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Negligence finding in liability trial does not preclude criminal finding in insurance coverage trial


November 8, 2010   by Canadian Underwriter


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Finding an insured’s act to be “negligent” (but not intentional) in a liability trial does not preclude a finding that the insured’s act might also be “criminal” during a subsequent trial on insurance coverage, the Alberta Court of Appeal has found.
In Raywalt Construction Co. Ltd. v. Allstate Insurance Company, a trial court found Timothy Witoshynski was negligent in releasing diesel fuel from a tank surrounded by machinery at a construction site. His companion on the site later ignited the spilled fuel and the resultant fire damaged the equipment of Raywalt.
A judge at the liability trial found that Witoshynski’s actions were negligent, but not intentional.
Raywalt launched a direct recourse action against Witoshynski’s insurer, Allstate, which argued that Witoshynski’s actions were criminal, and thus were excluded from policy coverage. The trial judge in the direct recourse trial agreed, noting that Allstate’s exclusion for claims “resulting from” an insured’s criminal act were precluded from coverage.
Witoshynski appealed the judgment, arguing issue estoppel, a principle according to which a person cannot be tried twice on the same issue. Basically, he argued the liability case had already determined that he was negligent, and this was the same as addressing the issue of criminality.
The Alberta Appeal Court confirmed there was a difference between the liability trial and the insurance trial.
“In the liability trial, it was whether Witoshynski’s actions constituted negligence or were intentional,” Alberta Court of Appeal Justice Michelle Crighton wrote. “In the direct recourse [insurance] action, it was whether his acts were criminal and resulted in damage, permitting Allstate to rely on its exclusion clause.”
Crighton found the trial judge in the insurance trial was entitled to characterize the acts as criminal, so long as she did not contradict or alter the findings of the original judge in the liability trial, who found them to be negligent.
“[The insurance trial judge’s] conclusion that the earlier events constituted criminal mischief [was] consistent with the facts found by the original judge.”