Sam's Auto Wrecking Co. v. Lombard General Insurance Co. of Canada et al., 2013 ONCA 186

• Judge: Laskin, Rosenberg and Tulloch, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: September 10, 2012
• Jurisdiction: Ontario
• Citations: 2013 ONCA 186;(2013), 305 O.A.C. 68 (CA)

Sam's Auto v. Lombard General (2013), 305 O.A.C. 68 (CA)

MLB headnote and full text

Temp. Cite: [2013] O.A.C. TBEd. AP.029

Sam's Auto Wrecking Co. Ltd., c.o.b. as Wentworth Metal (plaintiff/appellant) v. Lombard General Insurance Company of Canada, Dalton Timmis Insurance Group Inc., and George McCarter (defendants/ appellants /respondent)

(C54634; 2013 ONCA 186)

Indexed As: Sam's Auto Wrecking Co. v. Lombard General Insurance Co. of Canada et al.

Ontario Court of Appeal

Laskin, Rosenberg and Tulloch, JJ.A.

March 28, 2013.

Summary:

Wentworth Metal's operations manager, Ferber, was injured in a workplace accident caused by one of Wentworth's employees, Cooper. Ferber was an executive officer of Wentworth and was not covered by workers' compensation. He sued Wentworth and Cooper for damages for his injuries. Wentworth's insurer, Lombard General Insurance Co. of Canada (Lombard), denied coverage. Wentworth sued Lombard, its insurance broker, Dalton Timmis Insurance Group Inc., and Dalton's broker, McCarter, who had secured Wentworth's insurance. Wentworth alleged that Ferber's claim was covered by its commercial general liability policy with Lombard and, in the alternative, that Lombard, Dalton, and McCarter were negligent in failing to provide insurance if Wentworth was sued by an employee not covered by workers' compensation. Dalton and McCarter cross-claimed against Lombard. Ferber's action was settled. Wentworth and Dalton contributed to the settlement. Wentworth discontinued its action against Dalton and McCarter, and proceeded against Lombard.

The Ontario Superior Court, in a decision reported at [2011] O.T.C. Uned. 6441, dismissed Wentworth's claim. The court held that at the time of the accident, Ferber was an employee of Wentworth and was working in the course of his employment. Therefore insurance coverage was unavailable because of the "employee injury exclusion" in Lombard's commercial general liability policy. Wentworth, Dalton, and McCarter appealed. The appellants argued that the employee injury exclusion did not apply to executive officers. The appellants also submitted that: an umbrella policy later purchased by Wentworth provided coverage for Ferber's injuries; Lombard was obligated to indemnify Cooper; and Lombard was vicariously liable for Dalton's negligence.

The Ontario Court of Appeal dismissed the appeal.

Insurance - Topic 402

Agents - General principles - Agent - What constitutes - [See Insurance - Topic 549 ].

Insurance - Topic 549

Agents - Liability of insurer for acts of agent - Vicarious liability - Wentworth Metal's operations manager, Ferber, was injured in a workplace accident caused by a Wentworth employee, Cooper - Ferber was an executive officer of Wentworth and was not covered by workers' compensation - He sued Wentworth and Cooper for damages for his injuries - Wentworth's insurer, Lombard, denied coverage - Wentworth sued Lombard, its insurance broker, Dalton, and Dalton's broker, McCarter, who had secured Wentworth's insurance - Wentworth alleged that Ferber's claim was covered by its commercial general liability policy with Lombard and, in the alternative, that Lombard, Dalton, and McCarter were negligent in failing to provide insurance if Wentworth was sued by an employee not covered by workers' compensation - Ferber's action was settled - Wentworth and Dalton contributed to the settlement - Wentworth discontinued its action against Dalton and McCarter, and proceeded against Lombard - The trial judge held that insurance coverage was unavailable because of the "employee injury exclusion" in the policy - Wentworth appealed, arguing, inter alia, that Lombard was vicariously liable for Dalton's negligence - Wentworth contended that Dalton was Lombard's agent and Lombard was legally responsible for Dalton's acts and omissions - The contention of agency rested on an admission in Lombard's pleadings - The Ontario Court of Appeal dismissed this ground - Lombard's "admission" was an unintended slip - It was inconsistent with its overall position and with express allegations in other paragraphs of its pleading - Thus, the so-called "admission" was not determinative of whether Dalton was Lombard's agent - Wentworth's submission of vicarious liability could not succeed for two reasons - First, Wentworth did not pursue its negligence claim against Dalton and McCarter - Thus, there was nothing for which Lombard could be vicariously liable - Second, no evidence was led at trial to support Wentworth's contention that Dalton was Lombard's agent - See paragraphs 61 to 65.

Insurance - Topic 731

Insurers - Duties - To set out all terms and conditions of contract - At issue was whether an insurer, Lombard, was required to indemnify its insured, Wentworth Metal, for money paid to settle a personal injury claim brought by Wentworth's former operations manager, Ferber - Wentworth argued, inter alia, that an umbrella policy purchased by Wentworth provided coverage for Ferber's injuries - The umbrella policy was added to Wentworth's liability insurance by a Change Endorsement, which listed a schedule of coverages - One of the coverages was the Employer's Liability Exclusion endorsement - That exclusion endorsement would disentitle Wentworth to coverage for Ferber's injuries - However, Wentworth submitted that Lombard was not entitled to rely on that exclusion endorsement because it was not "delivered" to Wentworth in accordance with s. 124(1) of the Insurance Act - The Ontario Court of Appeal held that the delivery of the umbrella policy, including the exclusion endorsement, complied with s. 124(1) - When Lombard delivered the Change Endorsement to Wentworth's agent, McCarter, it complied with its obligation under s. 124(1) to provide the policy wordings to Wentworth - See paragraphs 51 to 57.

Insurance - Topic 6861

Liability insurance - Business - Comprehensive policy - General - Wentworth Metal's operations manager, Ferber, was injured in a workplace accident caused by one of Wentworth's employees, Cooper - Ferber was an executive officer of Wentworth and was not covered by workers' compensation - He sued Wentworth and Cooper for damages for his injuries - Wentworth's insurer, Lombard, denied coverage - Wentworth sued Lombard, alleging that Ferber's claim was covered by its commercial general liability policy with Lombard - Ferber's action was settled - The trial judge held that Ferber was an employee of Wentworth and insurance coverage was unavailable because of the "employee injury exclusion" in Lombard's commercial general liability policy - Wentworth appealed, arguing, inter alia, that Lombard was obligated to indemnify Cooper - Wentworth submitted that the employee injury exclusion did not apply in respect of claims against an employee - The Ontario Court of Appeal stated that "Even without considering whether the exclusion applied to a claim against a co-employee, I would not give effect to this ground of appeal. Wentworth never asserted before the trial judge or at any time in the eight year period between the settlement of the Ferber action and the trial that Lombard was obligated to defend or indemnify Cooper. Wentworth is the sole plaintiff in this action. Cooper is not a plaintiff. The amended statement of claim makes no claim on behalf of Cooper. In it, Wentworth does not allege: that it made a payment on behalf of Cooper; that Cooper incurred any costs to defend Ferber's action; or that Cooper contributed any money to the settlement of that action. Moreover, no evidence was led at trial that he did so. As there is no allegation or evidence that Cooper sustained a monetary loss or that Wentworth sustained a loss on his behalf, Lombard cannot be required to indemnify him" - See paragraphs 58 to 60.

Insurance - Topic 6902

Liability insurance - Business - Comprehensive policy - Exclusions - Employees - Wentworth Metal's operations manager, Ferber, was injured in a workplace accident caused by one of Wentworth's employees, Cooper - Ferber was an executive officer of Wentworth and was not covered by workers' compensation - He sued Wentworth and Cooper for damages for his injuries - Wentworth's insurer, Lombard, denied coverage - Wentworth sued Lombard, arguing that Ferber's claim was covered by its commercial general liability policy with Lombard - The trial judge dismissed the claim - The trial judge held that at the time of the accident, Ferber was an employee of Wentworth and was working in the course of his employment - Therefore insurance coverage was unavailable because of the "employee injury exclusion" in Lombard's commercial general liability policy - Wentworth appealed, arguing that Ferber was not an "employee" - Secondly, even if he was an "employee", the employee injury exclusion did not extend to employees who were also executive officers - The Ontario Court of Appeal dismissed the appeal - The evidence at trial overwhelmingly supported the trial judge's finding that Ferber was an employee when he was injured - There was no basis to interfere with that finding - Ferber was therefore both an employee and an executive officer of Wentworth when he sustained the workplace injury - The employee injury exclusion applied to all employees including those who were also executive officers - See paragraphs 24 to 50.

Master and Servant - Topic 303

Nature of relationship - What constitutes an employer-employee relationship - [See Insurance - Topic 6902 ].

Practice - Topic 4952

Admissions - What constitutes - [See Insurance - Topic 549 ].

Cases Noticed:

Alie et al. v. Bertrand & Frère Construction Co. et al. (2002), 167 O.A.C. 20; 62 O.R.(3d) 345 (C.A.), refd to. [para. 26].

Ryan v. Workmen's Compensation Board (Ont.), PPG Industries Canada Inc. and Tyaack et al.; Ryan v. Workmen's Compensation Board (Ont.), Westinghouse Canada Inc., Madden and Whitfield (1984), 6 O.A.C. 33 (Div. Ct.), refd to. [para. 29].

Berger v. Willowdale A.M.C. et al. (1983), 41 O.R.(2d) 89 (C.A.), refd to. [para. 33].

Fontana v. Zurich Insurance Company (1983), 430 So.2d 718 (Louisiana C.A.), refd to. [para. 33].

Zaiontz v. Trinity Universal Insurance Company (2002), 87 S.W. 3d. 565 (Texas C.A.), refd to. [para. 33].

Barnet Properties Ltd. v. Commonwealth Insurance Co. et al. (1998), 113 B.C.A.C. 31; 184 W.A.C. 31 (C.A.), refd to. [para. 56].

Keddie v. Horne and Canada Life Assurance Co. (1999), 129 B.C.A.C. 90; 210 W.A.C. 90; 1999 BCCA 541, refd to. [para. 64].

Statutes Noticed:

Insurance Act, R.S.O. 1990, c. I-8, sect. 124(1) [para. 54].

Authors and Works Noticed:

Lichty, Mark G., and Snowden, Marcus B., Annotated Commercial General Liability Policy (2006 Looseleaf Ed.), pp. 16-01 to 16-17 [para. 45].

Counsel:

Mark M. O'Donnell, for the appellants;

Jack F. Fitch and Jason Arcuri, for the respondent.

This appeal was heard on September 10, 2012, before Laskin, Rosenberg and Tulloch, JJ.A., of the Ontario Court of Appeal. The following judgment of the Court of Appeal was delivered by Laskin, J.A, and was released on March 28, 2013.