A New York-based real estate management firm whose property was damaged during Hurricane Sandy cannot recover more than $3 million from its insurance provider because it waited too long to submit a claim, a Delaware judge ruled on Thursday.
In a nine-page opinion, Delaware Superior Court Judge Eric M. Davis said Bedrock Leasing Corp. filed its complaint to collect on part of the $10 million policy it held with Lexington Insurance Co. after a contractual two-year window for doing so had expired.
According to court papers, Bedrock's commercial property was damaged when Sandy swept through New York in October 2012, causing more than $19 million in losses in the city. Lexington, a Delaware-based insurance company, denied coverage under a policy for "direct physical loss or damage including flood, earthquake and terrorism" the following September.
It was not clear from court filings which of Bedrock's properties had been damaged in the storm.
Bedrock sued in the Superior Court's Complex Commercial Litigation Division in August 2016, and Lexington responded with a motion to dismiss, saying the two-year limitations period had expired in October 2014.
Statute of limitations expired
At oral argument in January, Bedrock argued that Lexington could not raise a statute of limitations argument without first notifying Bedrock of relevant time bars. The company called Lexington's refusal to pay, based on the time elapsed since the "date of loss," "repugnant" to Delaware public policy, and said that it was never alerted to the shortened statute of limitations.
In support of its position, the company cited two provisions of Delaware law that require insurers to provide written notice of applicable statutes of limitation for damages while a claim is pending. However, on Thursday Davis ruled that the suit limitations provision in the policy was valid and that Lexington was not required to give Bedrock notice.
In his opinion, Davis noted that neither of the cited statutes — which relate to casualty and personal or residential property — applied to commercial property in New York. Without those protections, Davis said, Bedrock was required to file suit either by the two-year anniversary of the storm or no later than September 2015, two years after coverage was denied.
"Bedrock knew when the damage occurred, and that triggered its two-year statute of limitations," Davis wrote. "Further, Lexington denied Bedrock's claim in September 2013, well within the two-year statute of limitations timeframe to file a lawsuit over Lexington's denial."
An attorney for Bedrock was not immediately available to comment on the ruling and a Lexington attorney did not immediately respond Friday to a call seeking comment.
The case was captioned Bedrock Leasing v. Lexington Insurance.
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