Tuesday, December 24, 2013
Happy Holidays
Happy holidays from the Ontario Insurance Law Blog. We'll return in January with new posts. All the best in 2014!
Great article on ALI's Principles of Liability Insurance
Randy Maniloff's Coverage Opinions newsletter continues to be the most entertaining read on insurance coverage issues each month, as well as highly informative. This month's newsletter has a particularly interesting article on the American Law Institute's work on Principles of Liability Insurance, which is likely to have a large impact on insurance coverage law in the coming years.
Saturday, December 21, 2013
US District Court holds that failure of temporary patches does not prove faulty workmanship
I have been writing about General Casualty Co. of Wisconsin v. Five Star Building Corp., 2013 WL 5297095 (D. Mass.), in which rainwater penetrated temporary roof patches placed there by Five Star during HVAC work it was doing for UMass.
Five Star's insurer argued that coverage was excluded by an exclusion for property damage "to that particular part of any property that must be restored, repaired or replaced because 'your work' was incorrectly performed on it." The insurer argued that the fact that the temporary patches failed to keep out rainwater shows that Five Star's work was incorrectly performed. The court rejected that argument because it assumes either a strict liability or breach of contract theory of faulty workmanship.
Five Star's insurer argued that coverage was excluded by an exclusion for property damage "to that particular part of any property that must be restored, repaired or replaced because 'your work' was incorrectly performed on it." The insurer argued that the fact that the temporary patches failed to keep out rainwater shows that Five Star's work was incorrectly performed. The court rejected that argument because it assumes either a strict liability or breach of contract theory of faulty workmanship.
Thursday, December 19, 2013
US District Court construes construction exclusion narrowly
In my last post I wrote about General Casualty Co. of Wisconsin v. Five Star Building Corp., 2013 WL 5297095 (D. Mass.), in which rain infiltrated a building when temporary patches put up by Five Star during HVAC work for UMass failed.
Five Star's insurer argued that coverage was excluded by an exclusion for property damage "to that particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the 'property damage' arises out of those operations."
The insurer argued that the entire roof was the "particular part" on which Five Star was working and that therefore all damage to the roof was excluded.
The court held that the exclusion does not extend beyond "the essence" of the insured's work. It held that Five Star's work extended only to the replacement of the ventilation system, not to repair or replacement of the roof. Although as part of its work Five Star was required to punch holes in the roof, that roof work was merely incidental to the replacement of the HVAC system. Therefore the exclusion does not apply.
Five Star's insurer argued that coverage was excluded by an exclusion for property damage "to that particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the 'property damage' arises out of those operations."
The insurer argued that the entire roof was the "particular part" on which Five Star was working and that therefore all damage to the roof was excluded.
The court held that the exclusion does not extend beyond "the essence" of the insured's work. It held that Five Star's work extended only to the replacement of the ventilation system, not to repair or replacement of the roof. Although as part of its work Five Star was required to punch holes in the roof, that roof work was merely incidental to the replacement of the HVAC system. Therefore the exclusion does not apply.
Wednesday, December 18, 2013
The Definition of "Dependency" Under the SABS
Does an adult child attempting to become self-supporting qualify as a "dependent" under the SABS? The answer may be "yes", depending on the person's circumstances at the time of the accident.
In State Farm v. Bunyan, 2013 ONSC 6670 (S.C.J.), Mr. Bunyan was a pedestrian who was catastrophically injured in a motor vehicle accident. He moved out of his mother's house after high school, lived with a girlfriend and had a child. He moved twice to Alberta to find work, but came back to his live with his mother each time. At the time of the accident he had $0.24 in his bank account and was covering his daily expenses with money from his mother. He had problems with alcohol. Corbett J. was satisfied that Mr. Bunyan would have continued relying on his mother's support until she refused help or he obtained help with his alcohol issues.
Corbett J. held that "dependency" must be assessed looking at four factors:
1. Amount of dependency;
2. Duration of dependency;
3. Financial or other needs of the alleged dependent; and
4. The ability of the alleged dependent to be self-supporting.
Corbett J. held that Mr. Bunyan was principally dependent on his mother: although he was seeking to become self-supporting, more than half of his day-to-day expenses were covered by his mother, he had not found permanent accommodation, had not obtained transportation, had not established that he could keep steady employment, was not paying child support, had no savings, and had problems with alcohol. He therefore qualified as an "insured person" under his mother's policy.
In State Farm v. Bunyan, 2013 ONSC 6670 (S.C.J.), Mr. Bunyan was a pedestrian who was catastrophically injured in a motor vehicle accident. He moved out of his mother's house after high school, lived with a girlfriend and had a child. He moved twice to Alberta to find work, but came back to his live with his mother each time. At the time of the accident he had $0.24 in his bank account and was covering his daily expenses with money from his mother. He had problems with alcohol. Corbett J. was satisfied that Mr. Bunyan would have continued relying on his mother's support until she refused help or he obtained help with his alcohol issues.
Corbett J. held that "dependency" must be assessed looking at four factors:
1. Amount of dependency;
2. Duration of dependency;
3. Financial or other needs of the alleged dependent; and
4. The ability of the alleged dependent to be self-supporting.
Corbett J. held that Mr. Bunyan was principally dependent on his mother: although he was seeking to become self-supporting, more than half of his day-to-day expenses were covered by his mother, he had not found permanent accommodation, had not obtained transportation, had not established that he could keep steady employment, was not paying child support, had no savings, and had problems with alcohol. He therefore qualified as an "insured person" under his mother's policy.
Tuesday, December 17, 2013
US District Court holds that damages from faulty workmanship are not an occurrence
UMass hired Five Star to upgrade the HVAC system in the Morill Science Center. As part of its work Five Star sometimes penetrated the building roof and installed temporary patches to protect the building until permanent patches and flashing could be installed.
During a severe rainstorm several temporary patches failed and rainwater penetrated the roof, causing damage to insulation and to the interior of the building and its contents.
Five Star sought coverage from its general liability insurer, General Casualty. General Casualty agreed to cover most of the loss, but denied coverage for damage to the roofing system.
The first issue before the court was whether faulty workmanship is an "occurrence," an issue over which there is much disagreement around the country. In General Casualty Co. of Wisconsin v. Five Star Building Corp., 2013 WL 5297095 (D. Mass.), the United States District Court for the District of Massachusetts held, not in so many words, that the question was irrelevant, because the rain damage itself was an occurrence whether or not faulty workmanship was an occurrence.
During a severe rainstorm several temporary patches failed and rainwater penetrated the roof, causing damage to insulation and to the interior of the building and its contents.
Five Star sought coverage from its general liability insurer, General Casualty. General Casualty agreed to cover most of the loss, but denied coverage for damage to the roofing system.
The first issue before the court was whether faulty workmanship is an "occurrence," an issue over which there is much disagreement around the country. In General Casualty Co. of Wisconsin v. Five Star Building Corp., 2013 WL 5297095 (D. Mass.), the United States District Court for the District of Massachusetts held, not in so many words, that the question was irrelevant, because the rain damage itself was an occurrence whether or not faulty workmanship was an occurrence.
Assuming that Five Star engaged in faulty workmanship, its workmanship extended only as far as the installation of temporary patches and not to the roof itself. Thus, Five Star does not seek coverage for faulty workmanship itself, but rather coverage of the damage resulting from the rainstorm even if such allegedly faulty workmanship contributed to the leaking. The rain damage to the roofing system, therefore, is an "occurrence" under the policy.
Saturday, December 14, 2013
SJC seeks amicus briefs on attorney's fees for PIP cases
The Supreme Judicial Court of Massachusetts is seeking amicus briefs in the following case:
SJC-11561
Barron Chiropractic & Rehabilitation vs. Norfolk & Dedham Group
Whether an insurer can be liable for costs and attorney's fees in an action pursuant to G. L. c. 90, � 34M, on a claim that it failed to pay PIP benefits in accordance with the statute, if the insurer, allegedly for business reasons unrelated to the merits of the litigation, tenders payment of the full amount of the disputed benefits after the commencement of the action but before a judgment has entered against it.
Scheduled for March argument.
SJC-11561
Barron Chiropractic & Rehabilitation vs. Norfolk & Dedham Group
Whether an insurer can be liable for costs and attorney's fees in an action pursuant to G. L. c. 90, � 34M, on a claim that it failed to pay PIP benefits in accordance with the statute, if the insurer, allegedly for business reasons unrelated to the merits of the litigation, tenders payment of the full amount of the disputed benefits after the commencement of the action but before a judgment has entered against it.
Scheduled for March argument.
Wednesday, December 11, 2013
The Standard of Care in Parking Lots
The Divisional Court recently considered an appeal involving the standard of care in a parking lot. The primary conclusion is that the Highway Traffic Act does not generally apply to parking lots.
In Bossio v. Ramsahoye, 2013 ONSC 6878 (Div. Ct.), the parties were in a motor vehicle accident in a GO Train station parking lot. The plaintiff was driving northbound in the centre lane of the parking lot, and the defendant was westbound in one of several exit lanes. The trial judge's charge referred to the location of the accident as "a completely neutral intersection". The jury dismissed the action and the plaintiff appealed.
The plaintiff alleged that the trial judge erred by failing to instruct the jury that the common law duties of drivers approaching an uncontrolled intersection set out in the Highway Traffic Act would apply. The defendant submitted that:
47. The absence of any reference to the Highway Traffic Act at first instance was not inadvertent. The Highway Traffic Act generally has no application to private parking lots. While the Act and the rules of road therein have been found to apply to certain peculiar parking lot situations (i.e. where the parking lot has a dual function as a thoroughfare, or where the Act provision at issue does not use the word “highway” or any word that incorporates the word “highway in its definition), this was not the case at hand and there was never any dispute as between the parties on this point.
48. The authority cited by the Plaintiff does not support her assertion that there are duties at common law equivalent to those found in the Highway Traffic Act, applicable where the Act is silent. At most, the “rules of the road” are distillations of what amounts to reasonable care and offer guidance to situations not covered by the Act.
49. Had the Highway Traffic Act applied, this would have been to the benefit of the Defendant, not the Plaintiff. Under the rules of the road, and specifically subsection 135(3) of the Act, when two vehicles enter an uncontrolled intersection of highways at approximately the same time, the driver on the right (the Defendant in this case) has the right of way.
The Divisional Court agreed with the defendant's submissions and dismissed the appeal.
Wednesday, December 4, 2013
Attendant Care Benefits under SABS-2010
Can an insurer pro-rate attendant care benefits payable based on the hours of work lost by the attendant care provider?
Tyrone Henry was left a paraplegic after a motor vehicle accident in September 2010. His mother took an unpaid leave of absence from work to provide the full-time care he required. Gore Mutual Insurance took the position that the attendant care payments were limited to the number of hours that Tyrone Henry’s mother had been working as a proportion of the total attendant care hours assessed as reasonable.
Tyrone Henry brought an Application before the Ontario Superior Court (Henry v. Gore Mutual Insurance Company, 2012 ONSC 3687) taking the position that he was entitled to the total attendant care hours. The judge agreed. At issue was the interpretation of the Statutory Accident Benefits Scheduleeffective September 1, 2010 (“SABS-2010”). Justice Ray commented that the intent of SABS-2010 was “to prevent a member of an insured’s family who was not ordinarily an income earner or working outside the home, from profiting from an attendant care benefit, when they would likely be at home anyway and would have looked after the injured person without compensation”. This was not the case with Tyrone Henry’s mother who was employed full-time. Justice Ray held that Gore Mutual was obliged to pay to Tyrone Henry all reasonable and necessary attendant care expenses he was obliged to pay his mother, not limited to the economic loss she sustained from leaving her 40 hour per week job.
Tyrone Henry was left a paraplegic after a motor vehicle accident in September 2010. His mother took an unpaid leave of absence from work to provide the full-time care he required. Gore Mutual Insurance took the position that the attendant care payments were limited to the number of hours that Tyrone Henry’s mother had been working as a proportion of the total attendant care hours assessed as reasonable.
Tyrone Henry brought an Application before the Ontario Superior Court (Henry v. Gore Mutual Insurance Company, 2012 ONSC 3687) taking the position that he was entitled to the total attendant care hours. The judge agreed. At issue was the interpretation of the Statutory Accident Benefits Scheduleeffective September 1, 2010 (“SABS-2010”). Justice Ray commented that the intent of SABS-2010 was “to prevent a member of an insured’s family who was not ordinarily an income earner or working outside the home, from profiting from an attendant care benefit, when they would likely be at home anyway and would have looked after the injured person without compensation”. This was not the case with Tyrone Henry’s mother who was employed full-time. Justice Ray held that Gore Mutual was obliged to pay to Tyrone Henry all reasonable and necessary attendant care expenses he was obliged to pay his mother, not limited to the economic loss she sustained from leaving her 40 hour per week job.
Gore Mutual appealed to the Ontario Court of Appeal (Henry v. Gore Mutual Insurance Company 2013 ONCA 480). The appeal was dismissed. The Court held that Justice Ray was correct in concluding economic loss was a threshold for entitlement to, but not a measure of, reasonable and necessary attendant care benefits to be paid by an insurer. Once Tyrone Henry’s mother sustained an economic loss, attendant care benefits were payable with respect to all the care she provided to him.
As a result of this case, regardless of the attendant care provider's amount of lost income, as long as they experience a loss of income, they will receive the entire benefit. This will result in some attendant care providers earning more than they would have if they had not left their employment and others earning less.
Wednesday, November 27, 2013
Damages for Intentional Tort Survive Bankruptcy
The Court of Appeal recently released a decision that looks at the interplay of tort law and bankruptcy.
In Dickerson v. 1610396 Ont. Inc. (c.o.b. Casey's Pub & Grill), 2013 ONCA 4955 (C.A.), a jury awarded the plaintiff damages against the defendant in excess of $1 million arising out of an assault. The defendant punched the plaintiff once in the head, causing the plaintiff to lose consciousness, fall to the ground and sustain brain damage. As a result of the judgment, the defendant declared bankruptcy. The plaintiff brought a motion for an order that the award of damages survived bankruptcy, based on s. 178(1)(a.1) of the Bankruptcy and Insolvency Act, which provides:
The Court of Appeal allowed the appeal, holding that s. 178(1)(a.1) will apply where there is direct proof of intentional infliction of bodily harm or where it can be reasonably inferred. As long as there is intent, the section will apply; there is no requirement to show the circumstances were sufficiently offensive to social mores to justify withholding the protection of bankruptcy.
In Dickerson v. 1610396 Ont. Inc. (c.o.b. Casey's Pub & Grill), 2013 ONCA 4955 (C.A.), a jury awarded the plaintiff damages against the defendant in excess of $1 million arising out of an assault. The defendant punched the plaintiff once in the head, causing the plaintiff to lose consciousness, fall to the ground and sustain brain damage. As a result of the judgment, the defendant declared bankruptcy. The plaintiff brought a motion for an order that the award of damages survived bankruptcy, based on s. 178(1)(a.1) of the Bankruptcy and Insolvency Act, which provides:
178(1) An order of discharge does not release the bankrupt from
(a.1) any award of damages by a court in civil proceedings in respect of
(i) bodily harm intentionally inflicted, or sexual assault or
The motions judge held that although the jury found the defendant "deliberately punched the plaintiff in the head", the verdict did not provide a framework to assess whether it was an "intentional infliction of bodily harm". She dismissed the motion and the plaintiff appealed.(ii) wrongful death resulting therefrom.
The Court of Appeal allowed the appeal, holding that s. 178(1)(a.1) will apply where there is direct proof of intentional infliction of bodily harm or where it can be reasonably inferred. As long as there is intent, the section will apply; there is no requirement to show the circumstances were sufficiently offensive to social mores to justify withholding the protection of bankruptcy.
Friday, November 22, 2013
Still fighting to get releases of liability removed from Boston Public Schools permission slips
I have posted here, here, here, and here on my efforts to have releases of liability removed from field trip permission slips Boston Public School parents are required to sign.
This past Wednesday I returned to the Boston School Committee. I spoke during the public comment period and pointed out that last February the BSC had requested that the BPS legal department report back to it on whether other school systems in Massachusetts require similar releases of liability. That report has not happened yet. I again requested that the releases of liability be removed from permission slips.
The following is the handout I gave to the School Committee members (slightly redacted to protect the privacy of my children):
FOLLOW UP ON RELEASES OF LIABILITY IN FIELD TRIP PERMISSION SLIPS
This past Wednesday I returned to the Boston School Committee. I spoke during the public comment period and pointed out that last February the BSC had requested that the BPS legal department report back to it on whether other school systems in Massachusetts require similar releases of liability. That report has not happened yet. I again requested that the releases of liability be removed from permission slips.
The following is the handout I gave to the School Committee members (slightly redacted to protect the privacy of my children):
FOLLOW UP ON RELEASES OF LIABILITY IN FIELD TRIP PERMISSION SLIPS
THE ISSUE: Boston public school permission slips require parents to sign a release of all rights if their child is injured on a field trip.
The release includes “any acts of negligence or otherwise from the moment that my student is under BPS supervision and throughout the duration of the trip.”
In the release, parents agree “to indemnify and hold harmless BPS and any of the individuals and other organizations associated with the BPS in this field trip from any claim or liability arising out of my child’s participation in this field trip.”
PREVIOUS COMMENT BEFORE THE SCHOOL COMMITTEE, AND LACK OF PROMISED FOLLOW UP
I spoke during the public comment period on this issue at the School Committee meeting of February 27, 2013.
My written comments are attached.
Schoolcommittee member Mary Tamer requested a report back from the legal department on what other school systems in Massachusetts are doing.
I sent a follow up email in the spring and was told by Chairperson O’Neill that the School Committee would reach the issue but not before the conclusion of the current (2012-2013) school year.
I sent another email a few weeks ago to which I received no reply.
I am therefore here to again request that releases of liability be removed from field trip permission slips.
WHAT DO OTHER SCHOOL DISTRICTS DO?
First, this is not the right question to be asking. Boston is the largest and the best school district in Massachusetts, and has among the most resources to determine what is right. We should lead other school districts, not follow them.
Second, there is a great deal of variation; however, I am not aware of any school district that has a release as comprehensive as Boston’s. I have attached permission slips from Brockton and from Chicago, which contain no waiver of liability. I have also attached a permission slip from New York City, which releases liability “except if due to the negligence of school officials.”
MASSACHUSETTS LAWYERS WEEKLY ARTICLE
I have attached an article in Massachusetts Lawyers Weekly which covered the issue on April 18, 2013.
BPS spokesperson Lee McGuire was quoted in the article. He made two statements with which I disagree.
First, he stated that Massachusetts courts have upheld school releases of liability. That is incorrect. The case he cites, Sharon v. City of Newton, 437 Mass. 99 (2002), upheld releases in voluntary afterschool activities -- in that case, cheerleading. It specifically reserved the question of whether a release of liability would be upheld in the context of a required school activity.
More importantly, McGuire asserted that the waivers of liability allow the schools to continue to offer field trips. That is simply the wrong approach. The BPS and its students are best protected by insurance, which is a cost of doing business, not by a waiver which allows entities to avoid responsibility for their own negligence. If a child is seriously injured on a field trip and liability has been released, then ultimately that child will be taken care of by taxpayers through public programs that assist people with disabilities. In the meantime the child’s family has not only suffered as a result of the child’s injury but has possibly been bankrupted by the cost of care. It is much fairer and better for everyone -- the BPS, the students, the parents, the taxpayers -- to simply require insurance.
CONCLUSION
The release of liability should be removed from field trip permission slips. Instead, the BPS should require that its partners have adequate insurance to protect students in the event that they are injured as a result of negligence.
REQUEST FOR RESPONSE
I request that the school committee get back to me with a response by December 1, 2013.
ABOUT ME
I am a lawyer who specializes in liability insurance issues (“insurance coverage”). As such, I spend a lot of time thinking about the purposes served by insurance, about how risk should be reasonably delegated, and about the devastating impact on individuals and families when risk is not delegated reasonably.
Wednesday, November 20, 2013
Municipality Not Liable in Recreational Trail Case
Recently the Ontario Courts found a municipality not liable, under section 4(1) of the Occupier’s Liability Act, for the plaintiff’s fall off the edge of a ravine. In coming to this finding the court took an expansive view of when this section applied and indicated what is required to meet the lower standard of care under this section.
In Pierce v. Hamilton(City), 2013 ONSC 6485 (S.C.J.), the plaintiff entered the park on a marked recreational trail near the edge of the Niagara Escarpment, he then left the trail and proceeded on an unmarked dirt path and fell off the edge of the ravine sustaining physical injuries. The City of Hamilton acknowledged that they were the occupier of the premises, but asserted they had met the standard of care. The trail itself qualified as a recreational trail and was clearly marked as such, but the issue was whether the dirt path also qualified. The Court held that the standard of care was the same as if the plaintiff was on a marked trail, stating:
“If that owner is given the benefit of the lower standard of care in return for allowing the public to enjoy the recreational trail on the land, it makes no sense to saddle the owner with the higher standard of care the moment a hiker or cyclist or skier moves off of the recreational trail. Further, it makes no sense for two different standards of care to alternately apply as a trail user hops on and off of the recreational trail.”
Given this, the plaintiff was deemed to have willingly assumed all risks associated with the premises and the lesser standard set out in section 4(1) of the Occupier’s Liability Act applied.
The Court accepted the evidence of the representative of the City that they had not received any previous complaints of people falling into the ravine and thus had no information that would suggest there was an unusual danger on any dirt path in the park area. Justice Henderson rejected the plaintiff’s argument that the City failed to meet the standard of care for failing to conduct inspections of the park, for failing to have warning signs and for failing to construct a protective fence. Justice Henderson held that it would be impossible for the City to conduct regular inspections of the 3,000 acres of natural areas. Regarding the signage and fencing, the Court held:
“As to signage, clearly a specific warning sign was not warranted if the City was not aware of any specific danger... I find that the failure of the City to erect a more general warning sign, such as "Caution. Uneven Ground in the Woods" does not constitute a breach of its duty. Such a warning sign would in fact be a sign stating the obvious; that is, that the terrain in the woods is uneven and unpredictable... I also reject the plaintiffs' submissions that the City ought to have built a barricade or a fence near the drop-off into the ravine. The danger of a sharp drop in elevation in a wooded area that was near the edge of an escarpment should be obvious to anyone who entered the woods.”
This case builds on the Ontario Court of Appeal decision in the Schneider v. St. Clair Region Conservation Authority case regarding when section 4(1) applies and highlights the lower standard of care under this section.
Settlement mills and insurers
Tina Willis Law Blog has an article discussing a 2009 law review article called Run-of-the-Mill Justice, about so-called settlement mills, large-volume plaintiffs' personal injury firms that acquire most of their clients by advertising.
Towards the end of the law review article the author discusses the advantages to insurers of dealing with those types of firms. The article posits that the insurers end up paying a lot of low-value cases for more than they are worth, but in exchange they are able to settle high -value cases at a steep discount.
I began my career as an insurance-defense attorney and I still do quite a bit of insurance defense work, most of it indirectly on a subcontract basis. In the hundreds of cases I have defended or participated in defending over the years, only a small handful have been brought by the types of firms discussed in the article, although they certainly exist in this state. My experience was that the attorneys that handled them were average: certainly no standouts in their representation of their clients, but they knew what they were doing.
Insurance defense attorneys tend to only see the more interesting cases: cases that go into suit rather than settling pre-suit because there is a question over liability or the case won't settle for its reasonable value as perceived by the adjuster.
Nevertheless, the idea that insurance companies have a symbiotic relationship with plaintiffs' mills does not ring true to me. I have worked with many adjusters and their supervisors, both on the side of the insurer/insured and on the side of the claimant. I simply can't imagine any department settling low value cases for more than they're worth in the expectation of an easy settlement in a high value case. That's the sort of allegation that I would expect the state attorney general to look into, as it would be a large volume unfair settlement practice.
Towards the end of the law review article the author discusses the advantages to insurers of dealing with those types of firms. The article posits that the insurers end up paying a lot of low-value cases for more than they are worth, but in exchange they are able to settle high -value cases at a steep discount.
I began my career as an insurance-defense attorney and I still do quite a bit of insurance defense work, most of it indirectly on a subcontract basis. In the hundreds of cases I have defended or participated in defending over the years, only a small handful have been brought by the types of firms discussed in the article, although they certainly exist in this state. My experience was that the attorneys that handled them were average: certainly no standouts in their representation of their clients, but they knew what they were doing.
Insurance defense attorneys tend to only see the more interesting cases: cases that go into suit rather than settling pre-suit because there is a question over liability or the case won't settle for its reasonable value as perceived by the adjuster.
Nevertheless, the idea that insurance companies have a symbiotic relationship with plaintiffs' mills does not ring true to me. I have worked with many adjusters and their supervisors, both on the side of the insurer/insured and on the side of the claimant. I simply can't imagine any department settling low value cases for more than they're worth in the expectation of an easy settlement in a high value case. That's the sort of allegation that I would expect the state attorney general to look into, as it would be a large volume unfair settlement practice.
Wednesday, November 13, 2013
Resolution of a third party case may entitle you to be paid additional money by OPM
In a small number of OWCP claims, the cause of the injury is due to the negligence of a third party. You cannot sue your employer and coworkers, but if your injury was caused by an entity outside of the federal government you might have a third party case. When your third party case is resolved, your lawyer will distribute the money that is recovered, including repaying OWCP for some or all of the wage loss payments you have received. When that occurs you are repaying the workers compensation payments that you previously received. If you are also approved for your regular or disability pension, repaying the workers compensation wage loss pay may trigger entitlement to a payment from OPM for that closed period of time that you have had to repay OWCP. This can add up to a significant amount of money. If you have settled a third party case, you may be entitled to a payment from OPM for the period that you repaid OWCP.
Leave Required for Refusals Motion After Set Down – Part II
We previously posted on the decision of Jetport v. Jones Brown, 2013 ONSC 2470 (S.C.J.), which held that leave is required for a refusals motion that is commenced after the action has been set down. The Jetport decision has been followed in Hamilton v. Ontario(Minister of Transport), 2013 ONSC 4536 (S.C.J.).
In Hamilton, a representative of the defendant was examined for discovery on March 30, 2012. In response to a status notice, the plaintiffs delivered a trial record and set the matter down for trial on January 22, 2013. The plaintiff then brought a motion seeking answers to refusals on March 7, 2013. The motion was dismissed by Master Haberman on the basis that the plaintiff had not sought leave for as required by rule 48.04 and the plaintiff appealed.
On appeal Firestone J. held that although there was disagreement in the case law on the issue of whether leave is required, Master Haberman was not in error when she chose the line of authority that appeared most persuasive. The line of authority followed by Master Haberman and approved of on appeal was that of Jetport v. Jones Brown. Because leave was not sought, the Master was correct in not considering the issue of refusals.
It may have been that the Master’s decision was meant to be a procedural slap on the wrist to the plaintiff. The decision notes that the requirement for leave was neither sought nor addressed by the plaintiff in their original motion material. The Master’s decision did not preclude the plaintiff from bringing a motion for leave to have their refusals motion heard. Counsel should be cautious about setting a matter down if they wish to pursue refusals. They should also seek leave of the court, and address this in motion materials when in doubt. Wednesday, November 6, 2013
1st Circuit holds that reasonable expectations doctrine does not trump unambiguous policy language
I posted here about the United States District Court case of Clark School for Creative Learning, Inc. v. Philadelphia Indem. Ins. Co., 2012 WL 6771835 (D. Mass.). In that decision the court held that an exclusion for known circumstances revealed in a financial statement applied to a claim that a school had misused a donation. The exclusion excluded claims "arising out of, directly or indirectly resulting from or in consequence of, or in any way involving" any circumstances disclosed in a financial statement that was attached to the policy. The financial statement referenced the gift at issue.
In Clark School for Creative Learning, Inc. v. Philadelphia Indem. Ins. Co., __ F.3d __, 2013 WL 57337339 (1st Cir.) the United States Court of Appeals has affirmed the ruling.
The court held that the plain language of the exclusion excluded coverage because the loss "involved" the gift disclosed in the financial statement.
The court rejected the school's argument that the reasonable expectations of the parties were that the exclusion would not apply to a lawsuit over the gift, but only to lawsuits over the school's financial difficulties discussed in the financial statement. The court held that even if the school could have reasonably expected coverage, the reasonable expectations doctrine does not apply when policy language is unambiguous.
In Clark School for Creative Learning, Inc. v. Philadelphia Indem. Ins. Co., __ F.3d __, 2013 WL 57337339 (1st Cir.) the United States Court of Appeals has affirmed the ruling.
The court held that the plain language of the exclusion excluded coverage because the loss "involved" the gift disclosed in the financial statement.
The court rejected the school's argument that the reasonable expectations of the parties were that the exclusion would not apply to a lawsuit over the gift, but only to lawsuits over the school's financial difficulties discussed in the financial statement. The court held that even if the school could have reasonably expected coverage, the reasonable expectations doctrine does not apply when policy language is unambiguous.
Limitation Periods in Insurance Contracts
Can a one year limitation period in an insurance contract override the two year limitation period?
The Boyces claimed that the business had been vandalized, a peril covered by the policy, and they filed a proof of loss claim in December 2010 and commenced an action in February 2012, more than one year, but less than two years after the incident. The Co-Operators moved for summary judgment, claiming that the action was time barred by a one year limitation period set out in the insurance contract.
The motion judge held that the one year limitation period in the contract did not override the statutory two year limitation period set out in s. 4 of the Limitations Act, 2002. The Co-Operators appealed.
A term in a contract purporting to vary an otherwise applicable limitation period under the Limitations Act has to comply with s. 22 of the Limitations Act. That section allows parties to vary or exclude, by agreement, the otherwise applicable statutory limitation period. The Co-Operators relied on s. 22(5) which applies only to business agreements.
The Court of Appeal stated at paragraph 20:
A court faced with a contractual term that purports to shorten a statutory limitation period must consider whether that provision in ‘clear language’ describes a limitation period, identifies the scope of the application of that limitation period, and excludes the operation of other limitation periods. A term in a contract which meets those requirements will be sufficient for s. 22 purposes, assuming, of course, it meets any of the other requirements specifically identified in s. 22.
In order for s. 22(5) to apply the contract must be a “business agreement” defined by the Limitations Act as “an agreement made by parties none of whom is a consumer”. The Court of Appeal found that the Boyces contracted with the Co-Operatos for insurance covering various risks related to the operations of their business and the contract was not for personal, family or household purposes. As such the contract was a “business agreement”. The appeal was allowed.
Friday, November 1, 2013
Wednesday, October 30, 2013
Surveillance particulars must be served even if not relying on it at trial
A recent decision has held that a defendant who obtains surveillance must serve particulars of it, even if not relying on it at trial.
In Arsenault-Armstrong v. Burke, 2013 ONSC 4353 (S.C.J.), the plaintiff sought an undertaking that the defendant provide particulars of future surveillance, including date, time, name of investigator and so forth. The defendant refused to provide particulars if she was not relying on the surveillance at trial.
Justice Hambly held that the defendant must provide particulars of surveillance even if she does not intend to rely on it at trial. At paragraph 11, Justice Hambly stated:
[11] The consequences of the defence not producing the full particulars of surveillance evidence in its possession, even if in the period leading up to the trial the defence is of the view that it will not rely on it at trial are well illustrated in Beland. The surveillance evidence will assist the plaintiff in evaluating the strength of her case and arriving at her settlement position prior to trial. Even if the defendant will not be able to use the surveillance evidence for impeachment purposes, as a result of its non-disclosure, the defence will gain knowledge of the plaintiff from the surveillance evidence which it will be able to use to its benefit. A requirement that the defence produce it even if it does not presently intend to use at trial is consistent with what the Court of Appeal said in Ceci v. Bank (1992), 7 O.R. (3d) 381 quoted above by Justice Howden. In Beland, after a 17 day trial a jury dismissed the plaintiff’s case. The trial judge fixed costs against the plaintiff, exclusive of HST at $115,318. This is a devastating result for a plaintiff. Perhaps it could have all been avoided if the disputed surveillance evidence had been produced by the defendant.
The difficulty with this decision for the defence is that the value of surveillance as an impeachment tool may be lost if the plaintiff has knowledge of the particulars. In addition, if the defence does not intend to rely on it at trial, how can it assist in settlement? Lastly, the decision does not give guidance on how far in advance of trial the particulars must be disclosed.
In Arsenault-Armstrong v. Burke, 2013 ONSC 4353 (S.C.J.), the plaintiff sought an undertaking that the defendant provide particulars of future surveillance, including date, time, name of investigator and so forth. The defendant refused to provide particulars if she was not relying on the surveillance at trial.
Justice Hambly held that the defendant must provide particulars of surveillance even if she does not intend to rely on it at trial. At paragraph 11, Justice Hambly stated:
[11] The consequences of the defence not producing the full particulars of surveillance evidence in its possession, even if in the period leading up to the trial the defence is of the view that it will not rely on it at trial are well illustrated in Beland. The surveillance evidence will assist the plaintiff in evaluating the strength of her case and arriving at her settlement position prior to trial. Even if the defendant will not be able to use the surveillance evidence for impeachment purposes, as a result of its non-disclosure, the defence will gain knowledge of the plaintiff from the surveillance evidence which it will be able to use to its benefit. A requirement that the defence produce it even if it does not presently intend to use at trial is consistent with what the Court of Appeal said in Ceci v. Bank (1992), 7 O.R. (3d) 381 quoted above by Justice Howden. In Beland, after a 17 day trial a jury dismissed the plaintiff’s case. The trial judge fixed costs against the plaintiff, exclusive of HST at $115,318. This is a devastating result for a plaintiff. Perhaps it could have all been avoided if the disputed surveillance evidence had been produced by the defendant.
The difficulty with this decision for the defence is that the value of surveillance as an impeachment tool may be lost if the plaintiff has knowledge of the particulars. In addition, if the defence does not intend to rely on it at trial, how can it assist in settlement? Lastly, the decision does not give guidance on how far in advance of trial the particulars must be disclosed.
More on flood insurance
Following up on my article of the other day which discussed, in part, changes to flood insurance rates, Salon has a comprehensive article on the issue from a national perspective. (Ignore the click-bait title, which does not reflect the content of the article.)
Monday, October 28, 2013
Waxing philosophical
Talking with my daughter about a school assignment today (writing fortunes for fortune cookies, if you must know) led me to this John Donne poem. I knew the beginning and the end. The middle expresses how I feel about property loss from natural disasters. Whether or not there's ultimately insurance coverage for a building that has been damaged or destroyed by a hurricane, a family losing its home has repercussions throughout the fabric of our society.
No man is an island,
Entire of itself,
Every man is a piece of the continent,
A part of the main.
If a clod be washed away by the sea,
Europe is the less.
As well as if a promontory were.
As well as if a manor of thy friend's
Or of thine own were:
Any man's death diminishes me,
Because I am involved in mankind,
And therefore never send to know for whom the bell tolls;
It tolls for thee.
Along the same lines, the Boston Herald has this article about the effect of FEMA's new flood zone maps on flood insurance in Boston. I've posted before about the intersection of liability insurance and taxes. Given that higher flood risks are likely related to climate change, a result of the workings of our society as a whole (see above) and out of the individual control of longtime homeowners of property near major bodies of water, it seems only right that moderate-income families who can't afford higher insurance rates should receive subsidies. Assuming that the new maps accurately show the risk, as someone who is adamantly pro-insurance, I do support requiring homeowners in flood zones to have flood insurance; moreover, as I discussed here, I support flood insurance on the value of the entire property, not merely to the extent of the mortgagee's interest as the current regulations require. It's a fair way to spread the risk and will prevent the even worse economic devastation that would occur if entire neighborhoods are damaged by a hurricane and the homeowners are uninsured. It can be the difference between a few awful weeks or months and long-term homelessness.
No man is an island,
Entire of itself,
Every man is a piece of the continent,
A part of the main.
If a clod be washed away by the sea,
Europe is the less.
As well as if a promontory were.
As well as if a manor of thy friend's
Or of thine own were:
Any man's death diminishes me,
Because I am involved in mankind,
And therefore never send to know for whom the bell tolls;
It tolls for thee.
Along the same lines, the Boston Herald has this article about the effect of FEMA's new flood zone maps on flood insurance in Boston. I've posted before about the intersection of liability insurance and taxes. Given that higher flood risks are likely related to climate change, a result of the workings of our society as a whole (see above) and out of the individual control of longtime homeowners of property near major bodies of water, it seems only right that moderate-income families who can't afford higher insurance rates should receive subsidies. Assuming that the new maps accurately show the risk, as someone who is adamantly pro-insurance, I do support requiring homeowners in flood zones to have flood insurance; moreover, as I discussed here, I support flood insurance on the value of the entire property, not merely to the extent of the mortgagee's interest as the current regulations require. It's a fair way to spread the risk and will prevent the even worse economic devastation that would occur if entire neighborhoods are damaged by a hurricane and the homeowners are uninsured. It can be the difference between a few awful weeks or months and long-term homelessness.
Wednesday, October 23, 2013
Timeliness of claims - statute of limitations - don't rely on your OWCP claims examiner
I have recently had several OWCP clients' workers compensation claims erroneously denied as being untimely. The time for filing a traumatic injury claim is within three years of when you knew or should have known you were injured. There are circumstances where you can get around the time limitation. With regard to an occupational injury or disease, there is also a three year time limitation. However, with an occupational injury or disease, the claim is timely so long as it is filed within three years of when you were last exposed to the work factors contributing to your condition. That means if you are subjected to loud noise on the job, and have known for more than three years that that noise has damaged your hearing, you can file your claim up until it has been more than three years since you were last exposed to noise on the job. This type of claim can still be filed even after three years have passed since you were last exposed under certain circumstances. Its not clear why different claims examiners in different OWCP offices are getting this wrong and erroneously denying claims filed far more than three years after the injured worker was aware of their illness, but well within three years of when they were last exposed to the relevant work factors that contribute to the illness. If your claim is denied for any reason, keep in mind that you are entitled to appeal rights for a reason. The reason is that far too many OWCP claims examiners are poorly trained and unfamiliar with basic principles applicable to this system. Those running OWCP spend far too much time lobbying Congress to strip benefits from this program and far too much time working with employing agencies to come up with strategies to deny injured workers benefits that they are entitled to receive. Instead, those running this program should be focusing on providing competent training and mentoring to claims examiners who all too often are assigned so many cases that they are unable to provide quality work. In the end, its much easier to deny a claim and let someone else figure it out, especially in a work environment that values the volume of work completed and places no value on the quality of work completed.
Wednesday, October 16, 2013
First circuit holds that injury from portable fire pit does not arise out of premises; in dicta asserts the issue is interesting
Judge Selya introduced his decision in Vermont Mut. Ins. Co. v. Zamsky, __ F.3d __, 2013 WL 5543915 (1st Cir. 2013) by proclaiming that the decision addresses "what some might regard as an oxymoron: an interesting insurance coverage question."
Andrew Zamsky was an insured under three homeowners' policies issued to his parents by Vermont Mutual. Each of the policies covered a separate parcel of residential real estate they owned.
The policies provided coverage for claims of bodily injury caused by an occurrence. They also contained a "UL exclusion," which excluded coverage for injuries "arising out of a premises" owned by an insured but not itself an insured location.
On November 27, 2008, Zamsky, claimant Renata Ivnitskaya, and several friends drove to a house which was owned by Zamsky's parents but which was not an insured location under any of the policies.
Zamsky retrieved from a shed on the property a portable fire pit he had purchased earlier that year. The group tried to start a fire in it. When the wood would not burn readily, one of the group retrieved a container of gasoline from the garage or the shed and poured its contents on the fire.
In the subsequent conflagration three people were burned. Ivnitskaya suffered especially severe burns.
Ivnitskaya sued Zamsky. As Judge Selya wrote, she alleged a "golconda" (presumably meaning a source of great wealth, and not a mystical state of enlightenment where a vampire is no longer subject to the beast [thank you, Google]) of negligent acts and omissions.
Vermont Mutual agreed to defend the claim under a reservation of rights, and then filed a declaratory judgment action.
In rendering its decision the court relied on Massachusetts Appeals Court cases that interpreted the UL exclusion. One held that a UL exclusion did not exclude coverage for a dogbite case because, while the bite happened at the uninsured premises, the dog was not a condition of the premises.
In a second Appeals Court case the claimant was on uninsured premises "in order to minister to a dying tree" (perhaps so that it would no longer be subject to the beast?). He fell from a ladder and was injured. The Appeals Court held the UL exclusion applied because "where . . . a third person is on the property to repair a condition of the property . . . there is a sufficiently close relationship between the injury and the premises" such that the injury should be understood to have arisen out of the premises.
Taken together, the courts change the UL exclusion to claims "arising out of a condition of premises" owned by the insured that are not an insured location. Judge Selya held that a portable fire pit stored at the premises was not a condition of the premises, so the exclusion did not apply.
Vermont Mutual tried to change the debate by focusing not on "the premises" but on "arising out of," a phrase that is construed broadly. Judge Selya held that the "arising out of" language only comes into play if there is some causal link between the covered occurrence and a condition of the premises. "Here, there is no such linkage."
Judge Selya also rejected Vermont Mutual's argument that if the group went to the premises with the intention of lighting a fire, the occurrence arose out of the premises. "The group's reason for going to Falmouth was not material because that purpose was not related to a condition of the premises."
Judge Selya added that if Vermont Mutual had wanted to exclude from coverage all injuries occurring at an owned location it did not insure, "it would have been child's play to say so."
I think Judge Selya's decision is correct as a matter of a federal court interpreting Massachusetts law. He properly relied on Massachusetts Appeals Court cases because there are no SJC cases on point. Although Judge Selya asserted that he was predicting how the SJC would rule, I'm not so sure it would follow the Appeals Court cases. The exclusion does not exclude injuries "arising out of conditions of premises" that are not insured locations; it excluded injuries "arising out of premises" that are not insured locations. I don't see a basis for reading "condition of" into the exclusion.
Moreover, it makes sense to me that an insured buying three separate homeowner's policies for three discrete houses would not expect that an injury occurring at another house he owns to be covered by those policies. (The Zamsky family most likely had coverage from a different carrier for the house where the fire occurred. My guess is that this is a fight between carriers concerned about which one of them will pay if Ivnitskaya prevails on liability in her underlying action, not a fight about whether an insurer or the Zamsky family will pay. Not that that should make any difference in the contract interpretation issues, but it gives the fight a different flavor, right?)
In this I find myself at surprising odds with Barry Zalma, an insurance fraud specialist whose posts tend to be in favor of limited coverage. But here he claims that "the stupidity [of Vermont Mutual] arguing no coverage even outweighed the stupidity of throwing gasoline on a fire."
Andrew Zamsky was an insured under three homeowners' policies issued to his parents by Vermont Mutual. Each of the policies covered a separate parcel of residential real estate they owned.
The policies provided coverage for claims of bodily injury caused by an occurrence. They also contained a "UL exclusion," which excluded coverage for injuries "arising out of a premises" owned by an insured but not itself an insured location.
On November 27, 2008, Zamsky, claimant Renata Ivnitskaya, and several friends drove to a house which was owned by Zamsky's parents but which was not an insured location under any of the policies.
Zamsky retrieved from a shed on the property a portable fire pit he had purchased earlier that year. The group tried to start a fire in it. When the wood would not burn readily, one of the group retrieved a container of gasoline from the garage or the shed and poured its contents on the fire.
In the subsequent conflagration three people were burned. Ivnitskaya suffered especially severe burns.
Ivnitskaya sued Zamsky. As Judge Selya wrote, she alleged a "golconda" (presumably meaning a source of great wealth, and not a mystical state of enlightenment where a vampire is no longer subject to the beast [thank you, Google]) of negligent acts and omissions.
Vermont Mutual agreed to defend the claim under a reservation of rights, and then filed a declaratory judgment action.
In rendering its decision the court relied on Massachusetts Appeals Court cases that interpreted the UL exclusion. One held that a UL exclusion did not exclude coverage for a dogbite case because, while the bite happened at the uninsured premises, the dog was not a condition of the premises.
In a second Appeals Court case the claimant was on uninsured premises "in order to minister to a dying tree" (perhaps so that it would no longer be subject to the beast?). He fell from a ladder and was injured. The Appeals Court held the UL exclusion applied because "where . . . a third person is on the property to repair a condition of the property . . . there is a sufficiently close relationship between the injury and the premises" such that the injury should be understood to have arisen out of the premises.
Taken together, the courts change the UL exclusion to claims "arising out of a condition of premises" owned by the insured that are not an insured location. Judge Selya held that a portable fire pit stored at the premises was not a condition of the premises, so the exclusion did not apply.
Vermont Mutual tried to change the debate by focusing not on "the premises" but on "arising out of," a phrase that is construed broadly. Judge Selya held that the "arising out of" language only comes into play if there is some causal link between the covered occurrence and a condition of the premises. "Here, there is no such linkage."
Judge Selya also rejected Vermont Mutual's argument that if the group went to the premises with the intention of lighting a fire, the occurrence arose out of the premises. "The group's reason for going to Falmouth was not material because that purpose was not related to a condition of the premises."
Judge Selya added that if Vermont Mutual had wanted to exclude from coverage all injuries occurring at an owned location it did not insure, "it would have been child's play to say so."
I think Judge Selya's decision is correct as a matter of a federal court interpreting Massachusetts law. He properly relied on Massachusetts Appeals Court cases because there are no SJC cases on point. Although Judge Selya asserted that he was predicting how the SJC would rule, I'm not so sure it would follow the Appeals Court cases. The exclusion does not exclude injuries "arising out of conditions of premises" that are not insured locations; it excluded injuries "arising out of premises" that are not insured locations. I don't see a basis for reading "condition of" into the exclusion.
Moreover, it makes sense to me that an insured buying three separate homeowner's policies for three discrete houses would not expect that an injury occurring at another house he owns to be covered by those policies. (The Zamsky family most likely had coverage from a different carrier for the house where the fire occurred. My guess is that this is a fight between carriers concerned about which one of them will pay if Ivnitskaya prevails on liability in her underlying action, not a fight about whether an insurer or the Zamsky family will pay. Not that that should make any difference in the contract interpretation issues, but it gives the fight a different flavor, right?)
In this I find myself at surprising odds with Barry Zalma, an insurance fraud specialist whose posts tend to be in favor of limited coverage. But here he claims that "the stupidity [of Vermont Mutual] arguing no coverage even outweighed the stupidity of throwing gasoline on a fire."
Is the Insurer Always Justified in Denying Coverage On the Basis of a Breach of a Statutory Clause?
Every automobile insurance policy issued in Ontario contains statutory clause 4.1:
The insured shall not drive or operate or permit any other person to drive or operate the automobile unless the insured or other person is authorized by law to drive or operate it.
Section 32 of Highway Traffic Act requires an operator of a motor vehicle to hold a valid driver’s licence. In Kozel v.Personal Insurance Co. [2013] ONSC 2670 (S.C.J), the applicant was a 77 woman year old woman who was involved in a motor vehicle accident in Florida. Her insurer denied coverage on the basis that she was in breach of the policy at the time of the accident because her driver’s license had expired. The applicant brought this application for a declaration that the insurer owed a duty to indemnify and defend her in a third party action against her.
Approximately five months prior to the accident, the applicant received documentation from the Ministry concerning the renewal of her driver’s licence and vehicle plate sticker. Two weeks prior to the renewal date, the applicant gave the package of documentation to her dealership where she took delivery of a new vehicle. She was unaware that this package contained her licence renewal. Until the accident occurred, she was unaware that her licence had not been renewed. She reported the accident in a timely manner and renewed her license immediately upon discovering it was expired.
Justice Wood cited the 2011 Court of Appeal decision Tut v. R.B.C. General Insurance Company [2011] ONCA 644 where it was held that if an offence for breaching the regulation was one of strict liability rather than absolute liability, it was open to the insured to argue that he took all reasonable care in the circumstances to see that he was not in breach of the regulation. Were he able to argue this defence successfully it would follow that he remained authorized to drive within the meaning of statutory condition 4(1).
Justice Wood held that since an offence of driving with an expired licence is one of strict liability, an argument that the applicant exercised due diligence was available. Justice Wood found that the applicant took active steps to ensure that she met her duty, although mistakenly, she provided a believable explanation for her lack of perfect diligence and her actions were those of a reasonable person acting upon a genuinely mistaken belief. As such, the court found that the applicant was entitled to a defence under the policy.
This case shows that breaches of the insurance policy are not always clear cut and can involve the consideration by the court of many subjective factors.
Wednesday, October 9, 2013
Can a Plaintiff Avoid Discovery Due to Medical Reasons?
Can a plaintiff avoid attending discovery or an independent medical examination due to anxiety or an inability to respond to questions appropriately?
In Lalousis v. Roberts, 2013 ONSC 5897 (S.C.J), the plaintiff sought $4 million in two actions relating to two motor vehicle accidents. She alleged that she could not participate in oral discovery or an IME due to medical reasons, including that she was not able to respond to questions, had poor communication and attention, and discovery would increase her anxiety and depression. She sought to avoid the discovery process or have her husband act as a substitute.
Master Muir dismissed the motion. A party has a prima facie right to a full and complete discovery of an adverse party, which includes oral examination and may include a medical examination. The threshold to limit a party's right to discovery is a high one and should be ordered only in the rarest of cases. In the circumstances, an examination for discovery might be unproductive as she may not provide responsive answer, and it could cause anxiety for the plaintiff; however, there was no evidence that it would cause her permanent damage.
In order to permit the defence to fully respond to the claim against it, it makes sense that the threshold for taking away those rights is very high.
In Lalousis v. Roberts, 2013 ONSC 5897 (S.C.J), the plaintiff sought $4 million in two actions relating to two motor vehicle accidents. She alleged that she could not participate in oral discovery or an IME due to medical reasons, including that she was not able to respond to questions, had poor communication and attention, and discovery would increase her anxiety and depression. She sought to avoid the discovery process or have her husband act as a substitute.
Master Muir dismissed the motion. A party has a prima facie right to a full and complete discovery of an adverse party, which includes oral examination and may include a medical examination. The threshold to limit a party's right to discovery is a high one and should be ordered only in the rarest of cases. In the circumstances, an examination for discovery might be unproductive as she may not provide responsive answer, and it could cause anxiety for the plaintiff; however, there was no evidence that it would cause her permanent damage.
In order to permit the defence to fully respond to the claim against it, it makes sense that the threshold for taking away those rights is very high.
Tuesday, October 8, 2013
First Circuit overturns itself on flood insurance requirement
I posted here about Kolbe v. BAC Home Loans Servicing, LP, 695 F.3d 111 (1st Cir. 2012), a case in which the First Circuit Court of Appeals overturned the dismissal of the complaint of a homeowner alleging that a mortgage lender did not have authority under the loan documents to demand that the homeowner purchase flood insurance in excess of the outstanding loan amount. The court held that the loan documents were ambiguous and that therefore the court could not determine the issue as a question of law.
The First Circuit has now revisited the case in Kolbe v. BAC Home Loans Service, LP, __ F.3d __, 2013 WL 5394192 (1st Cir.) and overruled its prior decision.
Kolbe, the homeowner, contended that the mortgage lender cannot require more than the federally mandated minimum flood insurance, which is the lesser of the balance of the loan or $250,000 in flood zones and $0 in non-flood zones.
Kolbe's mortgage loan was guaranteed by the Federal Housing Administration. The mortgage agreement contained uniform covenants that are required by HUD regulations to be in every FHA-insured mortgage. One of those covenants provided:
Kolbe filed a class action suit contending that under the contract the bank could not require him to purchase insurance in excess of the balance of the loan. The District Court granted the lender's motion to dismiss. Kolbe appealed, and in the panel decision discussed in my previous post the First Circuit vacated the dismissal. The First Circuit then granted rehearing en banc.
In its en banc decision the court held, first, that the contract provision was a uniform provision used in many contracts, and therefore it must be interpreted uniformly regardless of what an individual contracting party may have understood the clause to mean.
It held, second, that because the uniform contract language was imposed by the government of the United States, the government's meaning with respect to the language controls. That meaning is determined in light of the purposes for which the government imposed the language and the context of the relevant regulatory scheme.
The court held that the bank's interpretation was the correct one. The language of the clause by itself and in combination with other clauses in the contract makes clear that the bank can impose a requirement of additional flood insurance.
The court also held that under a broader context the bank's interpretation must prevail. As one example given by the court, if the borrower defaulted on an FHA-guaranteed loan, HUD ultimately would take possession of and sell the property, reimbursing the mortgage insurance fund with the proceeds of the sale. But if the house had been destroyed by flood then "there is nothing" (a slight exaggeration, but still) for HUD to sell.
Finally, the United States submitted an amicus brief supporting the bank's interpretation. The court held that it was required to defer to the interpretation offered by the United States unless that interpretation was clearly erroneous.
The First Circuit has now revisited the case in Kolbe v. BAC Home Loans Service, LP, __ F.3d __, 2013 WL 5394192 (1st Cir.) and overruled its prior decision.
Kolbe, the homeowner, contended that the mortgage lender cannot require more than the federally mandated minimum flood insurance, which is the lesser of the balance of the loan or $250,000 in flood zones and $0 in non-flood zones.
Kolbe's mortgage loan was guaranteed by the Federal Housing Administration. The mortgage agreement contained uniform covenants that are required by HUD regulations to be in every FHA-insured mortgage. One of those covenants provided:
4. Fire, Flood and Other Hazard Insurance. Borrower shall insure all improvements on the property, whether now in existence of subsequently erected, against any hazards, casualties, and contingencies, including fire, for which 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 filed a class action suit contending that under the contract the bank could not require him to purchase insurance in excess of the balance of the loan. The District Court granted the lender's motion to dismiss. Kolbe appealed, and in the panel decision discussed in my previous post the First Circuit vacated the dismissal. The First Circuit then granted rehearing en banc.
In its en banc decision the court held, first, that the contract provision was a uniform provision used in many contracts, and therefore it must be interpreted uniformly regardless of what an individual contracting party may have understood the clause to mean.
It held, second, that because the uniform contract language was imposed by the government of the United States, the government's meaning with respect to the language controls. That meaning is determined in light of the purposes for which the government imposed the language and the context of the relevant regulatory scheme.
The court held that the bank's interpretation was the correct one. The language of the clause by itself and in combination with other clauses in the contract makes clear that the bank can impose a requirement of additional flood insurance.
The court also held that under a broader context the bank's interpretation must prevail. As one example given by the court, if the borrower defaulted on an FHA-guaranteed loan, HUD ultimately would take possession of and sell the property, reimbursing the mortgage insurance fund with the proceeds of the sale. But if the house had been destroyed by flood then "there is nothing" (a slight exaggeration, but still) for HUD to sell.
Finally, the United States submitted an amicus brief supporting the bank's interpretation. The court held that it was required to defer to the interpretation offered by the United States unless that interpretation was clearly erroneous.
Friday, October 4, 2013
The Government Shutdown and OWCP benefits
I have been receiving many concerned calls from FECA claimants regarding the status of their OWCP benefits in light of the government shutdown. OWCP is continuing to operate. While district offices are not answering telephones, wage loss payments, medical bills, and many case adjudication actions are all continuing to occur. The Branch of Hearings and Review is not conducting hearings during the shutdown.
Wednesday, October 2, 2013
Restoring an Action to the Trial List
The Court of Appeal has provided guidance with respect to the test for restoring an action to the trial list.
In Nissar v. Toronto Transit Commission, 2013 ONCA 361 (C.A.), the plaintiff alleged she was injured while a passenger on a bus in 1999. Examinations for discovery took place in 2002, but transcripts were not ordered and the tapes were destroyed in 2010. Although the matter was set down for trial in 2004, it was struck off the trial list in 2005. The plaintiff changed counsel three times. The motion to restore the action to the trial list was not brought until 2011, and not heard until 2012. The motion judge dismissed the motion, holding there was no explanation as to why it had taken seven years to bring the motion to restore the action to the trial list, and there was prejudice to the defendant as pre-accident OHIP records were not available and the defendant might not remember details of an accident that occurred 13 years previously.
The Court of Appeal dismissed the appeal. The plaintiff bears the onus of demonstrating there is an acceptable explanation for the delay in the litigation and that, if the action were allowed to proceed, the defendant would suffer no non-compensable prejudice. In the circumstances, the plaintiff had failed to meet the test.
The Nissar decision was release concurrently with the Faris case, which was the subject of last week's post. They may signal a new emphasis on moving cases swiftly through the system, rather than allowing them to languish for several years.
In Nissar v. Toronto Transit Commission, 2013 ONCA 361 (C.A.), the plaintiff alleged she was injured while a passenger on a bus in 1999. Examinations for discovery took place in 2002, but transcripts were not ordered and the tapes were destroyed in 2010. Although the matter was set down for trial in 2004, it was struck off the trial list in 2005. The plaintiff changed counsel three times. The motion to restore the action to the trial list was not brought until 2011, and not heard until 2012. The motion judge dismissed the motion, holding there was no explanation as to why it had taken seven years to bring the motion to restore the action to the trial list, and there was prejudice to the defendant as pre-accident OHIP records were not available and the defendant might not remember details of an accident that occurred 13 years previously.
The Court of Appeal dismissed the appeal. The plaintiff bears the onus of demonstrating there is an acceptable explanation for the delay in the litigation and that, if the action were allowed to proceed, the defendant would suffer no non-compensable prejudice. In the circumstances, the plaintiff had failed to meet the test.
The Nissar decision was release concurrently with the Faris case, which was the subject of last week's post. They may signal a new emphasis on moving cases swiftly through the system, rather than allowing them to languish for several years.
Tuesday, October 1, 2013
Book Review of Insurance Regulation Answer Book 2014, with discount code
The last time I was asked to review a book was when I was a college student freelancing for Seventeen Magazine. I remember being sort of embarrassed for giving a rave review of The Adrian Mole Diaries; but I couldn't help it -- I loved the book. In the same way I feel sort of silly to say that Practising Law Institute's Insurance Regulation Answer Book 2014 is a fantastic book, but I really think it is. Well-written, informative, easy to understand, and interesting (at least to insurance coverage junkies like me).
In the spirit of full disclosure I was asked by PLI itself to review the book, and received a free copy in exchange. It's not quite a junket but a perk is a perk.
To clear up some confusion: despite the British spelling of "practising," PLI is located in New York and the book addresses American law.
I had planned to skip to the parts of the book that discuss the subject I know -- liability insurance. But I immediately realized that this book is written and formatted so clearly that just by skimming it I was learning. For example, I did not know that life insurers are often prohibited from offering property and casualty insurance.
The first chapter provides succinct definitions of the different types of insurance. Ever wondered about the difference between casualty and liability insurance? (I have.) Turns out they are mostly but not completely interchangeable, and the book explains the subtle difference in definitions.
Chapter 2 gets into the heart of the book -- and territory more or less unknown to me. It discusses why states regulate insurance and the limited but changing role that the federal government plays in such regulation.
The rest of the book provides technical information, such as on the different forms of insurance companies, licensing issues, etc. There's also a healthy bit of discussion on reinsurance, which I have always considered a whole different world (sort of like a Superior Court litigator trying to navigate Probate Court).
I doubt that I'll have much use in my practice for the details the book provides -- my cases don't tend to involve international agreements among insurers, for example. But in light of recent developments in insurance law, having an overview is helpful. While I knew that the Federal Insurance Office somehow came into existence within the last few years, I didn't understand why. Now I know its relationship to the Dodd-Frank Act, and how that Act, which was created to regulate banks, also affects insurance.
Overall, I don't recommend this book for the casual insurance coverage practitioner. But for anyone who makes a habit of insurance coverage cases, this book provides valuable background.
Special to my blog-readers: Here's a link with a fifteen percent discount off the book.
In the spirit of full disclosure I was asked by PLI itself to review the book, and received a free copy in exchange. It's not quite a junket but a perk is a perk.
To clear up some confusion: despite the British spelling of "practising," PLI is located in New York and the book addresses American law.
I had planned to skip to the parts of the book that discuss the subject I know -- liability insurance. But I immediately realized that this book is written and formatted so clearly that just by skimming it I was learning. For example, I did not know that life insurers are often prohibited from offering property and casualty insurance.
The first chapter provides succinct definitions of the different types of insurance. Ever wondered about the difference between casualty and liability insurance? (I have.) Turns out they are mostly but not completely interchangeable, and the book explains the subtle difference in definitions.
Chapter 2 gets into the heart of the book -- and territory more or less unknown to me. It discusses why states regulate insurance and the limited but changing role that the federal government plays in such regulation.
The rest of the book provides technical information, such as on the different forms of insurance companies, licensing issues, etc. There's also a healthy bit of discussion on reinsurance, which I have always considered a whole different world (sort of like a Superior Court litigator trying to navigate Probate Court).
I doubt that I'll have much use in my practice for the details the book provides -- my cases don't tend to involve international agreements among insurers, for example. But in light of recent developments in insurance law, having an overview is helpful. While I knew that the Federal Insurance Office somehow came into existence within the last few years, I didn't understand why. Now I know its relationship to the Dodd-Frank Act, and how that Act, which was created to regulate banks, also affects insurance.
Overall, I don't recommend this book for the casual insurance coverage practitioner. But for anyone who makes a habit of insurance coverage cases, this book provides valuable background.
Special to my blog-readers: Here's a link with a fifteen percent discount off the book.
Friday, September 27, 2013
Comprehensive article on terrorism insurance
Wednesday, September 25, 2013
Dismissal for Delay at Status Hearings
The Court of Appeal has answered a question that arises fairly frequently in civil litigation: under what circumstances should an action be dismissed by the court following a status hearing?
In Faris v. Eftimovski, 2013 ONCA 360 (C.A.), the action was commenced in 2007 alleging damages from real estate transactions in 2003 and 2005. At the time of the status hearing in 2012, pleadings had not been finalized, no documentary productions had been exchanged, and no examinations for discovery had occurred. Two of the defendants had died. The status hearing judge dismissed the action, holding that there were unexplained delays in the action and there was non-compensable prejudice to the defendants since parties had died.
The Court of Appeal dismissed the appeal. Justice Tulloch distinguished between r. 24, which permits a defendant to take a deliberate procedural step to have the action dismissed, and r. 48, which allows the court to control the pace of litigation. The onus is on the plaintiff to demonstrate there was an acceptable explanation for the delay and that, if the action was allowed to proceed, the defendant would suffer no non-compensable prejudice.
There has been much discussion recently about lengthy delays in trial lists. Could the Court of Appeal be signalling an attempt to clear out cases that are slowing down the system?
In Faris v. Eftimovski, 2013 ONCA 360 (C.A.), the action was commenced in 2007 alleging damages from real estate transactions in 2003 and 2005. At the time of the status hearing in 2012, pleadings had not been finalized, no documentary productions had been exchanged, and no examinations for discovery had occurred. Two of the defendants had died. The status hearing judge dismissed the action, holding that there were unexplained delays in the action and there was non-compensable prejudice to the defendants since parties had died.
The Court of Appeal dismissed the appeal. Justice Tulloch distinguished between r. 24, which permits a defendant to take a deliberate procedural step to have the action dismissed, and r. 48, which allows the court to control the pace of litigation. The onus is on the plaintiff to demonstrate there was an acceptable explanation for the delay and that, if the action was allowed to proceed, the defendant would suffer no non-compensable prejudice.
There has been much discussion recently about lengthy delays in trial lists. Could the Court of Appeal be signalling an attempt to clear out cases that are slowing down the system?
US District Court holds that bond coverage does not increase policy limit
Katie Graf won a lawsuit against a restaurant called Torcia. Graf had alleged that she was injured at the restaurant. The judgment was for $500,000 plus prejudgment interest of $111,124.26.
Graf attached the restaurant's liquor license in the amount of $115,000 to secure payment of the prejudgment interest.
Torcia requested that its insurer, Hospitality Mutual Insurance Company, pay the cost of the bond to discharge the attachment. The Hospitality policy had a per person limit of $500,000, and defined "damages" as including prejudgment interest. Hospitality asserted that the prejudgment interest was therefore outside the policy limit and declined to pay the bond.
Under the policy Hospitality agreed to pay the cost of bonds to release attachments, "but only for bond amounts within the applicable limit of insurance."
In Graf v. Hospitality Mutual Ins. Co., 2013 WL 3878691 (D. Mass.), the court held that the policy was susceptible to only one reasonable interpretation -- "that it did not require [Hospitality] to pay prejudgment interest directly or the cost of the bond."
Torcia had assigned its rights against Hospitality to Graf in exchange for discharge of the attachment. Graf argued that Hospitality should pay the cost of the bond because the amount of the bond itself was within the policy limit. The court disagreed, holding that the bond was over the policy limit because Hospitality had already paid the policy limit.
Graf next argued that there was a separate $500,000 limit for bonds. Reading the policy as a whole, the court disagreed.
I dislike limits that includes prejudgment interest, just as I dislike limits that include attorney's fees. Depending on the case, insurers and insurance defense counsel have anywhere between some and a great deal of control over how long a case will take before resolution, just as they have between some and a great deal of control over attorney's fees. The limits are, however, a reality.
The takeaway: When choosing your policy limits, whether or not the limits include prejudgment interest is a factor you should consider. It is not unusual for a case to take several years to get to trial. At the prejudgment interest rate of 12 percent in Massachusetts, the verdict of a case that takes five years will be increased by 60 percent because of prejudgment interest.
Graf attached the restaurant's liquor license in the amount of $115,000 to secure payment of the prejudgment interest.
Torcia requested that its insurer, Hospitality Mutual Insurance Company, pay the cost of the bond to discharge the attachment. The Hospitality policy had a per person limit of $500,000, and defined "damages" as including prejudgment interest. Hospitality asserted that the prejudgment interest was therefore outside the policy limit and declined to pay the bond.
Under the policy Hospitality agreed to pay the cost of bonds to release attachments, "but only for bond amounts within the applicable limit of insurance."
In Graf v. Hospitality Mutual Ins. Co., 2013 WL 3878691 (D. Mass.), the court held that the policy was susceptible to only one reasonable interpretation -- "that it did not require [Hospitality] to pay prejudgment interest directly or the cost of the bond."
Torcia had assigned its rights against Hospitality to Graf in exchange for discharge of the attachment. Graf argued that Hospitality should pay the cost of the bond because the amount of the bond itself was within the policy limit. The court disagreed, holding that the bond was over the policy limit because Hospitality had already paid the policy limit.
Graf next argued that there was a separate $500,000 limit for bonds. Reading the policy as a whole, the court disagreed.
I dislike limits that includes prejudgment interest, just as I dislike limits that include attorney's fees. Depending on the case, insurers and insurance defense counsel have anywhere between some and a great deal of control over how long a case will take before resolution, just as they have between some and a great deal of control over attorney's fees. The limits are, however, a reality.
The takeaway: When choosing your policy limits, whether or not the limits include prejudgment interest is a factor you should consider. It is not unusual for a case to take several years to get to trial. At the prejudgment interest rate of 12 percent in Massachusetts, the verdict of a case that takes five years will be increased by 60 percent because of prejudgment interest.
Wednesday, September 18, 2013
Timing of Summary Judgment Motions
At what point in a lawsuit is it appropriate to bring a summary judgment motion?
In Stever v. Rainbow International Carpet Dyeing & Cleaning Inc., 2013 ONSC 4054 (S.C.J.), the defendant brought a summary judgment motion prior to discoveries, alleging there was no issue requiring a trial as the limitation period had expired. Justice Morgan held that summary judgment motions typically proceed after discoveries are complete, or with affidavit evidence and cross-examinations that "go a long way to replicating what will be produced at discoveries." Justice Morgan adjourned the summary judgment until after discoveries had been completed.
Stever is in line with the Court of Appeal's decision in Combined Air, which held:
In many cases, especially where there is an issue of discoverability, summary judgment is likely not appropriate until discoveries are complete.
In Stever v. Rainbow International Carpet Dyeing & Cleaning Inc., 2013 ONSC 4054 (S.C.J.), the defendant brought a summary judgment motion prior to discoveries, alleging there was no issue requiring a trial as the limitation period had expired. Justice Morgan held that summary judgment motions typically proceed after discoveries are complete, or with affidavit evidence and cross-examinations that "go a long way to replicating what will be produced at discoveries." Justice Morgan adjourned the summary judgment until after discoveries had been completed.
Stever is in line with the Court of Appeal's decision in Combined Air, which held:
58 Moreover, the record built through affidavits and cross-examinations at an early stage may offer a less complete picture of the case than the responding party could present at trial. As we point out below, at para. 68, counsel have an obligation to ensure that they are adopting an appropriate litigation strategy. A party faced with a premature or inappropriate summary judgment motion should have the option of moving to stay or dismiss the motion where the most efficient means of developing a record capable of satisfying the full appreciation test is to proceed through the normal route of discovery. This option is available by way of a motion for directions pursuant to rules 1.04(1), (1.1), (2) and 1.05.
In many cases, especially where there is an issue of discoverability, summary judgment is likely not appropriate until discoveries are complete.
Sunday, September 15, 2013
US District Court discusses New York law on policy cancellation by premium finance agency
Troy Sutler was injured when he was hit by a forklift. The forklift was driven by an employee of NYCP. Sutler sued NYCP and obtained a judgment against it. He then sued Redland Insurance for payment.
A few months before the accident NYCP had purchased a general liability policy from Redland. It paid for the policy with a loan from BIC. The loan agreement specified that as long as NYCP owed BIC any money, BIC would have a power of attorney to cancel the Redland insurance policy on NYCP's behalf, and thereby obtain a partial refund.
Two months after the companies entered into the loan agreement, and before the forklift accident, NYCP failed to make its monthly payment to BIC. BIC cancelled the policy.
Redland sent NYCP a notice that its insurance had been cancelled, and that it could avoid the cancellation by paying the total premium due within fifteen days. NYCP did not do so.
After the accident, BIC informed Redland that it had received payment from NYCP and asked Redland to retroactively reinstate NYCP's policy. Redland did not do so.
Sutler sued Redland on the ground that it is liable as NYCP's insurer for the judgment he obtained.
In Sutler v. Redland Ins. Co., 2013 WL 3732873 (D. Mass. 2013), Sutler argued that the cancellation of the policy was invalid because NYCP did not receive notice at least ten days (or fifteen; the decision is inconsistent) before its policy was cancelled as required by the terms of the policy.
The court rejected the argument, because Redland did not cancel the policy; BIC cancelled the policy under its power of attorney from NYCP. The insurance policy allows NYCP to cancel upon advance written notice.
The court also held that the cancellation complied with governing New York statute. That statute allows a premium finance agency such as BIC to cancel an insurance contract if it first gives the insured party ten days' written notice.
Sutler argued that BIC's cancellation was ineffective because BIC sent the notice of cancellation on May 22, 2007, with an effective date of May 29, 2007, only seven days. But, the court held, Sutler was confusing a notice of intent to cancel with the notice of cancellation. BIC sent its notice of intent to cancel on May 8, 2007, fourteen days before it sent the notice of cancellation. That fourteen-day period was sufficient under New York statute.
A few months before the accident NYCP had purchased a general liability policy from Redland. It paid for the policy with a loan from BIC. The loan agreement specified that as long as NYCP owed BIC any money, BIC would have a power of attorney to cancel the Redland insurance policy on NYCP's behalf, and thereby obtain a partial refund.
Two months after the companies entered into the loan agreement, and before the forklift accident, NYCP failed to make its monthly payment to BIC. BIC cancelled the policy.
Redland sent NYCP a notice that its insurance had been cancelled, and that it could avoid the cancellation by paying the total premium due within fifteen days. NYCP did not do so.
After the accident, BIC informed Redland that it had received payment from NYCP and asked Redland to retroactively reinstate NYCP's policy. Redland did not do so.
Sutler sued Redland on the ground that it is liable as NYCP's insurer for the judgment he obtained.
In Sutler v. Redland Ins. Co., 2013 WL 3732873 (D. Mass. 2013), Sutler argued that the cancellation of the policy was invalid because NYCP did not receive notice at least ten days (or fifteen; the decision is inconsistent) before its policy was cancelled as required by the terms of the policy.
The court rejected the argument, because Redland did not cancel the policy; BIC cancelled the policy under its power of attorney from NYCP. The insurance policy allows NYCP to cancel upon advance written notice.
The court also held that the cancellation complied with governing New York statute. That statute allows a premium finance agency such as BIC to cancel an insurance contract if it first gives the insured party ten days' written notice.
Sutler argued that BIC's cancellation was ineffective because BIC sent the notice of cancellation on May 22, 2007, with an effective date of May 29, 2007, only seven days. But, the court held, Sutler was confusing a notice of intent to cancel with the notice of cancellation. BIC sent its notice of intent to cancel on May 8, 2007, fourteen days before it sent the notice of cancellation. That fourteen-day period was sufficient under New York statute.
Wednesday, September 11, 2013
Discount Rate
The new discount rates have been posted on the Attorney General's website. They can be found at:
http://www.attorneygeneral.jus.gov.on.ca/english/courts/civil/pecuniary_damages.asp
For 2014, the discount rate is 0.3% for the first 15 years and 2.5% thereafter.
http://www.attorneygeneral.jus.gov.on.ca/english/courts/civil/pecuniary_damages.asp
For 2014, the discount rate is 0.3% for the first 15 years and 2.5% thereafter.
Wednesday, September 4, 2013
Bifurcation
Rule 6.1.01 became effective on January 1, 2010. It provides as follows:
With the consent of the parties, the court may order a separate hearing on one or more issues in a proceeding, including separate hearings on the issues of liability and damages.
In Soulliere v. Robitaille Estate, 2013 ONSC 5073 (S.C.J.), the issue was whether a court may bifurcate a trial when one party does not consent. The Court of Appeal held in Kovach (Litigation Guardian of) v. Linn 2010 ONCA 126 (C.A.) that a judge does not have the jurisdiction to bifurcate a jury trial when one party does not consent. In Soulliere, however, the trial would be heard by judge alone.
Justice Smith held that r. 6.1.01 does not remove the Court's inherent jurisdiction to bifurcate a trial. In keeping with the Court of Appeal's decision in Elcano Acceptance v. Richmond, Richmond, Stabler and Mills (1989), 55 O.R. (2d) 56 (C.A.), a Court may order bifurcation in the clearest of cases. In the circumstances, Justice Smith declined to order bifurcation. The case was not so exceptional as to warrant departure from the normal practice of hearing liability and damages together, and there was potential prejudice to the plaintiff if forced to wait.
With the consent of the parties, the court may order a separate hearing on one or more issues in a proceeding, including separate hearings on the issues of liability and damages.
In Soulliere v. Robitaille Estate, 2013 ONSC 5073 (S.C.J.), the issue was whether a court may bifurcate a trial when one party does not consent. The Court of Appeal held in Kovach (Litigation Guardian of) v. Linn 2010 ONCA 126 (C.A.) that a judge does not have the jurisdiction to bifurcate a jury trial when one party does not consent. In Soulliere, however, the trial would be heard by judge alone.
Justice Smith held that r. 6.1.01 does not remove the Court's inherent jurisdiction to bifurcate a trial. In keeping with the Court of Appeal's decision in Elcano Acceptance v. Richmond, Richmond, Stabler and Mills (1989), 55 O.R. (2d) 56 (C.A.), a Court may order bifurcation in the clearest of cases. In the circumstances, Justice Smith declined to order bifurcation. The case was not so exceptional as to warrant departure from the normal practice of hearing liability and damages together, and there was potential prejudice to the plaintiff if forced to wait.
Thursday, August 29, 2013
OWCP recognizes entitlement to Augmented FECA Compensation Based on Claimant's Same Sex Spouse
OWCP now recognizes that same sex spouses are entitled to receive compensation at the augmented rate. If you are in a same sex marriage, you are entitled to receive augmented compensation pay retroactively back to the date of your marriage so long as you have lived with your spouse during this time period. Send a letter to your claims examiner requesting these benefits. You should include a copy of your marriage certificate and in your letter you need to confirm that you have lived with your spouse from the date of your marriage to the present. You may want to print out the link below and include that with your letter in case your claims examiner is unaware of this rule. As always, every piece of paper you send to OWCP should have your claim number clearly marked on the top right.
Wednesday, August 28, 2013
Production of SIU Documents
When seeking production of documents from a non-party, it is important to remember that it is not sufficient to only show relevance; it must also be unfair to proceed to trial without the documents.
In Boucher (Litigation Guardian of) v. Charles, 2013 ONSC 3120 (S.C.J.), the plaintiffs brought a r. 30.10 motion to obtain documents from a non-party, the Special Investigations Unit (SIU). The action arose out of an accident between a cyclist and a police motor vehicle. The SIU conducted an investigation and concluded there were no grounds to lay criminal charges against the officer.
In a r. 30.10 motion for production of documents from a non-party, the moving party must satisfy a two-part test: 1) the document must be relevant to a material issue in the action and, 2) it would be unfair to proceed to trial without having discovery of the document. The test sets a high bar and is permissive rather than mandatory (i.e. if it is met, the Court may order production).
The SIU conceded relevance of all of its documents except for statements from two civilian witnesses who did not witness the event. Master McAfee held that the documents were relevant, but the plaintiffs were not able to meet the second part of the test. The witnesses had not consented to release of their statements, and the statements of witnesses given to police officers had been produced in the police file. Master McAfee also considered the public interest. The efficacy of the SIU's investigative process and its ability to discharge its mandate depends on maintaining the confidence of witnesses.
Master McAfee ordered production of a statement by a deceased witness as he would not be available to testify at trial or to provide consent to release the statement. The plaintiffs were not able to show that they would be prejudiced by proceeding to trial without the remaining documents.
In Boucher (Litigation Guardian of) v. Charles, 2013 ONSC 3120 (S.C.J.), the plaintiffs brought a r. 30.10 motion to obtain documents from a non-party, the Special Investigations Unit (SIU). The action arose out of an accident between a cyclist and a police motor vehicle. The SIU conducted an investigation and concluded there were no grounds to lay criminal charges against the officer.
In a r. 30.10 motion for production of documents from a non-party, the moving party must satisfy a two-part test: 1) the document must be relevant to a material issue in the action and, 2) it would be unfair to proceed to trial without having discovery of the document. The test sets a high bar and is permissive rather than mandatory (i.e. if it is met, the Court may order production).
The SIU conceded relevance of all of its documents except for statements from two civilian witnesses who did not witness the event. Master McAfee held that the documents were relevant, but the plaintiffs were not able to meet the second part of the test. The witnesses had not consented to release of their statements, and the statements of witnesses given to police officers had been produced in the police file. Master McAfee also considered the public interest. The efficacy of the SIU's investigative process and its ability to discharge its mandate depends on maintaining the confidence of witnesses.
Master McAfee ordered production of a statement by a deceased witness as he would not be available to testify at trial or to provide consent to release the statement. The plaintiffs were not able to show that they would be prejudiced by proceeding to trial without the remaining documents.
Saturday, August 24, 2013
First Circuit holds that flooding from roof is covered because roof is a dry land area
I've been discussing Fidelity Co-operative Bank v. Nova Casualty Co., __ F.3d __, 2013 WL 4016361 (1st. Cir. 2013), in which the United States Court of Appeals for the First Circuit held that property damage from a flooded roof was proximately caused by the inadequate roof drainage system, a covered loss, not by rainwater, an excluded loss.
Nova, the insurer, argued that there was no coverage because the water that flooded the building was surface water excluded by the policy. The court agreed that the water was surface water. It held, however, that the surface water exclusion did not apply. Although the policy excluded damage from surface water, an amendatory endorsement provided coverage for flooding caused by the unusual or rapid accumulation or runoff of surface waters from any source. The flood coverage provision defined "flood" as a "general or temporary condition of partial or complete inundation of normally dry land areas." The court held that the roof is a "dry land area" under the standard technical definition of land, which includes buildings, fixtures and fences.
Nova, the insurer, argued that there was no coverage because the water that flooded the building was surface water excluded by the policy. The court agreed that the water was surface water. It held, however, that the surface water exclusion did not apply. Although the policy excluded damage from surface water, an amendatory endorsement provided coverage for flooding caused by the unusual or rapid accumulation or runoff of surface waters from any source. The flood coverage provision defined "flood" as a "general or temporary condition of partial or complete inundation of normally dry land areas." The court held that the roof is a "dry land area" under the standard technical definition of land, which includes buildings, fixtures and fences.
Thursday, August 22, 2013
First Circuit holds faulty workmanship exclusion does not apply to work done before insureds owned building
In my last post I discussed Fidelity Co-operative Bank v. Nova Casualty Co., __ F.3d __, 2013 WL 4016361 (1st. Cir. 2013), in which the court held that there was coverage for a flooded roof because the proximate efficient cause of the loss was the failure of a roof drain, a covered loss, not the rainwater that accumulated on the roof, an excluded loss.
The insurer, Nova, also denied coverage of the basis of a faulty workmanship exclusion, asserting that the inadequacy of the roof's drainage system was faulty workmanship.
The United State Court of Appeals for the First Circuit held that the faulty workmanship exclusion did not apply. It held that the exclusion was "intended to prevent the expansion of coverage under the policy to insuring the quality of a contractual undertaking by the insured or someone authorized by him." The record showed that the roof was repaired prior to the insureds' ownership and that the insureds did not repair, renovate or replace the roof or its drain.
The insurer, Nova, also denied coverage of the basis of a faulty workmanship exclusion, asserting that the inadequacy of the roof's drainage system was faulty workmanship.
The United State Court of Appeals for the First Circuit held that the faulty workmanship exclusion did not apply. It held that the exclusion was "intended to prevent the expansion of coverage under the policy to insuring the quality of a contractual undertaking by the insured or someone authorized by him." The record showed that the roof was repaired prior to the insureds' ownership and that the insureds did not repair, renovate or replace the roof or its drain.
Wednesday, August 21, 2013
The Onus at Status Hearings
The decision of Master Hawkins in 1745361 Ontario Ltd. v. St. Paul's Investments, 2013 ONSC 4642 (S.C.J.) reminds us that the onus at a status hearing is on the plaintiff.
In this case, there was a delay of between 13 and 25 months, depending on whether or not the plaintiff had served an affidavit of documents (the parties disputed whether it had been served). The plaintiff also failed to comply with the Master's Order that it deliver material for a status hearing.
Master Hawkins emphasized that Rule 48.14(13) places the onus on the plaintiff to persuade the court that the action should not be dismissed for delay. The plaintiff must demonstrate that he, she or it has an acceptable explanation for the delay, and that if the action is allowed to proceed, the defendant will suffer no non-compensable prejudice.
The plaintiff's affidavit used at the status hearing provided no explanation for the delay and was silent on the issue of prejudice to the defendant. On the contrary, the defendant delivered an affidavit setting out that two critical witnesses had disappeared. Accordingly, the plaintiff had failed to discharge its onus under r. 48.14(13) and the action was dismissed.
Although the onus is on the plaintiff, one has to assume that the affidavit filed by the defendant setting out the prejudice it suffered as a result of the delay was helpful to the Court.
In this case, there was a delay of between 13 and 25 months, depending on whether or not the plaintiff had served an affidavit of documents (the parties disputed whether it had been served). The plaintiff also failed to comply with the Master's Order that it deliver material for a status hearing.
Master Hawkins emphasized that Rule 48.14(13) places the onus on the plaintiff to persuade the court that the action should not be dismissed for delay. The plaintiff must demonstrate that he, she or it has an acceptable explanation for the delay, and that if the action is allowed to proceed, the defendant will suffer no non-compensable prejudice.
The plaintiff's affidavit used at the status hearing provided no explanation for the delay and was silent on the issue of prejudice to the defendant. On the contrary, the defendant delivered an affidavit setting out that two critical witnesses had disappeared. Accordingly, the plaintiff had failed to discharge its onus under r. 48.14(13) and the action was dismissed.
Although the onus is on the plaintiff, one has to assume that the affidavit filed by the defendant setting out the prejudice it suffered as a result of the delay was helpful to the Court.
Tuesday, August 20, 2013
1st Circuit holds that efficient proximate cause of water damage from leaky roof is failure of drain, not rain
Matthew and Sondra Knowles owned a five story rental property building. Nova insured the building.
The Nova policy contained an exclusion for water damage, but an amendatory endorsement deleted the exclusion. (This is why I can't give advice about coverage under a policy unless I have the complete policy.) An additional endorsement added flood coverage for loss attributable to "flood, meaning a general and temporary condition of partial or complete inundation of normally dry land due to the unusual or rapid accumulation or runoff of surface waters from any source."
The policy also contained a "rain limitation" which excluded coverage if a loss suffered to the interior of the building was caused by or resulted from rain, whether driven by wind or not, unless the building first sustains damage by a covered cause of loss to its roof or walls through which the rain enters.
A tropical storm caused a significant amount of water to accumulate of the roof of the building. The water overwhelmed the rooftop drain and pooled on the roof, eventually leaking through the building's two skylights, resulting in property damage.
Nova denied the claim in part on the basis of the rain limitation.
Due to the financial losses, the Knowles defaulted on their mortgage and Fidelity took title to the property. Fidelity then brought an action against Nova.
In Fidelity Co-operative Bank v. Nova Casualty Co., __ F.3d __, 2013 WL 4016361 (1st. Cir. 2013), the United States Court of Appeals for the First Circuit found that the rain limitation did not exclude coverage.
The court applied the "efficient proximate cause test" or the "train of events test" set forth in Jussim v. Mass. Bay Ins. Co., 415 Mass. 24 (1993). Under that test, if the efficient proximate cause of a loss is an insured risk then the policy provides coverage even if the final form of the property damage, produced by a series of related events, appears to take the loss outside the terms of the policy. The court noted that the efficient proximate cause test applies to any policy that does not have an anti-concurrent causation clause.
Nova's experts had determined that the blocked or inadequate roof drain caused water to accumulate of the roof, flooding it. Thus, the blocked or inadequate drain set in motion a train of events that caused the interior water damage. "The failure of the drain must properly be determined the efficient proximate cause of the damage, not the rain." The court found that the blocked or inadequate roof drain was a covered loss under the policy, so that the policy provided coverage for the damages.
The Nova policy contained an exclusion for water damage, but an amendatory endorsement deleted the exclusion. (This is why I can't give advice about coverage under a policy unless I have the complete policy.) An additional endorsement added flood coverage for loss attributable to "flood, meaning a general and temporary condition of partial or complete inundation of normally dry land due to the unusual or rapid accumulation or runoff of surface waters from any source."
The policy also contained a "rain limitation" which excluded coverage if a loss suffered to the interior of the building was caused by or resulted from rain, whether driven by wind or not, unless the building first sustains damage by a covered cause of loss to its roof or walls through which the rain enters.
A tropical storm caused a significant amount of water to accumulate of the roof of the building. The water overwhelmed the rooftop drain and pooled on the roof, eventually leaking through the building's two skylights, resulting in property damage.
Nova denied the claim in part on the basis of the rain limitation.
Due to the financial losses, the Knowles defaulted on their mortgage and Fidelity took title to the property. Fidelity then brought an action against Nova.
In Fidelity Co-operative Bank v. Nova Casualty Co., __ F.3d __, 2013 WL 4016361 (1st. Cir. 2013), the United States Court of Appeals for the First Circuit found that the rain limitation did not exclude coverage.
The court applied the "efficient proximate cause test" or the "train of events test" set forth in Jussim v. Mass. Bay Ins. Co., 415 Mass. 24 (1993). Under that test, if the efficient proximate cause of a loss is an insured risk then the policy provides coverage even if the final form of the property damage, produced by a series of related events, appears to take the loss outside the terms of the policy. The court noted that the efficient proximate cause test applies to any policy that does not have an anti-concurrent causation clause.
Nova's experts had determined that the blocked or inadequate roof drain caused water to accumulate of the roof, flooding it. Thus, the blocked or inadequate drain set in motion a train of events that caused the interior water damage. "The failure of the drain must properly be determined the efficient proximate cause of the damage, not the rain." The court found that the blocked or inadequate roof drain was a covered loss under the policy, so that the policy provided coverage for the damages.
Thursday, August 15, 2013
When worker's compensation collides with freedom of religion
Worker's Comp Insider has a fascinating article about a lawsuit in which a religious sect called the Hutterites, with similar roots to Mennonites, have been forced to purchase worker's compensation insurance for its communal work crews who receive no wages as such and have sworn not to ever sue anyone on pains of being banned from the sect.
Wednesday, August 14, 2013
Excess Insurance
Excess insurers may be interested in the recently reported decision of ACE INA Insurance v. Associated Electric & Gas Insurance Services Ltd., [2012] O.J. No. 6500 (S.C.J.).
ACE insured Toronto Hydro, which was sued over an explosion that occurred in the underground parking of a high-rise apartment building. AEGIS was the excess insurer. Although there was no explicit duty to defend under the AEGIS policy, ACE brought an application that AEGIS had a duty to pay defence costs pursuant to the doctrine of equitable contribution.
The AEGIS policy was an "indemnity policy" rather than a "liability policy". Under its policy, AEGIS limited its indemnity obligation where there is other insurance, and limited its duty to indemnify to defence costs incurred by the insured, not those incurred by a third-party such as ACE. Defence counsel had been appointed by ACE rather than the insured. AEGIS's obligation was only to indemnify defence costs at the end of the litigation, where the costs were not covered by other insurance.
Justice C.J. Brown rejected the argument that AEGIS had an equitable duty to contribute to defence costs despite the clear wording of the policy. There is no equitable obligation to defend where an excess policy precludes a duty to defend. In addition, a relevant factor was that any defence costs paid by AEGIS would reduce the policy limits available to the insured so there was potential prejudice to Toronto Hydro.
Tuesday, August 13, 2013
U.S. District Court rules no 93A violation where damages were not clear
Lynne Ingalls hired a lawyer, Michael Goldstein, to file a bankruptcy petition. Ingalls told him and signed an affidavit affirming that she had filed a homestead declaration on real estate she owned with her sister. (A homestead declaration protects certain equity in a home from creditors; until recently the exemption was not effective unless a document was filed with the Registry of Deeds.) She testified on the issue in bankruptcy court. Goldstein did not independently confirm the homestead declaration. Eventually it was discovered that there was no homestead declaration of record. As a result, the real estate was exposed to the claims of creditors.
Ingalls sued Goldstein for malpractice. He asserted a defense of comparative negligence. If successful, that defense would reduce or negate his liability.
Ingalls sent a 93A demand letter to Goldstein's Insurer, Minnesota Lawyers Mutual Company, demanding $100,000. Minnesota offered $10,000, which Ingalls rejected. Ingalls won at trial against Goldstein and, after post-trial motions, Minnesota paid the judgment of $98,018.95 including interest.
In the 93A suit, Minnesota argued on summary judgment that liability was never reasonably clear prior to the jury verdict.
In Ingalls v. Minn. Lawyers Mut. Ins. Co., 2013 WL 3943537 (D. Mass.), the United States District Court for the District of Massachusetts noted under Mass. Gen. Laws ch. 176D liability encompasses both fault and damages. If damages are contested in good faith, then liability is not reasonably clear. "This is especially true in cases involving comparative negligence. In such circumstances, even if fault has been determined, if the percentage of potential damages attributable to the defendant is the subject of a good faith disagreement, then liability is not clear."
The court held that although Goldstein's negligence was clear, the damages in the malpractice action were never reasonably clear prior to trial. Ingalls' 93A demand letter did not lay out damages of $100,000, and her discussions of damages during discovery in the malpractice action continually evolved and involved future damages. There was no evidence of actual out of pocket damages. Moreover, there was always the possibility that her damages would be reduced by a comparative negligence finding.
The court granted summary judgment to Minnesota, holding that it was impossible to conclude from the record that no reasonable insurer would have failed to settle the case.
Ingalls sued Goldstein for malpractice. He asserted a defense of comparative negligence. If successful, that defense would reduce or negate his liability.
Ingalls sent a 93A demand letter to Goldstein's Insurer, Minnesota Lawyers Mutual Company, demanding $100,000. Minnesota offered $10,000, which Ingalls rejected. Ingalls won at trial against Goldstein and, after post-trial motions, Minnesota paid the judgment of $98,018.95 including interest.
In the 93A suit, Minnesota argued on summary judgment that liability was never reasonably clear prior to the jury verdict.
In Ingalls v. Minn. Lawyers Mut. Ins. Co., 2013 WL 3943537 (D. Mass.), the United States District Court for the District of Massachusetts noted under Mass. Gen. Laws ch. 176D liability encompasses both fault and damages. If damages are contested in good faith, then liability is not reasonably clear. "This is especially true in cases involving comparative negligence. In such circumstances, even if fault has been determined, if the percentage of potential damages attributable to the defendant is the subject of a good faith disagreement, then liability is not clear."
The court held that although Goldstein's negligence was clear, the damages in the malpractice action were never reasonably clear prior to trial. Ingalls' 93A demand letter did not lay out damages of $100,000, and her discussions of damages during discovery in the malpractice action continually evolved and involved future damages. There was no evidence of actual out of pocket damages. Moreover, there was always the possibility that her damages would be reduced by a comparative negligence finding.
The court granted summary judgment to Minnesota, holding that it was impossible to conclude from the record that no reasonable insurer would have failed to settle the case.
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