Judge admonishes Insurer and denies their Costs despite dismissing Plaintiff's Claim for Losses arising from House Fire criminally caused by Plaintiff's Husband
The Plaintiff sought compensation from her home insurer, Allstate Insurance Company of Canada, for the property damage to her home, but Allstate filed a motion for summary judgement to have the plaintiff's claim against them dismissed" on the basis of an exclusionary clause in the insurance policy. The clause essentially states that the insurer does not insure for loss or damage "resulting from any intentional or criminal act or failure to act by any person insured by the policy" and/or resulting from vandalism or a malicious act perpetrated by the homeowner or a resident of the household.
The clause was relevant in the Plaintiff's case because she and her husband were co-owners of the home. Accordingly, Allstate asserted that they were not obligated to pay for the damages to the Plaintiff's home because it was damaged by one of the owners of the home. The insurer's counsel argued that the clause was applicable to both owners of the home as they were both included in the policy coverage.
The Plaintiff's counsel argued that applying the exclusionary clause to the Plaintiff would be unfair since the clause exists to ensure that an insured person does not benefit from their own wrongdoing. However, in this case, the Plaintiff was clearly a victim and not the offender.
Allstate stood its ground on the matter and justified their position with five arguments.
The Plaintiff's position is" an abuse of process in the face of her husband's criminal conviction.
There is nothing inherently ambiguous about the exclusionary clause and it is enforceable on its literal terms.
The evidence proves that the Plaintiff's husband's actions were deliberate and premeditated.
New evidence presented by the Plaintiff about her husband's mental state is unreliable.
The report and the Plaintiff's current position regarding her husband's mental capacity are contrary to the position she took during the criminal trial.
Justice Morgan examined each argument individually, before making his ruling.
On the first matter, Allstate's assertion was in response to the Plaintiff's counsel making the argument that the Plaintiff's husband may not have had the mental capacity to act intentionally and if that was the case, then his action would not fall under the exclusionary clause which covers intentional losses. " Counsel for Allstate argued that the Plaintiff's husband pleaded guilty to the charge of attempted murder during the criminal trial and that the plea was final. Further, the Plaintiff's current claim that her husband may have lacked the capacity to act intentionally was comparable to" Demeter v. British Pacific Life Insurance Co., where a husband who murdered his wife attempted to make a claim on the life insurance policy they had purchased from the insurer.
Justice Morgan disagreed with Allstate that the two cases were similar and that the Plaintiff in the present case was attempting to make a collateral attack on the criminal trial and abuse the legal process. The judge referenced the Supreme Court of Canada ruling in" Adgey v. The Queen, which states, "In pleading guilty an accused admits having done that with which he is charged". In other words, an admission by an accused does not distinguish between the physical and mental aspects of the offence. Therefore, Allstate was incorrect in their assertion that the guilty plea by the Plaintiff's husband automatically invalidated the possibility that he may have lacked the mental capacity to act intentionally when he set fire to his wife and home.
The judge also pointed out that the obvious difference in the" Demeter" case is that the civil action was brought by the convicted Defendant, in contrast with the current action which was being pursued by a Plaintiff who suffered great loss through no action or fault of her own. Justice Morgan stated that for Allstate to try to compare the two cases not only mischaracterizes the personal tragedy undergone by the Plaintiff but also misconstrues the extremely different position of a victim versus the perpetrator of a crime.
On the matter of insurance benefits being stayed by malicious acts by policyholders, Justice Morgan referenced Justice La Forest's dissent in the Supreme Court of Canada ruling of" Scott v. Wawanesa Mutual Insurance Co., in which he stated that reasonable persons expect to lose the right to recover damages resulting from their own intentional destruction; however, these same persons would not expect to lose all if their house was burned down by their spouse. Justice Morgan agreed with Justice La Forest's reasoning and pointed out that several provinces proceeded to enact legislature barring this type of exclusionary clause in insurance policies, largely based on the dissent in" Scott.
Unfortunately for the Plaintiff, Ontario is one of the few provinces that has not enacted the relevant legislation and therefore, Allstate was within its legal right to include and enforce the exclusionary clause. The judge also noted that Justice La Forest was writing for the dissent, which meant the majority ruling by the Supreme Court was that the wording of the exclusion clause is unambiguous and must be applied on its face and not any special interpretive rule.
On the third issue, counsel for Allstate argued that the evidence showed a series of goal-oriented steps that occurred before the incident - which included waiting until the plaintiff's daughter and granddaughter had left the house and disarming the smoke alarm - and these actions indicated that the plaintiff's husband's intent to cause damage was deliberate and premeditated. Allstate asserted that this premeditation triggered the exclusionary clause.
Although counsel for the Plaintiff did not challenge the husband's intent to cause damage to her, they challenged the argument that his actions were proof that he intended to cause damage to the home. Justice Morgan understood the basis of the Plaintiff's argument, but ultimately found that it was a distinction without a difference. The judge stated that one must conclude that the Plaintiff's husband knowingly and intentionally poured gasoline on her and set her on fire, and he had to have foreseen that an inevitable consequence of his action would be the destruction of the house.
The fourth matter involved a psychologist's report that was introduced into evidence by the Plaintiff. The report concluded that the Plaintiff's husband may have lacked "the mental capacity to intend his actions" when he attacked the Plaintiff and burned their home. Counsel for Allstate challenged the report on the basis that the psychologist in question never personally met with and examined the Plaintiff's husband; the entire report, including the psychologist's assessment, was based on second-hand information. Allstate also noted that there was already a reliable psychiatrist assessment of the Plaintiff's husband, which included an in-person examination three days after the incident. In that report, the psychiatrist ruled that the Plaintiff's husband did not need any psychiatric treatment and exhibited no psychotic symptoms.
Justice Morgan stated that he understood why the psychologist's report may have helped the plaintiff come to grips with the senseless losses she experienced; nevertheless, he found that the methodology does not adhere to established practices for psychological assessment as it lacked a first-hand examination of the Plaintiff's husband. The judge ruled that the Court could not rely on the evidence from the report and" therefore, it did not" contradict the previous assessment that the Plaintiff's husband was of sound mind and intended to set the fire.
Finally, Allstate accused the Plaintiff of taking contradictory positions in the two parts of the current litigation. In a trial for punitive damages resulting from the default judgment against her husband, the Plaintiff was awarded $75,000. Allstate reasoned that this clearly meant that the Plaintiff took the position that her husband's actions were intentional, as there would be no other explanation for the judge to award the Plaintiff punitive damages. Allstate also noted that the psychologist's report submitted by the Plaintiff in the current motion was obtained several years prior and she chose not to submit it during the trial for punitive damages.
While Justice Morgan accepted Allstate's argument, he understood the Plaintiff's perspective and perceived her conflicting arguments as a reflection of the impossible position in which the exclusionary clause can place an innocent party. The judge noted that it was not surprising that a person in the Plaintiff's position would perhaps overreach in seeking a way to argue around the clause.
Despite his empathy with the Plaintiff, Justice Morgan granted Allstate's motion for summary judgement and dismissed the Plaintiff's claim. The judge's decision was largely based on the majority ruling of the Supreme Court of Canada, where it was found that an individual in the Plaintiff's current position is excluded from receiving damages, even if an innocent party. " Further, the judge found that the facts of the case and new evidence presented by the Plaintiff did not reverse the criminal court's finding that her husband acted criminally and intentionally in burning down the house. The judge concluded that a trial was not justified as he was able to decide on the case in summary judgement, based on its legal merits.
Although ruling in Allstate's favour, Justice Morgan chose not to award the insurer any costs (which is a discretionary decision for a judge) on the grounds that he found Allstate's corporate conduct to be "less than admirable". The judge noted that while the majority in the Supreme Court ruling in" Scott" were in favour of interpreting the exclusionary clause on its face, the strongly worded criticisms in the dissent made it clear that the clause is essentially unfair to innocent consumers, despite being technically legal.
Several provinces have intervened to legislate the clause out of existence, to protect innocent co-insureds such as the Plaintiff. Yet, as noted by Justice Morgan, insurance companies continue to capitalize on the clause in provinces that haven't yet intervened.
The last thing an accident victim wants to endure, after having been seriously injured by another person or as a result of a negligent action, is to battle their insurer for owed compensation. " Through early consultation with a knowledgeable and empathetic personal injury lawyer, victims and their families are able to upload much of the stress and decision-making that often accompanies an insurance dispute. At Rastin & Associates, we have a long and successful history of championing our clients in their fight to receive the compensation they deserve and are owed.
You can call us at " 844-RASTIN1 or email Rastinlaw.com
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