Precedent 15. Property Insurance Contract Insurer s and Agent s Breach of Contract and Negligence

Transcription

1 Contracts

2 CONTRACTS Precedent 15. Property Insurance Contract Insurer s and Agent s Breach of Contract and Negligence Statement of Claim 1. The plaintiff claims: (a) damages for breach of contract and negligence in the amount of $[...]; (b) prejudgment and postjudgment interest pursuant to sections 128 and 129 of the Courts of Justice Act, R.S.O. 1990, c. C.43; (c) the costs of this action on a substantial indemnity basis, plus HST as applicable; and (d) such further and other relief as this Honorable Court may deem just. PARTIES 2. The plaintiff ( P) resides in [...], and at all material times, owned the lands and premises known municipally as XXX [...], Ontario (the Property ). 3. The defendant D Insurance Inc. ( D1 ) is an insurer licenced to carry on the business of property and liability insurance in the Province of Ontario. 4. The defendant Insurance Broker Limited ( D2 ) is an insurance broker licenced to sell insurance with offices in [...] INSURANCE POLICY 5. D2 acted as P s insurance broker. D2 knew of P s insurance needs and P relied upon D2 to ensure that P was adequately insured for all foreseeable risks. 6. To address P s insurance needs, D2 caused a D1 insurance policy to be issued to P. 7. This policy was described as a homeowners insurance policy ( the policy ) bearing policy number [...]. The term of this policy was from [...] to [...]. 8. On the Declaration Sheet of the policy, the policy was described as Homeowners Broad. 9. Further, the declaration sheet stated: *Risk Details: Primary Heat: oil tank outside above ground, oil tank year: [...]. 10. The policy provided for coverage for property including Coverage A dwellings to a limit of $[...]. 11. Coverage A was defined under the policy as follows: Your Dwelling Coverage A 12. The policy provided that there was coverage for contamination or pollution caused by

3 CONTRACTS the sudden accidental bursting or overflowing of P s domestic fixed fuel tank, apparatus or pipes. FUEL OIL ESCAPE 13. P had a heating fuel tank outside her house. 14. On or about [...] the fuel supplier filled the fuel tank with approximately [...] litres of fuel. 15. On [...] P noticed that the fuel tank was empty and that the snow next to the tank was pink in colour. 16. Fuel was lost as a result of the sudden accidental bursting of the fuel tank. 17. P immediately reported this occurrence to D1 through D2. ACTION BY THE INSURER AND ITS AGENT 18. On [...] D1 s agent ( the agent ), attended and inspected the fuel spill. 19. The agent arranged for a contractor ( the contractor ) to inspect the property on [...] and to begin remediation work. 20. P relied upon the agent and the contractor that the agent brought on the premises to promptly take whatever steps were needed to minimize the damage and remove the contamination from the property in a cost effective manner. 21. The agent and the contractor took no steps to contain the fuel spill until [...]. 22. On or about [...] the agent advised P that D1 would only cover the footprint of the house. When P asked the agent what footprint meant, the agent advised that footprint was 8 to 10 feet past the foundation. The agent further advised that there may be a small part of the remediation costs that P would have to pay. 23. On or about [...], the contractor advised P that the fuel had spread beyond the footprint of the property and into the septic field and driveway. 24. On or about [...], P was advised by the agent that the septic field should be considered part of the dwelling since it was connected to the house and that they were covered for any damage to the septic system. 25. On or about [...], P was advised that D1 was denying the claim for the septic field. 26. On or about [...], P was advised that the fuel had spread to an area close to P s property line and that P would have to pay approximately $[...] to cover the cleanup costs outside the foot print of her house. P did not receive any written explanation about the amounts owing or the reasons for any payment by her. 27. For reasons unknown to P, D1 did not pay the contractor brought in by its agent. As a result, the contractor demanded payment of the sum of $[...] from P. The contractor registered a construction lien against the property and commenced legal proceedings against P to recover the sums outstanding. The Construction Lien Action remains outstanding. 28. P was not given any explanation for the delay in paying the contractor.

4 CONTRACTS 29. After considerable delay D1 paid $[...] of the $[...] account of the contractor leaving $[...] unpaid. 30. As a result of D1 s instructions, the contractor did not remove all the contamination from P s property. 31. The cost to remove all contamination from P s property is estimated at $[...]. 32. P states that had D1 and the agent acted promptly to deal with the fuel spill as reported to them, then the cost to remove the contamination from the property would have been significantly less, and in particular, within the property damage limit of $[...]. 33. Further, P states that had D1 or the agent properly planned and supervised the work undertaken by the contractor, less costs would have been incurred resulting in more funds available from the property damage limit for clean up costs. D1 S BREACH OF CONTRACT 34. P states that D1 has breached its contract of insurance by: a) denying coverage for contamination to the property beyond the footprint of the dwelling; b) failing to ensure that steps were taken immediately to contain the contamination; c) failing to ensure that work undertaken by the contractor brought to the property was cost effective; d) failing to complete the work to be undertaken to return the property to a condition similar to that before the fuel spill including required landscaping; e) failing to pay the contractor when, and as, required; f) failing to repair damage to the septic field caused by this spill or during the work done after the spill; g) failing to pay for additional living expenses incurred including hotel and increased hydro costs; h) failing to replace the damaged tank and pay for the lost fuel. 35. P states that as a consequence of these breaches of contract she has sustained damages including the cost to remove the contamination from the property and expert fees including engineers and lawyers retained as a consequence of D1 s breach of contract.

5 CONTRACTS 36. P further states that as a consequence of these breaches of contract, P sustained other damages, including but not limited to the following: a) cost to appraise the property; b) losses from being unable to sell all or part of the property because of contamination; c) losses from being unable to sell the property and move as she had intended; d) losses from being unable to secure financing for the property because the property is contaminated; e) losses from exposing P s liability claims from other parties because of failure to properly review the property; f) loss of time from work to deal with consequences flowing from these breaches of contract. 37. P further states she obtained the policy of insurance to provide peace of mind for the protection of her property and for her protection against liability. The breaches of contract have resulted in significant distress, upset and frustration. P therefore claims damages for the significant distress, upset and frustration. P states that her life has been significantly disrupted by the breaches of contract. D1 S NEGLIGENCE 38. P further states that D1 was negligent in its handling of P s insurance claim. This negligence consists of the following acts or omissions or the cumulative effect of any combination thereof: [add particulars] D2 S BREACH OF CONTRACT 39. P states that D2 breached its contract to P in failing to provide adequate and sufficient insurance coverage in fulfillment of its contractual obligations to P. As a consequence P has suffered the damages described. D2 S NEGLIGENCE 40. In addition, P alleges that D2 was negligent in placing insurance coverage that resulted in the damages described. This negligence consists of the following acts or omissions or the cumulative effect of any combination thereof: [add particulars] 41. The Plaintiff pleads the Negligence Act, R.S.O. 1990, c. N.1. [Date of issue]... Lawyers for the plaintiff

6 Personal Injury

7 PERSONAL INJURY STATEMENT OF CLAIM 1. The Plaintiff, <Plaintiff s Name>, is a corporation duly incorporated under the laws of <incorporating jurisdiction>, extra-provincially registered to carry on business in <jurisdiction(s) where registered> [or for individual plaintiffs] The Plaintiff, <Plaintiff s Name>, is resident in the <City/Town/Village/Hamlet> of <City/Town/Village/Hamlet Name>, in the Province/Territory of <Province/Territory>. 2. At all material times, the Plaintiff carried on business in <jurisdiction> as <nature of business>. 3. The Defendant, <Defendant Manufacturer s Name>, to the knowledge of the Plaintiff, is a corporation duly incorporated under the laws of <incorporating jurisdiction>, extraprovincially registered to carry on business in <jurisdiction(s) where registered>. 4. The Defendant, <Defendant Retailer s Name>, to the knowledge of the Plaintiff, is a corporation duly incorporated under the laws of <incorporating jurisdiction>, extraprovincially registered to carry on business in <jurisdiction(s) where registered>. 5. At all material times, the Defendant Manufacturer carried on business in <jurisdiction> as a manufacturer of <product or product type>. 6. At all material times, the Defendant Retailer carried on business in <jurisdiction> as a supplier of <product or product type> 7. The Defendant Manufacturer manufactured <product>, bearing serial number <serial number>, and model number <model number>, (the Product ). 8. On <date of purchase>, the Plaintiff purchased the Product from the Defendant Retailer in its ordinary course of business. 9. On <date of incident>, an employee of the Plaintiff turned on the Product. Suddenly, and without warning, there was an explosion in the tank of the Product, which then started on fire. 10. The fire spread to the building owned and occupied by the Plaintiff, located at <address> and caused damage to the building and its contents (the Fire ). 11. As a result of the fire and resulting fire-extinguishment activities, the Plaintiff has suffered the following damages: (a) Damages to inventory in the amount of $<amount> (b) Damages to equipment in the amount of $<amount> (c) Damage to the Building and related service costs in the amount of $<amount>; (d) Storage costs of $<amount>; (e) Payroll expenses of $<amount>; (f) Loss of profits of the business in the amount of $<amount>; and (g) Such further and other damages as are currently unknown to the Plaintiff, but that will be proven at a trial of this action (the Damages ) 12. The Fire was caused by a defect in the electrical system of the Product, and specifically that the wire carrying the battery voltage was not insulated and could contact the metal while the engine was running, causing a spark in the fuel tank (the Defect ).

8 PERSONAL INJURY LIABILITY OF DEFENDANT MANUFACTURER 13. The Defendant Manufacturer knew, or ought to have known, prior to the date of the Fire, that the Product was defective when used for the purposes for which it was intended, or for the reasonably foreseeable misuse of the Product. 14. The Defendant Manufacturer owed a duty of care to the Plaintiff, and breached its duty by failing to act as a reasonable manufacturer of the Product, the particulars of which negligence include, but are not limited to: (a) Manufacturing and/or designing a product that was not fit for the purpose for which it was intended; (b) Failing to manufacture and/or design a product in a good and workmanlike manner and in accordance with generally accepted standards; (c) Failing to use a reasonable degree of care in manufacturing and designing the Product; (d) Failing to comply with industry or statutory standards for the manufacture and design of the Product; (e) Failing to provide adequate or any training to its employees, contractors and agents involved in the design and/or manufacture of the Product; (f) Failing to employer competent employees, contractors and agents involved in the design and/or manufacture of the Product; (g) Failing to warn consumers and potential users of the Product, including the Plaintiff, that the Product was unfit for its purpose and not of merchantable quality; (h) Failing to adequately warn consumers and potential users of the Product, including the Plaintiff, of the proper use of the Product and of the risks associated with the Product s use or foreseeable misuse, when it knew or ought to have known that such risks existed; (i) Failing to instruct subsequent retailers and distributors to warn consumers and potential users of the Product of the risks outlined in (g) and (i) above; and, (j) Such other and further particulars of negligence, unknown to the Plaintiff at this time but as will be proven at the trial of this matter (the Defendant Manufacturer s Negligence ) 15. The Defendant Manufacturer s Negligence was the cause, in whole or in part, of the Defect and the resulting Fire and Damages, which were the reasonably foreseeable result of the Defendant Manufacturer s Negligence. 16. Further, or in the alternative, in breach of its duty of care, the Defendant Manufacturer made untrue, inaccurate or misleading statement about the fitness for use and quality of the product, upon which the Plaintiff reasonably relied (the Manufacturer s Misstatement ). 17. The Manufacturer s Misstatement was the cause of the Fire and Damages, which were the reasonably foreseeable result of the Manufacturer s Misstatement. 18. Further, or in the alternative, the Product included a limited warranty from the Defendant Manufacturer that the Product was free from defects for a two-year period

9 PERSONAL INJURY following purchase (the Limited Warranty ). 19. The Defendant Manufacturer breached the above terms of the Limited Warranty, which breach resulted in the Damages. LIABILITY OF DEFENDANT RETAILER 20. At the time of purchase of the Product, the purpose for which the Plaintiff required the Product was expressly or implicitly made known to the Defendant Retailer. 21. The Plaintiff relied on the Defendant Retailer s skill and judgment as a supplier of the Product. 22. The Defendant Retailer expressly or implicitly warranted that the goods were reasonably fit for the purpose it was intended, and that the goods were of merchantable quality (the Warranty ). 23. The Plaintiff had a contract of sale with the Defendant Retailer. 24. It was an express or implicit term of the contract of sale that the goods were reasonably fit for the purpose it was intended, and that the goods were of merchantable quality (the Contractual Warranty ). 25. The Defendant Retailer breached the terms of the Contractual Warranty and the Warranty, which breach resulted in the Damages. 26. The Plaintiff specifically pleads and relies upon the <Sale of Goods Act of the relevant jurisdiction>. 27. The Defendant Retailer knew, or ought to have known, prior to the date of the Fire, that the Product was defective when used for the purposes for which it was intended, or for the reasonably foreseeable misuse of the Product. 28. The Defendant Retailer owed a duty of care to the Plaintiff, and breached its duty by failing to act as a reasonable retailer of the Product, the particulars of which negligence include, but are not limited to: (a) Selling products that were defective or contained defective components; (b) Failing to warn consumers and potential users of the Product, including the Plaintiff, that the Product was unfit for its purpose and not of merchantable quality; (c) Failing to warn the Plaintiff about how to minimize the risks resulting from use of the Product; (d) Failing to advise the Plaintiff of the manufacturer s directions and instructions regarding the operation of the Product so as to minimize the risks resulting from use of the Product; (j) Such other and further particulars of negligence, unknown to the Plaintiff at this time but as will be proven at the trial of this matter (the Defendant Retailer s Negligence ). 29. The Defendant Retailer s Negligence was the cause, in whole or in part, of the Defect and the resulting Fire and Damages, which were the reasonably foreseeable result of the Defendant Retailer s Negligence.

10 PERSONAL INJURY 30. Further, or in the alternative, in breach of its duty of care, the Defendant Retailer made untrue, inaccurate or misleading statement about the fitness for use and quality of the product, upon which the Plaintiff reasonably relied (the Retailer s Misstatement ). 31. The Misstatement was the cause of the Fire and Damages, which were the reasonably foreseeable result of the Misstatement. 32. The Plaintiff, <PLAINTIFF S NAME>, Claims against the Defendants, Jointly and Severally: (a) Damages in the amount of $<total damages>; (b) Pre-judgment Interest; (c) Costs of this action; and (d) Such further and other relief as this Honourable Court deems meet. 2. Defences There are many possible defences available against a products liability claim. As in any standard negligence defence, the defendant may be able to dispute any of the component parts of a negligence-based products liability claim duty, breach of duty, causation or damages. In a contractual or warranty-based claim, the defendant may be able to attack the applicability or existence of the contractual provision or warranty. A common difficulty in products liability claims is the proper identification of the defendants. In the modern era of international subsidiaries and sub-contracted work, it may be diffi- cult for the Plaintiff to correctly identify each defendant and their role in the production, design, manufacture and ultimate sale of the allegedly defective product. The defendant will want to clarify its exact role in the process; it may also want to consider whether it will go on to further identify other parties whose actions were mistakenly assigned to the defendant. 1 Products liability claims are frequently cases where contributory negligence may be claimed. It is commonplace for a plaintiff to have contributed to his or her own injury through misuse or abnormal use of the product, ignoring obvious hazards, failing to follow safety directions, or tampering with or altering the product. Similarly, depending on the circumstances, a defendant may be able to plead that the plaintiff voluntarily assumed the risk (the volenti non fit injuria principle). Taking a defence one step further, the defendant may be able to plead lack of a defect or lack of a causal link between the defect and the damage, including pleading intervening causes or intermediate inspection. 1 For an excellent discussion on this topic, see Lawerence G. Theall et al., Product Liability: Canadian Law and Practice, looseleaf (Aurora, Ont.: Canada Law Book, 2007) at p1:

11 PERSONAL INJURY The doctrine of intermediate inspection applies where a manufacturer anticipates that the product will be tested by a third party before use, or where an intermediary does conduct an examination that discloses the defect, and it may reduce or obviate liability entirely. The form that follows are defences on behalf of a manufacturer and retailer dealing with breach of contract/warranty, negligent manufacture, negligent design, failure to warn and negligent misstatement. However, not all of defences may apply to any given case and, as with any standard precedent, the form will have to be adapted to your claim s particular circumstances. (a) Defence of retailer and manufacturer <Style of Cause>