I have previously written about a decision of the United States District Court for the District of Massachusetts in the case of Manganella v. Evanston Ins. Co., 2011 WL 5118898 (D. Mass.). A Jasmine employee, Burgess, sued Jasmine and another employee, Manganella, on the ground that she had been sexually harassed by Manganella.
Jasmine sought defense and indemnity under an insurance policy issued by Evanston Insurance. Evanston denied coverage on the ground that the sexual harassment did not happen in its entirety after the policy period began, as required for coverage under the policy.
The District Court granted summary judgment to Jasmine, holding that Evanston had not met its burden of proving that the harassment began before the policy period.
Evanston appealed to the First Circuit Court of Appeals. The issue on appeal was whether the finder of fact, rather than a judge deciding a question of law, must conclude that the sexual harassment did or did not begin before the policy period.
Burgess's complaint alleged that Manganella had subjected her to sexual harassment throughout her employment with Jasmine, which began prior to the policy period. She later filed an affidavit stating that the harassment did not begin until after the policy period began. Later she asserted that although Manganella made off-color comments prior to the policy period, she was not threatened by him until after the policy period began.
In Manganella v. Evanston Ins. Co., __ F.3d __, 2012 WL 6217625 (1st Cir.), the First Circuit held that considered in the light most favorable to Jasmine, Burgess's statements do not necessarily show that the conduct giving rise to the discrimination complaint began before the policy period. The court also held that when considered in the light most favorable to Evanston, the statements could support the inference that the harassing conduct did include the pre-policy period statements.
The court held that the undisputed facts therefore do not entitle either party to summary judgment. Rather, the issue "is a quintessential question for a factfinder."
Tuesday, December 25, 2012
Monday, December 24, 2012
Happy Holidays
Happy holidays from the Ontario Insurance Law Blog. We'll be back in January with our weekly posts. We wish you all the best in 2013.
Wednesday, December 19, 2012
When Has FSCO Mediation Failed - Part 2
Last week, we blogged on the Court of Appeal`s decision in Hurst v. Aviva, which held that insureds may proceed to bring court actions or arbitration proceedings if 60 days have passed since an application for mediation at FSCO has been filed and no mediation has taken place.
The Court released its decision in Younis v. State Farm Insurance Company, 2012 ONCA 836 (C.A.) concurrently with Hurst. In the Hurst actions, the 60 day period had elapsed prior to the insured filing a court action. In Younis, however, the claimant applied for mediation on July 14, 2011 and filed a court action a few days later. State Farm`s motion to stay the action took place well after the 60 day period had elapsed. Justice Sloan refused to stay the action.
The Court of Appeal allowed the appeal. The Court held that the insured commenced his action in contravention of the statutory requirement by not waiting 60 days. Since Younis had not waited until mediation had failed, his action was barred. To allow otherwise would permit insured person to immediately commence civil actions and the statute did not permit this tactic.
The Court released its decision in Younis v. State Farm Insurance Company, 2012 ONCA 836 (C.A.) concurrently with Hurst. In the Hurst actions, the 60 day period had elapsed prior to the insured filing a court action. In Younis, however, the claimant applied for mediation on July 14, 2011 and filed a court action a few days later. State Farm`s motion to stay the action took place well after the 60 day period had elapsed. Justice Sloan refused to stay the action.
The Court of Appeal allowed the appeal. The Court held that the insured commenced his action in contravention of the statutory requirement by not waiting 60 days. Since Younis had not waited until mediation had failed, his action was barred. To allow otherwise would permit insured person to immediately commence civil actions and the statute did not permit this tactic.
Thursday, December 13, 2012
New York times discusses allocation of loss in football concussion lawsuits
The article, here, is a bit overwrought about possible difficulty that youth sports leagues might have in obtaining insurance in the future, but it does nicely describe the issues facing both insureds and insurers at the beginning of long-tail loss claims.
Wednesday, December 12, 2012
When Has FSCO Mediation Failed - Part 1
We previously blogged on the decision in Cornie v. State Farm, in which Justice Sloan held that insureds may commence claims against their accident benefits carriers if 60 days have elapsed since an application for mediation has been filed, even if mediation itself has not occurred. The Court of Appeal has now released its appeal decision in Hurst v. Aviva, 2012 ONCA 837 (C.A.).
Section 281(2) of the Insurance Act prevents insured persons from commencing court actions or arbitrations against their insurers unless they first seek mediation and mediation has failed. The claimants waited 60 days after applying for mediation and when no mediation had taken place, they commenced actions. FSCO`s position was that the prescribed 60 day time limit for conducting mediation did not begin to run until an application for mediation had been assessed by FSCO and found to be complete. FSCO refused to issue a report declaring the mediations had failed. The insurers in four actions brought motions to have the actions stayed on the basis that they were barred by s. 281(2) as mediation had not taken place. Justice Sloan dismissed the motions and the insurers appealed.
The Court of Appeal dismissed the appeals. The Court concluded that the process is intended to be completed with 60 days after an application for mediation has been filed; however, if mediation has not taken place within 60 days, insured persons are free to pursue either court action or arbitration.
The Court rejected the insurers` arguments that the cost to the industry could be $83 million as a result of the interpretation of the Act that does not require mediation to actually take place. The insurers submitted statistics that 75% of claims are resolved by mediation at FSCO. One has to expect a flood of court proceedings as a result of this decision, along with significant costs to insurers.
Section 281(2) of the Insurance Act prevents insured persons from commencing court actions or arbitrations against their insurers unless they first seek mediation and mediation has failed. The claimants waited 60 days after applying for mediation and when no mediation had taken place, they commenced actions. FSCO`s position was that the prescribed 60 day time limit for conducting mediation did not begin to run until an application for mediation had been assessed by FSCO and found to be complete. FSCO refused to issue a report declaring the mediations had failed. The insurers in four actions brought motions to have the actions stayed on the basis that they were barred by s. 281(2) as mediation had not taken place. Justice Sloan dismissed the motions and the insurers appealed.
The Court of Appeal dismissed the appeals. The Court concluded that the process is intended to be completed with 60 days after an application for mediation has been filed; however, if mediation has not taken place within 60 days, insured persons are free to pursue either court action or arbitration.
The Court rejected the insurers` arguments that the cost to the industry could be $83 million as a result of the interpretation of the Act that does not require mediation to actually take place. The insurers submitted statistics that 75% of claims are resolved by mediation at FSCO. One has to expect a flood of court proceedings as a result of this decision, along with significant costs to insurers.
Tuesday, December 11, 2012
US District Court holds that for forgery coverage an email promising compensation is not similar to a check, draft or promissory note
Kenneth Engleman alleged that CustomMade and its CFO induced him to leave a lucrative job to work for CustomMade as a partner and co-owner of the company, but then did not follow through with the promises.
During the course of the underlying suit, CustomMade's CFO realized that a critical email allegedly sent by him to Engleman had been altered. At least in part as a result, the court dismissed Engelman's complaint.
CustomMade asserted that it was entitled to defense costs under forgery coverage in an insurance policy issued to it by Sentinel. Sentinel denied coverage for the claim.
In CustomMade Ventures Corp. v. Sentinel Ins. Co., Ltd., 2012 WL 4321060 (D. Mass.), the United States District Court for the District of Massachusetts granted summary judgment to Sentinel. The court noted that the forgery coverage came within a special property coverage form, and that for it to apply the loss must involve covered property. The policy defined covered property as "checks, drafts, promissory notes, or similar written promises, orders or directions to pay a sum certain."
CustomMade argued that the email was a written promise to pay a sum certain and therefore came within the forgery coverage. The court held that the email was not a "similar written promise" to checks, drafts, or promissory notes.
During the course of the underlying suit, CustomMade's CFO realized that a critical email allegedly sent by him to Engleman had been altered. At least in part as a result, the court dismissed Engelman's complaint.
CustomMade asserted that it was entitled to defense costs under forgery coverage in an insurance policy issued to it by Sentinel. Sentinel denied coverage for the claim.
In CustomMade Ventures Corp. v. Sentinel Ins. Co., Ltd., 2012 WL 4321060 (D. Mass.), the United States District Court for the District of Massachusetts granted summary judgment to Sentinel. The court noted that the forgery coverage came within a special property coverage form, and that for it to apply the loss must involve covered property. The policy defined covered property as "checks, drafts, promissory notes, or similar written promises, orders or directions to pay a sum certain."
CustomMade argued that the email was a written promise to pay a sum certain and therefore came within the forgery coverage. The court held that the email was not a "similar written promise" to checks, drafts, or promissory notes.
Wednesday, December 5, 2012
Appellate Jurisdiction
Under the Courts of Justice Act, appeals relating to amounts greater than $50,000 must be made to the Court of Appeal. Appeals of judgments relating to amounts under $50,000 are to the Divisional Court. Where only a portion of a judgment is appealed, does the jurisdiction change?
In Grammatico v. Chambers, 2012 ONSC 6518 (Div. Ct.), the parties disagreed on whether the proper court to hear an appeal was the Divisional Court or the Court of Appeal. The substantive judgment involved sums greater than $50,000, the threshold imposed by s. 19(1.2) of the Courts of Justice Act for appeals to the Court of Appeal. The defendant argued that it sought to appeal an interest component relating to costs, rather than the substantive judgment. Since the amount would be less than $50,000 the defendant's position was that the appeal was to the Divisional Court.
Justice Eberhard held that the appeal was to the Court of Appeal. The jurisdiction for appeal must be determined by the aggregate of the sums awarded. The fact that only one part of the decision was under appeal did not determine jurisdiction.
In Grammatico v. Chambers, 2012 ONSC 6518 (Div. Ct.), the parties disagreed on whether the proper court to hear an appeal was the Divisional Court or the Court of Appeal. The substantive judgment involved sums greater than $50,000, the threshold imposed by s. 19(1.2) of the Courts of Justice Act for appeals to the Court of Appeal. The defendant argued that it sought to appeal an interest component relating to costs, rather than the substantive judgment. Since the amount would be less than $50,000 the defendant's position was that the appeal was to the Divisional Court.
Justice Eberhard held that the appeal was to the Court of Appeal. The jurisdiction for appeal must be determined by the aggregate of the sums awarded. The fact that only one part of the decision was under appeal did not determine jurisdiction.
Tuesday, December 4, 2012
New York state government creates a great resource
The state of New York has set up a website to monitor how insurers are responding to Hurricane Sandy claims. It includes the average time it takes each insurer to respond to, pay, and resolve claims, and the percentage of complaints out of total claims filed. This will be a useful resource for anyone choosing a homeowner's insurer.
Wednesday, November 28, 2012
Costs on a Summary Judgment Motion
In Mo v. Johnson, the defendant successfully moved for summary judgment dismissing the plaintiff's claim. Justice Morgan's decision on costs is reported at 2012 ONSC 6307 (CanLii).
One of the arguments made by the plaintiff was that the defendant was only entitled to costs of the motion, not the entire action. Justice Morgan disagreed, holding that:
One of the arguments made by the plaintiff was that the defendant was only entitled to costs of the motion, not the entire action. Justice Morgan disagreed, holding that:
[24] I agree with Mr. Bizezinski that where summary judgment dismisses the action, it is the costs of the action in its entirety that are at issue. To hold otherwise would allow a party who brings spurious litigation to cause the opposing side to incur substantial costs with no means of compensation.
The defendant was awarded costs of the entire action on a substantial indemnity basis due to the plaintiff's conduct, which was described as "aggressive and high-handed". The decision is a nice synopsis of some of the basic principles relating to costs.
Tuesday, November 27, 2012
Mass. Appellate Division holds that failure to attend two IME's after notification by mail sufficient to deny PIP claim
Arbella Mutual Insurance Company denied PIP payments to Chiropractic Care Centers, Inc. when its patient, Arbella's insured, failed to attend two scheduled independent medical examination.
In Chiropractic Care Centers, Inc. v. Arbella Mut. Ins. Co., 2012 WL 5830706 (Mass. App. Div.), the Massachusetts Appellate Division held that the insured's failure to appear for the IMEs after being notified of them by letter was a wilful failure to attend, justifying denial of PIP payments to Chiropractic Care.
The court noted that under Massachusetts law, the mailing of a properly addressed letter constitutes prima facie evidence of the intended recipient's receipt of the mailing.
In Chiropractic Care Centers, Inc. v. Arbella Mut. Ins. Co., 2012 WL 5830706 (Mass. App. Div.), the Massachusetts Appellate Division held that the insured's failure to appear for the IMEs after being notified of them by letter was a wilful failure to attend, justifying denial of PIP payments to Chiropractic Care.
The court noted that under Massachusetts law, the mailing of a properly addressed letter constitutes prima facie evidence of the intended recipient's receipt of the mailing.
Wednesday, November 21, 2012
Cost of Productions
Who pays for the cost of producing documents?
In Veillette v. Piazza Family Trust, 2012 ONSC 4782 (S.C.J.), the plaintiffs brought a motion to compel the defendant to answer undertakings and refusals he gave on an examination in aid of execution. The defendant took the position that the plaintiffs must pay any charges for obtaining the documents.
The Court cited two cases dealing with production of documents before trial, Ho v. O’Young-Lui, 2002 CanLII 6346 (ON SC), and Traverse v. Turnbull, [1996] N.S.J. No. 212 N.S.C.A. which held that the general rule is the party in possession or control of the documents is to produce them at their expense, although the court has residual discretion to depart from that rule where fairness and justice so require. The general rule may be altered if its application would prevent a party from presenting its case. Justice Kane held that there was no reason to depart from the general rule.
Although this case deals with an examination in aid of execution, disagreement over who pays for documents can often arise in the context of examination for discovery. The Veillette case is useful in providing a succinct argument as to why plaintiffs should bear the cost of producing their documents.
In Veillette v. Piazza Family Trust, 2012 ONSC 4782 (S.C.J.), the plaintiffs brought a motion to compel the defendant to answer undertakings and refusals he gave on an examination in aid of execution. The defendant took the position that the plaintiffs must pay any charges for obtaining the documents.
The Court cited two cases dealing with production of documents before trial, Ho v. O’Young-Lui, 2002 CanLII 6346 (ON SC), and Traverse v. Turnbull, [1996] N.S.J. No. 212 N.S.C.A. which held that the general rule is the party in possession or control of the documents is to produce them at their expense, although the court has residual discretion to depart from that rule where fairness and justice so require. The general rule may be altered if its application would prevent a party from presenting its case. Justice Kane held that there was no reason to depart from the general rule.
Although this case deals with an examination in aid of execution, disagreement over who pays for documents can often arise in the context of examination for discovery. The Veillette case is useful in providing a succinct argument as to why plaintiffs should bear the cost of producing their documents.
Tuesday, November 20, 2012
Friday, November 16, 2012
First Circuit interprets exclusion for claims arising out of restraint of trade
Two real estate developers, Rubloff Development Corp. and McVickers Development, had deals to develop shopping centers that would include Wal-Mart stores.
In an underlying complaint against Saint Consulting Group the developers alleged that Saint, a company that provides advice and advocacy in land use disputes, had a niche practice in which, acting on behalf of rival grocery store chains, it aims to block or delay Wal-Mart stores from opening in a rival's territories.
In 2007, Supervalu allegedly hired Saint to lead a campaign to delay or block the two developments. Saint organized local landowners to oppose the developments. Saint's representative, Mayo, told a false story of his parents being evicted from their home to make room for a Wal-Mart store and retained an attorney to represent the local landowners, without revealing that both Mayo and the attorney were being paid by Saint and Supervalu.
Editorial aside: Although the court doesn't discuss it, Saint's practice is known as astro-turfing. It's an invidious and, in my view, despicable practice. Has your community had a grassroots fight over whether or not a new supermarket should be approved? The supermarket trying to come in and other area supermarkets hoping to stop the new competition may have both used astro-turfers. If so, there's a significant chance that grassroots community leaders on either side of the fight were not even aware that they are being fed resources such as information and funding by the supermarket chains.
Editorial over.
Saint's efforts led the developments to be delayed, one possibly permanently.
After Mayo left Saint's employ, upstanding guy that he was, he contacted Rubloff and, in exchange for payment, turned over thousands of Saint documents detailing its scheme to block the developments.
In their suit against Saint, Rubloff and McVickers alleged that Saint violated RICO by engaging in a pattern of mail or wire fraud involving deceptions; conspiracy in restraint of trade; and tortious interference with prospective economic advantage.
The court dismissed all the underlying claims.
Saint sought defense costs under an an errors and omissions policy issued by Endurance. Endurance asserted that coverage was excluded by Exclusion N, which excludes coverage for any claim "based upon or arising out of any actual or alleged price fixing, restraint of trade, monopolization or unfair trade practices."
In Saint Consulting Group, Inc. v. Endurance Am. Specialty Ins. Co., __ F.3d __, 2012 WL 5381333 (1st Cir.), the court emphasized that Exclusion N extends to any claim arising out of restraint of trade. The term "arising out of" is construed broadly as looking at "the character of the behavior alleged."
The court noted that every count of the underlying complaint is either an antitrust claim or depends centrally on the existence of a scheme to forestall competition through misuse of legal proceedings and through deception.
The court rejected Saint's argument that Exclusion N did not apply because an Illinois court ruled in the underlying case that Saint's alleged conduct was protected against antitrust scrutiny by a legal doctrine, and since "it was not wrongful conduct, it could not be excluded from coverage by Exclusion N."
The court properly held that that argument "is a non-sequitur." Exclusion N (and more broadly, the duty to defend), does not depend on whether conduct occurred and whether it was unlawful, but on what the complaint alleged. The second amended complaint alleged an anti-competitive scheme which is excluded by Exclusion N.
Saint then made an argument that is a clear indication that it was grasping at straws: that if the exclusion applied coverage was illusory because the activities described in the complaint comprise "such a large part of its business." It was bound to lose right there -- "such a large part of its business" admits that there were other parts of its business that did not come within the exclusion.
I have occasionally made the illusory argument but only under very specific circumstances. Once I represented an insured who the coverage selection page indicated had paid an additional premium for a specific coverage, but then that coverage was excluded in the body of the policy. That's illusory. An exclusion that excludes a broad range but not all coverage is not illusory -- it's a sign that the insured needs a better agent.
One bone to pick with this decision: The court states that in a coverage case, the insured has to show coverage and then the "burden shifts" to the insurer to show that an exclusion applies. Many decisions make this same statement, but it makes no sense the in the context of a duty to defend. The duty to defend is determined by the eight corners test -- whether the facts alleged in the complaint fall within the coverage of the insurance policy as interpreted as a matter of law by the court. Ambiguous terms are interpreted against the insurer because it drafted the contract. Burdens of proof have no place in this analysis.
In an underlying complaint against Saint Consulting Group the developers alleged that Saint, a company that provides advice and advocacy in land use disputes, had a niche practice in which, acting on behalf of rival grocery store chains, it aims to block or delay Wal-Mart stores from opening in a rival's territories.
In 2007, Supervalu allegedly hired Saint to lead a campaign to delay or block the two developments. Saint organized local landowners to oppose the developments. Saint's representative, Mayo, told a false story of his parents being evicted from their home to make room for a Wal-Mart store and retained an attorney to represent the local landowners, without revealing that both Mayo and the attorney were being paid by Saint and Supervalu.
Editorial aside: Although the court doesn't discuss it, Saint's practice is known as astro-turfing. It's an invidious and, in my view, despicable practice. Has your community had a grassroots fight over whether or not a new supermarket should be approved? The supermarket trying to come in and other area supermarkets hoping to stop the new competition may have both used astro-turfers. If so, there's a significant chance that grassroots community leaders on either side of the fight were not even aware that they are being fed resources such as information and funding by the supermarket chains.
Editorial over.
Saint's efforts led the developments to be delayed, one possibly permanently.
After Mayo left Saint's employ, upstanding guy that he was, he contacted Rubloff and, in exchange for payment, turned over thousands of Saint documents detailing its scheme to block the developments.
In their suit against Saint, Rubloff and McVickers alleged that Saint violated RICO by engaging in a pattern of mail or wire fraud involving deceptions; conspiracy in restraint of trade; and tortious interference with prospective economic advantage.
The court dismissed all the underlying claims.
Saint sought defense costs under an an errors and omissions policy issued by Endurance. Endurance asserted that coverage was excluded by Exclusion N, which excludes coverage for any claim "based upon or arising out of any actual or alleged price fixing, restraint of trade, monopolization or unfair trade practices."
In Saint Consulting Group, Inc. v. Endurance Am. Specialty Ins. Co., __ F.3d __, 2012 WL 5381333 (1st Cir.), the court emphasized that Exclusion N extends to any claim arising out of restraint of trade. The term "arising out of" is construed broadly as looking at "the character of the behavior alleged."
The court noted that every count of the underlying complaint is either an antitrust claim or depends centrally on the existence of a scheme to forestall competition through misuse of legal proceedings and through deception.
The court rejected Saint's argument that Exclusion N did not apply because an Illinois court ruled in the underlying case that Saint's alleged conduct was protected against antitrust scrutiny by a legal doctrine, and since "it was not wrongful conduct, it could not be excluded from coverage by Exclusion N."
The court properly held that that argument "is a non-sequitur." Exclusion N (and more broadly, the duty to defend), does not depend on whether conduct occurred and whether it was unlawful, but on what the complaint alleged. The second amended complaint alleged an anti-competitive scheme which is excluded by Exclusion N.
Saint then made an argument that is a clear indication that it was grasping at straws: that if the exclusion applied coverage was illusory because the activities described in the complaint comprise "such a large part of its business." It was bound to lose right there -- "such a large part of its business" admits that there were other parts of its business that did not come within the exclusion.
I have occasionally made the illusory argument but only under very specific circumstances. Once I represented an insured who the coverage selection page indicated had paid an additional premium for a specific coverage, but then that coverage was excluded in the body of the policy. That's illusory. An exclusion that excludes a broad range but not all coverage is not illusory -- it's a sign that the insured needs a better agent.
One bone to pick with this decision: The court states that in a coverage case, the insured has to show coverage and then the "burden shifts" to the insurer to show that an exclusion applies. Many decisions make this same statement, but it makes no sense the in the context of a duty to defend. The duty to defend is determined by the eight corners test -- whether the facts alleged in the complaint fall within the coverage of the insurance policy as interpreted as a matter of law by the court. Ambiguous terms are interpreted against the insurer because it drafted the contract. Burdens of proof have no place in this analysis.
Wednesday, November 14, 2012
Martin v. Fleming - Deductibles
The Court of Appeal has now released its decision in Martin v. Fleming, which can be found at the following link: Martin v. Fleming, 2012 ONCA 750 (C.A.)
At issue was the operation of the deductible where a plaintiff has been in multiple accidents. The motions judge ruled that where the plaintiff has been involved in two accidents and the actions are tried together, there is a deductible for each action.
In a brief endorsement, the Court of Appeal dismissed the appeal. They followed the motion judge's reasoning that s. 267.5(7) is unambiguous and the plaintiff is subject to two deductibles.
Although this is a brief endorsement, it is important to those defending claims where the plaintiff has been in multiple accidents. Insurers for each defendant retain the benefit of the deductible.
Wednesday, November 7, 2012
Expert Independence
Do the new rules pertaining to expert evidence impose a higher duty than at common law? When an expert is alleged to be biased due to a connection to one of the parties or a matter in issue, does it go to admissibility or weight?
In Henderson v. Risi, 2012 ONSC 3459 (S.C.J.), the defendant proffered an expert, Mozessohn, to give testimony at trial regarding irregularities in the financial records of Timeless Inc., provide an opinion on the value of shares in Timeless held by the plaintiff, and critique the plaintiff expert's opinion. The plaintiff objected to the admissibility of Mozessohn's evidence on the basis that he was not independent or impartial since he was a partner in the accounting firm that acted as Timeless' Trustee in Bankruptcy. Mozessohn testified that there had been no communication between members of his firm about the case.
Justice Lederman quoted the Newfoundland Court of Appeal in Gallant v. Brake-Patten 2012 NLCA 23 (CanLII), which summed up the law regarding the admissibility of expert evidence where the allegation is the expert lacks institutional independence as opposed to personal advocacy:
Plaintiff's counsel argued that the new r. 4.1 and the changes to r. 53 imposed a higher level on duty on an expert in Ontario, and that the question of institutional independence must be determined at the admissibility stage rather than leaving it to be considered as a matter of weight.
Justice Lederman disagreed and allowed the expert to give testimony. Rules 4.1 and 53 simply remind experts of their already existing obligations to provide opinion evidence that is fair, objective and non-partisan. Any lack of institutional independence went to weight rather than admissibility. The new rules impose no higher duties than already existed at common law.
In Henderson v. Risi, 2012 ONSC 3459 (S.C.J.), the defendant proffered an expert, Mozessohn, to give testimony at trial regarding irregularities in the financial records of Timeless Inc., provide an opinion on the value of shares in Timeless held by the plaintiff, and critique the plaintiff expert's opinion. The plaintiff objected to the admissibility of Mozessohn's evidence on the basis that he was not independent or impartial since he was a partner in the accounting firm that acted as Timeless' Trustee in Bankruptcy. Mozessohn testified that there had been no communication between members of his firm about the case.
Justice Lederman quoted the Newfoundland Court of Appeal in Gallant v. Brake-Patten 2012 NLCA 23 (CanLII), which summed up the law regarding the admissibility of expert evidence where the allegation is the expert lacks institutional independence as opposed to personal advocacy:
In summary, in civil cases, if expert evidence meets the Mohan criteria for admissibility, it is admissible. Bias or partiality in expert evidence which is based on the expert having a connection with a party or issue or a possible pre-disposition or approach in the case is a reliability issue which is best determined when the whole of the expert evidence is considered in the context of all of the trial evidence. As such, the issue is one of weight and not admissibility.
Plaintiff's counsel argued that the new r. 4.1 and the changes to r. 53 imposed a higher level on duty on an expert in Ontario, and that the question of institutional independence must be determined at the admissibility stage rather than leaving it to be considered as a matter of weight.
Justice Lederman disagreed and allowed the expert to give testimony. Rules 4.1 and 53 simply remind experts of their already existing obligations to provide opinion evidence that is fair, objective and non-partisan. Any lack of institutional independence went to weight rather than admissibility. The new rules impose no higher duties than already existed at common law.
Monday, November 5, 2012
Wednesday, October 31, 2012
Restricting Summary Judgment
Are courts beginning to restrict the use of summary judgment?
Justice Brown took the opportunity to comment on summary judgment in a decision encompassing two cases, George Weston Limited v. Domtar Inc and 1318214 Ontario Limited v. Sobeys Capital Inc., 2012 ONSC 5001 (S.C.J.). These were two cases from the Commerical List in Toronto where counsel sought to schedule summary judgment motions. In George Weston, the plaintiff sought to schedule a summary judgment motion prior to examinations for discovery. In 1318214 Ontario, discoveries were mostly complete and when the plaintiff sought to set the matter down for trial, the defendant advised it intended to bring a motion for partial summary judgment to limit the issues for trial.
Justice Brown laments the motion culture in Toronto and what he sees as a reluctance of counsel, especially counsel who have practiced for less than 15 years, to bring cases to trial. He suggests that instead of bringing summary judgment motions, counsel should take more cases to trial and that courts should facilitate the process by approving innovative ways of proceeding to trial; for example, evidence could be a hybrid of written and viva voce evidence.
It will be interesting to see if other judges share Justice Brown's concerns and if courts will start restricting the use of summary judgment motions. Defence counsel and insurers will need to carefully assess each case to determine whether the appropriate way is to proceed by way of summary judgment or whether it might be more beneficial to simply proceed to trial.
Justice Brown took the opportunity to comment on summary judgment in a decision encompassing two cases, George Weston Limited v. Domtar Inc and 1318214 Ontario Limited v. Sobeys Capital Inc., 2012 ONSC 5001 (S.C.J.). These were two cases from the Commerical List in Toronto where counsel sought to schedule summary judgment motions. In George Weston, the plaintiff sought to schedule a summary judgment motion prior to examinations for discovery. In 1318214 Ontario, discoveries were mostly complete and when the plaintiff sought to set the matter down for trial, the defendant advised it intended to bring a motion for partial summary judgment to limit the issues for trial.
Justice Brown laments the motion culture in Toronto and what he sees as a reluctance of counsel, especially counsel who have practiced for less than 15 years, to bring cases to trial. He suggests that instead of bringing summary judgment motions, counsel should take more cases to trial and that courts should facilitate the process by approving innovative ways of proceeding to trial; for example, evidence could be a hybrid of written and viva voce evidence.
It will be interesting to see if other judges share Justice Brown's concerns and if courts will start restricting the use of summary judgment motions. Defence counsel and insurers will need to carefully assess each case to determine whether the appropriate way is to proceed by way of summary judgment or whether it might be more beneficial to simply proceed to trial.
Tuesday, October 30, 2012
Just what you need for Halloween
Tired of handing out candy? The older kids scoff at stickers and playdough.
How about zombie insurance? As Horrance.com points out, car insurance is useless if a zombie has eaten you.
How about zombie insurance? As Horrance.com points out, car insurance is useless if a zombie has eaten you.
Wednesday, October 24, 2012
Second Independent Medical Examination - Evidence
What evidence is necessary on a motion to compel the plaintiff to attend a second independent medical examination?
In Nasir v. Kochmanski, 2012 ONSC 4088 (S.C.J.), the plaintiff was a minor who was injured in a motor vehicle accident. The claim alleged the plaintiff was struck while a pedestrian and sustained a head injury and various psychological impairments. He had been assessed by a number of medical doctors and psychologists, both treating and arranged by plaintiff`s counsel. He had been assessed by a paediatric neurologist on behalf of the defendant, although no report had been prepared. The defendant sought to have the plaintiff assessed by a psychologist. The proposed assessor wrote a letter to defence counsel outlining the assessment, its length, information she would require from the plaintiff`s parents, and test results from other assessments she required.
Justice Daley permitted the assessment. The proposed assessment was outside the scope of expertise of the neurologist, according to the psychologist`s letter. There was no evidence the assessment would delay trial or prejudice the plaintiff. Since the plaintiff was very young, his evidence would be of limited evidentiary value, and the most probative and reliable evidence would have to come from experts. Trial fairness favoured the second examination.
It should be noted that the evidence in support of the motion appears to come from a letter from the proposed assessor. Justice Daley stated that it would have been preferable to have an affidavit or report from the neurologist outlining the need for a further examination, but accepted that there was enough evidence to support the motion. There is some inconsistency in the case law as to the form of evidence needed on a motion for a further examination, and counsel should carefully consider whether it would be beneficial to have affidavit evidence.
In Nasir v. Kochmanski, 2012 ONSC 4088 (S.C.J.), the plaintiff was a minor who was injured in a motor vehicle accident. The claim alleged the plaintiff was struck while a pedestrian and sustained a head injury and various psychological impairments. He had been assessed by a number of medical doctors and psychologists, both treating and arranged by plaintiff`s counsel. He had been assessed by a paediatric neurologist on behalf of the defendant, although no report had been prepared. The defendant sought to have the plaintiff assessed by a psychologist. The proposed assessor wrote a letter to defence counsel outlining the assessment, its length, information she would require from the plaintiff`s parents, and test results from other assessments she required.
Justice Daley permitted the assessment. The proposed assessment was outside the scope of expertise of the neurologist, according to the psychologist`s letter. There was no evidence the assessment would delay trial or prejudice the plaintiff. Since the plaintiff was very young, his evidence would be of limited evidentiary value, and the most probative and reliable evidence would have to come from experts. Trial fairness favoured the second examination.
It should be noted that the evidence in support of the motion appears to come from a letter from the proposed assessor. Justice Daley stated that it would have been preferable to have an affidavit or report from the neurologist outlining the need for a further examination, but accepted that there was enough evidence to support the motion. There is some inconsistency in the case law as to the form of evidence needed on a motion for a further examination, and counsel should carefully consider whether it would be beneficial to have affidavit evidence.
Monday, October 22, 2012
New Cavalcade of Risk is up
For a roundup of risk-related blog posts from around the web, take a look here. Special thanks to My Personal Finance Journey for including my post on insurance as a kind of tax as one of the top three posts for this Cavalcade.
Thursday, October 18, 2012
Great article on certificates of insurance
Virginia Business has an excellent article by Collin Hite on the uselessness of certificates of insurance. I wholeheartedly agree with his analysis.
The article discusses a new law in Virginia that attempts to prevent certificates of insurance from containing misleading language about what rights the certificate gives a certificate-holder. While that may be occasionally helpful, in my view the real problem with certificates of insurance is that they exist at all. As they cannot be used as proof of coverage, why issue them? The safer practice would be for an entity seeking proof that it is an additional insured on someone else's policy to require that the primary insured provide a copy of the coverage selection page. If the coverage selection page does not list additional insureds by name, that part of the policy that does name or define additional insureds should be provided. Although that won't prevent the problem of a policy being canceled by the primary insured without notice to the additional insured, it would be a step in the right direction.
The article discusses a new law in Virginia that attempts to prevent certificates of insurance from containing misleading language about what rights the certificate gives a certificate-holder. While that may be occasionally helpful, in my view the real problem with certificates of insurance is that they exist at all. As they cannot be used as proof of coverage, why issue them? The safer practice would be for an entity seeking proof that it is an additional insured on someone else's policy to require that the primary insured provide a copy of the coverage selection page. If the coverage selection page does not list additional insureds by name, that part of the policy that does name or define additional insureds should be provided. Although that won't prevent the problem of a policy being canceled by the primary insured without notice to the additional insured, it would be a step in the right direction.
Wednesday, October 17, 2012
Catastrophic Impairment: Aviva v. Pastore
The Court of Appeal has released an important decision relating to catastrophic impairment:
Aviva Canada Inc. v. Pastore, 2012 ONCA 642 (C.A.)
The insured was injured in a 2002 motor vehicle accident as a pedestrian and sustained an ankle injury. She alleged her gait had been altered and was diagnosed with a pain disorder. A DAC found her to be catastrophically impaired in 2005 due to a marked mental or behavioural impairment under s. 2(1.1)(g) of the SABS. An assessment under s. 2(1.1)(g) is carried out with reference to the AMA Guides, which provide for an assessment of function in four categories:
Pastore was diagnosed with a number of psychological disorders and the DAC concluded that she had a class 4 marked impairment in activities of daily living. The DAC concluded she was catastrophically impaired on the basis of the one class 4 impairment. The insurer did not agree with the assessment and the matter proceeded to mediation then arbitration.
At arbitration, the arbitrator agreed with the DAC assessors and held that one marked impairment was enough to comply with the Guides approach to impairment. In addition, it was appropriate to consider physical pain in assessing mental disorder, as it was not possible to factor out all physically based pain since it was intertwined with mentally based pain. The Director's Delegate upheld the decision, but the Divisional Court overturned the arbitrator.
The Court of Appeal allowed the appeal and reinstated the arbitrator`s decision. The conclusion that only one marked impairment is sufficient to meet the definition of catastrophic impairment was a reasonable one. In addition, it was not an error for the DAC assessors to consider both physical and mental pain.
Pastore appears to have lowered the bar for catastrophic impairment based on a mental disorder and more claimants may be able to fit themselves into a catastrophic designation than prior to this decision.
Aviva Canada Inc. v. Pastore, 2012 ONCA 642 (C.A.)
The insured was injured in a 2002 motor vehicle accident as a pedestrian and sustained an ankle injury. She alleged her gait had been altered and was diagnosed with a pain disorder. A DAC found her to be catastrophically impaired in 2005 due to a marked mental or behavioural impairment under s. 2(1.1)(g) of the SABS. An assessment under s. 2(1.1)(g) is carried out with reference to the AMA Guides, which provide for an assessment of function in four categories:
(1) Activities of daily living (ADL);
(2) Social functioning;
(3) Concentration, persistence and pace; and
(4) Deterioration or decompensation in work or work-like settings.
Pastore was diagnosed with a number of psychological disorders and the DAC concluded that she had a class 4 marked impairment in activities of daily living. The DAC concluded she was catastrophically impaired on the basis of the one class 4 impairment. The insurer did not agree with the assessment and the matter proceeded to mediation then arbitration.
At arbitration, the arbitrator agreed with the DAC assessors and held that one marked impairment was enough to comply with the Guides approach to impairment. In addition, it was appropriate to consider physical pain in assessing mental disorder, as it was not possible to factor out all physically based pain since it was intertwined with mentally based pain. The Director's Delegate upheld the decision, but the Divisional Court overturned the arbitrator.
The Court of Appeal allowed the appeal and reinstated the arbitrator`s decision. The conclusion that only one marked impairment is sufficient to meet the definition of catastrophic impairment was a reasonable one. In addition, it was not an error for the DAC assessors to consider both physical and mental pain.
Pastore appears to have lowered the bar for catastrophic impairment based on a mental disorder and more claimants may be able to fit themselves into a catastrophic designation than prior to this decision.
Tuesday, October 16, 2012
Representing an insurance company does not make you a bad person
In the Massachusetts Senate race between Scott Brown and Elizabeth Warren, Brown has attacked Warren for representing Travelers Insurance in asbestos litigation. Warren has responded with ads in which family-members of people who died from asbestos-related illnesses defend her, asserting that she fought to increase and protect settlement money available to the victims and their families.
What if that wasn't Warren's role? What if she had been hired to simply defend Travelers from asbestos claims, to argue that the claims were excluded by the policies, or that the insured was not liable? Would that mean she is in the pocket of corporations and therefore should not be elected as a Democrat?
Without going into a Democrat/Republican/all politicians are sellouts tirade, no. I spend the first six years of my legal career as an insurance defense attorney, and I still represent insurers both directly and indirectly through subcontract work. There have been times when, given my personal views, I felt somewhat uncomfortable with the cases I was given. A low point came when I represented as insurance defense counsel a used car dealer that was being sued for allegedly charging customers illegal fees. I've represented insured defendants who discovery showed were clearly liable.
In all of my cases, no matter which side I'm on, I zealously represent my clients. Sometimes zealous representation means advising the insurer to settle. Sometimes it means advising the insurer not to settle even though liability is clear, because the plaintiff is asking too much in damages.
There are plaintiffs attorneys who are incompetent and don't give their clients good advice about a case, and there are insurance defense attorneys who are incompetent and don't give their clients good advice about a case. In my experience, those attorneys are relatively rare. Competent representation -- an ability to analyze the law, the facts, and the risks -- on both sides leads to fair outcomes.
I don't know enough about Warren's role in the asbestos litigation to judge it. But I do know that the mere fact that she represented an insurer in asbestos litigation does not, in and of itself, tell us anything about her character or her worthiness to hold office.
What if that wasn't Warren's role? What if she had been hired to simply defend Travelers from asbestos claims, to argue that the claims were excluded by the policies, or that the insured was not liable? Would that mean she is in the pocket of corporations and therefore should not be elected as a Democrat?
Without going into a Democrat/Republican/all politicians are sellouts tirade, no. I spend the first six years of my legal career as an insurance defense attorney, and I still represent insurers both directly and indirectly through subcontract work. There have been times when, given my personal views, I felt somewhat uncomfortable with the cases I was given. A low point came when I represented as insurance defense counsel a used car dealer that was being sued for allegedly charging customers illegal fees. I've represented insured defendants who discovery showed were clearly liable.
In all of my cases, no matter which side I'm on, I zealously represent my clients. Sometimes zealous representation means advising the insurer to settle. Sometimes it means advising the insurer not to settle even though liability is clear, because the plaintiff is asking too much in damages.
There are plaintiffs attorneys who are incompetent and don't give their clients good advice about a case, and there are insurance defense attorneys who are incompetent and don't give their clients good advice about a case. In my experience, those attorneys are relatively rare. Competent representation -- an ability to analyze the law, the facts, and the risks -- on both sides leads to fair outcomes.
I don't know enough about Warren's role in the asbestos litigation to judge it. But I do know that the mere fact that she represented an insurer in asbestos litigation does not, in and of itself, tell us anything about her character or her worthiness to hold office.
Friday, October 12, 2012
Another side to insurance coverage litigation
Over at FMG Law's BlogLine, Seth Kirby has posted an interesting article on the marketing risk to insurers of insurance coverage litigation. I agree with his points. On the one hand, insurers have an absolute right -- perhaps even a duty as public corporations -- to determine both liability and damages before settling, even in cases that initially seem obvious. Bad faith comes in when the insurer takes an unreasonable amount of time to do so, or when it continues to deny a claim or it fails to make a reasonable settlement offer after it has determined that its insured is liable and the claimant suffered damages.
Kirby points out that in this age of blogs and social media, an insurer runs a risk of appearing to act in bad faith even when it is reasonably investigating or litigating a claim. The case he discusses is that of a woman who was killed in a car accident. Her family sought coverage under the uninsured motorist coverage of her policy and the insurer litigated rather than paying immediately. This is a case I have heard of before -- thanks to publicity the case has gained on the internet. I haven't seen enough to convince me one way or another about whether the insurer is acting in bad faith in its investigation and litigation of the claim. But, as Kirby states in the article, insurers now need to be aware of how easy it is to paint them as a bad actor in such a situation.
Kirby points out that in this age of blogs and social media, an insurer runs a risk of appearing to act in bad faith even when it is reasonably investigating or litigating a claim. The case he discusses is that of a woman who was killed in a car accident. Her family sought coverage under the uninsured motorist coverage of her policy and the insurer litigated rather than paying immediately. This is a case I have heard of before -- thanks to publicity the case has gained on the internet. I haven't seen enough to convince me one way or another about whether the insurer is acting in bad faith in its investigation and litigation of the claim. But, as Kirby states in the article, insurers now need to be aware of how easy it is to paint them as a bad actor in such a situation.
Wednesday, October 10, 2012
Motion to Add Municipal Defendant Dismissed
A motion to add a municipality as a defendant was recently dismissed.
In Temporin v. DiVincenzo, 2012 ONSC 5213 (S.C.J.), the plaintiff was injured in a 2007 motor vehicle accident. Although the City of Burlington had been named as a third party, the plaintiff did not move to add it as a defendant until 2012. The plaintiff ordered the police report in 2007, but did not receive officer's notes as counsel had inadvertently neglected to send payment. The notes were ultimately received in 2010 when a follow up request was made. They referred to road conditions consisting of "fierce" black ice. The plaintiff argued that the two year limitation period for adding the municipality began in 2010.
Parayeski J. dismissed the motion. The failure to follow up for police notes until 2010 did not give rise to a discoverability issue. The plaintiff had not exercised reasonable diligence and even though there was no prejudice to the municipality, this did not justify it being added as a defendant post-limitation.
This decision is a good example of the maxim that limitation periods are not enacted to be ignored. The burden is on plaintiffs to act diligently to identify defendants within the appropriate limitation period.
In Temporin v. DiVincenzo, 2012 ONSC 5213 (S.C.J.), the plaintiff was injured in a 2007 motor vehicle accident. Although the City of Burlington had been named as a third party, the plaintiff did not move to add it as a defendant until 2012. The plaintiff ordered the police report in 2007, but did not receive officer's notes as counsel had inadvertently neglected to send payment. The notes were ultimately received in 2010 when a follow up request was made. They referred to road conditions consisting of "fierce" black ice. The plaintiff argued that the two year limitation period for adding the municipality began in 2010.
Parayeski J. dismissed the motion. The failure to follow up for police notes until 2010 did not give rise to a discoverability issue. The plaintiff had not exercised reasonable diligence and even though there was no prejudice to the municipality, this did not justify it being added as a defendant post-limitation.
This decision is a good example of the maxim that limitation periods are not enacted to be ignored. The burden is on plaintiffs to act diligently to identify defendants within the appropriate limitation period.
Insurance as a kind of tax, and a foray into socialism and outside my area of expertise
My recent posts here and here on cases addressing flood insurance under the National Flood Insurance Program got me thinking about the similarities and differences between insurance and taxes.
As we all know, taxes are one of the two things in life that are certain, and insurance is not the other thing. But -- sometimes insurance is required by the government. Flood insurance, for one, if you have a mortgage and live in a flood zone. Health insurance, in Massachusetts and soon nationally for the most part. (Don't start calling me with health insurance disputes -- I don't do those. They are different from liability insurance disputes.) Worker's comp insurance, generally. Car insurance. A fee the government requires you to pay sounds like a tax to me.
Insurance is a for-profit private-sector business. But in the case of flood insurance, the insurers are merely the plan administrators, with the losses paid by the government. In other words, the government itself is the insurer.
Taxpayers are a larger risk pool than insureds. Even if only 53 percent of Americans pay income taxes (I take no position on that), that's a whole lot of people and it makes it pretty easy to spread the risk. Then again, according to my Google search 95 percent of Americans own cars, and therefore buy car insurance in states where it is required. The insurance risk pool is subdivided, however, into insureds of each insurer.
My taxes are based, more or less, on my income. My insurance premiums may or may not be based on my level of risk. My auto premiums are based on where I live, the kind of car I drive, and my driving record. But my health insurance premiums are not based on the likelihood that I'll get sick -- everyone with my plan pays the same. That means that, like with taxes, healthy people are subsidizing health care for people who need more of it. It seems to me that, given that reality, it would make more sense to spread the risk more broadly -- among all taxpayers. That way who is subsidizing who is not based on the almost accidental decision of what health plan you happen to have, but on what you can afford to pay. (And, yeah, I know, that's socialism.)
As we all know, taxes are one of the two things in life that are certain, and insurance is not the other thing. But -- sometimes insurance is required by the government. Flood insurance, for one, if you have a mortgage and live in a flood zone. Health insurance, in Massachusetts and soon nationally for the most part. (Don't start calling me with health insurance disputes -- I don't do those. They are different from liability insurance disputes.) Worker's comp insurance, generally. Car insurance. A fee the government requires you to pay sounds like a tax to me.
Insurance is a for-profit private-sector business. But in the case of flood insurance, the insurers are merely the plan administrators, with the losses paid by the government. In other words, the government itself is the insurer.
Taxpayers are a larger risk pool than insureds. Even if only 53 percent of Americans pay income taxes (I take no position on that), that's a whole lot of people and it makes it pretty easy to spread the risk. Then again, according to my Google search 95 percent of Americans own cars, and therefore buy car insurance in states where it is required. The insurance risk pool is subdivided, however, into insureds of each insurer.
My taxes are based, more or less, on my income. My insurance premiums may or may not be based on my level of risk. My auto premiums are based on where I live, the kind of car I drive, and my driving record. But my health insurance premiums are not based on the likelihood that I'll get sick -- everyone with my plan pays the same. That means that, like with taxes, healthy people are subsidizing health care for people who need more of it. It seems to me that, given that reality, it would make more sense to spread the risk more broadly -- among all taxpayers. That way who is subsidizing who is not based on the almost accidental decision of what health plan you happen to have, but on what you can afford to pay. (And, yeah, I know, that's socialism.)
Saturday, October 6, 2012
What they're offering across the pond, now that the Olympics are over
Over at Insureblog Hank Stern writes about insurance now being offered in England for risks from social media use, such as account jacking.
Thursday, October 4, 2012
Not related to insurance coverage directly
But, hey, it's my blog.
Here's me on HuffpostLive talking about what makes a good argument:
http://live.huffingtonpost.com/#r/segment/5065f32e2b8c2a45be00011e
Here's me on HuffpostLive talking about what makes a good argument:
http://live.huffingtonpost.com/#r/segment/5065f32e2b8c2a45be00011e
Wednesday, October 3, 2012
Election of Arbitration or Court Proceeding
Gordyukova v. Certas Direct Insurance Company, 2012 ONCA 563 (C.A.)
The subject of this appeal is s. 281.1(1) of the Insurance Act, which provides that an insured shall commence a court proceeding or arbitration within two years of the insurer's refusal to pay benefits.
The plaintiff was in a motor vehicle accident in 2001. She applied for accident benefits and a dispute arose over certain medical benefits. After mediation failed, she issued a Statement of Claim in 2002. In 2005, the insurer advised her she had exhausted her non-catastrophic limits for medical and rehabilitation benefits. Her application for a catastrophic designation was rejected so she commenced an arbitration at FSCO in 2008. Certas brought a motion to stay the arbitration on the grounds that the CAT dispute should be added to the court action. The arbitrator ruled the plaintiff could not proceed with both the court action and the arbitration, but could proceed with arbitration if she discontinued the court action. The arbitrator ruled he was not ruling on the limitation issue. The plaintiff gave notice of her intention to discontinue the court action and proceed with arbitration, and the insurer brought a motion seeking a ruling on the limitation issue. The arbitrator ruled the plaintiff could add all of the matters pending before the Superior Court to the arbitration.
Certas appealed, arguing that the plaintiff could not re-elect the method of proceeding eight years after the court action was commenced. The matter was appealed to the Director 's Delegate then the Divisional Court.
The Court of Appeal held that the arbitration should be stayed. Section 281.1(1) of the Insurance Act requires an election between a court action and an arbitration. It provides that a proceeding shall be brought within two years. The insured has the choice of forum, but cannot switch forums after the expiry of the limitation period. Since the court proceeding included a claim for "continued accident benefits", it would necessarily include a determination of the CAT issue.
The subject of this appeal is s. 281.1(1) of the Insurance Act, which provides that an insured shall commence a court proceeding or arbitration within two years of the insurer's refusal to pay benefits.
The plaintiff was in a motor vehicle accident in 2001. She applied for accident benefits and a dispute arose over certain medical benefits. After mediation failed, she issued a Statement of Claim in 2002. In 2005, the insurer advised her she had exhausted her non-catastrophic limits for medical and rehabilitation benefits. Her application for a catastrophic designation was rejected so she commenced an arbitration at FSCO in 2008. Certas brought a motion to stay the arbitration on the grounds that the CAT dispute should be added to the court action. The arbitrator ruled the plaintiff could not proceed with both the court action and the arbitration, but could proceed with arbitration if she discontinued the court action. The arbitrator ruled he was not ruling on the limitation issue. The plaintiff gave notice of her intention to discontinue the court action and proceed with arbitration, and the insurer brought a motion seeking a ruling on the limitation issue. The arbitrator ruled the plaintiff could add all of the matters pending before the Superior Court to the arbitration.
Certas appealed, arguing that the plaintiff could not re-elect the method of proceeding eight years after the court action was commenced. The matter was appealed to the Director 's Delegate then the Divisional Court.
The Court of Appeal held that the arbitration should be stayed. Section 281.1(1) of the Insurance Act requires an election between a court action and an arbitration. It provides that a proceeding shall be brought within two years. The insured has the choice of forum, but cannot switch forums after the expiry of the limitation period. Since the court proceeding included a claim for "continued accident benefits", it would necessarily include a determination of the CAT issue.
Tuesday, October 2, 2012
Another First Circuit case on whether mortgage lender can increase flood insurance requirement
Last week I posted about Lass v. Bank of America, __ F.3d __, 2012 WL 4240504 (1st Cir.), in which the United States Court of Appeals for the First Circuit held that, taken as a whole, mortgage documents were ambiguous as to whether the lender could demand that the borrower increase her flood insurance coverage.
The First Circuit issued a companion opinion in the case of Kolbe v. BAC Home Loans Servicing, LP, __ F.3d __, 2012 WL 4240298 (1st Cir.).
As in Lass, Kolbe, a mortgage borrower, asserted that Bank of America's demand that he increase his flood coverage breached the terms of his mortgage contract.
The mortgage contract required that Kolbe "insure all improvements on the Property, whether now in existence or subsequently erected, against any hazards . . . for which the Lender requires insurance. This insurance shall be maintained in the amounts and for the periods that Lender requires. Borrower shall also insure all improvements on the Property, whether now in existence or subsequently erected against loss by floods to the extent required by the Secretary [of HUD]."
Kolbe was required by federal law to obtain flood insurance because his property is located in a special flood hazard zone under the National Flood Insurance Act. The minimum amount mandated by the law is coverage at least equal to the outstanding principal balance of the loan, or $250,000, whichever is less.
An aside: I find this provision shocking. I believe everyone should have adequate insurance, and I support the government regulating flood insurance to the extent that such flood insurance might not be affordable, or available at all, in flood hazard zones without such regulation. But I can see no reason why the government should mandate that homeowners are required to have insurance to protect the interests of the lenders but not of the homeowners. The lenders can protect their interests by including a flood insurance requirement in the loan contract.
Moreover, as the court noted in Kolbe, the National Flood Insurance Act was passed because major floods had required "unforeseen disaster relief measures and placed an increasing burden on the Nation's resources." By requiring insurance only to the extent of the lender's interests, the law demonstrates that the government is interested in protecting financial institutions but not homeowners.
Getting back to the decision, Kolbe purchased more than the minimum required amount of flood insurance. Bank of America subsequently sent notice to Kolbe that he was required to increase his flood insurance coverage to the total replacement cost of his property as identified in his homeowner's policy. (Everyone: if you are in a flood plain you should have flood insurance to the replacement cost of your property, regardless of what your mortgage lender says.)
The court held that the insurance provision in the contract was ambiguous, and therefore turned to extrinsic evidence to interpret it. It noted that HUD treats hazard insurance and flood insurance separately, but also that FEMA recommends replacement value flood insurance.
The court concluded that the extrinsic evidence was also, therefore, ambiguous. It held that the District Court erred when it dismissed Kolbe's complaint on the ground that the mortgage unambiguously permitted the lender to demand additional coverage.
The First Circuit issued a companion opinion in the case of Kolbe v. BAC Home Loans Servicing, LP, __ F.3d __, 2012 WL 4240298 (1st Cir.).
As in Lass, Kolbe, a mortgage borrower, asserted that Bank of America's demand that he increase his flood coverage breached the terms of his mortgage contract.
The mortgage contract required that Kolbe "insure all improvements on the Property, whether now in existence or subsequently erected, against any hazards . . . for which the Lender requires insurance. This insurance shall be maintained in the amounts and for the periods that Lender requires. Borrower shall also insure all improvements on the Property, whether now in existence or subsequently erected against loss by floods to the extent required by the Secretary [of HUD]."
Kolbe was required by federal law to obtain flood insurance because his property is located in a special flood hazard zone under the National Flood Insurance Act. The minimum amount mandated by the law is coverage at least equal to the outstanding principal balance of the loan, or $250,000, whichever is less.
An aside: I find this provision shocking. I believe everyone should have adequate insurance, and I support the government regulating flood insurance to the extent that such flood insurance might not be affordable, or available at all, in flood hazard zones without such regulation. But I can see no reason why the government should mandate that homeowners are required to have insurance to protect the interests of the lenders but not of the homeowners. The lenders can protect their interests by including a flood insurance requirement in the loan contract.
Moreover, as the court noted in Kolbe, the National Flood Insurance Act was passed because major floods had required "unforeseen disaster relief measures and placed an increasing burden on the Nation's resources." By requiring insurance only to the extent of the lender's interests, the law demonstrates that the government is interested in protecting financial institutions but not homeowners.
Getting back to the decision, Kolbe purchased more than the minimum required amount of flood insurance. Bank of America subsequently sent notice to Kolbe that he was required to increase his flood insurance coverage to the total replacement cost of his property as identified in his homeowner's policy. (Everyone: if you are in a flood plain you should have flood insurance to the replacement cost of your property, regardless of what your mortgage lender says.)
The court held that the insurance provision in the contract was ambiguous, and therefore turned to extrinsic evidence to interpret it. It noted that HUD treats hazard insurance and flood insurance separately, but also that FEMA recommends replacement value flood insurance.
The court concluded that the extrinsic evidence was also, therefore, ambiguous. It held that the District Court erred when it dismissed Kolbe's complaint on the ground that the mortgage unambiguously permitted the lender to demand additional coverage.
Thursday, September 27, 2012
First Circuit vacates District Court ruling that mortgagee can require flood insurance in excess of amount of mortgage
I posted here about the decision of the United States District Court for the District of Massachusetts in Lass v. Bank of America, in which the court held that under the terms of the mortgage agreement that mortgagee bank could require the homeowner to have more flood insurance than the bank's interest in the property (in other words, more than the mortgage amount).
The United States Court of Appeals for the First Circuit has now vacated that decision and remanded the case. In Lass v. Bank of America, __ F.3d __, 2012 WL 4240504 (1st Cir.), the court held that although the pertinent mortgage provision gives the lender discretion over the amount of flood insurance, a supplemental document given to the borrower at her real estate closing may be read to state that the mandatory amount of flood insurance imposed at that time would remain unchanged for the duration of the mortgage.
The mortgage agreement required the borrower to have flood insurance to "be maintained in the amounts and for the periods that Lender requires."
A separate document, entitled "Flood Insurance Notification," stated, "At the closing the property you are financing must be covered by flood insurance in the amount of the principle [sic] amount financed, or the maximum amount available, whichever is less. This insurance will be mandatory until the loan is paid in full."
Lass obtained flood insurance equal to $40,000, the full amount of her loan. She subsequently voluntarily increased the coverage to $100,000.
The lender later told her that she needed an additional $145,086 in flood insurance, to reflect the replacement value of the improvements on the property.
Lass refused to purchase the additional insurance. After notice to her, the bank purchased it for her and charged her escrow account for the premium.
Applying contract interpretation principles, the court held that the mortgage and notification, taken together, are ambiguous as to the lender's authority to demand increased flood coverage on Lass's property.
The United States Court of Appeals for the First Circuit has now vacated that decision and remanded the case. In Lass v. Bank of America, __ F.3d __, 2012 WL 4240504 (1st Cir.), the court held that although the pertinent mortgage provision gives the lender discretion over the amount of flood insurance, a supplemental document given to the borrower at her real estate closing may be read to state that the mandatory amount of flood insurance imposed at that time would remain unchanged for the duration of the mortgage.
The mortgage agreement required the borrower to have flood insurance to "be maintained in the amounts and for the periods that Lender requires."
A separate document, entitled "Flood Insurance Notification," stated, "At the closing the property you are financing must be covered by flood insurance in the amount of the principle [sic] amount financed, or the maximum amount available, whichever is less. This insurance will be mandatory until the loan is paid in full."
Lass obtained flood insurance equal to $40,000, the full amount of her loan. She subsequently voluntarily increased the coverage to $100,000.
The lender later told her that she needed an additional $145,086 in flood insurance, to reflect the replacement value of the improvements on the property.
Lass refused to purchase the additional insurance. After notice to her, the bank purchased it for her and charged her escrow account for the premium.
Applying contract interpretation principles, the court held that the mortgage and notification, taken together, are ambiguous as to the lender's authority to demand increased flood coverage on Lass's property.
Wednesday, September 26, 2012
Threshold Motion Successful
Surveillance evidence can be useful in showing that the plaintiff does not meet the Insurance Act threshold.
In Dahrouj v. Aduvala, 2012 ONSC 4090 (S.C.J.), the plaintiff was injured in a minor rear end collision. She was a homemaker and alleged she developed chronic pain which impaired her functioning in the home and her social interaction in the community.
The evidence at trial was that the plaintiff visited her family doctor on multiple occasions prior to the accident complaining of head, neck and back pain. She made similar complaints post-accident. The defendant obtained surveillance showing the plaintiff engaged in a variety of activities, including scraping snow and ice off her car, pumping gas, reaching for groceries on an upper shelf and carrying groceries. Justice Hackland described the video as “particularly devastating” to the plaintiff’s credibility, as it showed the plaintiff stretching and lifting, the activities she alleged restricted her functioning as a homemaker.
The plaintiff’s expert diagnosed her with “central sensitization”, based on a 45 minute interview and relying only on the plaintiff’s self reports. Justice Hackland preferred the defence expert, who conducted a more thorough assessment and whose opinion was corroborated by the surveillance evidence.
Justice Hackland held the plaintiff had not proved she sustained a serious, permanent impairment of an important physical function. As a result, she was not entitled to general damages and her recovery was limited to $32,000, the amount the jury awarded for past housekeeping.
Surveillance of the plaintiff can be extremely important in defending claims, especially those alleging chronic pain. When surveillance can be combined with expert opinion, it can be effective in showing that the plaintiff’s claim does not meet the threshold.
Friday, September 21, 2012
You heard it here first
The Defense Research Institute (DRI) will be hosting a conference in Boston on June 6 and 7, 2013 on Insurance Bad Faith and Extra-Contractual Liability. No details yet. DRI attracts participants from around the country (especially from states that require continuing legal education) , so I would expect this to be an excellent networking opportunity.
Wednesday, September 19, 2012
Adding an Insurer as a Defendant Rather than a Statutory Third Party
Can an insurer add itself as a defendant rather than as a statutory third party?
In Azad v. Dekran, 2012 ONSC 4257 (S.C.J.), the Personal insured the defendant and brought a motion pursuant to r. 13.01 to intervene as an added defendant. It wished to allege that the accident did not occur or was staged and to crossclaim against its insured. It preferred this route rather than being added as a statutory third party since s. 258(14) of the Insurance Act prohibits a statutory third party from taking a position incongruous to its insured.
Master Dash dismissed the motion, holding that it was not a proper use of r. 13.01. One of the purposes of s. 258 is to permit an insurer to contest the plaintiff’s claim in a situation where it denies coverage. The plaintiff’s action is not the appropriate forum to decide issues between the insured and insurer. Any dispute could be decided in subsequent proceedings, including a proceeding to recover the statutory minimum paid to the plaintiff.
Master Dash noted that if the accident was staged, the plaintiff would not be entitled to damages; on the other hand, if the trial court did award damages, it would mean there was a legitimate accident and there would be no basis for a crossclaim against the insured. In addition, as a statutory third party, the insurer would have a right to discover its insured.
Master Dash refused to follow the decision in Esho v. Dekran, 2012 ONSC 3638 (S.C.J.), where the insurer was added as a defendant. Now that there are conflicting decisions on this issue, perhaps it will be up to the Divisional Court
Tuesday, September 18, 2012
Mass. Appeals Court holds that services by structural engineer hired by architect were "performed for" project owner
Cable Mills intended to renovate an old mill property it owned into mixed use condominium units. It hired Feingold for architectural services. Feingold hired William Barry to provide structural engineering services. Barry fell through the floor at the site. He sued Cable Mills.
Cable Mills was insured by Lloyd's, London. Lloyd's denied coverage for Barry's claim, relying on an exclusion for "bodily injury . . . for operations performed for you by independent contractors or your acts or omissions in connection with your general supervision of such operations."
Cable Mills argued that the exclusion does not apply because Feingold, not Cable Mills, retained Barry, so his services were "performed for" Feingold, not Cable Mills.
In Cable Mills, LLC v. Coakley Pierpan Dolan & Collins Ins. Agency, Inc., 82 Mass. App. Ct. 415 (2012), the Massachusetts Appeals Court agreed with Lloyd's that coverage was excluded. It held, "performance of professional engineering services essential to the project, pursuant to a contract between the property owner and its architect, sufficiently fulfills the common meaning of 'operations performed for you.'"
Cable Mills was insured by Lloyd's, London. Lloyd's denied coverage for Barry's claim, relying on an exclusion for "bodily injury . . . for operations performed for you by independent contractors or your acts or omissions in connection with your general supervision of such operations."
Cable Mills argued that the exclusion does not apply because Feingold, not Cable Mills, retained Barry, so his services were "performed for" Feingold, not Cable Mills.
In Cable Mills, LLC v. Coakley Pierpan Dolan & Collins Ins. Agency, Inc., 82 Mass. App. Ct. 415 (2012), the Massachusetts Appeals Court agreed with Lloyd's that coverage was excluded. It held, "performance of professional engineering services essential to the project, pursuant to a contract between the property owner and its architect, sufficiently fulfills the common meaning of 'operations performed for you.'"
Monday, September 17, 2012
Camp Lejeune Contaminated Water and OWCP
President Obama signed the "Honoring America's Veterans and Caring for Camp Lejeune Families Act of 2012" ("Camp Lejeune Act") on August 6, 2012. This law in part provides for medical care for veterans and their families who were exposed to contaminated water while stationed in Camp Lejeune, North Carolina. Passage of this legislation has triggered inquiries concerning FECA coverage for employees and former employees at Camp Lejeune.
A federal employee would be entitled to FECA benefits for a timely claimed medical condition caused by water contamination at Camp Lejeune if he or she was exposed to such water contamination in the performance of his or her duties (such as by drinking such water while at work) and could provide medical evidence that such exposure caused, contributed to or aggravated that medical condition.
In a case of latent disability (the illness shows up later), or a condition such as a cancer due to occupational exposure, the time for filing a claim does not begin to run until an employee is aware, or by the exercise of reasonable diligence should have been aware, of the causal relationship between his or her employment and the compensable condition / disability.
A federal employee would be entitled to FECA benefits for a timely claimed medical condition caused by water contamination at Camp Lejeune if he or she was exposed to such water contamination in the performance of his or her duties (such as by drinking such water while at work) and could provide medical evidence that such exposure caused, contributed to or aggravated that medical condition.
In a case of latent disability (the illness shows up later), or a condition such as a cancer due to occupational exposure, the time for filing a claim does not begin to run until an employee is aware, or by the exercise of reasonable diligence should have been aware, of the causal relationship between his or her employment and the compensable condition / disability.
Thursday, September 13, 2012
First Circuit holds that dec page cannot create ambiguity in flood policy terms
In McGair v. Am. Bankers Ins. Co., __ F.3d __, 2012 WL 3793130 (1st Cir. 2012), the First Circuit Court of Appeals held that the terms of a declarations page do not create an ambiguity in a flood insurance policy.
The McGairs purchased a flood insurance policy from American Bankers Insurance Company. The policy was part of the federal flood insurance program about which I've written previously. Under the program, private insurers issue and administer flood policies and claim payments are reimbursed by the Federal Emergency Management Agency (FEMA). FEMA provides a standard text for the policies, which are called Standard Flood Insurance Policies, or SFIPs.
The policy stated that it is provided "under the terms of the National Flood Insurance Act," and that it "cannot be changed nor can any of it provisions be waived without the express written consent of the Federal Insurance Administrator."
SFIPs limit coverage for personal property in basements. (According to the court in McGair, the limitation "serves to encourage construction that minimizes the risk of flooding (e.g., elevated foundations and buildings without basements.)" I'll have to suspend my disbelief on that one.)
In 2010 a flood damaged the McGairs' house and personal property in their basement. They sought compensation from American Bankers. American Bankers denied the claim, asserting the basement contents were not covered.
The McGairs sued, arguing that the Declarations Page created an ambiguity as to the scope of their policy. The Declarations Page indicated that the McGairs have a finished basement and that the contents of their home are located in the "basement and above." It provides that the contents of the home are covered by the policy up to $100,000 and identifies none of the SFIP limitations. The parties agreed that the information was used by American Bankers for the purpose of calculating premiums.
The court held, "there can be no ambiguity between the SFIP and the McGair's Declaration page because the terms of the SFIP control . . . Thus, as a matter of law, any discrepancy between the SFIP and an accompanying Declarations Page must be resolved in favor of SFIP."
The McGairs purchased a flood insurance policy from American Bankers Insurance Company. The policy was part of the federal flood insurance program about which I've written previously. Under the program, private insurers issue and administer flood policies and claim payments are reimbursed by the Federal Emergency Management Agency (FEMA). FEMA provides a standard text for the policies, which are called Standard Flood Insurance Policies, or SFIPs.
The policy stated that it is provided "under the terms of the National Flood Insurance Act," and that it "cannot be changed nor can any of it provisions be waived without the express written consent of the Federal Insurance Administrator."
SFIPs limit coverage for personal property in basements. (According to the court in McGair, the limitation "serves to encourage construction that minimizes the risk of flooding (e.g., elevated foundations and buildings without basements.)" I'll have to suspend my disbelief on that one.)
In 2010 a flood damaged the McGairs' house and personal property in their basement. They sought compensation from American Bankers. American Bankers denied the claim, asserting the basement contents were not covered.
The McGairs sued, arguing that the Declarations Page created an ambiguity as to the scope of their policy. The Declarations Page indicated that the McGairs have a finished basement and that the contents of their home are located in the "basement and above." It provides that the contents of the home are covered by the policy up to $100,000 and identifies none of the SFIP limitations. The parties agreed that the information was used by American Bankers for the purpose of calculating premiums.
The court held, "there can be no ambiguity between the SFIP and the McGair's Declaration page because the terms of the SFIP control . . . Thus, as a matter of law, any discrepancy between the SFIP and an accompanying Declarations Page must be resolved in favor of SFIP."
Wednesday, September 12, 2012
Production of Statements Made Following an Accident
A recent motion decision deals with two issues that can arise in defending claims: the extent of litigation privilege with respect to statements made following an incident, and whether reviewing such a statement prior to examination for discovery waives privilege.
In Knox v. Applebaum Holdings, 2012 ONSC 4181 (CanLii) the plaintiff brought a motion seeking production of a statement prepared by the defendant’s property manager following an accident in its parking lot. The accident occurred at 8:55 p.m.. The property manager was quickly notified, travelled to the parking lot, took pictures and called her risk manager to report what she had found at 12:35 a.m. At this point, she was aware that two people had been injured. She typed up a statement detailing her recollection of what she had seen and learned of the accident while it was fresh in her mind. The statement was delivered to the adjuster later that day.
On the motion, the issues were whether the statement was protected by litigation privilege and whether privilege was lost when the property manager reviewed it when she prepared for her examination for discovery.
Justice Hockin held that litigation privilege attached to the document. The property manager knew there was an accident and that two people had been injured. She believed that litigation would follow. It did not matter that the defendant was not represented by counsel at the time. The dominant purpose of the document was to facilitate her employer’s defence and to assist in her forensic involvement of the case.
Privilege was not waived. Justice Hockin relied on Wronick v. Allstate (1997), 7 C.P.C. (4th) 285 (Gen. Div.) where Justice Leitch held that reviewing a privilege document to refresh one’s memory in preparation for examination for discovery does not amount to a waiver of privilege.
Wednesday, September 5, 2012
Failure to Add Property Owner as Additional Insured
Many winter maintenance contracts require the contractor to add the property owner as an additional insured on its policy. But what happens when the contractor fails to do so and the owner is sued?
In Papapetrou v. 1054422 Ontario Ltd., 2012 ONCA 506 (C.A.), the plaintiff sued the Cora Group, alleging she slipped and fell on black ice on its property. Cora contracted with Collingwood Landscape for winter maintenance services. In the service contract, Collingwood agreed to name Cora as an additional insured on its CGL policy, but failed to do so. On a motion for summary judgment, Collingwood was ordered to assume Cora's defence and indemnify it for damages. Collingwood appealed. Cora conceded that the order to indemnify was premature so the primary issue on appeal was whether the motions judge erred in ordering Collingwood to assume Cora's defence.
The Court of Appeal set aside the original Order and substituted an Order that Collingwood pay for Cora's defence.
Simmons J.A. held that Collingwood's breach of its contractual obligation to name Cora as an additional insured did not create a duty to defend; rather, it gave rise to a remedy in damages. The quantum of such damages is the amount Cora will be required to pay for a defence of the claims that Collingwood's insurer would have paid had Collingwood fulfilled its contractual obligations. The costs would include all of the costs of Cora's defence except for those incurred exclusively to defend claims that do not arise from Collingwood's performance or non-performance of the contract. Cora was entitled to separate counsel given there were distinct claims against the two parties, which meant there would be an inherent conflict between them.
Monday, September 3, 2012
First circuit rules on gradual detioration and faulty construction or maintenance exclusions
Insureds Paul Gargano and his wife sought coverage from Vigilant, who provided them with a homeowner's policy, for the cost to remedy failed staining on shingles on their house. The stain was peeling off the shingles.
Vigilant denied coverage on the basis of two policy exclusions. The first excluded coverage for "gradual deterioration . . . however caused, or any loss caused by . . . gradual deterioration." The second excluded losses resulting from faulty acts, errors or omissions in planning, construction or maintenance. "Construction" was defined as including materials and workmanship used for construction or repair.
In Gargano v. Vigilant Ins. Co., 2012 WL 3632442 (1st Cir.), the United States Court of Appeals for the First Circuit rejected the Garganos' argument that the policy exclusions were ambiguous. It held that the Garganos' argument that the deterioration of the stain was progressing "rapidly," not gradually, "did not rise above word play." "While, to be sure, 'gradual' has no mathematically fixed range, the pace of the detaching stain was a long way from a lightning bolt or a falling tree, and in calling it gradual the district court was drawing no fine line."
The court also held that in the faulty construction or maintenance exclusion, "'faulty' does not mean negligent or blameworthy on the part of a homeowner or his contractor, but simply tainted by imperfection."
Vigilant denied coverage on the basis of two policy exclusions. The first excluded coverage for "gradual deterioration . . . however caused, or any loss caused by . . . gradual deterioration." The second excluded losses resulting from faulty acts, errors or omissions in planning, construction or maintenance. "Construction" was defined as including materials and workmanship used for construction or repair.
In Gargano v. Vigilant Ins. Co., 2012 WL 3632442 (1st Cir.), the United States Court of Appeals for the First Circuit rejected the Garganos' argument that the policy exclusions were ambiguous. It held that the Garganos' argument that the deterioration of the stain was progressing "rapidly," not gradually, "did not rise above word play." "While, to be sure, 'gradual' has no mathematically fixed range, the pace of the detaching stain was a long way from a lightning bolt or a falling tree, and in calling it gradual the district court was drawing no fine line."
The court also held that in the faulty construction or maintenance exclusion, "'faulty' does not mean negligent or blameworthy on the part of a homeowner or his contractor, but simply tainted by imperfection."
Wednesday, August 29, 2012
Withdrawing Deemed Admissions
When will a party be permitted to withdraw deemed admissions arising from the failure to respond to a Request to Admit?
In Epstein Equestrian Enterprises Inc. v. Cyro Canada Inc., 2012 ONSC 4653 (S.C.J.), the plaintiff served a Request to Admit eleven days before trial was scheduled to begin in 2010. Trial was adjourned initially for one week and then again until 2012. One of the defendants, Jonkman, failed to respond to the Request to Admit. Rule 51.02(1) provides that a party is deemed to admit the contents of a Request to Admit if it does not respond to it within 20 days after it is served. Jonkman sought to either set aside the Request to Admit or to withdraw the admissions.
Justice Morgan held that even though the Request to Admit was not served 20 days before trial, once the trial was adjourned and did not start for 20 days, the deeming provision applied. The main issue therefore centred on whether Jonkman was entitled to withdraw its admissions. The court may grant leave to withdraw the admissions if the following conditions are met:
Justice Morgan held that even though the Request to Admit was not served 20 days before trial, once the trial was adjourned and did not start for 20 days, the deeming provision applied. The main issue therefore centred on whether Jonkman was entitled to withdraw its admissions. The court may grant leave to withdraw the admissions if the following conditions are met:
- The proposed change raises a triable issue;
- There is a reasonable explanation for the change of position; and
- The withdrawal will not result in any prejudice that cannot be compensated for in costs. (citing Antipas v. Coroneos, 1988 CarswellOnt 358)
Justice Morgan permitted the admissions to be withdrawn. At the time the Request was served, Jonkman was basically without legal representation as its counsel was in the process of being removed from the record. It had instructed counsel not to respond to the Request to Admit. It subsequently brought a coverage application and was now being defended by an insurer. The plaintiff supported the coverage application and must have understood that if coverage was achieved, a defence would be pursued. Jonkman's new counsel and insurer were unaware of the Request Admit and it would be unable to defend itself if the admissions stood. The coverage application had been settled, and Justice Morgan speculated that the insurer's position may have been different had it known that Jonkman had effectively deprived itself of a defence by failing to respond to a wide ranging Request to Admit.
Justice Morgan was of the view that any prejudice to the plaintiff would not be inordinate as a trial would have been needed to canvas issues with the co-defendant in any event. The plaintiff further argued it was prejudiced as it had entered into a Pierringer Agreement with the remaining defendants and was concerned Jonkman would attempt to pin liability on those parties at trial. Justice Morgan held that the plaintiff had previously assumed Jonkman was insolvent when it entered the settlement and so this factor was to the plaintiff's benefit not prejudice. The admissions were withdrawn.
Wednesday, August 22, 2012
Action Dismissed for Failing to Comply with Municipal Act Notice Requirement
Argue v. Tay (Township), 2012 ONSC 4622 (CanLii)
A municipality was recently successful in having a case dismissed based on the failure of the plaintiff to comply with s. 44(10) of the Municipal Act. The section requires written notice be given to the clerk within ten days of the incident. Section 44(12) provides that the failure to give notice can be excused if the plaintiff has a reasonable excuse and the defendant is not prejudiced by the lack of notice.
In Argue v. Tay (Township), the plaintiff alleged she sustained soft tissue injuries in a motor vehicle accident caused by potholes in the defendant municipality's road. She provided written notice through her lawyer almost two years after the incident. By that time, the surface of the road had changed materially. The plaintiff argued the municipality had either actual or constructive knowledge of the accident as the municipal volunteer fire department attended the scene and would have received a copy of the police report. The municipality brought a summary judgment motion seeking to have the action dismissed for failing to comply with the Municipal Act notice requirement.
DiTomaso J. held the plaintiff did not comply with the notice requirements. Section 44(10) requires written notice be given to the clerk and the fact that the fire department attended or may have received a copy of the police report was insufficient to comply with the section. There is no support in the jurisprudence that actual or construction notice pre-empts the requirement to give written notice to the clerk, and the section cannot be dispensed with in favour of notice to a different municipal department.
The plaintiff had no reasonable excuse for the failure to give notice. She was discharged from hospital the same day as the accident, had no broken bones and was able to return to work two to three weeks after the accident. She was aware people could bring lawsuits and believed the state of the road contributed to the accident, yet took no steps to inform herself about the law. She was physically and mentally able to instruct counsel.
The municipality had been prejudiced by the lack of notice. There is a presumption of prejudice where notice has not been provided and the plaintiff bears the onus of showing there was no prejudice. She failed to do so. Neither she nor the municipality had photos or measurements of the road, the condition of the road had changed materially since the accident and the municipality had lost the opportunity to interview witnesses. As a result, summary judgment was granted.
Argue is a useful summary of the relevant authorities relating to s. 44(12). Those defending municipal claims with notice issues should consider whether it would be useful to bring a summary judgment motion in the circumstances.
A municipality was recently successful in having a case dismissed based on the failure of the plaintiff to comply with s. 44(10) of the Municipal Act. The section requires written notice be given to the clerk within ten days of the incident. Section 44(12) provides that the failure to give notice can be excused if the plaintiff has a reasonable excuse and the defendant is not prejudiced by the lack of notice.
In Argue v. Tay (Township), the plaintiff alleged she sustained soft tissue injuries in a motor vehicle accident caused by potholes in the defendant municipality's road. She provided written notice through her lawyer almost two years after the incident. By that time, the surface of the road had changed materially. The plaintiff argued the municipality had either actual or constructive knowledge of the accident as the municipal volunteer fire department attended the scene and would have received a copy of the police report. The municipality brought a summary judgment motion seeking to have the action dismissed for failing to comply with the Municipal Act notice requirement.
DiTomaso J. held the plaintiff did not comply with the notice requirements. Section 44(10) requires written notice be given to the clerk and the fact that the fire department attended or may have received a copy of the police report was insufficient to comply with the section. There is no support in the jurisprudence that actual or construction notice pre-empts the requirement to give written notice to the clerk, and the section cannot be dispensed with in favour of notice to a different municipal department.
The plaintiff had no reasonable excuse for the failure to give notice. She was discharged from hospital the same day as the accident, had no broken bones and was able to return to work two to three weeks after the accident. She was aware people could bring lawsuits and believed the state of the road contributed to the accident, yet took no steps to inform herself about the law. She was physically and mentally able to instruct counsel.
The municipality had been prejudiced by the lack of notice. There is a presumption of prejudice where notice has not been provided and the plaintiff bears the onus of showing there was no prejudice. She failed to do so. Neither she nor the municipality had photos or measurements of the road, the condition of the road had changed materially since the accident and the municipality had lost the opportunity to interview witnesses. As a result, summary judgment was granted.
Argue is a useful summary of the relevant authorities relating to s. 44(12). Those defending municipal claims with notice issues should consider whether it would be useful to bring a summary judgment motion in the circumstances.
Tuesday, August 21, 2012
Labor Secretary Solis appoints new permanent Member to ECAB
Hopefully boding well for OWCP claimants, on July 2, 2012 Patricia Howard Fitzgerald was appointed as one of the three permanent Members of the Employees’ Compensation Appeals Board by Secretary of Labor Hilda L. Solis. Prior to her appointment she was a staff attorney for the American Postal Workers Union where, since 2004, she advised the Director of Industrial Relations on matters concerning the negotiation and enforcement of the APWU/USPS national collective bargaining agreement. She also handled matters pertaining to the National Labor Relations Act, Family and Medical Leave Act, Privacy Act, and USERRA.
Earlier in her career, she was an associate attorney at Zwerdling, Paul, Kahn & Wolly, P.C., where she litigated cases on behalf of employees, labor organizations, and professional associations in various labor and employment law matters. She was also awarded a law fellowship at the Service Employees International Union where she assisted with litigation, legislative initiatives, and union organizing campaigns.
Judge Fitzgerald holds a Bachelor of Science degree in Industrial and Labor Relations from Cornell University and a Juris Doctor degree from The Catholic University of America, Columbus School of Law. She is a member of the Maryland and District of Columbia Bars.
This appointment is a step toward creating some balance to a Board still dominated by Bush appointees selected for their management / employer orientation and political fundraising prowess.
Earlier in her career, she was an associate attorney at Zwerdling, Paul, Kahn & Wolly, P.C., where she litigated cases on behalf of employees, labor organizations, and professional associations in various labor and employment law matters. She was also awarded a law fellowship at the Service Employees International Union where she assisted with litigation, legislative initiatives, and union organizing campaigns.
Judge Fitzgerald holds a Bachelor of Science degree in Industrial and Labor Relations from Cornell University and a Juris Doctor degree from The Catholic University of America, Columbus School of Law. She is a member of the Maryland and District of Columbia Bars.
This appointment is a step toward creating some balance to a Board still dominated by Bush appointees selected for their management / employer orientation and political fundraising prowess.
Monday, August 20, 2012
Appeals Court holds that threats by landlord on premises is not invasion of the right of private occupancy of the premises
James Freedman leased property to Encarnacion and her husband. Encarnacion used the property for an auto body shop. When she fell behind on her rent Freedman made threatening and harassing phone calls to Encarnacion, including "threatening to have his wife come to the premises and beat her up." He also harassed and threatened her on the premises.
Encarnacion feared for her safety and began to suffer from anxiety attacks for which she received medical treatment.
Encarnacion filed suit against Freedman, seeking a restraining order and alleging negligent and intentional infliction of emotional distress and interference with business relations.
Freedman sought coverage from his commercial liability insurer, USL, asserting that the claim came within the policy's coverage for personal and advertising injury because it alleged invasion of the right of private occupancy of the premises. USL denied coverage.
In Freedman v. U.S. Liab. Ins. Co., 82 Mass App. Ct. 331 (2012), the court noted that in the underlying complaint Encarnacion did not complain of Freedman's appearance on her premises as landlord, or deny his right to be there. Therefore, the complaint was not for an invasion of the right of private occupancy.
Rather, the complaint was based on Freedman's harassing and threatening behavior while on the premises. Without going into details, the court held that the complaint came within the exclusion for actions made by or at the direction of the insured "with the knowledge that the act would violate the rights of another and would inflict 'personal and advertising injury.'"
Encarnacion feared for her safety and began to suffer from anxiety attacks for which she received medical treatment.
Encarnacion filed suit against Freedman, seeking a restraining order and alleging negligent and intentional infliction of emotional distress and interference with business relations.
Freedman sought coverage from his commercial liability insurer, USL, asserting that the claim came within the policy's coverage for personal and advertising injury because it alleged invasion of the right of private occupancy of the premises. USL denied coverage.
In Freedman v. U.S. Liab. Ins. Co., 82 Mass App. Ct. 331 (2012), the court noted that in the underlying complaint Encarnacion did not complain of Freedman's appearance on her premises as landlord, or deny his right to be there. Therefore, the complaint was not for an invasion of the right of private occupancy.
Rather, the complaint was based on Freedman's harassing and threatening behavior while on the premises. Without going into details, the court held that the complaint came within the exclusion for actions made by or at the direction of the insured "with the knowledge that the act would violate the rights of another and would inflict 'personal and advertising injury.'"
Thursday, August 9, 2012
Interested in another perspective . . .
. . . on insurance coverage issues?
Dennis Wall, a solo practitioner in Florida, has an excellent blog called Insurance Claims and Issues. He discusses both liability and medical insurance issues, and recent case law from around the country.
Dennis Wall, a solo practitioner in Florida, has an excellent blog called Insurance Claims and Issues. He discusses both liability and medical insurance issues, and recent case law from around the country.
Friday, April 27, 2012
Be careful when posting anything online
When you have a work related injury, OWCP and employing agency investigators will conduct surveillance to see if your activities are consistent with your medical restrictions. Such investigations will include viewing your web page, blog, Facebook account, My Space account, and any other content you place on the internet.
They are looking for anything they can use against you. For example, dancing, participating in sports, horsing around, or other hazardous, physical and/or embarrassing activities.
They are looking for anything they can use against you. For example, dancing, participating in sports, horsing around, or other hazardous, physical and/or embarrassing activities.
Unlike other types of injury systems, there is never a settlement of an OWCP case. For so long as you wish to receive these benefits, be very aware of what you put on the internet and how it may look to others. If you feel that you must engage in online media, I strongly recommend that blogs, web pages and internet accounts (i.e., Face Book, My Space, networking pages and any other personal internet pages) be set to “private” or “by invitation only” so that the general public cannot readily access these accounts, web pages or blogs.
However, just because a page is “private” does not stop federal law enforcement personnel from gaining access to your content. Please be careful what you post or say online!
Thursday, April 19, 2012
FECA Benefits Under Attack - Call Your Senators!
Below is a bulletin sent out by FLEOA regarding Sen Bill 1789 and an amendment proposed by Senator Akaka that would strip the huge benefit cuts to FECA recipients out of the Postal Reform Act.
Please contact both Senators from your state to tell them that they should support the Akaka amendment to Sen Bill 1789. This bill could be taken up as soon as tomorrow, so time is nearly out to convince Senators to vote against 1789 or at least support Sen. Akaka’s amendment.
FLEOA BULLETIN:
FLEOA continues its fight to maintain the FECA benefits federal law enforcement officers have earned. Senator Akaka's Amendment S.2034 to the "21st Century Postal Reform Act" is a common sense reform that sustains the benefit levels all injured federal officers deserves and lays the groundwork for correcting the system so it better supports injured law enforcement officers.
Dear Senator:
I am writing on behalf of the more than 26,000 members of the Federal Law Enforcement Officers Association to advise you of our strong support for S. Amdt. 2034 to S. 1789, the “21st Century Postal Service Act,” offered by Senator Akaka.
Please contact both Senators from your state to tell them that they should support the Akaka amendment to Sen Bill 1789. This bill could be taken up as soon as tomorrow, so time is nearly out to convince Senators to vote against 1789 or at least support Sen. Akaka’s amendment.
FLEOA BULLETIN:
FLEOA continues its fight to maintain the FECA benefits federal law enforcement officers have earned. Senator Akaka's Amendment S.2034 to the "21st Century Postal Reform Act" is a common sense reform that sustains the benefit levels all injured federal officers deserves and lays the groundwork for correcting the system so it better supports injured law enforcement officers.
FLEOA can't do this alone, it needs the help of EVERY member to call both of their respective Senator's DC offices and express to them the urgency of supporting Senator Akaka's amendment.
You can contact your Senators by calling the Capitol switchboard at (202) 224-3121.
Stay strong
FLEOA
Dear Senator:
I am writing on behalf of the more than 26,000 members of the Federal Law Enforcement Officers Association to advise you of our strong support for S. Amdt. 2034 to S. 1789, the “21st Century Postal Service Act,” offered by Senator Akaka.
As you know, included in Title III of the legislation are provisions to enact governmentwide reforms of the Federal Employees’ Compensation Act (FECA). While FLEOA does not disagree with the need to reform both the U.S. Postal Service or FECA, we hardly believe it is appropriate to attempt both in the same legislative vehicle. More importantly, we have serious concerns about the impact that the reforms in Title III will have on injured law enforcement officers currently in the FECA system. In particular, the retroactive application of benefit cuts for law enforcement officers upon reaching retirement age and the elimination of the FECA supplement for dependents.
Amendment #2034 is a sensible compromise that will make commonsense changes to the FECA program without reducing benefits for those who have sacrificed their health in service of this nation. It would replace the current language of Title III with the text of H.R. 2465, the “Federal Workers' Compensation Modernization and Improvement Act,” which passed the House of Representatives last November by a unanimous voice vote. Specifically, Amendment #2034 will ensure injuries or illnesses sustained as the result of terrorism are covered as a war-risk hazard, streamline the claims process for workers who sustain a traumatic injury in a designated zone of armed conflict, expand the Labor Department’s (DOL) ability to collect from third parties and combat fraud, and promote greater accountability in the program. And that is why FLEOA respectfully requests your support for this important amendment.
On behalf of the membership of the Federal Law Enforcement Officers Association, thank you for your attention to our concerns. Please do not hesitate to contact me, or our Washington Representative Chris Granberg at 202-457-7755, if we can provide you with any additional information or assistance.
Respectfully,
Jon Adler
National President
Respectfully,
Jon Adler
National President
Wednesday, April 11, 2012
Interesting new ECAB precedent
It is not unusual to receive a letter from OWCP "denying" entitlement to some aspect of your benefits that does not include appeal rights. Without a final decision and appeal rights, if you asked for review, the Employees Compensation Appeals Board and the Branch of Hearings and Review would simply dismiss your request for review as there was no final appealable decision. In a very recent decision, the Board has explained that even if appeal rights are not attached to correspondence denying you benefits, that the Board still has jurisdiction to review the denial. This is a concept long recognized by the MSPB and in many other jurisdictions. It is a small step in the long process to rein in the Kafkaesque manner in which OWCP conducts itself.
If you receive a letter denying benefits that is not framed as a formal decision with appeal rights, you can still appeal that denial to the Board. In B.C., docket 11-1903, issued March 26, 2012, the Board writes:
On July 14, 2011 an OWCP claims examiner advised appellant that her case (xxxxxx595) had been formally denied by decision dated March 12, 1993. OWCP further explained that it could not consider a recurrence on a denied claim and, therefore, no further action would be taken concerning the June 14, 2011 recurrence claim. It effectively denied appellant's recurrence claim. However, the July 14, 2011 correspondence did not provide any appeal rights. The Board considers the claims examiner's July 14, 2011 action a final, adverse decision subject to review under 20 CFR §§ 501.2(c) and 501.3(a).
This represents a long overdue recognition that the Board has jurisdiction to review a denial even where the formatting of the denial document is flawed.
If you receive a letter denying benefits that is not framed as a formal decision with appeal rights, you can still appeal that denial to the Board. In B.C., docket 11-1903, issued March 26, 2012, the Board writes:
On July 14, 2011 an OWCP claims examiner advised appellant that her case (xxxxxx595) had been formally denied by decision dated March 12, 1993. OWCP further explained that it could not consider a recurrence on a denied claim and, therefore, no further action would be taken concerning the June 14, 2011 recurrence claim. It effectively denied appellant's recurrence claim. However, the July 14, 2011 correspondence did not provide any appeal rights. The Board considers the claims examiner's July 14, 2011 action a final, adverse decision subject to review under 20 CFR §§ 501.2(c) and 501.3(a).
This represents a long overdue recognition that the Board has jurisdiction to review a denial even where the formatting of the denial document is flawed.
Wednesday, March 14, 2012
OWCP contractor files for bankruptcy after allowing claimant records to be stolen
A company called Impairment Resources was recently burglarized and computer drives with confidential claimant information was stolen. This is relevant to OWCP claimants because physician Christopher Brigham, who has contracts to review schedule award requests for OWCP, performs that work as Impairment Resources.
A report from the Wall Street Journal yesterday (see link below), advises that rather than deal with the time and expense of helping people with their problems created by this breach, Impairment Resources is being liquidated in a Chapter 7 bankruptcy.
It is very troubling that OWCP continues to send confidential OWCP claimant information to Christopher Brigham / Impairment Resources under these circumstances.
Even more troubling is that OWCP has not bothered to notify claimants of the theft of their personal information nor taken any steps to advise OWCP claimants what steps they can take and what resources are available to them to protect themselves from identity theft and other problems caused by the failure to have appropriate measures in place to secure claimant records.
http://blogs.wsj.com/bankruptcy/2012/03/12/burglary-triggers-medical-records-firm%E2%80%99s-collapse/
Monday, March 5, 2012
Getting records into your OWCP file
OWCP has created a new function that allows you to "upload" records directly into your workers compensation file instead of mailing or faxing. I have been using this function for about a month and it seems to work very well. Yesterday I was speaking with a Hearing Representative about an upcoming hearing and she was able to see a document that I had uploaded to that file just a few minutes before I called her. Here is the link: https://www.ecomp.dol.gov/#/
Thursday, March 1, 2012
OPM Disability Retirement
I am frequently asked how does OPM figure my disability retirement pension payment. For a FERS disability this is a fairly straightforward matter. During the first 12 months, you are paid 60 percent of your high-3, minus 100 percent of any Social Security disability benefit to which you are entitled. After the first 12 months, you receive 40 percent of your high-3. minus 60 percent of any Social Security disability benefit. Keep in mind that Social Security disability is frequently approved after OPM has already commenced paying you. In that circumstance, when you receive a retroactive payment from Social Security, you need to hold on to that money because OPM is going to come back and recalculate your pension payment from the date your Social Security started and declare an overpayment.
Thursday, February 23, 2012
Social Security Disability and OWCP
If you become eligible for SSDI benefits while drawing FECA benefits from OWCP, whether for wage loss or a schedule award, there is frequently an offset that will reduce your SSDI benefit. SSA has published documents that explain how the offset is calculated. Keep in mind that attorney fees paid in connection with your receipt of FECA workers' compensation payments from OWCP should be reported to SSA, as this will be used to reduce your offset amount.
http://www.socialsecurity.gov/pubs/10018.html
http://www.socialsecurity.gov/pubs/10018.html
Thursday, January 19, 2012
Submit Your OWCP Forms Online
OWCP has gone live with a new function that allows for web submission of forms and documents. You can submit a new claim form to create your case without going through your agency if you follow the instructions to first file the OSHA form. CA-7 and CA-7a forms can be submitted as well. There is a separate function to upload documents. This is pretty amazing, I wonder if it really works. I submitted a document in one of my cases today to see what happens. Here is a link: https://www.ecomp.dol.gov/#/
Wednesday, January 4, 2012
Do I need a lawyer to represent me with my OWCP claim for FECA benefits?
This is a question that I get asked quite often. OWCP sends claimants form letters telling them that they do not need a lawyer to represent them. When asked this question, I try to explain that after almost 20 years, there is a lot that someone like me can bring to the table. While speaking with a prospective client the other day I ran across a situation that answers this question pretty conclusively. Unfortunately, Ms. X's OWCP claim has recently been terminated. The termination was premised upon the report from a physician, Menachem Meller, MD, who the Employees Compensation Appeals Board indicated in a July 26, 2011 decision should not perform referee examinations. Based upon that decision, OWCP stopped sending my clients to that doctor, but this injured worker was sent a notice in September 2011 to attend an examination with this doctor who predictably wrote a report indicating she had fully recovered from her injuries when her own doctors continue to explain she has most certainly not recovered. If I had been representing her at that time, OWCP would not have sent her to this doctor, and if they did, I would have known to object. Even though FECA is supposed to be a noneadversarial process, and OWCP has an obligation to protect injured workers, in practice, OWCP treats injured workers in an adversarial manner and pretends that an injured worker is fully informed about all nuances of this process. So the answer to that common question in this case is that if I had been representing Ms. X she would most likely not even have been sent to this doctor, and if she had, I would have known to object to them selecting him, and she would then most likely not have had her benefits terminated. There is a great deal that a knowledgeable and zealous representative can bring to the process, OWCP is not looking out for you.
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