Ontario's Superior Court of Justice, in the 2012 decision Huestis v. Dahmer, held that a home insurer was obliged to defend concurrently with an automobile insurer in an action for personal injury. The plaintiff, Richard Spatola, accompanied the defendant, Earl Dahmer, the owner of a tilting-bed tow truck, on a delivery of large equipment, which included a snow blower, a lawn mower and a 470-pound tool chest. The two men arrived at the delivery site, the home of Vincent Huestis, the third party in the underlying proceedings.
Huestis and Spatola stood on the bed of the truck to help unload. It is disputed whether both Spatola and Huestis undid the straps securing the tool chest to the truck floor, or if Huestis stood by as Spatola did so. Huestis' precise role was unknown at the time of this application as he had not yet been examined for discovery. There was evidence, however, that Dahmer was on the ground at the rear of the truck, and caused the truck bed to begin to tilt. The tool chest started to roll and struck Spatola. He jumped and struck a nearby parked van, suffering injuries.
Spatola sued Dahmer, thereby engaging the latter's garage automobile policy with Lombard General Insurance Company. Dahmer sued Huestis alleging he negligently assisted Spatola with offloading the tool chest from the truck. This engaged Huestis's home insurance policy with Co-operators General Insurance Company.
Co-operators sought a declaration that Lombard was exclusively liable to pay the applicant's defence costs and indemnity for Spatola's damages because Huestis was an "occupant" of the truck.
Huestis and his insurer took the position that the accident occurred during the use and operation of an automobile and that any involvement that he may have had in unloading the equipment should be covered by Lombard's automobile policy. Dahmer and his insurer's position was that the homeowner was separately liable from the truck owner for negligence not arising out of the use and operation of a motor vehicle.
Justice Lauwers held that the automobile insurer had a duty to defend and indemnify the homeowner for damages resulting from his negligence, "but not necessarily exclusively."
He noted the limited evidence available about the events inside the truck immediately before the accident meant there was insufficient facts upon which to determine whether or not the automobile exclusion in the homeowner's policy applied, which would exclude coverage under the Co-operators policy. As there was a possibility the homeowner might have been negligent for a non-auto-related act in respect of which the homeowner's policy might also be engaged concurrently with the automobile policy, the practical effect was that both insurers were obliged to defend. The court further held the issue of the application of the automobile exclusion in Co-operators' policy be tried immediately following the trial of the underlying action.
In arriving at this decision, Justice Lauwers addressed two issues: first, whether in doing what he did, the homeowner was an "occupant" of the truck pursuant to the automobile policy; and second, whether or not the homeowner fell within the automobile exclusion in the homeowner's policy.
On the first issue, Justice Lauwers determined that Huestis was an "occupant" of the truck and, therefore, was an "insured" pursuant to the automobile policy.
Pursuant to section 239 of Ontario's Insurance Act, an "occupant" of an automobile is an insured person who should be defended by the insurer from allegations made against them for loss or damage from bodily injury arising from the ownership or direct or indirect use or operation of an automobile.
In accordance with the insurance contract in the case at bar, an "occupant" can be a driver, a passenger being carried in or on the automobile, or a person getting into, on, out of or off of the automobile. To determine if Huestis was an "occupant," two appeal court decisions that reached opposite results on similar facts were considered. Justice Lauwers held that the 2004 decision, Axa Insurance v. Dominion of Canada General Insurance Co., and not the 2006 decision, Djepic v. Kuburovic, was applicable.
In Axa, Dr. William Isen was sued by Dr. Stephen Simms for causing him personal injury. Dr. Isen had put his boat on a trailer and attached it to his wife's van using a bungee cord. The cord detached and snapped across the boat, striking Dr. Simms's eye. The court held that the automobile insurer had a duty to defend Dr. Isen.
In determining whether or not this accident arose from the "use and operation of an automobile," the court used a two-part test: First, did the accident result from the ordinary or well-known activities to which automobiles are put? Second, is there some nexus or causal relationship between the injuries and the use and operation of the vehicle or is it incidental or fortuitous? Since the bungee cord was being used to secure cargo to the trailer with a view to making it safe for transport, the court found the accident happened during the ordinary use of the automobile.
An opposite result was reached in Djepic. While using bungee cords to secure a mattress to the roof of the plaintiff's van, which was parked in the defendant's driveway, a cord came loose and struck the plaintiff in the eye. The court held that the defendant was not covered by the automobile policy because he was not an "occupant" of the motor vehicle pursuant to the policy. He was also not an "insured person" because he was not a passenger or a person getting into or out of the van. The policy is "not intended to cover someone who simply steps onto a part of the vehicle when the action is not connected in any way with being transported by that vehicle."
In deciding to follow the Axa precedent, Justice Lauwers stated the context was critical, noting "the vehicle in question was a truck with its own special constellation of uses," and the accident happened when the truck's tilting-bed feature was engaged and moving. During this time, Huestis was an "occupant" of the truck because he was involved in unloading - an ordinary and well-known activity to which trucks are put.
He continued: "In my view, it would be inconsistent with a purposive approach to construing a garage automobile policy to be categorical about the cargo that tilting-bed tow trucks might ordinarily carry apart from wrecks, auto parts and associated paraphernalia."
On the second issue, Justice Lauwers noted the home insurance policy contained a provision excluding liability for "damage arising from the ownership, use or operation of any motorized vehicle, trailer or watercraft except those for which coverage is provided for." After considering Djepic - where the Court of Appeal was not prepared
to find that a similar exclusion clause applied because it might be possible to identify alleged negligent acts that potentially constitute non-auto-related concurrent causes of the accident - he held that because of unknown and disputed facts, it was premature to decide whether or not this exclusion applied here.
He did not proffer any allegations that raised non-auto-related activities on Huestis's part. What could have happened on the truck that is not related to its use or operation? Could the court be hinting there was negligence in how the straps holding the tool chest were undone and that this is not auto-related? Ultimately, what those acts might be are speculative, but the absence of what fully transpired was sufficient for Justice Lauwers to find he could not make a final determination on the application of the exclusion.
1) In deciding that Huestis was an "occupant," Justice Lauwers emphasized his presence on the truck and involvement in the unloading process. This allowed the matter to be distinguished from Djepic, where it was found being next to or stepping onto some part of the vehicle was not sufficient to make someone its "occupant."
2) It is evident from certain comments in his ruling that Justice Lauwers was not prepared to permit one of two insurers to avoid a possible duty to defend or indemnify when all facts were not yet available that might establish there was, perhaps, non-auto-related negligence involved in the accident. The absence of all potentially relevant evidence permitted him to ensure both insurers participated in an upcoming pre-trial.
3) The court did not address the potential conflict posed by Co-operators currently defending Huestis, and that how the defence is carried out might influence the outstanding issue. That said, comments by Justice Lauwers infer that Huestis will now have to be represented by someone other than Co-operators' lawyer: "For practical purposes, the outcome of this application will determine who will pay Mr. Huestis's costs of defence and indemnity, if any, and whether he will be separately represented."