Landmark Cases Flashcards
Whiten v Pilot Ins Co - Facts
- family house burns down
- insurer pays for temporary shelter, then suddenly ceases payments
- insurer claims that they are not liable due to arson, but don’t provide any evidence to support arson
Whiten v Pilot Ins Co - Issues
Did Pilot use the power imbalance to force the insured into a smaller settlement?
Whiten v Pilot Ins Co - Rulings (1,2,3)
1) Jury awards $1m in punitive damages
2) on appeals, damages reduced to $100k in the ON appeals court
3) the Supreme Court reinstates original $1m in damages
Whiten v Pilot Ins Co - Details (general)
Awards of this type should consider PROPORTIONALITY along several other DIMENSIONS.
Whiten v Pilot Ins Co - Details (dimensions) (6)
- blameworthiness of insurer
- vulnerability of the victim
- harm to the victim
- deterrence to the insurer
- consider other penalties to insurer that may have already occurred
- punitive award should not be seen by the insurer as a license (no financial gain for the insurer)
Somersall v Scottish & York - Facts
- the victim is severely injured by UNDER-insured driver
- the injured party and the tortfeasor sign a limits agreement up to the tortfeasor’s limits
- the injured then claimed against their OWN insurer for the excess beyond the limits agreement
- the injured party’s own insurer denies the claim
Somersall v Scottish & York - Definition of Limits Agreement
An agreement between the injured party and the tortfeasor that the tortfeasor will admit liability in exchange for the agreement that the injured party won’t sue for more than the tortfeasor’s insurance limit.
Somersall v Scottish & York - Definition of SEF 44
It is an endorsement that provides coverage to an insured WHEN the tortfeasor is UNDER-insured.
Somersall v Scottish & York - Issue
Regarding the insurer: does a limits agreement imply that the plaintiff is not legally entitled to further recovery from the tortfeasor, AND THUS the insurer would lose their rights to subrogation?
Somersall v Scottish & York - Rulings (1,2,3)
1) ruling in favour of the insurer: claim denial is upheld
2) ON court of appeals reverses in favour of the plaintiff
3) Supreme Court dismisses the insurer’s appeal, the plaintiff is allowed to recover under SEF44.
Somersall v Scottish & York - Reasoning of Supreme Court’s dismissal
At the time of the accident, the SEF 44 coverage was in effect, therefore, the subsequent limits agreement did not preclude coverage under SEF 44.
Sansalone v Wawanesa - Facts
- BC transit bus driver sexually abused a teenager
- Wawanesa DENIED defence and coverage: policy terms exclude bodily injury caused intentionally
Sansalone v Wawanesa - Issues
How does the ‘duty to defend’ relate to the ‘duty to indemnify’
- does the insurer have a duty to defend where the indemnification is beyond the scope of policy?
Sansalone v Wawanesa - Ruling at initial trial
There is a duty to defend because the bus driver may have mistakenly or negligently believed that consent had been given.
- the insurer appeals this decision
Sansalone v Wawanesa - Ruling on appeal
The appeals court rules there is no duty to defend. It was a split decision (2 to 1).
Sansalone v Wawanesa - Ruling on appeal (majority reasoning)
IF an act is intentional AND an injury is a natural or probable result of that act, THEN there is the intention to cause injury, and therefore this is excluded by the policy.
Sansalone v Wawanesa - Ruling on appeal (minority reasoning)
The act WAS intentional, BUT there was no intention to injure.
- the defendant had the invalid belief that there was consent
- there IS a duty to defend, but not a duty to indemnify
Nichols v American Home Insurance - Facts
- a solicitor was accused of fraud but found innocent
- the solicitor sought defence costs from a professional liability insurer
- the insured’s claim was denied
Nichols v American Home Insurance - Issues
How does the ‘duty to defend’ relate to the ‘duty to indemnify’
- does the insurer have a duty to defend where indemnification is beyond the scope of the policy?
Nichols v American Home Insurance - Ruling at initial trial
The ruling was that the insurer must defend.
Nichols v American Home Insurance - Ruling on appeal
ON court of appeals dismissed the appeal:
- the duty to indemnify vs the duty to defend is different
- must pay for the defence since the defendant was found innocent
Nichols v American Home Insurance - Ruling at the Supreme Court
The Supreme Court allowed the appeal:
- the duty to defend is triggered by the duty to indemnify
- since fraud is beyond the scope of the coverage, there is no duty to indemnify, and therefore there is no duty to defend
Alie v Bertrand Frere Construction - Facts
There was defective concrete that required the replacement of the basements of 137 houses that were built between 1986 and 1992.
Alie v Bertrand Frere Construction - Issues
INDEMNITY COST ALLOCATION:
- different years were covered by different insurers
- which policies are triggered?
DEFENCE COSTS ALLOCATION:
- how are the defence costs ALLOCATED between primary & excess insurers
Alie v Bertrand Frere Construction - Ruling at initial trial (Indemnity Issue)
INDEMNITY TRIGGER: Main trigger theory was Injury-in-Fact:
- is based on the circumstances when loss occurred (eg: CGL - damage is suffered within the policy period)
But since the exact timing within many various policy periods was impossible to determine, losses were proportioned on a continuous/progressive basis
- therefore, it was combination of Injury-in-Fact and Triple Trigger Theory
Alie v Bertrand Frere Construction - Ruling at initial trial (Defence Issue)
DEFENCE TRIGGER:
- excess/umbrella policies have duty to defend provided…
- … they follow the form of the underlying policy AND do not specifically exclude the duty to defend
Precision Plating v Axa Pacific Insurance - Facts
- the insured had a fire on their premises causing the release and contamination of pollutants on neighbouring properties
Precision Plating v Axa Pacific Insurance - Issues
Does the insurer have a duty to defend
- pollution/contamination is EXCLUDED by the policy
- but the insured argued that the cause of the loss was fire & therefore should be covered
Precision Plating v Axa Pacific Insurance - Ruling at initial trial
The chambers judge held for the insured (that the insurer must defend):
- policy terms are ambiguous
- should not exclude contamination caused by fire
Precision Plating v Axa Pacific Insurance - Ruling at appeal
Insurer’s appeal is allowed (no duty to defend):
- third party claims were for CONTAMINATION not for fire (thus excluded from coverage)
Precision Plating v Axa Pacific Insurance - Compare this case to the other duty to defend cases
Other Cases where there is no duty to defend and no duty to indemnify:
- Sansalone v Wawanesa (sexual abuse)
- Nichols v American Home Insurance (fraud)
Precision Plating is different however:
- pollution/contamination was clearly excluded
- the insured argued that the cause of loss was fire not pollution (unsuccessful on appeal)
Amos v ICBC - Facts
- the insured, Amos, was shot by a gang in California (while driving)
- claims no-fault benefits against his BC auto policy