Law Times

Page 10 OctOber 19, 2015 • Law times www.lawtimesnews.com FOCUS Parker v. Dirar and Mahmoud Opportunity for pretrial determination of coverage disappears BY MARG. BRUINEMAN For Law Times recent decision has closed the door on plaintiffs seeking to find out before trial whether a defendant has insur- ance coverage. Rory Parker and his girl- friend suffered serious injuries in 2011 when the motorcycle he was riding collided with a mini- van that made a left turn across his path. Aboubeida Dirar was driving Salih Mahmoud's mini- van. Both men had insurance through State Farm Mutual Au- tomobile Insurance Co. Parker sought a motion for a determination from the court prior to trial whether State Farm, as the insurer for Mahmoud and Dirar, must re- spond to the plaintiff 's claim. State Farm's position was that only Mahmoud's policy had to respond to the claims in both actions because the two men lived in the same household and were in an employee- employer relationship, thus excluding the other policy. Parker's lawyer, John Lun- drigan, a partner at Nelligan O'Brien Payne LLP, brought the motion to determine the applicable policies at play because there were two ac- tions arising from the same accident: one by Parker and a second by his passenger. The total claims and dam- ages sustained by the plain- tiffs in both actions exceeded Mahmoud's coverage with $300,000 in auto liability lim- its and a $1-million personal umbrella policy. The driver, Dirar, also owned a car insured by State Farm under a different policy with a $1-million limit. "It's a very important issue to determine how much insurance is available," says Lundrigan. "I think this is a wrongly de- cided case. The decision forces parties to go to trial. And I don't know that it's the best use of judicial resources in this case." Dirar, who had arrived from Africa earlier that year, had been delivering pizza for Mahmoud's pizza busi- ness and was living with him temporarily so he could save enough money to send for his family. Lundrigan says they both described themselves as working for themselves, but State Farm wouldn't accept that as fact. Stacey Hsu, who was part of the defence team from Re- isler Franklin LLP in Parker v. Dirar and Mahmoud, says the case serves as a useful precedent because it confirms that plaintiffs have no stand- ing in coverage issues until af- ter they receive a judgment. "Until that happens, they have no standing on coverage determination," she says. "The reason why plaintiffs' counsel want to know early is because they want to know what they can get, what the total pot is." Parker closes the door on that strategy, leaving no hint of what might be available for plaintiffs. That, says Lund- rigan, leaves no opportunity for negotiation, meaning plaintiffs in that type of situation will end up going to trial. Justice Douglas Rutherford said in the March decision that the question could only be one of law rather than a mix of fact and law. "To begin with, I think the determinations sought here involve at best, questions of mixed fact and law," he wrote. Rutherford also gave specific guidance on the Rules of Civil Procedure and Rule 21 on pre- trial determination. "Without Rule 21, the whole basis of their motion was moot," says Hsu. And, she adds, the decision advances the law beyond Wil- liams v. Pintar on the question of whether the insurer was a statutory third party. In Wil- liams, the insurer was already a party to the proceedings as a statutory third party. Parker demonstrates a broad applica- tion to include non-statutory third parties. Grant Walsh, whose practice focuses on insurance defence litigation at Brown & Burnes, says Parker does clarify the law and agrees plaintiffs may not welcome it as they won't have a means of measuring before- hand what they can settle for. The concern raised in Parker by the plaintiffs was that they might succeed at trial and only later discover there's no cover- age. "The plaintiff can't bring a motion to try to confirm cover- age on behalf of the defendant and who has been denied cov- erage by an insurer before they have a judgment against that person," says Walsh. "It makes perfect sense to answer the two questions at the same time. There's no basis in the Insurance Act or elsewhere where they can do that before there's a judgment." Lundrigan begs to differ. Rule 21.01 allows a pleading on a question of law where the de- termination of it could shorten a trial or result in a substantial savings or cost. He says the judge's agreement with State Farm that the pleading didn't raise any allegations of appli- cable insurance policies is a concern because Dirar's policy wasn't known until after dis- covery. And without a determina- tion from the court, there will undoubtedly be a trial, the need to prove damages, collec- tion from Mahmoud, and new proceedings against Dirar, thus duplicating the process, he sug- gests. LT MATTER CREDENTIALS TORONTO I BARRIE I HAMILTON I KITCHENER 1-866-685-3311 I www.mcleishorlando.com A Noticeable Difference ™ Choosing a personal injury lawyer is one of the most important decisions an injured person will make. Help your client ask the right questions: Is the lawyer? Untitled-4 1 2015-02-17 10:59 AM A 'The reason why plaintiffs' counsel want to know early is because they want to know what they can get, what the total pot is,' says Stacey Hsu.

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