Loree Estate v. Canada West Insurance Company, 2013 ABQB 320

Court of Queen ’ s Bench of Alberta Citation: Loree Estate v. Canada West Insurance Company, 2013 ABQB 320 Date: 20130528 Docket: 9803 12181 Registry: Edmonton Between: Sharon Wright, Administrator Ad Litem of the Estate of Elden Doug Loree, Deceased Plaintiff - and - Canada West Insurance Company Defendant _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice Peter Michalyshyn _______________________________________________________ Introduction [ 1 ] The plaintiff Elden Doug Loree sustained injuries in an October 26, 1997 motor vehicle collision.

Some 9 years later, on August 19, 2006 Loree committed suicide. Between these dates Loree claimed against the Defendant for damages under an SEF 44 endorsement. The claim for damages had not been resolved before his passing. The parties are now unable to agree what rights Loree's Estate has, if any, under the SEF 44. For reasons which follow I agree with the Defendant that none of Loree's claims survive for the benefit of the Estate. Background

[ 2 ] Liability for the October 26, 1997 collision was determined at trial almost six years later before Lefsrud J. on August 19, 2003. The defendant in the collision was held 100% responsible. The filed Judgment states that "The Plaintiff, Doug Loree, is hereafter at leave to proceed to a trial on the issue of quantum." [ 3 ] Owing to the fact the original defendant was uninsured, Loree proceeded against the Administrator of the Motor Vehicle Accident Claims Act.

Almost two years after the liability trial Loree obtained partial judgment against the Administrator for $200,000 inclusive of judgment interest, plus costs. The partial judgment was filed July 15, 2005 and was funded on August 25, 2005. [ 4 ] Alleging a shortfall in injury damages, Loree continued his claim against his SEF 44 insurer, the Defendant in the application before me.

In fact that claim had issued on July 17, 1998 but was held in abeyance pending other liability and quantum determinations. [ 5 ] On August 26, 2005 Loree through counsel submitted a damages assessment to counsel for the SEF 44 insurer as follows:

a) General damages $150,000

b) Future loss of income $500,000

c) Past loss of income $83,673.56

d) Loss of housekeeping capacity $20,000

e) Housekeeping aides $4,000

f) Special damages and future cost of care $32,000 TOTAL $789,673.56 [ 6 ] Counsel's assessment of August 26, 2005 refers to a report from an expert occupational therapist and other medical information in support of his quantification. That said, it is clear the $789,673.56 value is counsel's own assessment, little more. Of that assessment, future loss of income is "estimated" at $500,000 based roughly on a mid-point of different scenarios set out in the occupational therapist's report.

The assessment states: "For the purpose of our assessment we would be prepared to accept $500,000 as a middle ground between these scenarios." [ 7 ] The assessment goes on to "estimate" past losses of income and other heads of damage. The assessment concludes with the comment: "In

summary, I am prepared to recommend the following compensation for Mr. Loree plus costs, file disbursements and interest, should we be able to negotiate a settlement at this stage." [ 8 ] Loree's counsel followed up the August 26, 2005 assessment in further correspondence dated November 25, 2005. At that time counsel suggested the parties should be taking steps to

schedule an arbitration under the SEF 44 endorsement. He also stated: "However, I would prefer to first hear from you with your client's proposed quantum assuming they are not inclined to accept our assessment." [ 9 ] A meeting between the parties and counsel was set up for December 19, 2005. The meeting accomplished nothing if only because no representative (other than counsel) of the Defendant attended. No counter offer was presented at that time by the Defendant .

[ 10 ] In a letter of February 1, 2006, counsel for the Defendant took issue with Loree's future loss of income assessment. Counsel suggested that while he awaited instructions, an arbitration might be necessary, or alternatively an examination of Loree to enable the Defendant to obtain further details of his claims. [ 11 ] In turn, counsel for Loree responded on March 17, 2006 seeking an update regarding the Defendant 's position regarding arbitration, and asking, alternatively, if the Defendant had an offer.

A further follow-up from Loree's counsel was sent June 9, 2006. [ 12 ] The last relevant correspondence before Loree's death was a July 19, 2006 letter from Defendant's counsel indicating he hoped to be back to Loree's counsel sometime in August, 2006. [ 13 ] At the end of the day, between August 26, 2005 and Loree's death on August 19, 2006 no agreement was reached and nothing was otherwise resolved regarding the value of Loree's claims against the Defendant. [ 14 ] After Loree's death, the Defendant declined to pay any claims under the SEF 44 endorsement.

Positions of the parties [ 15 ] The Defendant says that owing to Loree's death the Survival of Actions Act R.S.A. 2000 c. S-27 bars recovery for the heads of damage of general damages and future income losses. The parties agree that such heads are the only claims now being maintained against the SEF 44. [ 16 ] The Defendant agrees that as of the date of the motor vehicle collision in 1997, Loree's rights to claim under the SEF 44 endorsement crystallized. The Defendant disagrees however that the quantum of Loree's rights also crystallized at that time.

Rather, the Defendant says quantum must be determined as at the date of any agreement, arbitration or trial. And quantum must be determined " … in accordance with the law of the Province governing the [SEF 44] policy", that is to say, the Alberta law on bodily injury damages, including the Survival of Actions Act . [ 17 ] The Plaintiff says that long before Loree ’ s death, Loree's cause of action crystallized against the Defendant, both in terms of entitlement and quantum. The quantum is as assessed at $789,673.56, minus the $200,000 already received.

The claim is therefore no longer about heads of bodily injury damages. Instead, it is a claim for an "unliquidated debt". Counsel states in his brief: "Loree's claim against the Defendant is not a claim for pain and suffering or loss of earnings. It is a claim for money owed pursuant to a contract of insurance." [ 18 ] The plaintiff acknowledges that the quantum of the "debt" is subject to "adjustment and negotiation", but it is a debt nonetheless.

It is based on what the Plaintiff is "legally entitled to receive ” . [ 19 ] As to the Survival of Actions Act , the Plaintiff says the "debt" action survives as an "actual financial loss". The Plaintiff argues the later exclusions in the Act regarding bodily injury heads of damage do not apply. Analysis [ 20 ] The relevant statutory provisions are as follows:

Survival of Actions Act Recovery of damages 5(1) If a cause of action survives under

section 2, only those damages that resulted in actual financial loss to the deceased or the deceased's estate are recoverable.

(2) Without restricting the generality of subsection (1), the following are not recoverable: (

a) punitive or exemplary damages; (

b) damages for loss of expectation of life, pain and suffering, physical disfigurement or loss of amenities; (

c) damages in relation to future earnings, including damages for loss of earning capacity, ability to earn or chance of future earnings. (3) Subsection (2)(

c) applies only to causes of action that arise after the coming into force of this section. SEF 44 Endorsement 2. INSURING AGREEMENT In consideration of the premium charged and subject to the provisions hereof, it is understood and agreed that the Insurer shall indemnify each eligible claimant for the amount that such eligible claimant is legally entitled to recover from an inadequately insured motorist as compensatory damages in respect of bodily injury or death sustained by an insured person by accident arising out of the use or operation of an automobile. 5.

DETERMINATION OF THE AMOUNT AN ELIGIBLE CLAIMANT IS LEGALLY ENTITLED TO RECOVER a. The amount that an eligible claimant is legally entitled to recover shall be determined in accordance with the procedures set forth for determination of the issues of quantum and liability by the uninsured motorist coverage provisions of the policy. b.

In determining the amount an eligible claimant is legally entitled to recover from the inadequately insured motorist, issues of quantum shall be decided in accordance with the law of the province governing the policy and issues of liability shall be decided in accordance with the law of the place where the accident occurred. [ 21 ] There appears to be no disagreement that the cause of action for purposes of s. 5(1) of the Survival of Actions Act is a cause of action in contract.

[ 22 ] There is significant disagreement on how damages under that cause of action are to be determined, or quantified, and when. [ 23 ] In my view the cause of action in contract must be quantified by reference to injury heads of damage.

The SEF 44 endorsement refers to a claim for “ compensatory damages in respect of bodily injury... sustained by an insured person by accident arising out of the use or operation of an automobile. ” It provides that the Plaintiff is legally entitled to recover damages the quantum of which “ shall be decided in accordance with the law of the province governing the policy... ” [ 24 ] The leading case of Somersall v. Friedman 2002 SCC 59 confirms that SEF 44 claims for compensatory damages are to be quantified on the basis of bodily injury damages principles.

At paragraph 17 the court in Somersall states for example that the SEF 44's purpose is to provide coverage “ for injuries sustained by the insured ... in motor vehicle accidents ... to compensate the injuries suffered by the claimants. ” [ 25 ] The “ law of the province ” includes ss. 5(2) (

b) and (

c) of the Survival of Actions Act . On the death of a plaintiff, those provisions bar the heads of general damages and damages in relation to future earnings. [ 26 ] I agree with the Defendant that this case is about a straightforward application of these provisions of the Survival of Actions Act .

I also agree with the Defendant that while entitlement to claim such damages under the SEF 44 crystalized before Loree ’ s 2006 death, the quantum of the claim did not. [ 27 ] As to quantum, the Defendant did not seriously question that Loree had a claim for compensatory damages above and beyond the $200,000 paid by the Administrator. It was for Loree however to prove the balance of his claim according to law. Almost six years went by after the collision before even liability was decided. Another two years went by before Loree collected the Administrator ’ s $200,000.

Altogether it was almost eight years before the SEF 44 Defendant saw Loree ’ s first demand for compensatory damages. [ 28 ] As noted, that demand was clearly based on a conventional assessment of bodily injury damages including, most relevant to this application, significant claims under the heads of general damages and future earnings losses. [ 29 ] The Plaintiff suggested delay on the Defendant ’ s part during the year immediately preceding Loree ’ s death. The facts of what occurred during the year in question are set out above.

Without more, I am unable to find delay by the Defendant any more than I would find any lack of urgency by the Plaintiff during the same period of time, not to mention during the almost eight years it took the Plaintiff to quantify his claims for SEF 44 purposes. [ 30 ] What ’ s more, the difficult reality is that Loree is the author of the Estate ’ s misfortune in that he took his own life before the SEF 44 claim was resolved. The Defendant of course had nothing to do with that event.

Whether or not that there is a “ windfall ” has nothing to do with how I am required to apply the prevailing law to the facts. [ 31 ] Other than as mentioned above, nothing in Somersall particularly assists the Plaintiff. I am unable to agree that the Plaintiff ’ s cause is advanced by his reliance for example on Somersall at paragraph 30 , which states: 30. The question, therefore, is when the obligation to indemnify comes into being.

In my view, the answer must be that the insurer becomes obliged to make the payment the moment the claim of the insured against the tortfeasor comes into being, that is, at the time of the accident. At that moment, all the conditions set out in the SEF 44 will be satisfied; death or bodily injury has occurred, negligently caused by an inadequately insured motorist. In other words, all of the conditions to make out a claim in tort against the inadequately insured driver come into being at the moment of the accident.

The SEF 44 means to compensate the insured for the existence of such a claim against an inadequately insured driver. The obligation of the insurer, therefore, comes into being at the same time as the obligation of the tortfeasor to pay damages. [ 32 ] Again, I join the Defendant in reading this and other similar passages in Somersall as referring only to the entitlement to seek damages. It is the right to indemnity that crystallizes. Somersall does not say that any particular quantum of damages also crystallizes

or is frozen in time at any point retrospectively before the parties reach an agreement, or are bound by an arbitration or trial outcome. [ 33 ] Of course the quantification of damages has a retrospective element in that the claim arises from the date of the collision. But the claim is not entirely retrospective.

And again, it can be quantified only at the time the parties reach an agreement, or have gone to arbitration or trial, at which time the arbitrator or trial judge will determine quantum based on the evidence and prevailing law as it exists at the time of the agreement, arbitration or trial. [ 34 ] The authorities cited by the Defendant support this reading of Somersall : MacNeill v. Co-operators 2003 PEISCAD 9; Petrazzo v. State Farm Insurance Co. 2010 ONSC 3085 ; and Economical Mutual Insurance Co. v.

Lapalme 2010 NBCA 87 . [ 35 ] Turning again to paragraph 30 from Somersall, it is of some interest to note certain parallels as between the rights of plaintiff claiming against tortfeasors, and of plaintiffs claiming against SEF 44 insurers. Somersall notes for example that the right to indemnity from a tortfeasor arises at the time of the accident, just as it does against the SEF 44 (in the context of course of an inadequately-insured tortfeasor). Somersall does not say, and in my view, cannot be read to say, that the claimant in either context is relieved from proving damages, if necessary, at trial.

In neither context is the assessment of damages a done deal. If in the tort context, the claimant dies before settling or proving his claim at trial, clearly the Survival of Actions Act brings his claims for general damages and future earnings losses to an end.

I am not persuaded that anything in Somersall , or in any other authority for that matter, suggests any different outcome in the SEF 44 context. [ 36 ] The Plaintiff argues the claim of Loree ’ s estate is not affected by the Survival of Actions Act because it is not a claim for injury damages but rather is an “ unliquidated debt subject to adjustment and negotiation, but a debt nonetheless ” . Indeed, the Plaintiff appears to argue his claim had this quality even before his death.

In his Brief filed in support of this application the Plaintiff says that once liability was determined, in 2003, and the Administrator ’ s payment was made, in 2005, the SEF 44 became obliged to indemnify Loree “ for the shortfall as it existed at that time ” . The Plaintiff says the shortfall at that time was $587,673.56. “ From this point forward the claim was no longer a non-pecuniary damage claim but a contractual claim for insurance proceeds ... Loree ’ s claim against the Respondent is not a claim for pain and suffering or loss of earnings.

It is a claim for money owed pursuant to a contract of insurance. ” [ 37 ] I am unable to agree that Loree ’ s quantum became fixed in any sense at the moment the Administrator made a payment and a damages shortfall became likely although not yet proven. I am also unable to accept at face value frankly that this was Loree ’ s position at the time the shortfall became evident. The evidence before me suggests the contrary. The evidence is of an August 26, 2005 offer, requests for a counter-offer, failing which the parties were likely to have gone to arbitration, perhaps after questioning of the claimant.

Conceivably they may have gone to trial. All of this was consistent with the conventional handling of a claim for bodily injury damages albeit in the SEF 44 context. The attempt to characterize the claim as an “ unliquidated debt ” appears to have arisen only after Loree ’ s death in 2006 and, for the reasons stated, does not persuade me to that it is immune from application of the Survival of Actions Act . [ 38 ] The application is dismissed with costs to the Defendant. Heard on the 17 th day of May, 2013. Dated at the City of Edmonton, Alberta this 27 th day of May, 2013.

Peter Michalyshyn J.C.Q.B.A. Appearances: Craig MacKay Robinson LLP for the Plaintiff Bruce James Intact Insurance for the Defendant