Hello friends, in this post, we are going to talk about “Can The Insurer Be The Plaintiff Or The Defendant:” When an insurer denies coverage to its insured and the insured chooses not to contest the denial, does this imply that other involved parties cannot challenge the denial of coverage?
Adding the Denying Insurer to the Action
Can a co-defendant, particularly an uninsured carrier in the context of a motor vehicle accident (MVA), or the plaintiff add the denying insurer to the action to test the validity of the denial?
Historically, the answer to this question seemed to be “no.” Without a direct contractual relationship (privity of contract) between the denying insurer and the other parties involved, the insurer appeared to have a valid legal reason to refuse inclusion.
Can The Insurer Be The Plaintiff Or The Defendant: However, the recent decision by Master Roger in the case of Williams v. Pintar challenges these assumptions.
Case Study: Williams v. Pintar
In this case, Zdenko Pintar was the defendant in an action resulting from a motor vehicle accident. His automobile insurer, Jevco, denied coverage and became a statutory third party. Pintar did not defend himself and was noted in default.
Concerned about ending up with an unenforceable judgment against Pintar, the plaintiff successfully moved to have Jevco added as a defendant, seeking a declaration that coverage was available for Pintar.
Normal Procedure vs. Recent Developments
Traditionally, the plaintiff would obtain a judgment against the uninsured defendant and then commence an application against the defendant’s insurer under section 258.1 (for automobile insurance) or section 132 (for other types of insurance) of the Insurance Act to have the insurer pay the unrecoverable judgment. During this process, the insurer’s coverage defense would be tested.
Jevco’s principal argument against being added as a defendant was that an insurer is not a proper defendant until judgment is obtained against its insured.
While Master Roger partially agreed with Jevco’s argument, he ultimately found that the court had broad jurisdiction to grant declaratory relief. Citing the Supreme Court of Canada in Canada v. Solosky, he stated:
“Declaratory relief is a remedy neither constrained by form nor bounded by substantive content, which avails persons sharing a legal relationship, in respect of which a ‘real issue’ concerning the relative interests of each has been raised and falls to be determined.”
The court found that the proposed amendment disclosed a tenable form of declaratory relief.
Efficiency and Judicial Resources
This decision suggests a more efficient way of resolving coverage issues, as there is no reason why the coverage issue cannot be litigated simultaneously with the underlying action when the problems related to the main action are being considered.
Addressing this at an early stage also ensures that an insurer’s denial can be tested by other parties to the litigation, particularly in cases where the insured may not have the financial means to retain counsel and contest the denial of coverage.
This approach also conserves judicial resources by combining the initial trial and the Section 132 application into one trial.
Implications and Questions
Can The Insurer Be The Plaintiff Or The Defendant: While this decision provides guidance, it also raises several questions. How can these issues, if tried together, be presented in a jury trial?
Bifurcation may be needed to separate the coverage issues from those of liability and damages, though this might undermine the efficiency emphasized by Master Roger.
Additionally, one wonders if Jevco would have been in a better position to contest the amendment if it had not added itself as a statutory third party. The effectiveness of this decision may be undermined if the proposed defendant was not already part of the action.
It is also unclear if a co-defendant could rely on the Williams decision to add an insurer to an action where the insurer was not already present as a statutory third party, though the door seems to be opening.
There is no word yet on whether Jevco plans to appeal, but we will continue to monitor developments.
FAQs: Can The Insurer Be The Plaintiff Or The Defendant
1. What happens if an insurer denies coverage and the insured does not contest the denial?
When an insurer denies coverage and the insured chooses not to contest the denial, it might seem that other involved parties cannot challenge the denial. However, recent legal decisions suggest that co-defendants or plaintiffs may still have options to contest the denial.
2. What is the significance of the Williams v. Pintar case?
In Williams v. Pintar, the court allowed the plaintiff to add the insurer, Jevco, as a defendant to seek a declaration of coverage. This decision challenges the traditional view that insurers cannot be added to an action without direct privity of contract with other parties.
3. What was Jevco’s main argument against being added as a defendant?
Jevco argued that an insurer is not a proper defendant until a judgment is obtained against its insured. Despite partially agreeing with this argument, the court ultimately found that it had broad jurisdiction to grant declaratory relief.
4. How does the court’s decision affect the resolution of coverage issues?
The court’s decision allows coverage issues to be litigated simultaneously with the underlying action. This approach can be more efficient and ensures that an insurer’s denial of coverage can be tested early in the process, saving judicial resources and potentially preventing multiple trials.
5. What are the potential challenges of presenting coverage issues in a jury trial?
Presenting coverage issues alongside liability and damages in a jury trial can be complex. Bifurcation, or separating these issues, might be necessary to ensure clarity, though this could reduce the efficiency highlighted by the court.
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