Court File and Parties

Citation: Hordo v. State Farm Mutual Automobile Insurance Company, 2015 ONSC 2530 Court File No.: CV-13-485342 Date: 2015-06-15 Superior Court of Justice - Ontario

Re: Diana Michelle Daniella Hordo, Applicant And: State Farm Mutual Automobile Insurance Company, (A United States of America Illinois Registered Mutual Insurer), Barbara Bellissimo and Edward B. Rust Jr., Respondents

Before: Pollak J.

Counsel: Robert Besunder for the Applicant Mark A. Gelowitz and Karin Sachar, for the Respondents

Heard: March 30, 2015

Endorsement

[1] The Applicant, Diana Hordo, is insured under her mother’s contract of insurance with the Respondent, State Farm Mutual Automobile Insurance Company (“State Farm”).

[2] State Farm has its head office in the United States of America.

[3] The personal Defendants are: • Mr. Edward B. Rust, Chairman of the Board, President and Chief Executive Officer of State Farm; and • Ms. Barbara Bellissimo, Senior Vice President, Canada Market Area of State Farm.

[4] Ms. Hordo was in a car accident. State Farm paid Ms. Hordo for damages to the car and for some of her medical expenses.

[5] In 2011, State Farm told Ms. Hordo it would stop paying for some treatments and asked her for some medical assessments. Her father, Mr. Hordo, who is not a party to this Application, alleges that State Farm had engaged in "purposeful and constituted malicious deceit" in order to "inflict mental harm and continuing pain" on Ms. Hordo. He objects to the fact that the State Farm agents processing her claims are in the United States. Ms. Hordo commenced this Application, but has also started: (i) a tort claim against the driver of the other car in the accident; (ii) a claim against State Farm for the payment of statutory accident benefits (“AB Proceeding”); and, (iii) a complaint to the Financial Services Commission of Ontario and to the Privacy Commissioner of Canada.

[6] As well, Mr. Hordo tried to intervene in a hearing in the Bermuda Commercial Court to approve the transfer of business from State Farm International Life Insurance Company Ltd. to Desjardins Financial Security Life Assurance Company and he has threatened to bring a class action on behalf of all Canadians insured by State Farm, against State Farm.

[7] Finally, Ms. Hordo has filed a Notice of Motion requesting "interim relief" in this Application. The "interim relief" is for the same relief she seeks in this Application.

[8] In this Application, Ms. Hordo asks for the following declarations: (a) that State Farm and its officers and directors are in breach of the Personal Information Protection and Electronic Documents Act, S.C. 2000, c. 5 ("PIPEDA"), and that the Applicant has a reasonable expectation of privacy in respect of her health and medical records such that they should not be transmitted to another jurisdiction; (b) that State Farm and its officers and directors are in breach of the Insurance Act, R.S.O. 1990, c. I.8 and regulations enacted thereunder and are bound to apply the provisions of the Statutory Accident Benefits Schedule - Accidents on or After November 1, 1996, O. Reg. 403/96 in respect of the Applicant's insurance claims; (c) that State Farm has engaged in an unfair or deceptive act or practice under the Insurance Act, the Financial Administration Act, R.S.C. 1985, c. F-11, the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/2, s. 2, and 18 USC Chapter 96 - Racketeer Influenced and Corrupt Organizations; (d) that the actions of State Farm and its officers and directors in administering claims in the United States without consent were ultra vires the Constitution, the Canadian Charter of Rights and Freedoms, Part 1 of the Constitution Act, 1982, 1982, c. 11 (UK), Schedule B, and the Insurance Act; and (e) that the matters raised are of importance to all Canadians injured in motor vehicle accidents with foreign organized and domiciled insurers.

[9] This is a motion brought by State Farm to strike out the Application on the following grounds: (a) the absence of a pleaded cause of action in the Notice of Application; (b) the plain and obvious inappropriateness of granting declaratory relief in the context of the allegations in the application; (c) the abuse of process inherent in the application; (d) the failure of the Applicant to plead any cognizable claims for personal liability as against the individual respondents; and, (e) the retaliatory and vexatious nature of the application.

[10] In support of its motion, State Farm submits that: (a) it is plain and obvious that declaratory relief is not available in this case, since it will have no utility or binding effect on the parties and there are comprehensive legislative schemes available for dealing with the dispute. (b) it is plain and obvious that the application cannot expose the individual respondents to personal liability, as there are no pleadings regarding the conduct of the Individual Respondents; (c) it is plain and obvious that the application was brought for the improper purpose on the part of Ms. Hordo's father, a disbarred lawyer, of seeking to punish State Farm for imagined transgressions, and is therefore vexatious and an abuse of process.

[11] Ms. Hordo submits that the only way to ensure that her allegations are dealt with fairly, and on their merits, is for this Court to grant the requested declaratory relief. She argues that this Court must fully adjudicate the issues raised in this Application, which alleges bad faith, misrepresentation, and deceit in the conduct of the Respondents. She submits that these issues cannot be adjudicated in the other legal proceedings she has brought. Further, she submits that the “scope of the organizational misrepresentations and deceit extend beyond the merits of [Ms. Hordo’s] injury claims” and that such breaches affect “virtually all accident victims insured by State Farm in Ontario and whose claims are adjusted by State Farm”.

[12] Ms. Hordo submits that this Application is the proper forum to determine her rights, which are dependent “on the interpretation of a contract or the interpretation of a statue or regulation”.

[13] She submits that even if there are no identifiable damages caused by the alleged breaches, her rights under her mother’s insurance contract (i.e., privacy rights and the right to disseminate private information) must be identified by a declaration to ensure that State Farm the respects those rights.

[14] Further, it is alleged that this Application raises issues of public importance for any insurance claimant dealing with State Farm.

[15] State Farm submits that it is well-established law that declaratory relief should not be granted where it will not resolve the dispute, or if there is a comprehensive statutory scheme provided for the resolution of the issues.

[16] State Farm relies, in part, on the doctrine of abuse of process. The Court has the inherent power to prevent the misuse of its procedure in a way that would be manifestly unfair to a party to the litigation or would bring the administration of justice into disrepute.

[17] In accordance with guidance provided by the Supreme Court of Canada in Kourtessis v. Minister of National Revenue, 1993 CanLII 137 (SCC), [1993] 2 S.C.R. 53, [1993] S.C.J No. 45 at para. 45 the discretionary power of the Court to grant declaratory relief should be exercised with circumspection:

The policy concern against allowing declarations, even of unconstitutionality, as a separate and overriding procedure is that they will, in many cases, result in undesirable procedural overlap and delay. As long as a reasonably effective procedure exists for the consideration of constitutional challenges, I fail to see why another procedure must be provided. This is consistent with the discretion to grant the declaratory remedy in its traditional use. It is also consistent with the practice in respect of public interest standing declarations, where the courts are concerned that there be no other reasonable and effective way to bring the issue before the courts. [Internal citations omitted].

[18] State Farm submits that these principles are applicable in this Application because of the apparent procedural overlap between this Application and the AB Proceeding. Furthermore, there are procedures in the Insurance Act and PIPEDA for the resolution of Ms. Hordo’s dispute.

[19] State Farm relies on the case of McConnell v. Rabin (1986) 13.C.P.C. (2d) 184, 2 A.C.W.S. (3d) 36 (Ont. High Ct.), where it was held that no useful purpose would be achieved by declaring that the defendant was in breach of a regulation under the Securities Act, R.S.O. 1980, c. 466, as the Ontario Securities Commission—independent of any court declaration—would maintain its jurisdiction and obligation to deal with the defendant. In concluding that there was no purpose in making the request declaration, the Court wrote:

I have great difficulty accepting the notion that private individuals may go around asking the Courts for declarations to the effect that provisions of statutes have been breached simply on the basis that they assert an interest in having the declaration made. Surely there must be more. As stated at the outset, we are not now concerned with a cause of action for damages or any other cause for redress but only with a declaration. How can a declaration that the defendant breached the regulation in this case be of any assistance to anyone? The declaration will stop there. No useful purpose will have been achieved if a declaration is made by the Court. The commission will maintain its jurisdiction and its obligation to deal with the defendant as a registrant and exercise its powers under s. 26 of the Securities Act, quite independently of the Court declaration if one were made.

[20] State Farm submits that Ms. Hordo’s Application for declarations that it and the Individual Respondents are in breach of various statutes serves no practical purpose and does not assist in determining the parties' rights. State Farm notes that PIPEDA and the Insurance Act provide their own mandatory procedures for dealing with alleged breaches of PIPEDA, entitlement to statutory accident benefits, and unfair practices by insurers. It argues that it would be inappropriate for the court to grant a declaratory judgment in circumstances in which a governing statute provides a special and exclusive remedial procedure in another forum.

[21] In the case of MacLeod et al. v. White (1955), 1955 CanLII 764 (NB SC), 37 M.P.R. 341, [1955] N.B.J. No. 18, the Court refused to declaratory relief because it would have no binding effect. The Court stated that:

On principle I am impelled to the conclusion that declaratory judgments can only be made where they constitute, or amount to "binding declarations of right" - to quote the rule itself.

It is not the business of this Court to give opinions on questions of fact or points of law which may be puzzling the inhabitants of Lancaster. Its pronouncements must bind someone for the benefit of someone. It seems to me that by their proposed declarations the plaintiffs are seeking to elicit from the Court a legal opinion, not a judicial opinion with binding effects.

[22] State Farm argues that the requested declarations would have no binding effect on the Privacy Commissioner or the Superintendent of Financial Services. State Farm submits that this Application amounts to an abuse of process and should be struck out, relying on the case of Green v. Canada (Attorney General), 2011 ONSC 4778, [2011] O.J. No. 3615 in which the Court struck out a claim as an abuse of process because of the likely duplication of proceedings it would entail.

[23] State Farm notes that Ms. Hordo references this Application in the AB Proceeding, wherein she similarly alleges a breach of her privacy rights. State Farm argues that the obviously overlapping declarations are intended for use in AB Proceeding and potentially other alternative proceedings.

[24] I agree with the submissions of State Farm that the jurisprudence relied on is applicable and helpful in this case. Having regard to all of the above-noted factors, I find that the indicia of “abuse of process” of the court are present in this case and should be struck out. In light of my conclusion on this issue, it is not necessary to consider the other arguments raised by State Farm in support of the relief requested on this motion. I therefore allow State Farm’s motion to strike out this Application.

Costs

[25] State Farm has been successful on both these motions. It is therefore entitled to an appropriate cost award. If the parties are unable to agree on the cost award, they may make brief written submissions as follows:

State Farm’s costs submissions must be delivered by 12:00 p.m. on June 25, 2015; and the Ms. Hordo's costs submissions must be delivered by 12:00 p.m. on July 6, 2015. In accordance with what the Rules provide, the submissions should not exceed three pages in length.

Pollak J.

Date: June 15, 2015