Court of Appeal Overrules Judge’s Decision To Strike Case Against Insurance Adjusters in LTD Dispute

Thomson Rogers represents R.B. (the “Plaintiff”) who sued his insurer (“RBC”) and two insurance adjusters (the “RBC Employees”) for damages that he suffered as a consequence of the Defendants’ termination of his long-term disability benefits. More specifically, the Plaintiff is seeking damages in excess of $1 million for breach of contract, negligence, negligent misrepresentation, and bad faith.

The RBC Employees brought a motion against the Plaintiff to strike the Statement of Claim (the document that pleads the allegations in the lawsuit) on the basis that it failed to disclose any reasonable cause of action (legal grounds for suing) against them. The motion judge granted the motion, without leave to amend (permission to modify the allegations). The motion judge concluded that the Plaintiff “has not” and “cannot” plead a reasonable cause of action against the RBC employees (view motion decision here).

On behalf of the Plaintiff, Thomson Rogers appealed to the Ontario Court of Appeal. More specifically, the Plaintiff appealed only that portion of the motion judge’s decision to strike the Plaintiff’s causes of action in negligence, negligent misrepresentation, and bad faith, without leave to amend. In a decision released on June 4, 2020, the Ontario Court of Appeal allowed the appeal and granted the Plaintiff leave to amend his Statement of Claim. The Court agreed with the motion judge that the Plaintiff had not pleaded a reasonable cause of action against the RBC Employees in regards to the termination of his long-term disability benefits, but disagreed with the motion judge that the Plaintiff could not do so if the Statement of Claim were amended (view appeal decision here).

The important points to take away from the Ontario Court of Appeal’s decision include:

1. 1. The Court of Appeal referred to the principle that a cause of action in tort can lie against the employee of a corporate employer for conduct carried out in the usual course of employment as “well-established jurisprudence.” In essence, the Court doubled-down on its earlier decision in Sataur v. Starbucks Coffee Canada Inc., which supported the concept that a corporate employee can be personally liable for a tort committed during the usual course of employment even if the corporate employer would also be vicariously liable (at fault by association) for the employee’s conduct.
   2. The Court of Appeal emphasized that in order to properly plead personal liability against a corporate employee, the Statement of Claim should specifically identify and differentiate the alleged actionable wrongs done by the employees, and when those wrongs occurred. In other words, it is not enough to include dozens of particular allegations of misconduct and to plead that this misconduct was committed “jointly and/or severally” by the Defendants, which is a practice of pleading that has (for better or worse) become fairly common in practice. Rather, even if it may involve duplication, the allegations should be directed at one Defendant at a time so it is clear which allegations are being made against each Defendant.
   3. While the Court decided it was premature to rule on the real issue at hand between the parties, namely, whether individual insurance adjusters can be held personally liable in negligence, negligent misrepresentation, or bad faith separate and apart from any liability of the insurance company, the Ontario Court of Appeal’s ruling that “[t]he deficiencies in [the Statement of Claim] might well be cured by an appropriate amendment had the motion judge granted him leave to amend” is encouraging. This statement suggests that, at the very least, the Ontario Court of Appeal has not reached the conclusion that there is no way, under any circumstances, and irrespective of how it has been pleaded, that individual insurance adjusters can be personally liable for making decisions that terminate long-term disability benefits or decisions to deny appeals of that termination.

Deanna Gilbert is a personal injury lawyer and a partner at Thomson Rogers. Her practice is devoted to representing Plaintiffs in personal injury litigation including cases arising from motor vehicle accidents, medical malpractice, slip and falls, product liability and assaults. Deanna can be reached at 416-868-3205 or by EMAIL.