Duty to Defend

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An interesting decision was released by Ontario Superior Court Justice B. Glass on May 31, 2013 relating to an insurer’s duty to defend.

In Simone v. Economical Mutual, 2013 ONSC 3223 (CanLII), the applicant commenced an Application for a declaration requiring that Economical Mutual Insurance Company had a duty to defend on his behalf, a civil action against him for damages for personal injuries alleged to have been incurred by the plaintiff.

The claim relates to an incident that took place in a Tim Horton’s drive-thru when the applicant apparently cut in front of the plaintiff, Mr. Sgambelluri, which resulted in a physical altercation taking place between the parties.  At trial in the Ontario Court of Justice, the applicant was found guilty of common assault.

With respect to the civil action, the plaintiff, Mr. Sgambelluri had framed his claims in wilful and intentional assault and battery or in the alternative, that the applicant’s actions were negligent with a reckless disregard for Mr. Sgambelluri. There was also a claim for aggravated and punitive damages.

The applicant, Mr. Simone, sought an Order that Economical had a duty to defend the action on his behalf because if the civil trial resulted in a finding of negligence, then the Economical policy would cover the damages in negligence.

Economical argued that the claims were not covered by the insurance policy because the actions of the applicant were excluded as an intentional or criminal act or failure to act.

Justice Glass considered whether the actions of the applicant were within the exclusion provisions of the insurance policy regardless of what words were used in the Pleadings. Justice Glass noted that the Sgambelluri claims were framed in willful and intentional assault and battery, or in the alternative, that the applicant’s actions were negligent with a reckless disregard for Mr. Sgambelluri.

According to Justice Glass,

[o]ne might conclude that Mr. Sgambelluri fell simply by losing his balance as a result of his own actions. I do not have evidence to make any decision about what happened. What I do have is a statement of claim by a third party alleging a claim in damages for negligence that could be non-criminal activity.

Justice Glass suggested that if the Court hearing Mr. Sgambelluri's lawsuit were to determine that Mr. Sgambelluri's claim against the applicant was based on negligent actions by the applicant, that were not part of an assault, then the claim would not necessarily fall under the exclusions of Economical Insurance's policy.

As such, the applicant was entitled to declaratory relief and Economical had to defend the action on his behalf with the exception of the claim for punitive or exemplary relief which were explicitly excluded from the policy, regardless of the facts.

Overall, this decision is troubling from an analytical standpoint. 

While the decision references the importance of determining the true substance of a claim in order to determine whether or not the “negligence” pleadings are merely derivative of the initial act, in coming to the conclusion that Economical had a duty to defend, Justice Glass failed to articulate in what way the negligence pleading could possibly stand alone and not be derivative of the assault. 

Further, Justice Glass did not set out the extent to which he relied on extrinsic evidence to conclude that there was a possibility that a negligence claim could be advanced. Nor was there any discussion of the applicability of the criminal act exclusion, which would seem to be triggered by the facts of the case.

It is unclear at this time if the decision in Simone v. Economical Mutual will be appealed; however, given the lack of a detailed discussion of the pleadings and the evidence relied upon by Justice Glass to reach his decision, the decision should not be considered as a precedent for defining the insurer’s duty to defend in assault cases.

Topics:  Canada, Duty to Defend, Insureds, Insurers, Personal Liability

Published In: Civil Procedure Updates, Civil Remedies Updates, General Business Updates, Insurance Updates, Personal Injury Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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