I posted here my thoughts on how the Terrorism Risk Insurance Act (TRIA) should be amended rather than simply readopted as is next year.
The Insurance Information Institute has a comprehensive article on the past, present, and proposed future of TRIA here.
Friday, September 27, 2013
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.
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