Little River Landing LLC v. Allstate Vehicle and Property Insurance Company

FACTS:

The case involved a claim to reform a personal homeowners insurance policy on real property owned by the corporate plaintiff. The policy listed the corporation’s sole member and spouse as the named insureds individually, rather than the corporate entity. The property was owned by the corporate plaintiff in order to renovate and “flip” and was not used as a personal residence. Before the property was resold, a fire loss claim was made, coverage was denied, and litigation commenced. The matter involved issues of insurable interest and representations on the insurance application.

TRIAL DECISION:

After trial, the Magistrate found that the corporate plaintiff failed to meet its burden of proof that reformation was proper by failing to prove by “clear and convincing evidence” that a mutual mistake existed and ruled in favor of the insurer. The stakeholders of the corporate entity had unsuccessfully attempted to purchase a personal policy of homeowners insurance for a commercial property they did not own. The individual stakeholders in the corporation did not have an insurable interest in the property which was owned by the corporation. The application for insurance inaccurately identified the property as a personal residence, rather than a commercial property.

EXCEPTIONS:

Plaintiff took exceptions to the Magistrate’s decision on a lack of a mutual mistake, arguing that the Magistrate failed to impose proper sanctions on a spoilation issue regarding phone call recordings, and further arguing that the Magistrate misapplied principles of agency.

DECISION ON EXCEPTIONS:

On February 21, 2025, a Delaware Vice Chancellor denied exceptions filed by the plaintiff to the Magistrate’s Post Trial Final Report, endorsed the Magistrate’s analysis and conclusions, and affirmed the Final Report.

The insurer also took cross exceptions to the denial of the Summary Judgment Motion, but the Vice Chancellor’s affirming the Magistrate’s decision in favor of the insurer rendered the cross exceptions moot and were not addressed.

To read the full decision, click here.