Fuellbrandt v Bukley Valley Insurance Date:, 2014 BCPC 350

Citation: Fuellbrandt v Bukley Valley Insurance Date: 20141014 2014 BCPC 0350 File No: 16689 Registry: Smithers IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: ANDRE FUELLBRANDT CLAIMANT AND: BULKLEY VALLEY INSURANCE SERVICES AND CHRISTINE EZINGA DEFENDANTS REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE W. F. M. JACKSON Counsel for the Claimant: G. Greene Counsel for the Defendant: M. Schuster Place of Hearing: Smithers , B.C. Date of Hearing: October 2 and 3, 2014 Date of Judgment: October 14, 2014 Issues

[ 1 ] What is the standard of care required of the defendants regarding advice to their client, the claimant, about possible gaps in insurance coverage? Second, on the facts was that standard of care met? Evidence [ 2 ] Mr. Fuellbrandt testified that he had insured his house on Yelich Road since 2005 with the corporate defendant.

It was renewed automatically and paid for with pre-authorized monthly withdrawals from his bank account. [ 3 ] In cross-examination he agreed that he received notice of the annual automatic renewal by letter including exhibit 2 tab 3 which is dated July 28 th , 2012. [ 4 ] The claimant testified that in the summer of 2012 he became engaged to Theresa Fuellbrandt (former Schmidt) and they purchased a house together on Morris Road with a possession date of November 29 th , 2012. They were married on November 3 rd , 2012. [ 5 ] Mr.

Fuellbrandt also testified that he had contracted to sell his house on Yelich Road with a possession date of March 27 th , 2013. [ 6 ] The claimant testified that in January 2013 a faucet failed in the Yelich house causing water damage in the amount of $12,395.06 (Exhibit 1 tabs 3 and 4). He made a claim on his house insurance and was denied coverage by the insurer Peace Hills. He sued Peace Hills but the claim was dismissed on the basis that his policy did not cover vacant possession. [ 7 ] Mr.

Fuellbrandt testified that he spoke to the defendant Ezinga who was an employee of the corporate defendant to obtain a quote for house insurance on the new home being purchased on Morris Road. He stated that he had told her that he and Theresa were married, had bought the new house and that he was selling the Yelich house. [ 8 ] The claimant testified that after finding cheaper insurance with the Royal Bank of Canada he telephoned Ms. Ezinga and advised her that they were not buying the insurance on the Morris Road house from her. [ 9 ] Mr.

Fuellbrandt testified that he was not advised by the defendant Ezinga that he needed to purchase extra coverage for the Yelich house for the period that he owned it but was not living in it. [ 10 ] The claimant testified that after the loss in January and the denial of coverage by Peace Hills he purchased the extra vacant possession coverage from the corporate defendant for a premium of approximately $400.00.

He added that if he had known he needed the extra coverage he would have paid the $400.00 to protect an asset worth approximately $325,000.00. [ 11 ] In examination in chief he testified that he did not receive the email from the defendant Ezinga dated November 27 th , 2012 (Exhibit 2 tab 6). [ 12 ] In cross-examination Mr. Fuellbrandt stated that he had not fully moved out of the Yelich house, that he still spent some time there, and looked after the house. He added that he was also living in the Morris Road house with his wife.

He continued that he was slowly moving his things from the Yelich House to the Morris house but there was no

schedule for completion of the move. [ 13 ] In cross-examination he testified that the letter (exhibit 2 tab 3) was a renewal and he did not understand that it applied to a sale. [ 14 ] In cross-examination the claimant testified that if he was certain that the Yelich house was considered vacant that he might need more insurance coverage but that he expected his insurance broker to advise him if the Yelich house was considered vacant. [ 15 ] In cross-examination, Mr. Fuellbrandt was unclear as to the date of his conversation with the defendant Ezinga, how many times he spoke with her or where he spoke to her.

He explained that the marriage, two house transactions, and regular work made this the most hectic time in his life. [ 16 ] In cross-examination, the claimant did not remember the email from the defendant Ezinga (Exhibit 2 tab 6). At one point he said that he never saw the email. However, he did admit that he had received the quote for insurance on the Morris Road house that is referred to as attached in Exhibit 2 tab 6. [ 17 ] Theresa Fuellbrandt testified that she had a house of her own prior to her marriage to the claimant on November 3 rd , 2012.

After a two week honeymoon, they together had met with the defendant Ezinga at the offices of the corporate defendant to obtain a quote for insurance on the Morris Road house. [ 18 ] Ms. Fuellbrandt testified that she already had insurance through the defendants on her pre-existing house on Alfred Avenue and at the same time as obtaining the new quote was considering the cancellation of her insurance on the Alfred Avenue house. [ 19 ] Ms. Fuellbrandt testified that after obtaining a quote from the defendant Ezinger they had compared quotes and obtained the insurance elsewhere. [ 20 ] Ms.

Fuellbrandt remembered no discussion in her presence with the defendant Ezinga about the insurance on the Yelich house. [ 21 ] The defendant Ezinga testified that she has been an insurance broker for nine years and is a level two of three broker. She added that she only knew that the Fuellbrandts had married when she received the Binder of Insurance from the lawyers handling the purchase of the Morris Road house. That occurred late on November 26 th , 2012 (Exhibit 2 tab 1). The email from the conveyancing law firm required proof of coverage for the mortgagee by November 29 th , 2012. [ 22 ] Ms.

Ezinga testified that Ms. Fuellbrandt was her regular client but that another broker of the corporate defendant named Dawn

MacKay usually handled the claimant’s file. [ 23 ] Ms. Ezinga testified that as she had no information on the Morris house she needed to contact the Fuellbrandts to obtain that information which was necessary to determine what insurance was needed and the premium. [ 24 ] Ms.

Ezinga testified that the boldface portions of the renewal letter and checklist (Exhibit 2 tab 3) are to alert clients that they may have to change their coverage if certain changes have occurred. [ 25 ] The checklist notes that things such as business equipment, animals, daycare on premises, and child at college, tractor or vacant land / property may require new or increased coverage. Above that bold faced warning is a list of questions to “help us assess your home insurance needs.” There are nineteen questions.

Examples of which are, “I conduct a business from my home, I rent out or share part of my residence with a roommate or boarder, I act as a volunteer director of a non-profit organization, I have added to the contents of my home, etc.” [ 26 ] Ms. Ezinga testified that the actual insurance policy is sent out with a new policy but not on renewals. [ 27 ] Ms. Ezinga testified that she had emailed the draft quote along with the email sent to the claimant on November 27 th (Exhibit 2 tab 6). She indicated that Mr.

Fuellbrandt telephoned her the next day to advise that they were obtaining the insurance for the Morris Road house elsewhere. [ 28 ] Ms. Ezinga testified that she made notes on the corporate defendant’s computer records of that conversation at 4:44 p.m. which are reflected in Exhibit 2 tab 9. [ 29 ] She testified that page two of Exhibit 2 tab 9 is a note she completed at 4:45 p.m. on Teresa Schmidt’s electronic file which reads as follows “spoke to Andre, req that they keep us updated to the occupancy of their homes since they have purchased a new home.” [ 30 ] Ms.

Ezinga testified that on November 28 th , 2012 at 4:43 p.m. she emailed a memorandum to her co-worker Dawn Mackay indicating that Mr. Fuellbrandt had obtained insurance for the Morris Road house with RBC. The note also indicated that “I requested that Andre keep us apprised of the occupancy of his home.” [ 31 ] Ms. Ezinga testified that when the claimant advised that he might be selling his Yelich house and that he was buying the Morris Road house, “all the bells and whistles went off for her” as there might be gaps in one or the other of the two houses as both were based on owner occupancy. [ 32 ] Ms.

Ezinga repeated the phrase that the bells and whistles went off when Mr. Fuellbrandt telephoned and said he was purchasing RBC insurance on the Morris Road house and at that time she told him that there were exclusions in his insurance if there was a vacancy. She continued by stating that Mr. Fuellbrandt was vague as to when he would be moving out of the Yelich house and into the Morris Road house. She indicated that the claimant had said that he would be moving over time as there was no rush to move into the Morris Road house. She concluded that there was no doubt in her mind that she told Mr.

Fuellbrandt that a vacant house loses coverage for sewers and vandalism as it is her routine to explain that. [ 33 ] Ms. Ezinga testified that she had no further contact with Mr. Fuellbrandt. [ 34 ] In cross-examination, Ms. Ezinga admitted that she knew that both Mr. and Ms. Fuellbrandt were long-term clients of the corporate defendant. She did not know the date that Teresa Fuellbrandt’s policy on the Alfred Street house was cancelled.

She also indicated that she did not advise Theresa Fuellbrandt about possible gaps in her insurance on the Alfred Street house if that house became vacant as the object on November 27 th was to obtain insurance for the Morris Road house. [ 35 ] In cross-examination, Ms. Ezinga admitted that the quote on the Morris Road house was given on the basis of owner occupancy.

However, she denied that automatically meant that the earlier Yelich home was vacant because she believed that underwriters defined owner occupancy to be the owner eating sleeping in the house three or four days per week. [ 36 ] Later in cross-examination, Ms. Ezinga admitted that she knew that Mr. Fuellbrandt would be partially living in both houses. Later in cross-examination she indicated that she had told Mr. Fuellbrandt that if he lived in a house three or four days per week that that was occupancy. [ 37 ] In cross-examination, Ms. Ezinga admitted that she did not have a clear answer from Mr.

Fuellbrandt on when he was moving out. She also indicated that she advised Dawn MacKay that Mr. Fuellbrandt was to advise about occupancy but had no idea if that was followed up. Analysis [ 38 ] That there is a duty of care owed by insurance agents and brokers towards their clients is not in issue. Accordingly, the defendants owed such a duty of care to their client, the claimant. [ 39 ] On the evidence of Ms. Ezinga during her conversations with Mr. Fuellbrandt on November 27 th and 28 th , 2012 the defendants knew several things:

a) The first was that he and another longtime client Teresa Fuellbrandt each had insurance on two homes based on owner occupancy.

b) The second was that the two clients were buying a third house and obtaining quotes for insurance on the new house based on

owner occupancy.

c) The third is that at some time between the possession date of the Morris house, November 29 th , 2012 and the possession date of the Yelich house, March 27 th , 2013, Mr. Fuellbrandt would be changing residences.

d) Fourth, that “bells and whistles went off in Ms. Ezinga’s mind that there was a potential gap in insurance coverage on the Yelich house if Mr. Fuellbrandt changed occupancy from the Yelich house to the Morris Road house. [ 40 ] There is a dispute in the evidence on what Ms. Ezinga told Mr. Fuellbrandt about this potential gap in coverage. He grudgingly admitted to receiving the form letter enquiry about changes in circumstances in July 2012. I find it more likely than not that he did receive that letter.

However, I find the letter was neither clear on what vacancy/occupancy meant nor would it have turned his mind to the risk of gaps in coverage created by his change of residences four months later. [ 41 ] Ms. Ezinga also testified that she told Mr. Fuellbrandt that a change in occupancy of the Yelich house would cause a gap in his insurance as it was based on owner occupancy. Mr. Fuellbrandt strongly denied receipt of such a warning. [ 42 ] Ms. Ezinga relied in part to her enquiry about the “intended occupancy of the homes” in her email to Mr. Ezinga dated November 27 th , 2012.

As the draft quotes for the Morris Road house are attached to the email and were received by Mr. Fuellbrandt, I am satisfied on the balance of probabilities that he did receive the email. [ 43 ] However, the enquiry about the timing of the move into the Morris Road location is ambiguous as it would not clearly warn Mr. Fuellbrandt of the risk of a gap in insurance on the Yelich property as it can be read as an enquiry about when the owner-occupancy coverage will be effective on the Morris Road property. [ 44 ] The onus is on the claimant to prove his case on the balance of probabilities.

On the issue of whether Ms. Ezinga advised him that there was a risk of a gap in coverage if occupancy or a vacancy occurred in the Yelich house, I find that she did advise of it in those words. [ 45 ] However, that is not the end of the matter. The issue remains whether the warning that a change in occupancy to a vacancy without more detail meets the standard of care required of the defendants.

I find that it does not for the following reasons. [ 46 ] Fletcher v Manitoba Public Insurance [1990] S.C.R. 191 imposes a “stringent duty to provide both information and advice to their customers” on private agents and brokers (paragraph 57). At paragraph 58 that case explains the underlying reason which is to allow the client to have all relevant information to assess risk. [ 47 ] In the case at hand, the only indication that Ms. Ezinga told Mr. Fuellbrandt that vacancy was less than three or four nights per week occurred in cross-examination.

It is not reflected in any of the defendants’ correspondence or internal memoranda. A detailed warning is inconsistent with Ms. Ezinga’s admitted lack of any warning to Teresa Fuellbrandt about the risks of vacant possession on her Alfred Street house. That supposed detailed warning is also not consistent with the claimant’s actions after November 29 th , 2012. Accordingly, I accept the claimant’s evidence that he was given no details on what constituted vacancy or a change in occupancy. [ 48 ] Mr.

Fuellbrandt knew there was a potential risk of a gap in coverage if the Yelich Road house was vacant but had not received advice on what facts would constitute a vacancy. The defendants were aware of what would constitute a vacancy and the “bells and whistles” went off. However, they did not communicate that information to the claimant. [ 49 ] Similarly, the defendants although they knew that Mr. Fuellbrandt was moving from the Yelich house to the Morris house between November 29 th , 2012 and March 27 th , 2013 did nothing to follow up on whether he was still in occupancy of the Yelich house. [ 50 ] When Mr.

Fuellbrandt became aware of the gap in coverage after the denial of his claim by Peace Hills he immediately approached the corporate defendant and purchased the proper vacant possession insurance. That is only consistent with an informed if belated assessment of risk. [ 51 ] Gerber v Eagle Star Insurance [1981] B.C.J. 674 confirms the ongoing duty of the insured to disclose changes to the insurer that might affect the risk and create gaps in the coverage.

I find here that the claimant had disclosed the potential change to vacancy to the broker defendants when he indicated that he would be moving from the insured Yelich property to the Morris property gradually between November 29 th , 2012 and March 27 th 2013. [ 52 ] It was also submitted that the renewal letter of July 28 th , 2012 would have clearly brought home to the claimant the need to advise of “any changes (checklist on the reverse)”.

I do not find the 28 items listed that “may” not be covered combined with the 19 more detailed questions on the checklist provide any “clear” advice as to what triggers a vacancy. There is no issue that the claimant suffered a loss from water damage in the amount of $12,295.06 in January 2013 and that he was denied coverage by Peace Hills on the basis that he was in vacant possession not owner occupancy. Indeed, the corporate defendant sold him vacant possession insurance after the loss. Decision

[ 53 ] The claimant shall have judgment in the amount of $12,581.06 which includes costs. ________________________ W. F. M. Jackson Provincial Court Judge