AIG Insurance Co of Canada v Kostic, 2023 ABKB 702

Court of King’s Bench of Alberta Citation: AIG Insurance Co of Canada v Kostic, 2023 ABKB 702 Date: 20231208 Docket: 1701 06258 Registry: Calgary Between: AIG Insurance Co of Canada Applicant - and - Liliana Kostic Respondent _______________________________________________________ Reasons for Decision of the Honourable Justice Robert A. Graesser _______________________________________________________ Introduction [ 1 ] Liliana Kostic has applied for a Fiat to allow her to make an application to strike AIG Insurance Company of Canada’s (“AIG”) claim against her and for

summary judgment on her counterclaim. AIG argues that the Fiat request is frivolous and vexatious and neither proposed application should be allowed to proceed.

Background [ 2 ] This Decision comes out of the case management proceedings assigned to me by Order dated April 3, 2023. The Order covers a range of related lawsuits involving the Piikani Nation, Liliana Kostic, and Dale McMullen, amongst others.

I need not repeat much of the background, as it is covered in my recent decision in Kostic v Thom and Miller Thomson , 2023 ABKB 642 . [ 3 ] The Protocols for these case management proceedings require that a party make a formal request, with supporting materials, for permission to bring any application against or involving any other party in these case management proceedings or attempting to bring any other party into these proceedings. The proposed respondent has an opportunity to provide a brief response if they object to the proposed application or applications. [ 4 ] Ms.

Kostic wants to bring two applications against AIG and made a Fiat request on June 26, 2023, shortly before the first case management meeting I conducted in these matters. [ 5 ] American Home Assurance Company (“American Home” insured Raymond James Limited (“RJL”) under an errors and omissions policy (the “Policy”) during the period September 1, 2005 to December 2008. Ms. Kostic was an employee of RJL and was also covered by the Policy. Effective December 31, 2008, AIG assumed responsibility for all of American Home’s existing policies. [ 6 ] When RJL and Ms.

Kostic were sued by the Piikani Nation (the “Nation”) in 2006 in Action 0601 12086 (“Action 0601”) American Home appointed Jeff Thom of Miller Thomson LLP to defend the claims against RJL and Ms. Kostic. In 2013, Ms. Kostic had a falling out with Mr. Thom, and AIG agreed to replace him with Katerina Edgerton-McGhan and Scott Venturo Rudakoff LLP (“SVR”). SVR appears to have remained solicitors of record for both RJL and Ms. Kostic, but William Klym was also retained by AIG to represent Ms. Kostic’s interests. Shortly after that, Ms. Kostic sued Mr.

Thom and Miller Thomson for negligence in their handling of her defence. [ 7 ] In 2015, Ms. Kostic had AIG replace Mr. Klym with Gabor Zinner. In early 2017, Ms. Kostic fell out with SVR over their handling of the matter. AIG determined that Ms. Kostic was not cooperating with them in accordance with her obligations under the Policy, so they terminated coverage for her. SVR ceased to act for Ms. Kostic, and AIG stopped paying Mr. Zinner, or reimbursing Ms. Kostic for his costs. [ 8 ] Shortly after that, Ms.

Kostic sued SVG seeking damages against them for negligence in their defence of her. [ 9 ] AIG commenced this action in May 2017 seeking a Declaration that they had no further obligations to Ms. Kostic under the Policy, including defence obligations, and the ability to recoup defence costs incurred “as a direct result of her failure to cooperate in the defence of Action 0601.” [ 10 ] Ms.

Kostic defended the action and counterclaimed against AIG, seeking damages including legal defence costs and general damages for breach of AIG’s policy obligations to her. [ 11 ] In AIG Insurance Co of Canada v Kostic , 2018 ABQB 947 , ACJ Rooke considered Ms. Kostic’s application for

summary judgment relating to the termination of coverage, and AIG’s application for determination of certain issues before trial. ACJ Rooke answered five of AIG’s six questions and left determination of the sixth (an estoppel issue raised by Ms. Kostic) for the trial. No

summary trial was ordered. [ 12 ] Ms. Kostic then brought an application before the case management judge for relief against forfeiture of her benefits under the Policy. That was argued at case management meetings on June 27, 2019 and August 28, 2019. I do not see that a decision was made, although the August 28, 2019 transcripts shows that ACJ Rooke was leaning against making any interim orders. [ 13 ] On October 8, 2020, Ms. Kostic applied for an order preserving the limitation period on her counterclaim against AIG.

ACJ Rooke granted an order stating: Th i s in t erim o r der is granted stay i ng the runni ng of time under Rules 4 . 31, 4 . 33(1) pursuant to Rules 4.14, 4 . 33(2)(a) 4 . 33(9) pending a subsequent de t erminat i on o f whether this Interim Order should have been granted. [ 14 ] This Fiat application appears to go back to a case management conference on July 28, 2021. There was a discussion about whether the matter should be dealt with (on the merits) by

summary trial or

summary judgment. Mr. Picco advised he would seek instructions on that. Ms. Kostic also said “new evidence has come forward. I can now move for

summary judgment and I can also move to strike for no cause of action under 362 to Rule 3.65 and for abuser of process.” Ms. Kostic advised that she would likely need to file an amended affidavit of records. [ 15 ] ACJ Rooke enquired about deadlines for materials. Ms. Kostic was to seek Mr. Picco’s consent to the filing of amended pleadings by September 30. She was also to file her “proposed application to strike and/or for

summary judgment” by September 30. Mr. Picco agreed to an extension of time for the filing, and eventually Ms. Kostic filed materials with ACJ Rooke on November 4, 2021. The draft Notice of Application submitted by Ms. Kostic sought a

summary trial. No materials appear to have been filed regarding an application to strike. [ 16 ] ACJ Rooke responded on November 4, stating that he was not clear exactly what Ms. Kostic was asking him for, and he told her to make a Fiat application, which was the protocol adopted by him for interlocutory proceedings. [ 17 ] I have seen nothing on ACJ Rooke’s case management file or on the Court file indicating that anything more was done by Ms. Kostic to pursue these issues.

I have no way of knowing whether I have had access to all of the materials sent to ACJ Rooke that may not have been filed by either of the parties on the Court file. [ 18 ] ACJ Rooke retired in late 2022. Before he did so, he transferred these case management matters to Justice De Wit (as he then

was) by an order dated September 16, 2022. Ms. Kostic and her limited retainer counsel Gabor Zinner were involved in the transfer process and were aware that Justice De Wit would be assuming case management of this and other matters. [ 19 ] I have seen nothing in Justice De Wit’s case management file or on the Court file relating specifically to this lawsuit.

Again, I have no way of knowing whether I have had access to all of the materials sent to Justice De Wit that may have not filed by either of the parties on the Court file. [ 20 ] In the brief time Justice De Wit had case management of these matters, it appears that most of his time was spent dealing with applications by Chief Gayle Strikes With A Gun to allow her and others to become involved in Action 0601. [ 21 ] I assumed case management by direction of Acting Associate Chief Jeffrey dated April 4, 2023. [ 22 ] Mr. Zinner wrote me on May 15, 2023 concerning “Piikani Related Case Managed Actions”.

No mention was made of the AIG action. [ 23 ] I arranged for a case management meeting to take place on June 21, 2023. [ 24 ] Mr. Zinner wrote to me on June 19 in anticipation of the case management meeting, advising that Ms. Kostic was seeking a date to

schedule the hearing of her application to dismiss AIG’s action under r 4.33, as well as for the setting of a litigation plan for adjudicating her claim under her counterclaim. [ 25 ] On June 20, Dennis Picco from Dentons LLP wrote me on behalf of AIG. He advised that Ms. Kostic had not taken the steps directed by ACJ Rooke on February 4, 2022, and that it would be premature to do anything until Ms. Kostic had done so. Mr. Picco was unable to attend the case management meeting, so issues involving this lawsuit were not dealt with other than a brief discussion about Ms. Kostic’s pending applications and Mr.

Picco’s June 20 response. [ 26 ] On June 29, Ms. Kostic provided her Fiat request, with 278 pages of attachments. [ 27 ] Mr. Picco provided his response on September 29, following a case management meeting on September 7. [ 28 ] Ms. Kostic complained to me about the length of Mr. Picco’s response and that it was longer than permitted under the Fiat Protocol adopted by ACJ Rooke. That may be the case, but at this stage, additional materials (including the 278 pages of material provided by Ms.

Kostic in connection with her request) have been helpful to me in being able to better understand the background and context of her request. [ 29 ] I will clarify my expectations for any further applications at the next case management meeting I have with the parties. Issues 1. Should a Fiat be given to allow Ms. Kostic to proceed with an application to strike AIG’s claim; and 2. Should a Fiat be given to allow Ms. Kostic to proceed with an application for

summary trial? Positions [ 30 ] Ms. Kostic argues that AIG has essentially done nothing to advance its claim since she filed her statement of defence and counterclaim in 2017. She says that she is the one that has been trying to move things forward as she is keen to have her counterclaim adjudicated in some fashion. [ 31 ] Mr. Picco submits that

summary trial or

summary judgment would not be appropriate for this case, as it is too complex and there are contested facts that will require testimony and cross-examination. He also notes that some of the relief sought by Ms. Kostic in her draft notice of application is contrary to unappealed rulings from ACJ Rooke during case management. He did not specifically address r 2.31 and r 2.33 issues. Analysis 1. Application to strike for delay [ 32 ] There are a number of possible issues here.

It is certainly arguable that AIG itself has taken no steps in the lawsuit for the past three years that has advanced their claims against Ms. Kostic. However, success for Ms. Kostic would depend on whether the claim by AIG against her is severable from Ms. Kostic’s counterclaim. I am not aware of any cases in Alberta where a plaintiff’s claim has been struck for delay, but the defendant’s counterclaim has been allowed to succeed. I am doubtful that such a claim could succeed.

The two actions are joined, and a step in one is something that moves the whole action towards trial. [ 33 ] Second, it is arguable that the wording of ACJ Rooke’s order of October 8, 2020 that time stopped running against both parties. While it was Ms. Kostic who made the application, the Order does not distinguish between her counterclaim and AIG’s claim. I am doubtful that the Order would be interpreted as applying only to Ms. Kostic’s counterclaim. [ 34 ] Third, the matter was in a case management meeting in July 2021. Ongoing process for the entire lawsuit was discussed. Ms.

Kostic was directed to provide materials by the end of September, 2021. She required an extension in time, and her materials were eventually filed in November. ACJ Rooke rejected them and instructed Ms. Kostic to submit a Fiat request. While it would not have been unreasonable for AIG to press on with further steps itself, it was also not unreasonable for them to wait until she brought the application for

summary trial or

summary judgment herself. The parties had discussed during case management the most appropriate way of proceeding with the action. [ 35 ] Fourth, while being in case management does not by itself take the parties out of Rules 4.31 and 4.33, it is not the case management judge’s role to keep an eye on the clock. The “new” Rules of Court are premised on party control and management. Case management generally operates on an as-requested or as-needed basis as determined by the parties. [ 36 ] Here Ms. Kostic submits that she waited for ACJ Rooke to

schedule this application from October 2020. That did not happen before his retirement. I do not have any information to suggest that Ms. Kostic raised the matter with Justice De Wit during his brief case management of the matter, but it was clearly raised before me in June 2023. [ 37 ] I think there is a strong argument that neither party should be charged by any delays that occur through the case management process, or the lack of available time for the case management judge to deal with something.

There was undoubtedly delay in that regard arising from the transition of case management from ACJ Rooke to Justice De Wit and then to me. [ 38 ] All of these factors make a striking for delay application highly unlikely to succeed. [ 39 ] The reality, however, is that there is no point to a striking application here. There are no limitation periods at play for at least the main part of AIG’s claim. AIG seeks a declaration that it no longer has a duty to defend or indemnify Ms. Kostic. Ms. Kostic’s counterclaim seeks a declaration that they have continuing obligations under the Policy.

Striking their application for a declaration does not automatically mean that Ms. Kostic “wins” and that AIG would be unable to defend against her counterclaim. As well, striking the AIG claim does not mean that Ms. Kostic does not have to prove her damages or that AIG could not defend against her damage claim. [ 40 ] If for some reason the AIG claim was struck for delay, they do not lose any ability to maintain the positions they are taking. If necessary, they could abandon this lawsuit and start a new one seeking a declaration as to their obligations.

The recovery of monies paid out by them might face a limitations argument but not the main thrust of their position is a live issue until that last of the potentially insured claims against Ms. Kostic have been finally determined. [ 41 ] At worst for AIG, they might have to pay some thrown away costs if this action was struck and they had to start a fresh action. [ 42 ] My conclusion on Ms. Kostic’s Fiat request for this application is that it should be denied as it would be a futile process even if Ms. Kostic were to succeed.

The same issues as in this action still need to be litigated and determined. [ 43 ] Additionally, I doubt that the application has any reasonable chance of success for the reasons expressed above. [ 44 ] Any such application would simply add further cost to this process, and more importantly delay this action’s progress (including progress on Ms. Kostic’s counterclaim) until the application is heard, decided, and any appeals from that decision were completed. [ 45 ] The focus should be on getting the issues decided on the merits as expeditiously as reasonably possible. 2.

Summary trial or

summary judgment [ 46 ] Ms. Kostic has a certain belief that she will successfully defend against AIG’s claims and that she will recover a large damage award from them. She may ultimately be right. But I do not see that there is any benefit to either party by trying to have this matter determined by way of

summary trial or

summary judgment. [ 47 ] Those processes are aimed to be conducted differently than a trial. The expectation is that there will be no, or little, oral evidence. The parties’ testimony would be presented by way of affidavits. The parties would have an opportunity to provide a responding affidavit to deal with anything raised by their opponent in their affidavits. The number of affidavits or witnesses would be limited. Affiants would be cross-examined before trial and in the absence of the trial judge.

At the hearing itself, the parties would rely on their affidavits and the transcripts of their cross-examinations of the other party’s witnesses. Sometimes brief cross-examinations are permitted, and the affiant might have a chance to present brief re-examination. [ 48 ]

Summary processes are generally not suitable when there are significant credibility and reliability issues that cannot be well tested by affidavits and cross-examination transcripts. It is clear from the materials filed that credibility issues will be at the fore of any trial. There are significant factual issues that can only be addressed through oral testimony and cross-examination as the parties agree on very little concerning the reasons for Ms. Kostic falling out with SVR and the termination by AIG of their policy obligations because of Ms. Kostic’s alleged failure to cooperate with counsel.

These are factual issues. [ 49 ] Beyond determining liability matters, I cannot see a damage assessment involving general damages claims being dealt with other than through the ordinary trial process. In any event, I see no time savings that might be accomplished by trying to fashion a

summary process. [ 50 ]

Summary trials and

summary judgment processes do not always conclude with a final result. If the judge hearing the matter concludes that there is insufficient evidence for them to make a fair determination, the matter might then have to go to a full trial. [ 51 ] It is certainly possible for the parties to streamline a conventional trial by making agreements along the way, or perhaps hiving off a legal issue to be determined in advance of trial, but those are issues that should be discussed in case management and not by way of a formal application.

[ 52 ] Ultimately, I agree with Mr. Picco’s submission that this matter is not appropriate for a

summary determination, especially Ms. Kostic’s counterclaim to the extent that it covers general damages and not just out of pocket expenses. Conclusion [ 53 ] I decline to grant a Fiat for either of these applications. My conclusion is that a

summary dismissal application would be very unlikely to succeed, and in any event, it would be a waste of time. [ 54 ]

Summary proceedings are not appropriate for this litigation at this time. [ 55 ] If the parties cannot work out a litigation plan between themselves, they should return to case management to have me assist them with one. [ 56 ] Additionally, I am considering a process to address the assessment of Ms. Kostic’s damages. She has related damage claims against the Nation, Mr. Thom and Miller Thomson LLP, SVA, Bridgefield Financial Services Inc, and AIG. [ 57 ] If Ms.

Kostic is entitled to damages against more than one of these defendants, there will be complicated issues in determining which defendant or defendants are liable for what portion or portions of Ms. Kostic’s damages. [ 58 ] I hope to reach out to all of the parties involved in this case management to discuss a process or processes to assess Ms. Kostic’s damages and the timing of the same. Costs [ 59 ] The practice adopted for these Fiat requests is that costs are generally not awarded to either party. I see no reason here to depart from that practice and accordingly no costs are awarded to AIG.

Heard by way of written submissions. Dated at the City of Calgary, Alberta this 8 th day of December, 2023. Robert A. Graesser J.C.K.B.A. Appearances: Liliana Kostic, Self-Represented Litigant for the Applicant Dennis Picco K.C., Dentons LLP for the Respondent