Lee Lifeng Hsu and Jane Yuchen Hsu v. State Farm Fire and Casualty Company

• Court: Superior Court of Delaware
• Decided: February 27, 2026
• Docket: N24C-09-020 CLS
• Status: Published

Opinion

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

LEE LIFENG HSU and ) JANE YUCHEN HSU, ) ) Plaintiffs, ) v. ) ) C.A. No. N24C-09-020 CLS STATE FARM FIRE AND ) CASUALTY COMPANY, ) ) Defendant. ) ) )

Date Submitted: November 25, 2025 Date Decided: February 27, 2026

Upon Consideration of the Plaintiffs’ Motion for Partial Summary Judgment. DENIED.

Upon Consideration of the Plaintiffs’ Motion to Vacate the Modified Trial Scheduling Order. DENIED.

Upon Consideration of Defendant’s Motion for Summary Judgment. GRANTED in part, DENIED in part.

MEMORANDUM OPINION

Lee Lifeng Hsu & Jane Yuchen Hsu, Pro Se Plaintiffs.

Donald M. Ransom, Esquire for CASARINO CHRISTMAN SHALK RANSOM & DOSS, P.A., Attorney for Defendant.

SCOTT, J. This matter stems from an alleged breach of an insurance contract. Lee Lifeng

Hsu and Jane Yuchen Hsu (collectively, “Plaintiffs”) filed a pro se Motion for Partial

Summary Judgment on their claims for breach of contract, bad faith breach of

contract and fraud, and a Motion to Vacate the Modified Trial Scheduling Order. The

defendant, State Farm Fire and Casualty Company (“State Farm”) filed a Motion for

Summary Judgment on all claims against it. For the following reasons, Plaintiffs’

Motion for Partial Summary Judgment is DENIED; Plaintiffs’ Motion to Vacate is

DENIED; Defendant’s Motion for Summary Judgment is GRANTED in part,

DENIED in part.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY1

In August 2023, Plaintiffs entered into a contract with State Farm for

Homeowners’ Insurance (the “Policy”).2 On October 30, 2023, Plaintiffs’ home

flooded with sewage water.3 Plaintiffs allege that water started leaking from the

toilet on the second floor of Plaintiffs’ home, causing the kitchen ceiling to collapse,

which then caused sewage water to flood to the basement.4 Plaintiffs then filed a

claim with State Farm for coverage on the damages that resulted.5

1 The facts are drawn from the Complaint and all documents the parties incorporated by reference. The Court accepts these facts solely for the purpose of ruling on the Motion. 2 Def.’s Mot. for Summ. J. and Resp. to Pls.’ Mot. for Partial Summ. J., Ex. 5, D.I. 50 (“Def.’s Mot. for Summ. J.”). 3 Complaint, ¶ 1, D.I. 1 (“Compl.”). 4 Id. ¶ 8. 5 Id. ¶ 7. Following assessments from State Farm agents and an estimate from

Gibellino Construction, State Farm paid around $61,000 in coverage under the

Policy.6 State Farm denied coverage for additional claims made by Plaintiffs for

ceramic tiles, the kitchen floor ceiling, underlayment plywood, and thousands of

personal property items.7 Plaintiffs allege that the damage to their home was more

than $61,000 because the water intrusion was a “Category 3” leak.8 Although

unclear from the record, it seems that not all of the damages claimed by Plaintiffs

“appear[ed] loss[-]related” in State Farm’s view.9

The Court’s understanding from the parties’ briefing and the record is that

“category” refers to the severity of the contamination from the leak: Category 1 is

“generally clear;” Category 2 is “generally murky;” and Category 3 is “dark, highly

contaminated water.”10 According to Plaintiffs, State Farm wrongfully denied the

coverage by failing to classify the leak’s severity as Category 3, which requires

coverage on the entirety of Plaintiffs’ claim under the Policy.

On September 10, 2024, Plaintiffs filed a Complaint against State Farm for

breach of contract, bad faith breach of contract, fraud, unfair claims settlement

practices under 18 Del. C. § 2304(16), and insurance fraud under 18 Del. C. §

6 Def.’s Mot. for Summ. J., Ex. 2 at 71; Compl. ¶¶ 12, 14, 17, 19. 7 Compl. ¶¶ 19, 33; Def.’s Mot. for Summ. J., Ex. 2 at 25–26, 34, 41. 8 Compl. ¶ 7. 9 Def.’s Mot. for Summ. J., Ex. 2 at 71. 10 Def.’s Mot. for Summ. J. ¶ 2. 2407(c)(2).11 Plaintiffs seek declaratory judgment, damages for dwelling and

personal property losses, “opportunity costs,” emotional distress and associated

health issues, punitive damages, a court recommendation for a Department of

Insurance investigation, interest, and attorney’s fees and costs.12

Plaintiffs filed a Motion for Partial Summary Judgment on January 27, 2025,

arguing that there is no genuine dispute of material fact relating to their claims for

State’s Farm violation of 18 Del. C. § 2304(16)(c), breach of contract and bad faith

breach of contract, and fraud.13 State Farm filed a Motion for Summary Judgment

and Response to Plaintiffs’ Motion for Partial Summary Judgment on October 31,

2025.14 On November 25, 2025, Plaintiffs filed a Motion to Vacate the Court’s

January 9, 2025 Order modifying the trial scheduling order, Reply to State Farm’s

Response, and Response to State Farm’s Motion for Summary Judgment.15 The

matter is now ripe for decision.

STANDARD OF REVIEW

The burden of proof on a motion for summary judgment under Superior Court

Civil Rule 56 falls on the moving party to demonstrate that “there is no genuine issue

11 See generally Compl. 12 Compl. ¶ 40. 13 See generally Pls.’ Mot. for Partial Summ. J. and Mot. to Compel, D.I. 15 (“Pls.’ Mot. for Partial Summ. J.”). 14 See generally Def.’s Mot. for Summ. J. 15 See generally Pls.’ Mot. to Vacate Prior Scheduling Order Modification, Reply to Def.’s Resp. to Pls.’ Mot. for Partial Summ. J., and Resp. to Def.’s Mot. for Summ. J., D.I. 52 (“Pls.’ Reply Br”). as to any material fact and that the moving party is entitled to judgment as a matter

of law.”16 If the moving party satisfies its initial burden, the non-moving party must

sufficiently establish the “existence of one or more genuine issues of material

fact.”17 Summary judgment will not be granted if there is a material fact in dispute

or if “it seems desirable to inquire thoroughly into [the facts] in order to clarify the

application of the law to the circumstances.”18 “All facts and reasonable inferences

must be considered in a light most favorable to the non-moving party.”19

DISCUSSION

I. The breach of contract claim survives summary judgment, but personal property damages are limited to actual cash value.

To show the contractual liability of an insurer, the insured must establish:

“(1) the existence of a contract, whether express or implied, (2) breach of one or

more of the contract’s obligations, and (3) damages resulting from the breach.”20

The only element in dispute here is whether State Farm breached the Policy.

16 Super. Ct. Civ. R. 56(c). 17 Quality Elec. Co., Inc. v. E. States Const. Serv., Inc., 663 A.2d 488, 1995 WL 379125, at *3–4 (Del. June 19, 1995) (TABLE); see also Moore v. Sizemore, 405 A.2d 679, 681 (Del. 1979). 18 Ebersole v. Lowengrub, 180 A.2d 467, 469–70 (Del. 1962); see also CNH Indus. Am. LLC v. Am. Cas. Co. of Reading, 2015 WL 3863225, at *1 (Del. Super. June 8, 2015). 19 Nutt v. A.C. & S. Co., Inc., 517 A.2d 690, 692 (Del. Super. 1986) (citing Mechell v. Plamer, 343 A.2d 620, 621 (Del. 1975); Allstate Auto Leasing Co. v. Caldwell, 394 A.2d 748, 752 (Del. Super. 1978)). 20 Geico Gen. Ins. Co. v. Green, 308 A.3d 132, 140 (Del. 2022). A. Summary judgment is not appropriate on Plaintiffs’ claim for breach of contract.

The Court concludes that neither State Farm nor Plaintiffs are entitled to

summary judgment on the breach of contract claim. While it is undisputed that State

Farm has paid Plaintiffs just over $61,000 to cover the loss from the event, a material

issue of fact exists as to the severity of the loss and what coverage was required

under the Policy.21 Despite the parties’ clear dispute, State Farm claims that it is

nevertheless entitled to summary judgment because Plaintiffs fail to provide an

expert opinion “to address the proper categorization of [the] water loss[,] which in

turn affects the necessary . . . remediation to support their claims for any additional”

dwelling and personal property coverage “beyond what it has already paid.”22

Plaintiffs counter that Jason Scarpato is the “only qualified expert opinion in the

record.”23

The Court agrees with State Farm that the nature of the loss requires an expert

opinion as it is a matter outside the common knowledge of the factfinder.24

However, there is a dispute as to whether Plaintiffs have a qualified expert. In the

Complaint, Plaintiffs allege that their expert, Jason Scarpato, a certified specialist in

21 Def.’s Mot. for Summ. J. ¶¶ 2, 5; Pls.’ Reply Br. ¶ 15. 22 Def.’s Mot. for Summ. J. ¶ 3. 23 Pls.’ Reply Br. ¶ 16. 24 See Campbell v. DiSabatino, 947 A.2d 1116, 1118 (Del. 2008) (quoting Davis v. Maute, 770 A.2d 36, 40 n.3 (Del. 2001)) (explaining that “[i]t is settled Delaware law that, if a claim requires proof of facts that ‘are not within the common knowledge of laymen,’ those facts must be presented through expert testimony”). water damage restoration, assessed the damages and opined that the home suffered

a “Category 3” loss.25 The Court notes that Plaintiffs have not disclosed an expert

report on Mr. Scarpato and a ruling on whether Mr. Scarpato is qualified as an expert

is not suited for summary judgment. But the fact that Plaintiffs claim to have an

expert raises a genuine issue of material fact as to whether State Farm breached the

Policy. Accordingly, the Court will not grant summary judgment on the breach of

contract claim.

B. State Farm is entitled to summary judgment on replacement cost value for personal property damages.

Alternatively, State Farm argues that Plaintiffs’ remedy for personal property

should be limited to the actual cash value because Plaintiffs failed to meet a

condition precedent to receiving the replacement value under Section I Loss

Settlement, Coverage B – Personal Property, B1 – Limited Replacement Cost Loss

Settlement of the Policy.26 Plaintiffs’ only response is that it is entitled to the

replacement cost value because the defendant breached the contract in bad faith even

though Plaintiffs “acted in good faith and were willing to accept Actual Cash Value

(ACV) as the settlement cost.”

25 Compl. ¶ 9. 26 Def.’s Mot. for Summ. J. ¶ 8, Ex. 5 at 19. “Absent waiver or estoppel, an insurer may assert substantial non-

performance of any condition as a defense to any proceeding against it on a policy.”27

Section I Loss Settlement, Coverage B – Personal Property, B1 – Limited

Replacement Cost Loss Settlement provides:

COVERAGE B – PERSONAL PROPERTY

1. B1 – Limited Replacement Cost Loss Settlement

a. We will pay the cost to repair or replace property covered under SECTION I – PROPERTY COVERAGES, COVERAGE B – PERSONAL PROPERTY, except for property listed in item b below, subject to the following:

(1) until repair or replacement is completed, we will pay only the actual cash value of the damaged property;

(2) after repair or replacement is completed, we will pay the difference between the actual cash value and the cost you have actually and necessarily spent to repair or replace the property; and

(3) if property is not repaired or replaced within two years after the date of loss, we will pay only the actual cash value.28

Delaware laws instructs that unless the language is clear, courts should

construe insurance contracts strongly in favor of the insured where an ambiguity

exists.29 The language of this provision is unambiguous and only susceptible of one

27 Casson, 455 A.2d 361, 365 (Del. Super. 1982) (citing Bacon v. American Ins. Co., 330 A.2d 576 (N.J. Super. 1978), aff’d, 351 A.2d 771 (N.J. 1974)). 28 Def.’s Mot. for Summ. J., Ex. 5 at 19. 29 Casson, 455 A.2d at 366 (citing Novellino v. Life Ins. Co. of North America, 216 A.2d 420 (Del. 1966); Lamberton v. Travelers Indem. Co., 325 A.2d 104 (Del. Super. 1974)). meaning: State Farm would pay the replacement cost value of personal property if

Plaintiffs furnished State Farm with proof that the items claimed were repaired or

replaced. Consequently, Plaintiffs and State Farm are bound by the terms above for

payment of the replacement cost value versus actual cash value of personal property

covered under the Policy.

Here, there is no dispute that Plaintiffs did not provide State Farm with proof

that the personal property items being claimed have been repaired or replaced. Thus,

any potential recovery on Plaintiffs’ claims for personal property damage under the

Policy is limited to the actual cash value of those items.

II. State Farm is entitled to summary judgment on Plaintiffs’ bad faith breach of contract claim.

Plaintiffs allege that State Farm’s “intentional delays and unnecessary

bureaucratic procedures to frustrate and hinder the claim process” constitute bad

faith breach of contract.30 State Farm argues that it had a reasonable basis for

denying Plaintiffs’ claim.31 The Court agrees with State Farm.

Under Delaware law, for a claimant to prevail on a bad faith breach of contract

claim, the insured must prove that the insurer breached the insurance contract, and

that the breach was “clearly without any reasonable justification.”32 The “question

30 Compl. ¶ 39(a); Pls.’ Mot. for Partial Summ. J. ¶¶ 14–17. 31 Def.’s Mot. for Summ. J. ¶ 12. 32 Green, 308 A.3d at 144 (Del. 2022) (quoting Casson, 455 A.2d at 369). relevant to whether the insurer’s denial was reasonable becomes ‘whether at the time

the insurer denied liability, there existed a set of facts or circumstances known to the

insurer which created a bona fide dispute and therefore a meritorious defense to the

insurer’s liability.’”33

Although there is a disputed breach of contract claim, Plaintiffs otherwise

cannot show that State Farm’s denial of additional coverage was clearly without

reasonable justification. Nothing in the record supports the assertion that State Farm

was engaging in intentional delays at the time it denied the entirety of the coverage

that Plaintiffs seek or even that the supposed delays generate a breach of the Policy.

Further, there is a bona fide dispute as to the severity of the leak and whether

the Policy covered Plaintiffs’ entire insurance claim. The Policy does not cover

collapse, sewage leaks over time, or contamination from sewage leaks unless

covered by the losses insured—i.e., direct, accidental physical loss of the dwelling.34

While unclear, it looks like State Farm did not provide coverage on Plaintiffs’ entire

claim because some of the damages did not seem related to the loss or covered by

the Policy. Still, State Farm paid Plaintiffs around $61,000 for the loss based on

numerous assessments. Given the circumstances at the time, it denied some of the

liability claimed by Plaintiffs, State Farm disputed the coverage required under the

33 Id. 34 Def.’s Mot. for Summ. J., Ex. 5 at 5, 12, 14–15. Policy in good faith. Hence, summary judgment in favor of State Farm is appropriate

on Plaintiffs’ claim for bad faith breach of contract.

III. State Farm is entitled to summary judgment on Plaintiffs’ claims under 18 Del. C. § 2304(16).

There is no private right of action under 18 Del. C. § 2304.35 It is undisputed

that this case is a private action, and Plaintiffs admit that they are not asserting a

statutory claim under Section 2304(16) but rather using it as “a concise benchmark

for evaluating insurer conduct.”36 Therefore, summary judgment in favor of State

Farm is appropriate on this issue.

IV. State Farm is entitled to summary judgment on Plaintiffs’ claim for fraud as the allegations lack specificity.

The Complaint avers that State Farm’s actions show “a fraudulent pattern of

conduct” because its “systemic approach [is] rooted in a corporate culture that

promotes unethical behavior.”37 Plaintiffs argue that they are entitled to summary

judgment for this claim on two grounds: (1) State Farm’s failure to disclose the

replacement cost basis for personal property violates 18 Del. C. § 2407(c)(2) and

constitutes fraud under the common law; and (2) State Farm fraudulently told them

that the personal property claims were being investigated when they were not, and

35 Green, 308 A.3d at 142 (internal citations omitted). 36 Pls.’ Reply Br. ¶ 18. 37 Compl. ¶ 39(c). Plaintiffs were unaware due to the complicated software used for filing claims with

State Farm.38

State Farm, on the other hand, argues that summary judgment is appropriate

because the Complaint “fails to allege fraud with specificity and [P]laintiffs have

produced no factual evidence to support any claim of fraud.”39

To state a claim for fraud, the claimant must show that:

(1) the defendant falsely represented or omitted facts that the defendant had a duty to disclose; (2) the defendant knew or believed that the representation was false or made the representation with a reckless indifference to the truth; (3) the defendant intended to induce the plaintiff to act or refrain from acting; (4) the plaintiff acted in justifiable reliance on the representation; and (5) the plaintiff was injured by its reliance.40

Rule 9(b) also requires that the claim asserts: “(1) the time, place, and contents of

the false representation; (2) the identity of the person making the representation;

and (3) what the person intended to gain by making the representation.” 41 The

particularity requirement is satisfied if the allegations are made with “detail

sufficient to apprise the defendant of the basis for the claim.”42

38 Pls.’ Mot. for Partial Summ. J. ¶¶ 18–22. 39 Def.’s Mot. for Summ. J. ¶ 10. 40 Perfect Game, Inc. v. Rise 2 Greatness Found., 2025 WL 1555003, at *5 (Del. Super. June 2, 2025) (quoting Everphone, Inc. v. Go Tech. Mgmt., LLC, 2023 WL 7996560, at *4 (Del. Super. Nov. 17, 2023)) (internal quotation marks omitted). 41 Medlink Health Sols., LLC v. JL Kaya, Inc., 2023 WL 1859785, at * 2 (Del. Super. Feb. 9, 2023) (quoting Abry Partners V, L.P. v. F & W Acq. LLC, 891 A.2d 1032, 1050 (Del. Ch. 2006)) (internal quotation marks omitted). 42 Id. Primarily, there is nothing on this record that State Farm made statements that

they were investigating Plaintiffs’ claims when they were not, and that Plaintiffs

relied on those statements in acting or refraining from acting. Moreover, the

replacement cost value condition precedent is disclosed in the Policy and the record

does not show that State Farm had an obligation to directly disclose specific

provisions of the Policy to Plaintiffs. Accordingly, summary judgment in favor of

State Farm is also appropriate on Plaintiffs’ claim for fraud.

V. The remedies available are limited to Plaintiffs’ expectation damages.

Given that Plaintiffs’ claim for breach of contract is all that survives summary

judgment, the remedies that Plaintiffs can assert are limited to declaratory judgment,

and dwelling and personal property damages—i.e., Plaintiffs’ “expectation

interest.”43

While the Delaware Supreme Court has held that punitive damages may be

available in insurance contract disputes when the insurer acts in bad faith, the Court

has found that State Farm did not refuse to pay in bad faith.44 Plaintiffs assert no

other justifiable grounds for recovering punitive damages on a breach of contract

claim. In addition, emotional distress damages or “associated health issues” are not

43 E.I. DuPont de Nemours and Co. v. Pressman, 679 A.2d 436, 445 (Del. 1996). 44 Id. at 445–49. proper remedies where there is no evidence of physical injury or claim for intentional

infliction of emotional distress.45

The Court also finds that there is no authority supporting Plaintiffs’ contention

that “opportunity costs” are available for interference with Mr. Hsu’s achievement

of his ultimate life goal or that the Court may recommend a Department of Insurance

investigation.46

VI. Motion to Vacate January 9, 2024, Trial Scheduling Order

Finally, for the reasons discussed in this Court’s Order on Plaintiffs’ Motion

in Limine, Plaintiffs’ Motion to Vacate is DENIED.47

CONCLUSION

In sum, the only claim that survives summary judgment is Plaintiffs’ claim for

breach of contract and any expectation damages associated with that claim. Thus,

for the foregoing reasons, Plaintiffs’ Motion for Partial Summary Judgment is

DENIED; Plaintiffs’ Motion to Vacate is DENIED; and Defendant’s Motion for

Summary Judgment is GRANTED in part, DENIED in part.

IT IS SO ORDERED.

/s/ Calvin Scott Judge Calvin L. Scott, Jr.

45 Id. at 445–46 (internal citations omitted). 46 Compl. ¶ 40. 47 See Hsu v. State Farm Fire & Casualty Co., 2026 WL 165493, at *1 (Del. Super. Jan. 20, 2026).