Home insurer Wawanesa blasted by judge for hard-ball tactics




It’s taken 12 years of aggravation and litigation but in late June, Woodbridge, Ontario homeowners, Salvatore and Linda Brandiferri, finally received justice from their home insurer, The Wawanesa Mutual Insurance Company.

Unfortunately, it took a hard-fought lawsuit, including 12 days of trial, to achieve justice.

The saga began with a fire in the attached garage at the front of the Brandiferri home.

The garage and its contents were destroyed and the interior of the home suffered extensive smoke damage.

The Brandiferris were out of their home for 4½ years, resulting in extensive living expenses, in addition to the costs of restoring their house and compensation for damage to personal property.

Wawanesa paid out $479,000 under the insurance policy but this wasn’t sufficient to cover the actual losses, hence the lawsuit.

As insurance companies sometimes do, Wawanesa used hardball tactics in the litigation.

They asserted a defence of fraud. They didn’t claim the fire was intentionally caused by the Brandiferris, but that the proofs of loss submitted were fraudulently completed.

To up the pressure even further, they asserted a counterclaim for $600,000. This was abandoned on the eve of trial but the fraud defence was vigorously pursued throughout the trial.

The fraud defence was peculiar to say the least.

As the trial judge pointed out, “the schedules of loss were prepared in circumstances of complete transparency. By this I mean that apart from the items that were destroyed in the garage, the items that were removed from the building were available for inspection.

This was not like a typical and paradigmatic fire loss case in which the plaintiff claims recovery for items that were not actually in the fire, where the insurer has no way of knowing the truth because everything was destroyed.”

Worse, for Wawanesa, the judge called the allegation of fraud “opportunistic” and “more a product of legal strategy than factual reality.” Wawanesa also took the strange position the lawsuit could not succeed because the Brandiferris had failed to participate in an appraisal process — where each side appoints an appraiser who then appoint an umpire — to determine the amounts in issue.

But when the Brandiferris’ lawyer proposed an appraisal process, Wawanesa’s lawyer rejected it, stating “your client is not entitled (to) an appraisal.” The trial judge ordered Wawanesa to pay an additional $108,257 for extra work required for the proper restoration of the home.

As the judge put it, “I see, however, no compelling reason to require the Brandiferris to settle for less than adequate reconstruction.” The court also ordered Wawanesa to pay for an additional six months of alternate living arrangements, as well as an added sum for personal property damaged in the fire.

The special significance of the case is the judge’s award of $100,000 in punitive damages for violation of the insurer’s duty to act in the utmost of good faith in investigating, assessing and attempting to resolve the claim.

The judge made the punitive damages award to admonish Wawanesa for having engaged in a “high stakes litigation strategy designed to intimidate the Brandiferris.” Co-counsel for the Brandiferris, Jason D. Singer of Singer, Kwinter, referred to the insurer’s tactics as “scorched earth”. Co-counsel Alfred M. Kwinter believes the Brandiferris were bullied by Wawanesa.

The judge set the punitive damages award at $100,000 to take into account Wawanesa’s status as a repeat offender, as a result of a previous case where Wawanesa defended another fire claim.

In that one, the judge noted, the company asserted the property owners committed arson when they ought to have known the case for arson “did not pass much beyond suspicion” and succeeding in its defence “was a very long shot.”

Unfortunately, with assets of about $7 billion and 2011 profits of about $108 million, it’s doubtful a punitive damage award of $100,000 will create ripples in the Wawanesa boardrooms. 


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