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:

[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. 

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. 

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.

New York Times takes a bleak view of how insurers will adjust Hurricane Sandy claims

The article is here. 

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. 

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.

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:

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.

New Cavalcade of Risk is up

Take a look at it here.