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. 

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. 

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. 

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.

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. 

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.

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.

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.  

 

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.

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.