ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-10-4812
DATE: 20140327
B E T W E E N:
DIANE LAUZON, ERNIE TESSIER and SUZANNE TESSIER, O/B BONFIELD FIRST SPIKE RESTAURANT AND GAS BAR
Michael C. Birnie, Counsel for the Plaintiffs
Plaintiffs
- and -
THE DOMINION OF CANADA GENERAL INSURANCE COMPANY and DEMARCO-LUCENTI INSURANCE BROKERS LIMITED
Christopher I.R. Morrison, Counsel for the Defendant, The Dominion of Canada General Insurance Company
A. Benson Forrest, Counsel for the Defendant, Demarco-Lucenti Insurance Brokers Limited
Defendants
HEARD: March 14, 2014
Ellies J.
CORRECTED REASONS FOR DECISION
[1] The plaintiffs move under Rule 26 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 for leave to amend their statement of claim. The defendant, the Dominion of Canada General Insurance Company (“Dominion”), resists that request on the basis that the plaintiffs seek to add a new cause of action outside of the applicable limitation period. In addition, Dominion brings its own cross-motion under Rule 20, seeking a summary dismissal of the claim as presently pleaded against it.
[2] For the following reasons, the plaintiffs’ motion is dismissed and Dominion’s motion is allowed.
BACKGROUND
[3] The plaintiffs’ business was destroyed by fire on January 20, 2009. On January 19, 2010 they commenced an action against Dominion and Demarco-Lucenti Insurance Brokers Limited (“Demarco-Lucenti”). The plaintiffs claim that they were insured under a policy of commercial insurance placed through Demarco-Lucenti with Dominion at the time of the fire, but that they were not adequately indemnified under that policy for the losses they sustained in it.
[4] The policy provided coverage for losses due to business interruption, amongst other things. The affidavit provided in support of the plaintiffs’ motion alleges that Dominion improperly paid only $25,000 under that section of the policy, when it ought to have paid the entire $75,000 limits to the plaintiffs. Therefore, the plaintiffs seek to add the following paragraph to paragraph 6 of their statement of claim in which they set out the particulars of the negligence, breach of contract and breach of fiduciary duty alleged against the defendants:
They failed to assess, or otherwise properly adjust, the Plaintiffs’ losses and/or damages and, without limiting the generality of the foregoing, the Plaintiffs’ Claim for Business Interruption Loss.
[5] In addition to arguing that the proposed amendment asserts a new cause of action, Dominion seeks an order dismissing the plaintiffs’ claim as it is presently pleaded based on admissions made by the plaintiffs during their examinations for discovery, namely:
(a) that they never had any direct dealing with Dominion prior to sustaining the loss;
(b) that Demarco-Lucenti, and not Dominion, advised them as to their insurance coverage needs;
(c) that they received a copy of their policy prior to the loss occurring; and
(d) that they relied on Demarco-Lucenti, and not Dominion, to provide coverage advice.
[6] Counsel for the plaintiffs, with his customary candour, has conceded that if the plaintiffs’ motion fails, Dominion’s cross-motion should succeed. While Demarco-Lucenti supports the plaintiffs in their motion, it has not made the same concession.
ISSUES
[7] No issue has been taken with Dominion’s position that the applicable limitation period is contained in Statutory Condition 14, which is incorporated into the policy in question and reads:
ACTION
- Every action or proceeding against the Insurer for the recovery of any claim shall be absolutely barred unless commenced within one year after the loss or damage occurs, unless legislation provides otherwise.
[8] Nor is any argument made that issues of discoverability or special circumstances apply in this case.
[9] There is also no issue that if the proposed amendment constitutes a new cause of action, it should not be permitted: see Frohlick v. Pinkerton Canada Ltd. (2008), 2008 ONCA 3, 88 O.R. (3d) 401 (Ont. C.A.); Joseph v. Paramount Canada’s Wonderland, 2008 ONCA 469.
[10] Therefore, the two issues that must be decided are:
(1) Does the proposed amendment constitute a new cause of action?
(2) If so, is there a genuine issue requiring a trial of the crossclaim?
ANALYSIS
Does the Proposed Amendment Plead a New Cause of Action?
[11] The plaintiffs submit that the amendment sought merely particularises the claim that has already been pleaded. They point to the very first paragraph of their statement of claim, para. 1 (a), in which they claim:
Indemnification in respect of a fire loss that destroyed the Plaintiffs’ Commercial Premises.
[12] They argue that “indemnification” means to make whole the victim of a loss and that the failure of Dominion to pay out the limits under the business interruption coverage portion of the policy fits within their claim to be made whole. Thus, they contend, the amendment contains no new cause of action.
[13] In Ascent Inc. v. Fox 40 International Inc., 2009 CarswellOnt 4118, Master Dash adopted the following definition of “cause of action”:
A “cause of action” has been defined as a “factual situation the existence of which entitles one person to obtain from the court a remedy against another person.” The key is whether substantially all of the material facts giving rise to the “new cause of action” have previously been pleaded or whether new facts are sought to be added that are relied upon to support a new cause of action. A new cause of action is not asserted if the amendments simply plead an alternative claim for relief arising out of the same facts previously pleaded and no new facts are relied upon, or amount simply to different legal conclusions drawn from the same set of facts, or simply provide particulars of an allegation already pled or additional facts upon which the original right of action is based. (Citations omitted)
[14] The issue then is whether the proposed amendment in this case contains new facts or simply provides additional facts upon which the original right of action is based. To determine that issue, it helps to consider the purpose of a statement of claim. Fairness requires that a statement of claim provide the defendants with an answer to the question: on what factual basis do the plaintiffs seek relief against us? It seems to me that, unless the answer to that question would be the same or substantially the same after the amendment is made as it was before, a new cause of action is being pursued. In this case, the answer would not be the same.
[15] As it is presently constituted, the plaintiffs’ claim relates solely to the adequacy of the limits of coverage placed and not to the adequacy of the amount paid under those limits. All of the facts pleaded in support of the plaintiffs’ claim relate to failures alleged to have occurred before the loss did, and not after.
[16] Paragraph 5, after setting out the facts relating to the fire and the existence of the insurance policy, concludes with paragraph (g), which reads:
The coverage afforded by Policy CCP 8312685 was insufficient and/or inadequate to fully indemnify the Plaintiffs with respect to the losses and/or damages sustained as a result of the fire loss. (Emphasis added.)
[17] Paragraph 6 contains the particulars of negligence alleged against the defendants. Every particular, from paragraph (a) to paragraph (i), relates to placement of the policy. Paragraph (j), which alleges a breach of contract or breach of fiduciary duty in the alternative, sets out the basis of these alternative claims as being “the failure of the defendants … to place adequate insurance coverage on the plaintiffs’ Commercial Premises” (emphasis added).
[18] As the claim presently exists, therefore, the answer to the defendants’ question, “On what factual basis do the plaintiffs seek relief against us?” would be: “On the basis that you failed to place the appropriate insurance”. If the amendment was allowed, the answer would be, in addition: “On the basis that you failed to properly assess the loss within the limits of the insurance placed”. These are two fundamentally different answers and, therefore, two different causes of action.
[19] Analyzed this way, it is clear that indemnification is the relief requested by the plaintiffs. It provides no information in answer to the question posed above. It identifies what the plaintiffs are seeking, not why they are seeking it. That is why reference to it is found at paragraph 1 of the statement of claim. Form 14A of the Rules of Civil Procedure requires the plaintiffs to set out “the precise relief claimed” in that paragraph. It appears there in the same way a reference to “damages” or “a declaration” would. None of these are causes of action.
[20] The plaintiffs also rely in support of their argument on one paragraph found in Dominion’s statement of defence. At paragraph 10, Dominion pleads:
- The Dominion indemnified the Plaintiffs for their loss up to their policy limit, as required of it.
[21] It is submitted on behalf of the plaintiffs that, by virtue of this paragraph, the parties “joined issue”, as a result of which the issue of whether the policy limits had been paid out was always “front and center” in the action. I am also unable to accept this argument.
[22] This paragraph must be read in the context of the statement of claim as a whole. When that is done, it becomes clear that the issue that was joined was the issue of Dominion’s liability for the amount of coverage, i.e. what the limits were, not whether the limits were reached. Simply put, there was no other issue to join, as there was no other issue raised.
[23] The plaintiffs’ proposed amendment would create a cause of action in negligence for failing to properly adjust or assess the plaintiffs’ loss under the policy after the fire occurred, and not for failing to put in place a proper policy of insurance beforehand. As such, it is a new cause of action based on a new set of facts, and is barred by the expiry of the limitation period. Therefore, leave to add it is denied.
Is there a Genuine Issue for Trial?
[24] As mentioned, counsel for the plaintiffs conceded that if his clients were not successful on their motion to amend, they could not succeed against Dominion’s motion for summary judgment. Although that concession was not made on behalf of Demarco-Lucenti concerning its crossclaim, it is the only logical result, in my opinion, once summary judgment is granted in favour of Dominion against the plaintiffs.
[25] In its crossclaim, Demarco-Lucenti relies on three things (see paras. 23 through 25 of the crossclaim):
(a) the allegations made in its statement of defence;
(b) the allegations made in the statement of claim as they relate to Dominion; and
(c) the provisions of the Negligence Act and the Insurance Act.
[26] Neither the allegations made in the statement of claim nor the provisions of the Negligence Act, R.S.O. 1990, c. N.1 are sufficient to allow the crossclaim to continue in the absence of the plaintiffs’ claim against Dominion. This is because Dominion’s liability to Demarco-Lucenti on these grounds is based entirely on Dominion’s liability to the plaintiffs.
[27] Demarco-Lucenti has pleaded no basis on which Dominion could be liable directly to it under the Insurance Act, R.S.O. 1990, c. I.8 and I have been referred to none in the course of this motion.
[28] With respect to the statement of defence, nothing has been pleaded in it that would support any cause of action as between Demarco-Lucenti and Dominion.
[29] Dominion’s motion for summary judgment must, therefore, be allowed as against both the plaintiffs and Demarco-Lucenti.
CONCLUSION
[30] The plaintiffs’ motion is dismissed. Dominion’s motion is allowed. The plaintiffs’ claim and the crossclaim against Dominion are dismissed.
[31] If the parties are unable to agree on costs, written submissions limited to five typewritten pages, exclusive of attachments, may be made as follows:
(a) Dominion shall serve and file its submissions within 20 days of the release of these reasons;
(b) Demarco-Lucenti shall have 10 days thereafter to serve and file its reply; and
(c) the plaintiffs shall have 10 days thereafter to do likewise.
Ellies J.
Released: 20140327
CORRIGENDUM
Correction made on March 27, 2014:
Paragraph 18 was amended to read: As the claim presently exists, therefore, the answer to the defendants’ question, “On what factual basis do the plaintiffs seek relief against us?” would be: “On the basis that you failed to place the appropriate insurance”. If the amendment was allowed, the answer would be, in addition: “On the basis that you failed to properly assess the loss within the limits of the insurance placed”. These are two fundamentally different answers and, therefore, two different causes of action.
COURT FILE NO.: CV-10-4812
DATE: 20140327
ONTARIO
SUPERIOR COURT OF JUSTICE
DIANE LAUZON, ERNIE TESSIER and SUZANNE TESSIER, O/B BONFIELD FIRST SPIKE RESTAURANT AND GAS BAR
– and –
THE DOMINION OF CANADA GENERAL INSURANCE COMPANY and DEMARCO-LUCENTI INSURANCE BROKERS LIMITED
CORRECTED REASONS FOR DECISION
Ellies J.
Released: 20140327