Bedrock Leasing Corp. v. Lexington Insurance Company
N16C-08-084 EMD CCLD
Del. Super. Ct.Apr 27, 2017Background
- Bedrock Leasing Corp. and affiliates owned commercial property in New York insured by Lexington under a policy covering April 26, 2012–April 26, 2013.
- Superstorm Sandy damaged the property in October 2012; Bedrock alleges $3,273,494 in losses.
- Lexington denied coverage in September 2013; Bedrock sued on August 9, 2016, claiming Lexington breached the policy.
- Lexington moved to dismiss under Rule 12(b)(6), arguing the policy’s "SUIT AGAINST COMPANY" clause requires suit within 24 months of the date of loss (or the shortest period allowed by the property’s jurisdiction), so Bedrock’s suit was time-barred.
- Bedrock argued Lexington failed to notify it of any shortened contractual limitations period and invoked Delaware public-policy and statutory notice provisions (18 Del. C. §§ 3914, 4129) to avoid enforcement of the clause.
- The Court took the motion under advisement and ultimately granted Lexington’s motion, dismissing the complaint with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of policy's shortened suit limitation | Bedrock: clause is unenforceable without insurer notice; public policy disfavors shortening limitations | Lexington: clause is clear, unambiguous, and valid; suit must be within 24 months of loss | Court: clause is unambiguous and valid; triggered by date of loss and enforceable |
| Proper triggering date for the 24-month limit | Bedrock: limitation should not run or was tolled because no notice given | Lexington: runs from date of loss (Oct 2012) or, alternatively, from denial (Sept 2013) | Court: date of loss (Oct 2012) triggered clause; denial was within the 24-month window; action filed too late |
| Applicability of 18 Del. C. § 3914 (casualty notice requirement) | Bedrock: failure to give statutorily required notice tolls limitations | Lexington: § 3914 applies to casualty, not property, policies; not applicable here | Court: § 3914 does not apply to this property insurance dispute |
| Applicability of 18 Del. C. § 4129 (property policy notice requirement) | Bedrock: insurer must notify insured of contractual or statutory limits under § 4129 | Lexington: § 4129 applies only to certain Delaware residential/personal property risks; not to Bedrock's commercial NY property | Court: § 4129 is inapplicable (policy covers commercial NY property); no notice requirement invalidates clause |
Key Cases Cited
- Woodward v. Farm Family Cas. Ins. Co., 796 A.2d 638 (Del. 2002) (upholding shortened contractual limitations clause in an insurance policy)
- ABB Flakt, Inc. v. Nat’l Union Fire Ins. Co., 731 A.2d 811 (Del. 1999) (principles for construing insurance-policy language)
- Phillips Home Builders, Inc. v. Travelers Ins. Co., 700 A.2d 127 (Del. 1997) (unambiguous contract language binds parties)
- Rhone-Poulenc Basic Chems. Co. v. Am. Motorists Ins. Co., 616 A.2d 1192 (Del. 1992) (defining when policy language is not ambiguous)
- Smith v. Goodville Mut. Cas. Ins. Co., 29 A.3d 246 (Del. 2011) (enforcing a two-year contractual limitations period in an insurance policy)