CITATION: Turton v. The Estate of Nancy Grasso, 2016 ONSC 5574
COURT FILE NO.: CV-13-00493236
DATE: 20160907
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DAVID TURTON
Plaintiff
– and –
THE ESTATE OF NANCY GRASSO by its litigation administrator, CRYSTAL GRASSO and the ESTATE OF HENRY GRASSO by its Estate Trustee, CRYSTAL GRASSO
Defendants
Ian S. Epstein (as agent for Christopher Karpacz) for the Plaintiff
Ashley P. Richards for the Defendants
HEARD: September 1, 2016
ENDORSEMENT
DIAMOND J.:
Overview
[1] On May 27, 2016, I heard argument of the defendants’ motion for summary judgment seeking an order dismissing the plaintiff’s claim on the grounds that it was commenced outside the two year period set out in the Limitations Act, 2002 S.O. 2002, c.24 (“the Act”). The claim is a subrogated action commenced by the plaintiff’s insurer Insurance Company (“Intact”).
[2] By Endorsement released on June 3, 2016 as Turton v. The Estate of Nancy Grasso 2016 ONSC 3557, I ordered a mini-trial on the issue of Intact’s alleged due diligence. That mini-trial proceeded before me on September 1, 2016.
[3] As set out in my original Endorsement, on August 25, 2001, a fire and explosion occurred in the residential home of Nancy and Henry Grasso (“the Grassos”) in Brantford, Ontario. Several neighbouring homes, including the plaintiff’s, sustained property damage as a result of the fire and explosion. A summary of the relevant facts found in the original record is set out in paragraphs 5-13 of my original Endorsement, and need not be repeated here.
[4] During the mini-trial, the plaintiff filed affidavit evidence from Sandra Freeman (“Freeman”, an Intact claims representative) and Robert Smith (“Smith”, a Cunningham Lindsey adjuster). Subject to certain documents which were either (a) apparently no longer available, and (b) subject to litigation or solicitor/client privilege, the contents of the Intact and Cunningham Lindsey files dealing with the plaintiff’s subrogated claim were produced. Both Freeman and Smith were cross-examined before me on their respective affidavits.
Theories of the Case
[5] The evidence at the mini-trial focused upon when and how Intact viewed the possibility of a subrogated claim against one or more potential tortfeasors. The fire and explosion at the Grassos were either caused by the Grassos, a third party, or perhaps an “act of God”.
[6] If the fire and explosion were caused by the Grassos or a third party, the only possible cogent theories to be pursued by Intact would be that the fire and explosion were the result of either negligence, or an intentional act.
[7] If the fire and exposition were caused intentionally, presumably any insurer responding to the claim would take an off-coverage position (due to the intentional nature of the act in question, ie. arson).
Evidence of Freeman
[8] Freeman was Intact claim’s representative assigned to handle two property damage claims involving two neighbouring properties insured with Intact. The plaintiff’s insurance claim was not initially handled by Freeman, but by another claims representative name Dennis Gray (“Gray”, who has since retired and is no longer employed by Intact).
[9] Gray was the claims representative assigned to handle four claims made by four neighbours of the Grassos, including the plaintiff. From a review of the Intact files, it is apparent that one set of notes, emails, correspondence, etc. was kept in relation to all the property claims filed by the six neighbours.
[10] Freeman created her own set of notes in the Intact file. On August 30, 2011, Freeman typed “possible subro noted” as she was awaiting a Cunningham Lindsey report “re: damages/causation”. Freeman testified in her cross-examination that she would speak regularly with Smith on the phone while she was awaiting a formal report from Cunningham Lindsey.
Evidence of Smith
[11] After Cunningham Lindsey was retained, Smith’s first visit to the property site was on August 26, 2011, the day after the fire and explosion. In his Building Loss Site Visit notes, Smith noted that day that the cause of the loss was “explosion - gas” and indicated that “subrogation does not appear to be possible as it appears as though neighbour caused gas leak to commit suicide”. The “neighbour” was Mrs. Grasso. Admittedly, Smith’s notes were based upon the groundswell of rumours circulating among members of the community.
[12] On August 29, 2011, Smith went to the property again. In his Building Loss Site Visit notes made that day, Smith changed his view on a potential subrogated claim against the Grassos by indicating the following (emphasis in bold):
“There is a possibility that subrogation can be sought but preliminary information does not suggest that the likelihood of success will be good.”
[13] The defendants argue that Smith’s use of the words “likelihood of success” clearly refers to Intact’s chances of recovery (i.e. whether the losses would be excluded by an insurer responding to the subrogated claim), and not the potential merits of the subrogated claim itself. As such, the defendants submit that as early as late August 2011, both Cunningham Lindsey and Intact were aware of the potential subrogated claim against the defendants.
[14] Despite Intact seeking to be formally updated every 30-60 days, Smith’s first Interim Property Loss report did not arrive until approximately November 22, 2011. In that report, Smith included the following remarks:
“Please find enclosed three newspaper articles that we have located all pertaining to this incident and as indicated, it has been confirmed that natural gas is the cause of the explosion. They have identified that no natural gas leaks were reported outside of the home in question, although we have yet to secure any formal reports determining the cause for this incident. We confirm that there was a 46 year old female in the basement of the home that exploded and that she died in the explosion. There are rumours and indications that the deceased did suffer from mental difficulties and had a history of suicide, which has led to speculation that the natural gas that accumulated to cause the explosion was not as a result of a leak, but rather was intentionally opened.
Furthermore, we can confirm that there were no gas fireplaces, no gas fired appliances, such as fridges, freezers or stoves, and the only two gas appliances in the home were a furnace and a hot water heater.
Our investigation into the final determination of the cause is ongoing and once that has been determined, a decision on any potential recourse for subrogation will be discussed.”
[15] In his cross-examination, Smith confirmed that the report of the Ontario Fire Marshal (“OFM”) was apparently finalized sometime in April 2012. Apparently, it was the plaintiff himself who sought out and received a copy of the OFM report on July 3, 2012. The plaintiff refused to provide Intact with a copy (although he provided Smith with written consent for Intact to obtain its own copy from the OFM’s office).
[16] For reasons Smith could not explain, Intact took no steps to obtain the OFM report until September 14, 2012. There was no explanation offered for this three month delay. On July 31, 2012, Gray sent an email to Smith (which Smith testified he never saw as he believes he had already left the employment of Cunningham Lindsey). In that email, Gray advised as follows (my emphasis in bold):
“We also talked about subrogation as we have a few times. You tell me a report is out or coming out that will show the loss was not an Accidental Cause and that likely means we could have subrogation rights. It is imperative that Notice letters go out to the alleged responsible party or to the estate and Insurer.”
[17] Of note, letters from Cunningham Lindsey to the owner/occupier of the Grassos’ property were not mailed out until September 11, 2012.
Decision
[18] Intact takes the position on this motion that (a) it did not have knowledge of the material facts relating to the actual cause of the fire and explosion until after it had received the OFM report, (b) even if it had obtained the OFM report in July 2012, it acted with reasonable diligence to effectively toll the limitation period until then, and (c) it certainly did not have knowledge of the necessary material facts to support this claim by November 20, 2011 (being two years prior to the issuance of the claim in this proceeding).
[19] The documentary evidence filed at the mini-trial does not confirm Intact’s position. Among the documents produced by Intact from its files were additional notes to file made by Abu Sayeed Islam (“Islam”, the claims representative who ultimately took over carriage of the files from Freeman). Most of Islam’s notes have been redacted for litigation or solicitor/client privilege. However, in my Case Conference Endorsement released on August 24, 2016 Turton v. The Estate of Nancy Grasso 2016 ONSC 5351, I ordered Intact to produce un-redacted copies of all notes to file relating to any limitation period issues.
[20] In his original affidavit sworn and filed in response to the defendants’ motion, Islam gave evidence that neither Intact nor the plaintiff had any knowledge, or any reasonable way of determining the case of the fire and explosion prior to November 20, 2011. This evidence was presumably tendered to convince this Court that the limitation period did not expire on August 25, 2013 (being the presumed limitation period under the Act).
[21] The notes to file made by Islam fail to corroborate his affidavit evidence, and frankly show a very different picture than the one originally presented to this Court. The following un-redacted notes were entered by Islam in the Intact files (again, my emphasis in bold):
Date
Entry
April 26, 2013
My next diary is for June 26, 2013 (Limitation will expire on Aug 21, 2013)
June 26, 2013
I have reminded them about the expiry of limitation
August 23, 2013
The limitation expires on Aug 25, 2013 and counsel told me in June that he would issue the Statement of Claim to protect the limitation
[22] Islam’s notes show that (a) Intact viewed the limitation period for its subrogated claim (whatever the theory of the case) to expire on August 25, 2013, and (b) counsel for Intact was instructed and agreed to commence proceedings on or before August 25, 2013 to “protect the limitation period”.
[23] In paragraph 13 of my original Endorsement, I noted that Christopher Karpacz, (“Karpacz”, Intact’s original counsel) for Intact confirmed in an affidavit that he had mistakenly understood Intact’s instructions to only issue one of the claims (i.e. for only one of the six neighbours), and that it “later became apparent that Intact intended to pursue claims on behalf of five other homeowners”, including the plaintiff in this proceeding.
[24] As held by Justice Milanetti in Katanic v. State Farm Mutual Automobile Insurance Company 2013 ONSC 5103:
“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.”
[25] A concise summary of the law relating to the Act is set out in paragraphs 20-26 of my original Endorsement. Once again, Intact strongly relies upon the decision of Justice Pierce in Hansen v. Strone Corporation 2013 ONSC 713, appeal dismissed 2014 ONCA 385. In my view, the Hansen decision does not assist Intact on the facts exposed in the mini-trial. In Hansen, Justice Pierce found that the plaintiff was not in a position to allege negligence until he knew the cause of the fire as it would be irresponsible to commence a claim alleging negligence until there were sufficient particulars to ground such a claim.
[26] In the record before me, I find that Intact was only waiting for the OFM report in order to determine (a) whether the fire was set intentionally, and/or (b) whether subrogated claim would be “worth it” from a financial recovery perspective. Smith’s initial field notes confirm that what changed his mind on the potential subrogated claim was the possibility of the fire being set intentionally, which would impact the “likelihood of success” of any subrogated claim.
[27] I do not find that Intact was waiting for the OFM report to determine whether there was a cause of action against the Grassos in negligence – the very tort for which the Grassos have been sued (with a theory that the fire explosion were set intentionally in the alternative). Indeed, there are no facts contained within the OFM report which confirm that the fire explosion was a result of any negligence on the part of the Grassos.
[28] As I stated in paragraph 11 of my original Endorsement, the contents of the claim in this proceeding were cut and pasted from the claim that was commenced before August 25, 2013. If Intact was able to issue the first claim without the benefit of the OFM report, surely it believed that it already had all of the material facts necessary to support that first claim (which is identical to the plaintiff’s claim).
[29] Both Islam’s notes to file, and Karpacz’s affidavit evidence, confirm that Intact already had all of the necessary facts to support a claim in negligence (and intentional tortious conduct in the alternative). This renders the expiry of the limitation period to be two years from the date of the loss.
[30] Intact’s resistance to this motion appears to be an attempt to reconstruct history with the benefit of hindsight. The defendants’ motion for summary judgment is granted, and this claim is dismissed.
Costs
[31] If the parties cannot agree upon the costs of this motion and/or the costs of the action, the defendants may serve and file written costs submissions (totaling no more than four pages including a Costs Outline) within 10 business days of the release of this Endorsement.
[32] The plaintiff shall thereafter serve and file his responding costs submissions (also totaling no more than four pages including a Costs Outline) within 10 business days of the receipt of the defendants’ costs submissions.
Diamond J.
Released: September 7, 2016
CITATION: Turton v. The Estate of Nancy Grasso, 2016 ONSC 5574
COURT FILE NO.: CV-13-00493236
DATE: 20160907
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DAVID TURTON
Plaintiff
and
THE ESTATE OF NANCY GRASSO by its litigation administrator, CRYSTAL GRASSO and the ESTATE OF HENRY GRASSO by its Estate Trustee, CRYSTAL GRASSO
Defendants
ENDORSEMENT
Diamond J.
Released: September 7, 2016,