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The Application's Location of the Life Insured Was That of the Plaintiff
Post 5235

In Zenith Smith v. The Independent Order of Foresters, C.A. No. 24-658-GBW (D. Del. Nov. 21, 2025) Plaintiff Zenith Smith ("Smith") is the beneficiary of a $500,000 life insurance policy ("Policy") issued by Defendant The Independent Order of Foresters ("Foresters") on the life of Shaun Davis ("Davis" or "Insured").

THE POLICY

The Policy application listed Smith's contact information (email, phone number, and address) as Davis's, which the court later deemed material misrepresentations. Davis was murdered (date unspecified). Smith submitted a claim for Policy proceeds on October 27, 2022.

Non-Payment and Arrangement:

Foresters did not pay the claim. Smith alleged an informal arrangement where she managed Policy payments and premiums, funded partly by Davis, and that Foresters was aware of this via a service representative's call and agent Paul Funk (an independent producer).

Evidence Issues:

Smith referenced a July 27, 2021, phone transcript with Funk (claimed as "newly obtained") showing use of Smith's contact info for Davis's policy, and suggested two policies existed (one for Davis, one for Smith) with shared contacts.

PROCEDURAL HISTORY
Initial Suit:

On March 25, 2024, Smith filed in Delaware Superior Court alleging: (1) breach of contract; (2) breach of covenant of good faith and fair dealing; and (3) bad faith. Foresters removed to U.S. District Court for the District of Delaware.

Summary Judgment:

On October 10, 2025, the court granted Foresters summary judgment, finding at least three material misrepresentations in the application (Davis's email, phone, and address). The court upheld Foresters' rescission of the Policy under 18 Del. C. § 2711, a Delaware statute allowing rescission for material misrepresentations in insurance applications. The court directed entry of judgment for Foresters but noted it had not yet been entered.

Motion at Issue:

On October 24, 2025, Smith filed a Motion to Alter or Amend under Fed. R. Civ. P. 59(e) and 60(b) (D.I. 64), seeking relief from the "final judgment." Foresters opposed.

Court's Treatment:

The court recharacterized the motion as one for reconsideration of a pre-judgment order, as no judgment had been entered.

LEGAL STANDARDS APPLIED
Reconsideration Standard

Patent misunderstanding of a party, decision outside presented issues, or error of apprehension. Intervening change in controlling law; new evidence unavailable at decision time; or clear error of law/fact to prevent manifest injustice.

Substantive Law:

18 Del. C. § 2711 permits rescission of life insurance policies for material misrepresentations in applications, without need to prove intent to deceive.

COURT'S ANALYSIS OF ARGUMENTS

The court rejected Smith's three arguments as unmeritorious, emphasizing reargument, lack of new evidence, and failure to cite authority. Plaintiff s failure to cite any evidence from the record or newly discovered evidence showing the existence of two life insurance policies, the discussion excerpted above from the purportedly “newly obtained transcript” fails to plausibly evince that Mr. Funk was aware that the phone number and e-mail address on the application for the Policy were Plaintiffs phone number and e-mail address.

Plaintiff failed to articulate how Defendant's rescission letter improperly “prejudices” Plaintiff, let alone cite any legal authority supporting any part of his assertions. The court found that there was no clear error in prior ruling; pure reargument of settled issue is not proper for reconsideration.

Broader Implications:

The decision reinforces the obligation of the court to strictly apply Delaware's rescission statute for material misrepresentations in insurance apps; underscores the high bar for post-judgment relief, especially without new evidence or clear error.

Conclusion and Holding

The motion was denied in full for lack of grounds for reconsideration. Judgment to be entered for Foresters.

ZALMA OPINION

Rescission is a remedy designed to bring fairness to the relationships between parties to a contract and when one party misrepresents or conceals facts material or defrauds a party influencing the decision of the insurer to insure or not insure. The contract becomes void from its inception and is treated as if it never existed.

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