COURT FILE NO.: CV-11-438106
DATE: 20120808
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Belair Direct
Applicant
- and -
Penny Moar Shoup, Michael Moar, and Jon Peter Mulder
Respondents
Brian Lucas, for the Applicant
Rebecca Nelson, for the Respondent Penny Moar Shoup
Elizabeth Iwata, for the Respondent Michael Moar
HEARD: August 8, 2012
Morgan J.
[1] This is an Application under Rule 14.05(3)(d) for a determination of rights under a contract of insurance. The Applicant is an insurance company seeking a declaration that it need not defend an action for damages against the three Respondents, who are its insured parties. It contends that the conduct of the Respondents falls within an exclusion clause in the insurance policy.
[2] The plaintiffs in Court File No. 06-CV-316165PD2 (the “Main Action”), Kadin Kendall and his mother and litigation guardian Sarah Jayne Kendall, have claimed that Kadin was injured on July 13, 2002 when he was shot with a pellet gun fired from the window of a car being driven by the Respondent Jon Peter Mulder. That day Mulder spent over an hour driving around Toronto with his friends Jake Mercure and Stephen Collins, who fired pellet guns out of the car windows. One of those pellets struck Kadin Kendall just above the right eye. In September 2003, Mulder was convicted of a criminal offense for possession of a weapon for a dangerous purpose under section 88 of the Criminal Code. The plaintiffs in the Main Action allege that the acts for which Mulder was criminally convicted, and his having knowingly driven his friends Collins and Mercure on their shooting spree, caused or contributed to the injuries sustained by Kevin Kadin when he was shot.
[3] The vehicle driven by Mulder on July 13, 2002 was owned by the Respondent, Penny Moar Shoup, who is Mulder’s mother. Shoup consented to Mulder driving the car. The plaintiffs in the Main Action allege that Shoup and her then husband, the Respondent Michael Moar, failed to properly supervise Mulder, who was a minor at the time of the shooting incident, and failed to instill in Mulder the moral compass to avoid causing harm to others.
[4] Shoup and Moar were insured under a homeowner’s insurance policy issued by the Applicant. The policy also insured any person under 21 years of age under the care of the insureds and living in the same household. This would include Mulder. Under this policy, the Applicant is obliged to pay all amounts that an insured becomes liable to pay as compensatory damages because of unintentional injuries arising out of their personal actions wherever those actions may have taken place, and to defend the insured against such claims. This coverage obligation is qualified by an exclusion clause in the policy that provides:
We do not insure claims arising from:…
- bodily injury or property damage caused by any intentional or criminal act or failure to act by:
a) any person insured by this policy; or
b) any other person at the direction of any person insured by this policy.
[5] It is the Applicant’s position that Mulder’s acts leading to the claims against him in the Main Action were both intentional and criminal, and that they therefore fall within the exclusion clause. The Applicant also says that the allegation in the Main Action that Shoup and Moar failed to properly supervise and raise Mulder falls within the exclusion clause, arguing that the failures by those defendants were factors leading to Mulder’s intentional and criminal conduct. As a result, the Applicant wrote to all three Respondents on October 2, 2006 denying coverage for the claims brought against them in the Main Action. The Applicant’s letter further indicated that the Respondents would have to retain counsel on their own to defend themselves in the Main Action, as the Applicant would not be providing them with a defense. The Applicant now seeks a declaration that it was correct in taking that position.
[6] The Applicant relies on the decision of this court in G.P. v. D.J., 2000 50975 (ON SC), [2001] OJ No. 313, where a minor plaintiff sued for injuries sustained in a sexual assault perpetrated by the first defendant D.J., who was the husband of the second defendant R.J. The claims against D.J. were for intentional and criminal conduct leading to the plaintiff’s injuries, while the claims against R.J. were for negligence in failing to protect the plaintiff. The court held that both D.J.’s and R.J.’s acts were excluded under the insurance policy, which contained an exclusion clause similar in terms to those at issue in the present Application. Mossip, J. reasoned that the language of the clause, which excluded coverage for “bodily injury or property damage caused by any intentional or criminal act or failure to act”, encompassed either an intentional or criminal act or a non-intentional (i.e. negligent) and non-criminal failure to act. The Applicant analogizes the position of R.J. to that of Shoup and Moar, arguing that in both cases the negligent failure of those defendants to take precautions that would have prevented the plaintiff’s injuries falls within the “failure to act” term of the exclusion clause.
[7] The scope of similar exclusion clauses has been considered by the Court of Appeal in recent years. In her factum Ms. Iwata, on behalf of Moar, cites a number of such decisions, including Snaak (Litigation Guardian of) v. Dominion of Canada General Insurance Co. (2002), 2002 44897 (ON CA), 61 OR (3d) 230 (CA), where the court held that in considering the application of an exclusion clause one cannot lump all of the separately insured persons together. Likewise Ms. Nelson, on behalf of Shoup, cites Godonoaga (Litigation Guardian of) v. Khatambakhsh (2000), 2000 5737 (ON CA), 49 OR (3d) 22 (CA), where an action was brought against insured parents for negligent supervision of their children who had assaulted the plaintiff. Again, the court held that the claims against the parents amounted to separate torts, and that although the claim alleged that the intentional assault was a consequence of the negligence of the parents, those acts were directed at different parties and could not be considered one and the same.
[8] All parties cite the Court of Appeal’s very recent decision in Durham District School Board v. Grodesky, 2012 ONCA 270, the Respondents in order to support their argument and the Applicant in order to distinguish it from the present case. In Grodesky, as in the present case, there was a claim in intentional tort against a minor, who had caused extensive property damage by setting a fire at his school building, and a claim in negligence against the parents alleging poor child rearing and failure to supervise their son. As in the present case, an insurance policy would have covered the damage claimed by the school board if it did not fall within an exclusion clause covering “any intentional or criminal act or failure to act”.
[9] Juriansz, J.A., for a unanimous Court of Appeal, held that the words “intentional or criminal” in the exclusion clause should be read as modifying the phrase “act or failure to act”; otherwise, all negligence claims that allege a failure to act would be caught by the clause, which, as he put it at para. 11, “would lead to absurd consequences because almost any act of negligence could be excluded.” He then applied the analysis that had been set out in Non-Marine Underwriters, Lloyd’s of London v. Scalera, 2000 SCC 24, [2000] 1 SCR 551, where Iacobucci, J. stated, at para. 84, “…when there are multiple claims (e.g. when intentional torts and negligence are both alleged) the judge must decide if the negligence claim is merely derivative of the intentional claim, or whether the two claims are severable, by examining the actions allegedly taken by the defendant, and deciding whether the claims are related to the same actions.” Juriansz, J.A. pursued this thinking to its conclusion in Grodesky by stating, at para 14, that “[t]hough this negligence claim caused the same harm as the intentional tort allegedly committed by the son, it is not derivative of the intentional tort claim in the sense indicated by Iacobucci J… The elements of the intentional tort claim against the son and the negligence claim against the parents are entirely distinct.” The parents were accordingly not excluded from coverage.
[10] Mr. Lucas, on behalf of the present Applicant, rests his argument on the distinction between the introductory words of the exclusion clause in Grodesky and those in the Applicant’s policy. While the clause in Grodesky provided, “We do not insure your claims arising from…”, the otherwise identical clause in the Applicant’s policy provides, “We do not insure claims arising from…” He argues that the addition of the word “your” in the clause at issue in Grodesky makes all the difference in that it focused attention narrowly on the acts of each individual insured rather than the totality of acts committed by any of the insureds. By contrast, he points out that the Applicant’s policy excludes “claims”, without qualification, and argues that this connotes a broad exclusion that would encompass claims relating to the parents who are sued in negligence along with the claims relating to the son who is sued for criminal and intentional acts.
[11] In response, Ms. Iwata states that the word “your” in the Grodesky clause is superfluous; the exclusion clause in an insurance policy is clearly addressed to the insured parties, and means the same whether it specifically says “your claims” or simply “claims”. Ms. Nelson points out that the Applicant’s policy also contains a “separate coverage” clause, which makes it clear that claims made by each of the insured parties must be assessed on an individualized rather than a group basis. This clause is entitled “Coverages” and specifically states: “This insurance applies… separately to each insured against whom the claim is made or action is brought.”
[12] Both points are well taken. In my view, the insertion of the word “your” in the introduction to the Grodesky exclusion clause is a difference in syntax rather than in substance. The insurance policy, in Grodesky as well as in the present case, addresses the insureds, with or without a pronoun. The existence of the separate coverage clause in the present case verifies that the insureds are covered individually and that their coverage, and exclusions, must be assessed individually. As Finlayson, J.A. said in Godonoaga, supra, at para. 20, where there likewise was a separate coverage clause, “a proper interpretation of the policy is that the parents and the two children are each separately insured to the face value of the policy… They [i.e. the parents] are sued in negligence, which is not an excluded claim, and the fact that the pleadings allege intentional assaults by their children does not disentitle them to coverage.”
[13] Finally, counsel for Shoup and Moar both contend that not only are the parents not excluded from coverage, but arguably neither is Mulder. Mulder is named as a Respondent in this proceeding but has not made an appearance through counsel or in person, has not submitted any responding materials, and did not attend the hearing of the Application despite being properly served. Mr. Lucas submits that Mulder’s non-response to the Application must be taken to mean that he does not object to the relief sought by the Applicant, and that the court should take it as a given that Mulder’s acts fall within the scope of the exclusion clause.
[14] The argument advanced by the Respondents is based on an alleged lack of causal link between Mulder’s criminal act and the injuries suffered by Kadin Kendall. In short, they argue that Mulder was convicted of possession of a dangerous weapon but that Kadin Kendall’s injuries were caused by the discharge of a weapon, not by its mere possession. Mulder’s participation in the incident leading to those injuries was apparently limited to his being the driver of the car from which his two friends were doing the shooting, and to possessing a weapon.
[15] Ms. Nelson analogizes Mulder’s alleged acts to those of the son in Hartup v. BCAA Insurance Corp., 2002 BCSC 972, 2002 CarswellBC 1560 (BC Sup Ct), who had fired a pellet gun in his parents’ residence thereby injuring a bystander, and who was subsequently convicted of careless storage of a firearm. The court reasoned that the injuries were caused by the discharge of the firearm, not its storage, and accordingly held that the exclusion clause did not apply.
[16] The situation in Hartup is distinguishable from the present case. In Hartup, not only did the offense of which the defendant was convicted not directly cause the injury, but the entire incident surrounding the firing of the weapon was said to be a careless rather than an intentional act. In the court’s view, at para. 21, “[t]he real claim against the defendants is based on negligence.” By contrast, Mulder’s criminal offense is one of intention – there is no suggestion that his possession of a dangerous weapon was accidental – and the allegation that he engaged in harmful conduct by operating a vehicle from which his friends were shooting pellet guns amounts to a claim of participation in an intentional tort. His actions are alleged to have been part and parcel of the criminal and intentional conduct of his two friends, making the damages claimed by Kadin Kendall “claims arising from…bodily injury…caused by any intentional or criminal act”.
[17] I would accordingly grant the declaration sought with respect to Mulder, but would dismiss the request for a declaration with respect to Shoup and Moar. The Applicant has no duty to defend the claim against Mulder in the Main Action as that claim falls within the exclusion clause. On the other hand, the Applicant is obliged under the terms of the insurance policy to defend the claims brought against Shoup and Moar in the Main Action, as those claims are separate from the claims against Mulder and do not fall within the exclusion clause.
[18] The Respondents Shoup and Moar will have their costs against the Applicant on a partial indemnity scale. No costs are awarded for or against the Respondent Mulder. I have already received a bill of costs from counsel for Shoup. Counsel for Moar shall submit a bill of costs within ten days of the date of these reasons.
E.M. Morgan J.
Released: August 10, 2012
COURT FILE NO.: CV-11-438106
DATE: 20120808
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Belair Direct
Applicant
- and -
Penny Moar Shoup, Michael Moar, and Jon Peter Mulder
Respondents
Released: August 9, 2012