proceeds to be put toward replacing the building, the Court
of Appeals of Tennessee interpreted the lease differently, and held that the parties had expressly
agreed that the funds would only be used for replacing the building “[i]n the event these premises
are damaged by fire or other insurable loss, and the premises can be reasonably repaired within
ten (10) working days.” Id. at *2, *13. Because the premises could not be repaired within that
period, the lessor’s estate was not entitled to the insurance proceeds. Id. at *15.
In EVCO, the lessor covenanted to be responsible for “all major repairs” and was
required to “carry fire insurance upon the building structure,” while the lessee covenanted to

-- 19 of 27 --

Nos. 24-5452/5453 Hanover Am. Ins. Co. v. Tattooed
Millionaire Ent. et al.
Page 20
“return the premises back to the lessor at the expiration of the lease.” 528 S.W.2d at 21 (citation
omitted). The court held that the lessor’s promise to carry out major repairs, coupled with the
lessor’s covenant to carry fire insurance, meant that “the loss in this case must fall upon the
lessors” despite the lessee’s promise to return. Id. at 24. Nonetheless, due to the time spent in
litigation and the short time left on the lease, the Tennessee Supreme Court did not instruct
lessors to rebuild the premises, as it read the lease to require, and it left the scope of relief for
their breach open to Tennessee’s Chancery Court on remand. Id. at 24–25. In St. Paul, the
obligation was reversed: the lessee expressly covenanted to repair or to replace the premises and
promised to keep the premises “insured against loss or damage by fire.” 725 S.W.2d at 950. The
Tennessee Court of Appeals described the situation as “somewhat analogous . . . in reverse” to
EVCO, and stated that “obviously the funds from the fire insurance policies were to be used” for
the purpose of fulfilling the lessees’ promise to replace the building. Id. at 952. Where both
sides agreed the lease had terminated, and the proceeds had not been so used, the Court of
Appeals simply awarded the insurance proceeds in their entirety to the lessors. Id.
There are five clauses of Falls’ lease that are relevant to our determination of the intent of
the parties. First, the equipment lease provides that Brown/TME as lessor “shall maintain, at the
Lessor’s cost, the equipment in good repair and operating condition, allowing for reasonable
wear and tear. Such costs shall include labor, material, parts, and similar items.” CA6 R. 25,
App., at 00007. We call this the “repair” clause. Second, the lease provides that “[a]t the end of
the Lease term, the Lessee shall be obligated to return the equipment to the Lessor at the
Lessee’s expense.” Id. We call this the “return” clause. Third, the lease provides that Falls as
lessee “assumes all risk of damage to the equipment from any cause, and agrees to return it to the
Lessor in the condition received from the Lessor, with the exception of normal wear and tear,
unless otherwise provided in this Lease.” Id. at 00008. We call this the “assumption” clause.
Fourth, the lease provides that “[u]nless otherwise provided in this Lease, if the equipment is
damaged or lost, the Lessor shall have the option of requiring the Lessee to repair the equipment
to a state of good working order, or replace the equipment with like equipment in good repair,
which equipment shall become the property of the Lessor and subject to this Lease.” Id. We call
this the “option to replace” clause. Fifth and finally, the lease provides that Falls as lessee “shall

-- 20 of 27 --

Nos. 24-5452/5453 Hanover Am. Ins. Co. v. Tattooed
Millionaire Ent. et al.
Page 21
insure the equipment in an amount of at least $2,500,000.” Id. We call this the “insurance”
clause.
A court attempting to interpret a contract must strive to construe “all . . . provisions of a
contract . . . as in harmony with each other, if such construction can be reasonably made, so as to
avoid repugnancy between the several provisions.” Bank of Com. & Tr. Co. v. Nw. Nat’l Life
Ins. Co., 26 S.W.2d 135, 138 (Tenn. 1930). But at the same time, the contract terms should not
be given “a strained or unnatural interpretation.” EVCO, 528 S.W.2d at 23.
Because these clauses involve contrary obligations, it is difficult to harmonize them
completely. By the terms of the lease, the lessor undertakes at his cost to repair and maintain the
equipment,14 but at the same time the lessee promises to return it at the end of the lease term at
his own expense. The lessee assumes the risk of any damage, but if damage or loss occurs, the
lessor has the option to require the lessee to repair or replace (such replaced equipment becoming
subject to the lease). Finally, the lessee is required to insure.
It seems clear that where a lease expressly requires one party to procure insurance, the
proceeds of that insurance policy are presumed to benefit both parties absent some indication to
the contrary. See id. at 23–24. Neither Brown nor Falls separately protected their respective
interests in the equipment “wholly apart from the lease provisions.” Id.15 EVCO read an
insurance clause as support for its conclusion that lessors were required to bear the cost of
replacement, and left the ultimate disposition of the funds up to another court on remand, as the
lease was nearly up. Id.; see also Tate v. Trialco Scrap, Inc., 908 F.2d 974, at *3 (6th Cir. 1990)
(table) (applying Tennessee law and discussing EVCO and St. Paul)16; Doramus v. Rogers Grp.,
14And this language, which mentions “material” and “parts” and distinguishes reasonable wear and tear,
does not necessarily refer only to minor repairs.
15Brown had his own separate insurance policy on this BPP. Hanover did not have to pay out under the
policy, as determined in Hanover I, because of Brown’s unlawful insurance acts.
16Trialco confronted the distinct question whether, where a lessee causes loss to insured property by
negligence, the insurance company can recover from the lessee, or if instead, because required insurance was “for
the benefit” of both lessor and lessee, the negligent lessee was an “implied coinsured” against whom the insurance
company could not recover by subrogation. 908 F.2d 974 at *2–3, *6. In that case, “the burden of the insurance
provision [was] on the lessor while the burden of the repair provision [was] on the lessee.” Id. at *3 (emphasis

-- 21 of 27 --

Nos. 24-5452/5453 Hanover Am. Ins. Co. v. Tattooed
Millionaire Ent. et al.
Page 22
Inc., No. M1998-00918-COA-R3-CV, 2001 WL 196974, at *14 (Tenn. Ct. App. Feb. 28, 2001).
It also seems clear, based on this disposition in EVCO, and on the Court of Appeals’s allocation
in St. Paul, that where insurance proceeds are to be used to replace insured property under a
lease, but time has intervened since the loss in question, a court may allocate them to effectuate
this intent and compensate the parties for the interests at stake.
Here, if the lease had not contained TME’s general promise to repair and maintain the
equipment, the intent of the parties might be to require Falls to obtain insurance for the sole
purpose of fulfilling his obligation under the return clause or, alternatively, under the assumption
or damage clauses. And then, with the insurance obtained only for that purpose, it would seem
proper to allocate the funds either to Falls with the requirement that they be used to replace the
equipment, or, following St. Paul, entirely to Brown. But that is not the situation before us.
Falls did not obtain insurance for the sole purpose of fulfilling his obligation under the
return, assumption, or damage clauses. In fact, the lease includes an unqualified covenant for
Brown to maintain and repair the equipment—such an express inclusion is a contractual
departure from the default rule that the lessor is not responsible for repairs. See EVCO, 528
S.W.2d at 23. Further, Falls’s obligation in at least the return clause, and potentially the
assumption clause, only applies at the termination of the lease, while Brown/TME’s obligation in
the repair clause applies continuously. While the option to replace clause could come into
operation during the term of the lease, it (1) expressly applies only “[u]nless otherwise
provided,” (2) does not require replacement absent a request by Brown; and (3) contemplates
that the replaced property would become subject to the lease. Because the policy served to
protect both parties’ interests, including the ability to fulfill Falls’s own obligations under the
lease, we can reasonably conclude that the policy was obtained for the mutual benefit of both
Brown and Falls. In other words, Falls and Brown intended the policy to insure both of their
interests under their respective lease obligations.
omitted). This court determined that the insurance was for the benefit of both parties, meaning the lessee was a
coinsured, which prevented the insurance company from recovering from the lessee.

-- 22 of 27 --

Nos. 24-5452/5453 Hanover Am. Ins. Co. v. Tattooed
Millionaire Ent. et al.
Page 23
In sum, the intent of the parties, as far as we can ascertain it, was that, whether Falls
could seek repair from Brown under the repair provision, or Brown could seek replacement from
Falls under the option to replace provision, the lease would not terminate in the event of damage
to the equipment. Instead, the lease would continue in force, with equipment repaired and
maintained by Brown or replaced by Falls and still covered by the continuing lease. The lease
and insurance arrangement is thus best read as protecting both Falls’s valuable leasehold interest
and Brown’s interest in eventually receiving equipment back at the ultimate termination of the
lease, potentially after years of reasonable wear and tear. And because the policy, which was to
be paid jointly as interests might appear, protected both parties’ interests, the payout could
permissibly be allocated between them, as the district court did here.
If, on the other hand, we determined that the clauses could not be reconciled and that the
contract was ambiguous, we would look to “extrinsic evidence” to ascertain the intent of the
parties at the time of the lease, and our conclusion would be the same. See Cummings, Inc. v.
Dorgan, 320 S.W.3d 316, 333 (Tenn. Ct. App. 2009). The extrinsic evidence bolsters our
conclusion. Brown had his own separate insurance on the BPP. At trial in this case, Brown
testified that he expected the proceeds of the Falls policy to be paid to him, “because restoring
the studio was definitely the plan, building it back, and putting all the gear back into it”—
although, somewhat contradicting this belief, he also testified that he did not understand the lease
to oblige him to repair or replace. DE 156, Trial Tr., Page ID 4364, 4366–67. Falls, for his part,
testified that all parties expected the studio to reopen, and that the lease required him to return
the equipment “whenever” the lease terminated. Id. at Page ID 4438, 4443–44. The parties
intended their working relationship to extend far into the future, regardless of whether loss
intervened. Where the studio was never rebuilt, this state of affairs supports a division today of
these proceeds reflecting the interpretation that with this policy, Falls had insured a highly
valuable leasehold over many years, subject to a promise eventually to return the used equipment
(potentially repaired at Brown’s expense) to Brown.
Although the district court relied on the wrong lease and focused on termination to the
exclusion of the intent of the parties, we hold that this error was harmless. We agree with its
ultimate determination of the question that an allocation of the funds between Falls and Brown

-- 23 of 27 --

Nos. 24-5452/5453 Hanover Am. Ins. Co. v. Tattooed
Millionaire Ent. et al.
Page 24
based on a valuation of the leasehold, rather than a complete award to either one or the other,
was correct under Tennessee law.
D.
We turn now to the valuation of the interests at stake. During the bench trial, the court
heard testimony as to the value of the leasehold from Pete Matthews, an audio engineer, and
Robert Vance, an accounting expert. Vance was the only witness who directly testified as to the
value of the leasehold. Matthews testified that similar recording equipment to that in Studio B
could be rented out for $8,570 a day in Memphis, and that Falls’s reported income of $201,000
to 249,000 a month from renting out the studio and equipment was reasonable. Vance, in turn,
testified as to the longer-term value of the leasehold and relied in part on Matthews’s
estimations. Vance first took Falls’s reported revenue for renting out the Studio B space along
with the equipment for a 220-day period in 2015, then annualized it and subtracted expenses to
arrive at a net profit of $304,000 a year. Vance then relied on Matthews’s estimate that a long-
term commercial lease of equivalent equipment (i.e., if Falls had had to replicate the equipment
lease on the open market) would have cost about $22,500 a month. In that hypothetical situation,
with that number drastically increasing his expenses, Falls would only be making $52,481 in
yearly net profit. The value of the leasehold was calculated to be the difference between Falls’s
advantageous deal and the market conditions—$252,000 per year.
Vance then mapped out a model of slightly increasing revenue over time (complete with
modeling the dip and recovery from the COVID-19 shutdowns) discounted future profits after a
2022 trial date to a present value, and subtracted the $500,000 that Falls had already received in
lost business income coverage, out of a willingness to be conservative and fair. Vance’s estimate
assumed lease renewals through 2030, when Falls will be 50 years old. In sum, Vance
concluded that the leaseholds in both the Studio B space and in the equipment (the interest in
which is at stake here) were worth $2,295,797. Finally, Vance discounted this figure by a factor
of .926 to capture only the equipment leasehold, as distinct from the studio space.17
17This discount figure compared the warranty deed value of the entire studio premises ($200,000) with the
$2.5 million value of the insured equipment. The equipment was worth much more than the premises.

-- 24 of 27 --

Nos. 24-5452/5453 Hanover Am. Ins. Co. v. Tattooed
Millionaire Ent. et al.
Page 25
The district court found that this valuation was reasonable but reduced it further, relying
on a factor of .9 based on Falls’s testimony at trial, which estimated a value split between the
BPP and Studio B space as “90/10 in favor of the equipment.” DE 164, District Court Op., Page
ID 4596–97 (quoting DE 156, Trial Tr., Page ID 4438). The final figure, allocating the
$2,500,000, was $2,066,217.30 to Falls and $433,782.70 to Brown. This valuation method,
which used both an income and market comparison approach, was permissible.
Hanover argues that Vance’s calculations are too speculative because the lease
terminated sometime before 2030—as set out above, either before the fire, because of the fire, or
after the fire. But as we have shown, the parties’ intent regarding repair and replacement
controls distribution of insurance funds. And the probability of a leasehold’s being renewed is
properly considered a question of fact as to its value. At least one Tennessee court has stated, in
the condemnation context, that evidence of the probability of a lease’s renewal or cancellation is
relevant to that question. City of Johnson City v. Outdoor West, Inc., 947 S.W.2d 855, 859–60
(Tenn. Ct. App. 1996); cf. Eller Media Co. v. City of Memphis, No. W2007-02751-COA-R3-CV,
2008 WL 5330431, at *6 (Tenn. Ct. App. Dec. 22, 2008) (citing Outdoor West, 947 S.W.2d at
855–59). The district court did not err by valuing the leasehold as if it would have been renewed
absent the fire: in these circumstances, it is proper to consider the probability of renewal as a
component of the leasehold’s value.
In this case, the evidence supports a conclusion that the advantageous leasehold would
have been renewed. And such a likelihood was not impermissibly “remote or speculative.”
Outdoor West, 947 S.W.2d at 859. Falls testified that the equipment lease was a “ridiculously
good deal,” that Brown and Falls thought they “were trying to build something substantial,” and
that “the hope was to be there as a permanent fixture.” DE 156, Trial Tr., Page ID 4360, 4390,
4431, 4433. Brown testified that, at least immediately after the fire, “restoring the studio was
definitely the plan.” Id. at Page ID 4367; see also Hanover I, 974 F.3d at 771 (recognizing that
Falls and Brown both felt that they had a “‘spectacular’ working relationship”). And although
Hanover is correct to cite Norton v. McCaskill for the proposition that “in the absence of a
specific time designation in the lease, an option to renew remains effective only during the term

-- 25 of 27 --

Nos. 24-5452/5453 Hanover Am. Ins. Co. v. Tattooed
Millionaire Ent. et al.
Page 26
of the lease,” this principle is not incompatible with valuing the leasehold as if it would have
been properly renewed before termination by these parties. 12 S.W.3d 789, 790–91 (Ten. 2000).
We may affirm the district court on any grounds supported by the record. Garza v.
Lansing Sch. Dist., 972 F.3d 853, 877 (6th Cir. 2020). We hold that the district court’s findings
as to the valuation of the leasehold were not clearly erroneous.
E.
The final issue in this case is the argument that was explicitly preserved in Hanover I:
whether because of Tennessee equity principles, Brown’s insurance-related misdeeds mean that
any funds allocated to him need not be paid by Hanover. Hanover cites Box v. Lanier for this
proposition. 79 S.W. 1042, 1045 (Tenn. 1904) (“No one shall be permitted to profit by his own
fraud, or to take advantage of his own wrong, or to found any claim upon his own iniquity, or to
acquire property by his own crime.” (citation omitted)). In Box, the wrong, iniquity, and crime
was murder, and the court made an analogy to someone recovering insurance money after
committing arson. Id. In this case, the jury in Hanover I found that Brown had made material
misrepresentations as to the loss with intent to deceive and had made unlawful claims for
payment. Hanover I, 974 F.3d at 773–74. Brown has also pled guilty to a federal mail fraud
charge in connection with these insurance acts. No. 2:20-CR-20245, DE 63 (W.D. Tenn. Sept.
20, 2023); DE 96 (W.D. Tenn. Oct. 17, 2024).
Brown argues that the jury found only that he had made misstatements in connection with
the insurance policies for Studio A, and that he had nothing to do with the Studio B policies at
issue in this case. This is not the case. Although Brown and Falls signed separate proofs of loss,
they pulled from the same list of lost or damaged property, which became Exhibit 32 in the
Hanover I trial. Hanover I, 974 F.3d at 772. Brown admitted on the stand that he had added
“false” vendor information to theft claims for the BPP in Studio B to this list. No. 2:16-CV-
02817, DE 318, Trial Tr., Page ID 8720. Brown’s “forgery . . . on a grand scale” bars him from
recovering insurance proceeds when he made false statements as to the lost value in BPP.
Hanover I, 974 F.3d at 773. We affirm the district court on this point.

-- 26 of 27 --

Nos. 24-5452/5453 Hanover Am. Ins. Co. v. Tattooed
Millionaire Ent. et al.
Page 27
IV.
This is a difficult case, but it follows from the decision and verdict in Hanover I, the
application of Tennessee law to the unusual agreement at stake, and the district court’s
assessment of the testimony in this case. We affirm the district court’s decisions that Hanover is
precluded from making contractual interpretation arguments as to Falls, that the loss payee
clauses do not require that all money flow to Brown, that the fire did not prevent Falls from
recovering on his leasehold interest, that there was no clear error in the leasehold valuation, and
that Tennessee public policy prevents recovery by Brown of the funds allocated to him.
We affirm the district court’s decision.

-- 27 of 27 --