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Tag: Professional Negligence

Can I Get Fees With That? Law Firm Unsuccessfully Seeks Fees From Their Own Insurer's Negligence Payout

Reasons for judgement were released  this week by the BC Supreme Court, Vancouver Registry, addressing whether a lawfirm that negligently failed to file a lawsuit before the expiry of a limitation period can then seek fees from their clients for the payout the client’s receive in successfully pursuing the lawfirm for damages stemming from their negligence.  Not surprisingly the answer was no.
In this week’s case (Taylor v. Brozer) the clients were injured in a 2006 Washington State collision.  The crash was caused by an underinsured motorist.  They had ICBC Underinsured Motorist Protection coverage and retained the lawfirm to represent them in their UMP Claim. They did so on a contingency basis.  The lawfirm “failed to file a writ in Washington State and missed the limitation period thus denying the clients their rights to seek UMP protection/damages from ICBC“.
The clients hired a new lawyer to sue the former firm.   Ultimately the former firms insurer paid out a $200,000 settlement “based on the clients’ expected recovery under UMP“.
The initial lawfirm then sought over $25,000 in fees from their former clients “in respect of the work it did for the clients” arguing that the work they did before missing the limitation period “was of value and the lawfirm ought to be compensated“.  Registrar Sainty dismissed the claimed fees finding they could not be recovered.  In reaching this decision the court provided the following reasons for judgement:
[49]         There is no dispute between the parties that these solicitors were retained by these clients for a single purpose: “to handle the client’s claim for damages arising from injury suffered in the [Accident]” (paragraph 1 of the retainer agreement). The retainer agreement between them is therefore an “entire contract” in accordance with the holdings in Ladner Downs v. Crowley (supra).
[50]         Since it is an “entire contract”, unless the solicitors had “good cause” to withdraw from acting for the clients, they are not entitled to any fees for the work done by them for the clients up to the time the retainer contract was terminated (Maillott and Morrison Voss v. Smith, 2007 BCCA 296).
[51]         Did they have “good cause” to withdraw? There is no doubt that it was their negligence (in missing the limitation period) that terminated the retainer. After realising their negligence, the solicitors were bound to withdraw and they could no longer act for the clients.
[52]         Can the solicitors own negligence constitute “good cause” as submitted by the law firm or must it be said that as the solicitors “caused” the termination (by their own negligence) therefore must be found not to have had good cause to withdraw (as submitted by the clients)?
[53]         In my view, the solicitors cannot be found to have “good cause” to withdraw. It is simply not proper to hold that a lawyer may find “good cause” for withdrawal in his own negligence and thus be entitled to claim a fee for work done for his clients before his negligence was discovered but may not find “good cause” for withdrawal in something completely beyond his control (e.g., an appointment to the bench, nonpayment of practice fees, death or the like) and lose his entitlement to claim a fee for work done up to the time of the involuntary act. My view is supported by the decision of District Registrar Blok (as he then was) in McVeigh v. Ewachniuk, 2003 BCSC 1328) wherein it was held that a solicitor’s disbarment was not “good cause” for terminating an entire contract retainer.
[54]         Even if I am wrong in this analysis, I find that the work performed by the law firm was of no value to the clients and therefore the clients should not be required to pay the law firm for any of that work. The failure of the law firm to file the action in Washington State defeated the whole purpose of the retainer. But for the assistance of New Counsel and the intervention of the law firms’ insurer, the clients were left with no remedy against the underinsured motorist and thus the work done by the solicitors must be said to have been of no value. Any value was lost once the limitation period was missed and the personal injury action became doomed to fail.

Lawsuits Against Insurance Brokers: When Policy Exclusions Are Not Discussed

Important reasons for judgement were released last month by the BC Court of Appeal making it clear that insurance brokers can be sued for professional negligence if they fail to properly advise clients of the limits of their insurance policies.
In last month’s case (Beck v. Johnston, Maier Insurance Agencies Ltd.) the Plaintiff’s home was intentionally burned down by her husband in a tragic murder/suicide.  The home was insured however the policy had an exclusion for losses that occurred as a result of “intentional acts by named insureds“.
The Plaintiff’s estate sued the insurance broker claiming they were negligent in failing to discuss this exclusion when the policy was renewed (which last occurred after the Plaintiff split up with her husband).  The claim succeeded at trial.  The insurance brokers appealed arguing the claim should be dismissed as this damage was not forseeable.  The BC Court of Appeal dismissed the appeal and in doing so provided the following reasons which should ring as a caution to insurance brokers when selling policies of insurance:
[17] Members of the public purchase insurance to protect themselves and their property from unforeseen events. Policies of homeowner’s insurance, rented dwelling insurance and tenant’s insurance are invariably written by insurers, who describe the coverage that they are prepared to provide and the exceptions to that coverage in the policies they write. They then quote the premium that they require to provide the coverage….
[21] Both Mr. Sache, an insurance broker retained by the appellant and Mr. Pat Anderson, a licensed insurance broker retained by the respondent agreed that it is standard practice for brokers to explain the intentional act exclusion in a homeowner’s policy to a customer when insurance is first placed for that customer….
[25] While Ms. Beck may not have had any knowledge or belief that Mr. Beck intended to harm the home at the time her insurance coverage was renewed in July of 2007, such knowledge was not the issue. The issue was whether her insurance broker ought to have discussed her insurance needs with her when it was clear that she and her husband had separated….

[27] The summary trial judge was bound to accept, as she did, the uncontradicted evidence before her of the standard of care to be expected on an insurance broker. In areas where the courts lack expertise with respect to a particular field of endeavour, it is necessary to rely on expert evidence of standard practice of those in that field of endeavour in order to determine whether the requisite duty of care has been met. In ter Neuzen v. Korn, [1995] 3 S.C.R. 674 at para. 39 Sopinka J. referred with approval to the following statement by Professor Fleming in The Law of Torts(7th ed. 1987) at p. 109:

Conformity with general practice, on the other hand, usually dispels a charge of negligence. It tends to show what others in the same “business” considered sufficient, that the defendant could not have learnt how to avoid the accident by the example of others, that most probably no other practical precautions could have been taken, and that the impact of an adverse judgment (especially in cases involving industry or a profession) will be industry-wide and thus assume the function of a “test case”. Finally, it underlines the need for caution against passing too cavalierly upon the conduct and decision of experts.

[28] It was unnecessary for the respondent to prove that Ms. Beck foresaw that Mr. Beck Sr. represented a “real” or an actual risk of intentionally damaging the home. On the evidence, Ms. Beck’s change in circumstances presented a foreseeable new risk to be considered vis a vis her insurance needs…

[33] The summary trial judge was clearly of the view that, when a renewal of insurance coverage is required, the broker similarly has a duty to provide relevant information about the types of coverage available to the client, to meet any change in needs that the client may have as a result of any changes in his or her circumstances of which the broker is or should be aware. There was ample evidence upon which the trial judge could make that finding, and no basis upon which this Court can interfere with it.