Defendant Certified Financial Planner was Not Covered Under Policy

Defendant certified financial planner was not covered under a general liability policy in respect to a claim arising from the plaintiffs’ investment in a specific project, which turned out to be a fraudulent scheme.

Yanaky v. Arch Insurance (Canada), [2014] O.J. No. 3951, August 27, 2014, Ontario Superior Court of Justice, S.E. Firestone J.

The insured sought a declaration that he was entitled to coverage under a general liability policy issued by the insurer, and an order directing the insurer to remit to the insured payment for defence costs.

The insured was a certified financial planner who was named as a defendant in an action in which the plaintiffs claimed damages as a result of an investment in a specific project that turned out to be a fraudulent scheme. The plaintiffs sought damages for breach of fiduciary duty, breach of contract, negligence, negligent and fraudulent misrepresentation, and conspiracy.

The insured’s general liability policy provided coverage for professional liability arsing out of the solicitation, sale, or servicing of certain products, including insurance, mutual funds, and securities.

The Court found that the fraudulent scheme as described in the statement of claim was not an enumerated product within the definition of professional services contained in the policy and therefore any planning advice referred to in the claim was not related or connected to the solicitation, sale or servicing of those enumerated products. As a result, the court found that there was no possibility that the claim would be covered under the policy and therefore the claim did not trigger the duty to defend.

This case was originally summarized by Cameron B. Elder, and originally edited by David W. Pilley of Harper Grey LLP.

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