Bedrock Leasing Corp. v. Lexington Ins. Co., No. N16C-08-084 EMD CCLD (Del. Super. Ct. Apr. 27, 2017)
In this Hurricane Sandy litigation, the Delaware Superior Court granted MCWG client Lexington Insurance Company’s motion to dismiss on the basis of the insurance policy’s two-year suit-limitations provision.
In 2012, Plaintiffs, three related corporate entities, sustained Sandy flood damage to their commercial property in New York. In 2013, Lexington paid out the full amount of the policy’s flood sublimit of liability, but then denied coverage for flood loss in excess thereof. In 2016, Plaintiffs filed suit against Lexington for that denial.
Lexington moved to dismiss the suit on the ground that it was filed too late. Pursuant to a contractual suit-limitations provision in the policy, “[n]o suit, action or proceeding for the recovery of any claim under this Policy shall be sustainable in any court . . . unless the same be commenced within twenty four (24) months next after the date of the loss.”
Plaintiffs opposed the motion on the ground that Lexington’s adjusters were legally required to provide Plaintiffs with written notice of the contractual limitations provision. For purposes of the motion, it was undisputed that no such notice was given.
In support of their contention that a written notice was required, Plaintiffs relied foremost on two Delaware statutes. Lexington argued that the first of the two statutes applies to statutory (rather than contractual) limitations periods, and therefore did not apply. The Court agreed with Lexington, pointing out that “Lexington is not relying on the applicable statute of limitations.” The second statute, Lexington argued, applies to residential property located in Delaware, and therefore similarly did not apply. The court again agreed with Lexington, pointing out that Plaintiffs’ claim involves “commercial property located in New York.” Having found both statutes to be inapplicable, the Court held that “Lexington did not have to give [Plaintiffs] notice.”
Plaintiffs alternatively argued that, absent a notice from Lexington, it would be “repugnant against Delaware public policy” to enforce Lexington’s suit-limitations provision. The Court acknowledged, as had Lexington in its legal brief, that while there were “several cases where [a court in] Delaware has interfered with a party’s freedom of contract” on public policy grounds, “[n]one involve[s] . . . shortening a . . . limitations period or requiring notice.” Indeed, the case law cited by Lexington established that “Delaware Courts allow shortened limitations period[s].” Thus, the Court rejected Plaintiffs’ alternative argument.
The Court, having otherwise concluded that Lexington’s suit-limitations provision is “unambiguous and valid” as a matter of law, enforced it as written by granting Lexington’s motion to dismiss the complaint.