When people buy home or vehicle insurance, they hope they will never have to use it. For people who haven’t made claims against their insurance plan, there’s a good chance they haven’t ever really looked at their insurance policies and may not know the details of what they entail. 

Dealing with an insurance company can be difficult, especially when it comes to insurance coverage disputes or complex insurance claims. The details and processes involved in insurance disputes and the risk management needed to make decisions underscore the importance of working with experienced lawyers. As we see in a recent decision from the Alberta Court of Queen’s Bench, a failure to understand realistic expectations and limits for what can be claimed can lead to a failure to recover damages. 

Automobile accident leads to dispute over coverage

There were three plaintiffs in the matter, “TS,” “JS”, and “LZ.” According to the plaintiffs’ statement of claim, TS and JS owned a 2020 Tesla that was allegedly damaged in a motor vehicle accident on July 29, 2020. Their insurer was located in British Columbia, and the plaintiffs stated the insurer refused to pay for the damages to the car, putting them in breach of provincial “protocols.” The Tesla was ultimately towed to a dealership in Calgary. The details of what followed are scarce, but the plaintiffs say the dealership and the insurer began communicating with LZ in a manner that led to them becoming “unstable” due to luxury taxes and fees for cross-border purchases. This led to the transaction for a replacement vehicle to be put on hold. LZ eventually had another accident. The plaintiffs allege that following the accident, LZ became “extremely fearful,” which led to them not being able to travel to tend to vacation rental properties they owned. LZ sought $10 million in emotional distress and loss of lifetime income. 

TS also submitted a claim for damages, though his were much higher. At the time of the hearing, TS had been planning to attend a prestigious law school in the UK. However, due to the loss of income the parties experienced from having to abandon their property rental business, TS said he could no longer attend law school. TS’ claim stated that he had intended to work towards becoming a billionaire and that this plan was put in jeopardy. As a result, he sought $10 million in emotional distress and loss of lifetime income as well as $49 billion in additional damages. 

In addition to monetary damages, the plaintiffs also sought an order prohibiting the insurer from advising anyone or providing insurance underwriting to anyone. 

Court looks at the merits of the claim

The defendants responded by asking the court to consider denying a hearing under Alberta’s Civil Practice Note No. 7 which allows applicants to request that claims be dismissed or refiled if a court finds the litigation to be without merit or prospect of success, or “otherwise abusive and vexatious.” A 2018 decision from the same court stated that if a claim is found to fall within those parameters, the court can issue a written decision outlining how. The applicants can then re-submit their claim within 14 days. 

The court added that Alberta’s Civil Practice Note No. 7  is not designed for “close calls” but should instead be used when reasons for resubmitting a claim are apparent on the face of the pleading. 

The court began its analysis by looking at the pleadings themselves, finding that the plaintiffs failed to draw a connection between the actions of the defendants and the disruption of the plaintiffs’ business, specifically in that there is no reason given as to how LZ’s inability to operate a motor vehicle led to any of the three partners in the business being unable to operate it. The plaintiffs also failed to explain how the defendants were in breach of contract, instead just claiming they were. 

The court then turned to the amount of damages sought, particularly by TS. While TS said he intended to pursue business interests that would lead to him becoming a billionaire, the scenario was still hypothetical in nature. The court referenced a 2014 decision that stated an “action cannot rely on allegations that are absurd, highly implausible or hyperbole.”

As a result, the court ordered the plaintiffs to make another attempt at drafting their pleading, this time providing details for how the defendants breached their contracted obligations and how TS’s claims can be considered anything other than highly implausible or extraordinary. 

In looking at the amount of damages themselves, the court held that the statement of claim provided no plausible cause for the amount of damages sought. The court explained that damages “emotional stress” can be classified as “general damages” and that these types of damages are capped at about $365,000. The court also stressed that this maximum limit is considered appropriate where there are severe impacts on the plaintiff, such as nearly complete disability. There were indications of physical injury on the part of the plaintiffs. 

The court ordered the plaintiffs to take up to 14 days to re-draft their statement of claim. We will be sure to look for any developments in the matter and report back in our blog should the matter proceed to trial.

Calgary Insurance Lawyers Representing Insurers For Insurance Claims And Litigation

At HMC Lawyers, our experienced insurance lawyers have decades of collective experience in representing clients in matters related to insurance law. We understand the risks involved in every step of the litigation process and work with our clients to help identify and avoid potential problems with their claims. To find out what you might be able to expect from an insurance-related dispute, or to find out how we might be able to help you through the negotiation or litigation process, please don’t hesitate to contact us online or by phone at 403-269-7220.