Lombard General Insurance Company of Canada (insurer) moved for summary judgment to dismiss Mason Homes Limited's (insured) claim for defence and indemnity under a Commercial General Liability (CGL) policy.
Mason Homes, a property developer, was sued in an underlying action for breach of contract and alleged negligent/fraudulent misrepresentation regarding a steeply graded ravine lot and failure to include a required warning in the purchase agreement.
The court applied the three-part Scalera test to determine the duty to defend, analyzing whether the underlying claims constituted an "occurrence" (accident) and "property damage" under the CGL policy, and if any exclusions applied.
The court found that the true nature of the underlying claim was intentional conduct, not covered by the policy, and that the allegation of gross negligence was derivative.
Furthermore, several policy exclusions, including those for expected/intended injury, damage to the insured's work, and damage to impaired property, were applicable.
Consequently, the court granted summary judgment, dismissing Mason Homes' action against Lombard, finding no duty to defend.
