COURT FILE NO.: CV-20-83051

DATE: 20210519

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

MOORE EQUIPMENT LTD.

Applicant

– and –

TEMPLE INSURANCE COMPANY

Respondent

Kevin P. Nearing, for the Applicant

James Spotswood and Rachel Migicovsky, for the Respondent

HEARD: April 9, 2021

REASONS FOR DECISION

R. Smith J.

1The Applicant, Moore Equipment Ltd. (“Moore”), leased a Skyjack scissor lift to Bondfield Construction Company Limited (“Bondfield”) to be used on a construction project to install solar panels on the roof of a building (the “Premises”). The lease specified that Bondfield assumed all risk and was responsible for all damages and losses incurred while leasing the scissor lift. Bondfield also agreed to obtain all risk liability insurance for the construction project, naming Moore as an insured party.

2Bondfield obtained a specific Commercial General Liability Policy (“CGL”) for the construction project with the Respondent Temple Insurance Company (“Temple”) but failed to name Moore as an insured party. An electrical Safety Inspector named Mr. Cowley, was injured while using the scissor lift to inspect the installation of the solar panels. Mr. Cowley has commenced an action claiming damages against both Bondfield and Moore, alleging negligence against both.

3Moore has brought an application seeking a declaration that it is either an additional insured or an “Unnamed Insured” under Bondfield’s CGL insurance policy issued by Temple. As such, it submits that Temple is obliged to insure and indemnify Moore for any damages claimed in the Cowley action.

4Temple submits that Bondfield’s failure to name Moore as an additional insured under its policy precludes coverage and submits that it has no duty to indemnify or defend Moore in the circumstances. Temple argues that Moore’s remedy was to claim against Bondfield for damages for breach of contract. Unfortunately, Moore’s crossclaim was stayed by Bondfield’s bankruptcy.

5Temple further argues in its factum that Moore’s claim against it is statute barred.

Issues

6The following issues must be decided:

(1) Is Moore an “Unnamed Insured” entitled to insurance coverage pursuant to Endorsement no. 13 of Temple’s policy?

(2) Should Moore’s application be dismissed because its claim is statute barred?

Legal Test

7In Papapetrou v. 1054422 Ontario Ltd, 2012 ONCA 506 at para. 34 the Ontario Court of Appeal held that an insurer’s duty to defend arises where there is a mere possibility that the facts alleged in the pleadings, if proven to be true, would require the insurer to indemnify the insured for the claim.

8In Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2010 SCC 33 at para. 19 the Supreme Court stated that when the insurer can demonstrate that the claim falls outside the policy’s grant of coverage or is excluded by an exclusion clause, the insurer’s duty to defend does not arise.

9The failure of Bondfield to name Moore as an additional insured in its CGL policy does not provide Moore coverage under Bondfield’s CGL insurance policy.

10In Progressive Homes at paras. 22-23 the Supreme Court held that where the policy is unambiguous, the court should give effect to clear language, reading the contract as a whole. Where the language of the policy is ambiguous, the courts prefer interpretations that are consistent with the reasonable expectations of the parties. The question is whether the exclusion in Endorsement no. 13 is ambiguous.

Issue #1

Is Moore an “Unnamed Insured” entitled to insurance coverage pursuant to Endorsement no. 13 of Temple’s policy?

11Endorsement no. 13 of Temple’s insurance policy reads as follows:

5. Any person, firm, municipality, government agency or corporation (hereafter referred to as an "Unnamed Insured") in whose name the Named Insured has, by written agreement, contracted to effect insurance as provided by this policy. However, the insurance provided for such Unnamed Insured is restricted to apply solely to liability arising out of operations performed by or on behalf of the Named Insured in connection with contract(s) performed for such Unnamed Insured [Emphasis added].

12Bondfield had complete control of the work that was performed on the construction project. Bondfield also obtained a specific CGL policy to cover any claims resulting from the installation and maintenance of the solar panels installed by Bondfield for Potentia, the owner of the premises.

13The scissor lift lease stated that Bondfield agreed to assume all risk and was responsible for all damages and losses. Bondfield also agreed that it had inspected the scissor lift and that it was in good order and condition when it was delivered.

14Bondfield also agreed in the equipment lease to indemnify and hold Moore harmless, which supports a finding that the parties intended and believed Bondfield assumed all the risks from the use of the scissor lift, while it was in its control.

15If Moore’s and Bondfield’s names are substituted for the Unnamed Insured and the Named Insured respectively, the first part of the paragraph would read as follows:

“Any person… corporation (Moore) (hereafter referred to as an “Unnamed Insured”) in whose name Bondfield has, by written agreement (“the lease”) contracted to effect insurance as provided by this policy”

Bondfield contracted in writing, by signing the lease, to effect insurance as provided by Temple’s policy. Moore therefore meets the definition of an “Unnamed Insured” in the first sentence of paragraph 5.

16Substituting the parties’ names in the second sentence of paragraph 5 results in the following:

“However, the insurance provided for “Moore” is restricted to apply solely to liability arising out of operations performed by or on behalf of “Bondfield” in connection with the contract performed for “Moore”.

17The insurance coverage for an Unnamed Insured such as Moore is limited to operations performed by or on behalf of “Bondfield” in connection with contracts performed for “Moore”. The use of the scissor lift to inspect the installation of the solar panels was an operation performed by or on behalf of Bondfield. However, the question is whether the use of the scissor lift was in connection with a contract “performed for” Moore.

18The scissor lift was used in connection with the operations performed by Bondfield to install 8 solar panels pursuant to a contract between Bondfield and Potentia Solar Inc. (“Potentia”), which included the electrical inspection. The scissor lift was used in connection with the contract (the lease) between Bondfield and Moore, however, insurance coverage for an Unnamed Insured (Moore) is restricted to liabilities arising out of operations performed by Bondfield “in connection with contract(s) performed for Moore”.

19The electrical inspection of the solar panels was not an operation performed by Bondfield in connection with the contract for Moore. The use of the scissor lift to inspect the solar panels was not an operation “performed for Moore”. The inspection was performed for Potentia and Bondfield and not “for Moore”.

20The interpretation leads to a situation where Moore meets the definition of an “Unnamed Insured” but the limitation would only provide coverage for operations performed by Bondfield “in connection with the contract performed for Moore”. The contract for which the CGL insurance coverage is provided is specified in Endorsement no. 16 as the installation of solar panels by Bondfield for Potentia. The scissor lift was being used in connection with the contract performed for Potentia.

21Potentia would also fit as an “Unnamed Insured” if it was not already listed as a “Named Insured” in this context, as Bondfield had agreed to provide insurance coverage for Potentia as an additional insured.

22The insurance provided is restricted to liability that arose out of operations performed by Bondfield (the Named Insured) in connection with the contract performed “for” Potentia. Bondfield was also performing or fulfilling its lease contract “for” Moore by making the monthly lease payments, but the liability did not arise out of Bondfield making its lease payments to Moore, rather from conducting the electrical inspection for Bondfield and Potentia.

23I conclude that the restriction of liability insurance coverage for an Unnamed Insured, such as Moore in this case, solely to liability arising out of operations performed by or on behalf of Bondfield for Moore is unambiguous. The liability in this case arose out of the operations performed by Bondfield, namely conducting the electrical inspection, but did not arise in connection with a contract performed “for Moore”.

24Moore was not a Named Insured as a result of a breach of contract by Bondfield and was an “Unnamed Insured”, but subject to the restriction on coverage as set out in Endorsement no. 13, which is not ambiguous.

Disposition of Issue #1

25For the above reasons Moore’s application for a declaration that it is entitled to insurance coverage as an “Unnamed Insured” is dismissed.

Issue #2

Should Moore’s application be dismissed because its claim is statute barred?

26I do not dismiss the Application on the basis of a limitation defence because there was no cross application or motion seeking such relief and due to the lack of an evidentiary foundation for such relief. The written denial of coverage was only made in November of 2019, which is within the limitation period.

Disposition of the Application

27For the above reasons, the Application is dismissed. If the parties are unable to agree on costs, the Respondent shall make brief submissions within 10 days, the Applicant to respond within a further 10 days and the Respondent to reply within seven days.