Katanic v. State Farm Mutual Automobile Insurance Company , 2013 ONSC 5103

State Farm brought a summary judgment motion, submitting that Mr. Katanic’s claim for non-earner benefits was statute barred because (i) he did not commence a mediation proceeding within two years of the initial denial; and (ii) he did not commence his court proceeding within 90 days of the deemed receipt of the mediator’s report. State Farm succeeded on the motion before Madam Justice Milanetti.

State Farm’s denial of the non-earner benefit was premised upon the plaintiff’s ability to carry on a normal life more than 26 week after the accident. In fact, the plaintiff was employed on the date of the accident. While the Ontario Court of Appeal’s decision inGaldamez v. Allstate Insurance[1]subsequently rendered State Farm’s decision to refuse non-earner benefits wrong in law, Madam Justice Milanetti held that the insurer’s decision was not legally wrong when it was made in 2006. Further, the denial was made with a clear explanation of the available dispute mechanisms and applicable timeframes. The plaintiff had filed a mediation application more than 3.5 years after the denial, far exceeding the two-year limitation period. Similarly, he commenced a court action 206 days after the mediator’s report, which exceeded the 90 day limitation period. Finally, the plaintiff did not present any explanation as to why he was unable to commence his court action or his mediation application in time.

Katanic is an example of the courts’ role in balancing procedural and substantive rights in litigation. While the court acknowledged that the Ontario Court of Appeal’s intervening decision in Galdamez had rendered State Farm’s denial substantively wrong at law, this did not change the fact that Mr. Katanic had failed to commence a mediation and his court action within the applicable limitation periods in the eyes of the court. Another point to note is that the court placed weight on the fact that Mr. Katanic had legal representation (Ferro and Company), which should have made him more inclined to respect time requirements. The question this raises is whether the court would have been more sympathetic to Mr. Katanic if he had he been self-represented. A related inquiry is whether the court would have decided the issue differently if the limitation period was breached by a matter of a few days rather than by years or months. Ultimately, this decision appears to exemplify the court’s emphasis on the finality principle, which requires plaintiffs to commence their proceedings in a timely manner in accordance with the Insurance Act and the SABS.

[1]2012 ONCA 508 (CanLII)