Michael Ford (post until Oct. 31/18)

Vague allegations assist hockey player in faceoff with insurer

A recent B.C. Supreme Court decision demonstrates how broadly courts will interpret pleadings when ruling on an insurer’s duty to defend, says Vancouver insurance lawyer Sean Lerner.

The case concerns a professional hockey player facing a number of accusations by a complainant in a New York civil action. 

The player’s B.C. home insurance policy covered his legal liability for “unintentional bodily injury” arising from his actions, but the insurer resisted.

However, the judge found that just one of the four causes of action alleged in the claim was excluded from the policy, ordering the insurer to defend the player on the three remaining allegations.  

Lerner, principal of Lerner Law Corporation, tells AdvocateDaily.com that in cases like this, courts are required to assume the facts alleged in pleadings against the person seeking coverage are true.

“If those factual allegations could — not would — trigger an obligation under the policy, then the insurer will be ordered to defend,” he says. “The case law instructs judges to give very wide latitude to the pleadings when construing them for this purpose.”

The New York suit arose out of a night the pair spent together in a Buffalo hotel, but the vague pleadings failed to detail exactly what happened. Instead, the claim lists four separate causes of action against the player:

  • First, that he “inflicted a battery” upon the woman, resulting in bodily injuries and serious emotional trauma
  • Second, that he “intentionally and/or recklessly engaged in extreme and outrageous conduct,” that resulted in “severe emotional distress” and “serious, permanent and painful personal injuries” to the woman
  • Third, that he engaged in “conduct unreasonably endangering” the woman’s physical safety.
  • Fourthly, that he “negligently caused” her to suffer serious and painful personal injuries

Both sides agreed the first allegation was excluded from coverage under the policy because it would require the complainant to prove intentional physical touching by the player.

“Insurance companies do not want to insure claims arising out of intentional acts — liability insurance was never meant to cover that,” explains Lerner, who was not involved with the case and speaks generally. “We don’t want a society where you can beat someone up and have insurance for it.”

The insurer in the case argued that since the other three allegations all stemmed from the first intentional act, they should also fall outside the policy. But the judge found the lack of detail in the pleadings made it impossible to conclude that all four causes of actions arose from the same factual circumstances.  

“Any possibility of the claim succeeding within coverage will trigger the duty to defend. Any doubt is to be resolved in favour of the insured,” the judge wrote in the Sept. 27 decision. “In that event, I conclude that the alternate causes of action in the Second to Fourth Causes of Action in the Complaint are sufficiently separate, disparate and distinct such that they are not derivative of the battery allegation in the First Cause of Action. A ‘possible outcome’ in the Action is that [the hockey player] will be found to have not intended to cause harm to [the complainant] in relation to these Causes of Action, such that he may be found to be negligent, as opposed to having committed an intentional tort.”

“On what the judge had before her, it was certainly possible that the damage resulting from the alleged negligent conduct was something different than what flowed from the alleged intentional conduct,” Lerner says.

In cases where the duty to defend is disputed, Lerner says insurers are able to issue a “reservation of rights” that would potentially allow them to claim back their costs if the conduct at issue is eventually found to fall outside the policy.  

Lerner says this case is also notable for adding to a growing line of authority that suggests insureds who successfully sue an insurer for coverage are entitled to a full indemnity costs award.

“Normally a successful litigant at trial only receives partial indemnity for their legal costs,” he says. “This is a recent trend in B.C. that follows the lead of a number of Ontario cases. There is nothing at the appellate level on this issue, but it now appears to be the law here that when you sue for coverage and win, you are entitled to recover all of your legal costs against the insurer.”

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