an insurer's obligations are owed to their insured, not a third party contracted by their insured to repair damaged property.
The action by a homeowner ("Cirillo") against his insurer ("Wawanesa") for outstanding monies sought by a contractor who performed repairs on Cirillo's home after it was damaged by fire was dismissed where the court found that Wawanesa had no contractual relationship with the contractor and had fulfilled all of its obligations to Cirillo under the policy.
TGA General Contracting v. Cirillo, [2009] O.M. No. 4377, October 15, 2009, Ontario Superior Court of Justice, G.P. DiTomaso J.
Cirillo's home was extensively damaged in a fire. TGA General Contracting ("TGA") was retained to repair the damage. TGA was not fully paid for its work and commenced a lien claim against Cirillo for $153,000. Cirillo took the position that Wawanesa was responsible for all outstanding amounts owed to TGA and sued Wawanesa for payment of those amounts. Wawanesa contended that it had fully indemnified Cirillo under the Policy. Wawanesa further contended that it had no connection with TGA who had been retained by Cirillo and was Cirillo's contractor.
Cirillo's action against Wawanesa was dismissed. The court found that it was readily apparent that the sole reason Cirillo commenced an action against Wawanesa was to force Wawanesa to satisfy TGA's account. The court held that TGA was not entitled to any payment from Wawanesa directly as there was no contract between Wawanesa and TGA. Similarly, there was no agreement between Cirillo and Wawanesa that Wawanesa would pay TGA's account. The guaranteed replacement cost endorsement in the Policy merely provided coverage up to the lowest estimate of repair with materials of like kind and quality. Cirillo was advised of this limit and provided with the lowest cost estimate. Cirillo did not take issue with the scope or cost of repairs based on that estimate. Cirillo did not take issue when Wawanesa made final payment pursuant to that lowest cost estimate. Following the final payment, Wawanesa had no further obligation to Cirillo. Any further dealings with TGA were solely the responsibility of Cirillo.
This case was originally summarized by Jonathan D. Meadows and originally edited by David W. Pilley.
