ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 11-31541
DATE: 2013-08-02
B E T W E E N:
Bojan Katanic
Sean Oostdyk, for the Plaintiff
Plaintiff
- and -
State Farm Mutual Automobile Insurance Company
Douglas Patton, for the Defendant
Defendant
HEARD: April 8, 2013
The Honourable Madam Justice J. A. Milanetti
REASONS FOR JUDGMENT
[1] State Farm brings this motion for summary judgment on what I find to be a point of law. They argue that the plaintiff’s November 21st, 2011 claim for Non-earner benefits is statutorily barred on two fronts:
(1) A 2 year limitation from the date of insurer’s refusal; and/or
(2) 90 days from the date of deemed receipt of Report of the Mediator.
Background Facts
[2] The plaintiff Bojan Katanic was involved in a motor vehicle accident on June 7th, 2006. State Farm forwarded a four page letter with its accident benefit application forms; said letter included a description of the benefits available to an insured.
[3] The action log included in the supplementary affidavit of Mr. Bollard reflects that the insured said that he had legal representation – Lou Ferro and Co. (Jane) and their phone number.
[4] The plaintiff submitted his accident benefit applications dated July 2nd, 2006 on July 10th, 2006, although his doctor’s Disability Certificate (O.C.F. 3) was not forwarded to the insurer until July 14th, 2006.
[5] State Farm provided Mr. Katanic an Explanation of Benefits (O.C.F. 9) on July 20th, 2006. It indicates that to be eligible for non-earner benefits:
“…an insured person must suffer a complete inability to carry on a normal life more than 26 weeks following the accident. As you were employed on the date of the accident you do not qualify for this benefit.”
[6] Part 6 of that document sets out an insured’s right to dispute the insurer’s determination.
[7] State Farm takes the position that this July 20th, 2006 “refusal” sets the clock running.
[8] The plaintiff says that this is not the case as the insurer’s position is wrong in law (pursuant to the recent Court of Appeal decision of Galdamez v. Allstate Insurance 2002 ONCA 508 ()), and thus cannot be relied upon as the commencement of the limitation period.
[9] Moreover, they argue that as non-earner benefits cannot be paid for 26 weeks; the claim had not even crystallized at the time of the purported refusal. In this regard, they argue that an insurer cannot make an anticipatory or blanket refusal.
[10] Mr. Ferro’s office wrote to State Farm on December 20th, 2009 saying that his client may be entitled to non-earner benefits and that the insurer had failed to put him to an election.
[11] The plaintiff filed a mediation application for non-earner benefits – regarding his activities of daily living on March 4th, 2010 (3 years, 7 months and 12 days after the State Farm purported denial of this benefit on July 20th, 2006).
[12] The application was served on the State Farm November 4th, 2010. The parties attended the mediation and it failed. The Report of the Mediator is dated April 28th, 2011.
[13] The plaintiff’s statement of claim seeking non-earner benefits was filed November 21st, 2011 (206 days after the Report of the Mediator).
[14] ISSUES
(1) Is the plaintiff’s claim for non-earner benefits barred as it was not commenced within two years of the denial on July 20th, 2006? and/or
(2) Is the plaintiff’s claim for non-earner benefits barred as it was not commenced within 90 days of the Report of the Mediator?
(3) As such, is the defendant entitled to summary judgment because there is no genuine issue requiring a trial, or (as per Rule 20.04(4)), the only genuine issue deals with a question of law?
[15] The plaintiff opposes this motion. In the alternative, they have cross motioned to amend their claim to add the tort of negligent misrepresentation.
Analysis
[16] The Court of Appeal in Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764, [2011] OJ No. 5431, sets out the test to be applied on application for summary judgment. A “court must ask if a full appreciation of the evidence and issues that are required to make dispositive findings can be achieved by way of summary judgment, or can this full appreciation only be achieved by way of trial.”
[17] Rule 20.04(4) states that where the court is satisfied that the only genuine issue is a question of law, the court may determine the question and grant judgment accordingly.
[18] It is my view the determination of a limitation period falls within the purview of this Rule. This is particularly so when there is no issue of discoverability.
[19] It is clear to me that the insurer made a determination on July 20th, 2006 that their insured, Mr. Katanic, was not entitled to a non-earner benefit. They told him that and explained why they took this position in their July 20th, 2006 letter.
[20] They included an explanation of all of the benefits available to an insured and set out the steps that could be taken if the insured disagreed with their decision.
[21] This sequence distinguishes the case at bar with the Spadafora v. Dominion of Canada, 2013 ONSC 182, decision of Justice Reilly, relied upon by the plaintiff. In that case, no explanation was given by the insurer.
[22] It has become apparent, since the Court of Appeal decision in Galdamez, that the explanation for denial provided by the insurer in the case before me is no longer correct. I note that Galdamez did not deal with limitation periods initially, and the Court of Appeal specifically refused to deal with that issue on appeal.
[23] The Court of Appeal decision of Turner v. State Farm does specifically deal with a situation where an insurer has given their insured the wrong reason for a denial. That case states:
Section 24(8) of the Statutory Accident Benefits Scheme obliges the insurer to give the insured “the reasons for the refusal”. It does not provide that the reasons must be legally correct. The purpose of the requirement to give reasons is to permit the insured to decide whether or not to challenge the cancellation. If the reasons given are legally wrong the insured will succeed in that challenge. Requiring that the reasons be legally correct goes beyond both the requirement in the relevant regulation, and the purpose of such a notice.
Turner v. State Farm Mutual Automobile Insurance Co., 2005 2551 (ON CA)
[24] While the plaintiff would cast the insurer’s basis for denial as nefarious, I do not find it to be so. The denial by State Farm reflected the law pre the 2012 decision of Galdamez. While clearly wrong now, it was not legally wrong in 2006. Regardless, Turner specifically says that “requiring that the response be legally correct goes beyond both the requirement in the relevant regulation, and the purpose such notice.”
[25] Limitations are important. They provide certainty; ensure that evidence is maintained; and ensure that plaintiffs do not sleep on their rights. This is particularly so when they are represented by counsel.
[26] In the case before me, the denial was made, an explanation was given in clear and straightforward language, and dispute mechanisms and timeframes were provided. The plaintiff appears to have had legal representation at the time of these events.
[27] Section 281.1 of the Insurance Act sets out the two year limitation period that is repeated in the Statutory Accident Benefits Schedule. It reads:
(1) A mediation proceeding or evaluation under section 280 or 280.1 or a court proceeding or arbitration under section 281 shall be commenced within two years after the insurer’s refusal to pay the benefit claimed.
[28] Section 51(1) of the Statutory Accident Benefits Schedule reads:
A mediation proceeding or evaluation under section 280 or 280.1 of the Insurance Act or a court proceeding or arbitration under clause 281(1)(a) or (b) of the Act in respect of a benefit under this Regulation shall be commenced within two years after the insurer’s refusal to pay the amount claimed.
[29] Both pieces of legislation put the limitation period at two years from the date of denial.
[30] Over and above, the Insurance Act allows an additional 90 day grace period if an insured person commences mediation within the two year period. Section 281.1(2) of the Insurance Act extends the limitation period to allow time for compliance if mediation is launched in a timely fashion but parties are still awaiting a Report of the Mediator.
[31] Section 281.1(2) reads:
Despite subsection (1), a proceeding or arbitration under clause (1)(a) or (b) may be commenced,
(a) if there is an evaluation under section 280.1, within 30 days after the person performing the evaluation reports to the parties under clause 280.1(4)(b);
(b) if mediation fails but there is no evaluation under section 280.1, within 90 days after the mediator reports to the parties under subsection 280(8).
[32] Once again, such language is incorporated in the Statutory Accident Benefits Schedule. Section 51(2) reads:
Despite subsection (1), a court proceeding or arbitration under clause 281(1)(a) or (b) of the Insurance Act may be commenced within 90 days after the mediator reports to the parties under subsection 280(8) of the Act or within 30 days after the person performing the evaluation provides a report to the parties under section 280.1 of the Act, whichever is later.
[33] I have no adequate explanation as to why a claim or mediation regarding this denial of non-earner benefits was not commenced within two years of same.
[34] Further, I have no explanation whatsoever, as to why the plaintiff did not comply with the 90 day rule aforesaid. Instead, it launched a mediation in March 2010 (approximately 3 ½ years post denial) and issued a statement of claim for non-earner benefits on November 21st, 2011 (before the Galdamez decision of the Court of Appeal), but more than 5 years after the denial, and 206 days after the Report of the Mediator (rather than the prescribed 90 days).
[35] While the plaintiff’s suggest that the insurers response was a ‘blanket denial’ as the claim for Non Earner Benefits does not crystallize until 26 weeks post accident; such does not assist given the significant passage of time before any steps were taken to challenge the insurers clear and unequivocal decision.
[36] Mr. Katanic had a denial (even if considered premature) when he had counsel who would be deemed to have known that it was premature, yet nothing was done until March 2010 (Mediation application), and November 21, 2011 (Statement of Claim). Even if the claim crystallized on December 7, 2006 (26 weeks post accident), the claim is commenced well past the statutory limitation periods of two years or December 7, 2008. This argument does nothing to assist.
[37] I feel I have a full appreciation of the evidence and issues before me. A trial, in my view, is unnecessary.
[38] By way of alternative relief, the plaintiff seeks to plead the tort of negligent misrepresentation if I find against them in relation to the limitation period argument. I do not understand how changing the claim on facts known by counsel within the limitation period, could in anyway revitalize a limitation period that passed many years ago. If an amendment to the claim were allowed, I would expect a limitation argument would be raised once again. This is not in the interest of either of the parties or of justice.
[39] Summary judgment shall issue in favour of the insurer.
[40] If the parties are unable to agree on costs they might provide 3 pages of written submissions to me within 30 days of the date of this judgment.
MILANETTI J.
Released: August 2, 2013
COURT FILE NO.: 11-31541
DATE: 2013-08-02
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Bojan Katanic
Plaintiff
– and –
State Farm Mutual Automobile Insurance Company
Defendant
REASONS FOR JUDGMENT
MILANETTI J.
JAM:mg
Released: August 2, 2013