Court discourages lawyer from adding insurer as defendant ‘just in case’

If a claim is brought against an insurer with no facts or evidence to support the claim, indemnity costs will be awarded against the plaintiff, the Ontario Superior Court of Justice ruled in a case involving a frivolous or vexatious lawsuit.

“To add a defendant [i. e. an insurance company] to an action knowing that at the time of the inception of the claim against that defendant, there do not exist any facts or evidence to support the claim being brought, warrants the imposition of substantial indemnity costs,” Ontario Superior Court Justice Thomas R. Lofchik wrote in his Oct. 17 decision.

In RamelliEstatev. Estate, four separate actions arising out of motor vehicle accidents were brought against the Co-operators General Insurance Company.

There was no evidence put before the court of any coverage issues between the defendants and their insured, nor were any defendants uninsured or underinsured with respect to these claims, the judge noted in his reasons for decision.

“Counsel for the respondent plaintiff concedes that there is no present cause of action against the Co-operators and that the Co-operators have been added as a defendant ‘in the event the tortfeasors are uninsured or underinsured,'” Lofchick wrote. “It would appear from a review of these cases that it is the practice of plaintiff’s counsel to commence an action against the plaintiff’s own insurer ‘just in case’ a coverage problem should arise in the course of the action, without there being any reason to believe that such a problem exists at the time of the inception of the action. Such a practice should be discouraged.”

The Co-operators were awarded costs of the motion totaling $10,921 and costs of the action amounting to $4,547 total. •