Cheecham v. Saskatchewan Government Insurance [2011] S.J. No. 500, August 2, 2011, Saskatchewan Court of Queen’s Bench, B. Scherman J.

In 1993 the plaintiff attended at Meadow North’s office and completed an application for insurance for the property. The policy was issued and renewed annually thereafter. A booklet that outlined the policy stated that coverage for vandalism while the property was vacant was excluded.  It also stated that the plaintiff was required to notify the insurer within 30 days if the property became vacant. The insured was operating under the assumption that during those 30 days he would be coved for vandalism. That was not the case, as his coverage ended immediately upon vacancy.

In 2004, the property sustained $30,000.00 in damage shortly after the plaintiff’s tenants had vacated the property. The plaintiff asserted that he was not aware of vacancy exclusion.

The Court found that Meadow North breached the duty of care owed to the plaintiff and that it was a proximate cause of the loss. There was no evidence that the plaintiff was provided with the booklet that outlined the coverage and the exclusions, nor was he advised about the fact that coverage would not be provided immediately when the property became vacant. It was reasonably foreseeable that a policy holder may think that they had 30 days to advise of the vacancy. Meadow North had a stringent duty as an insurance broker to provide information and advice to the plaintiff about his insurance coverage, including any gaps it may have had.

The plaintiff was awarded $30,000.00 in damages, plus pre-judgment interest, and costs.

This case was digested by Kim Yee and edited by David W. Pilley of Harper Grey LLP.

Motion allowed. No duty to defend found because the only allegations against the insured were for a failure to act and these allegations were specifically caught by the "intentional act" exclusion clause.

Durham District School Board v. Grodesky [2011] O.J. No. 3533, May 31, 2011, Ontario Superior Court of Justice, D.S. Gunsolus J.

The insured commenced a third party claim against the insurer for indemnification under his homeowner’s policy. The insurer denied coverage and indemnification on the basis that the allegations against the insured’s son fell under the following exclusion clause:

Exclusion Status Section II: We do not insure your claims arising from: (6) Bodily injury or property damage caused by any intentional or criminal act or failure to act by: (a) any person insured by this policy; or (b) any other person at the direction of any person insured by this policy.

The insurer brought a motion for a determination of an issue of law. Specifically, whether the insurer was required to defend the insured for the claims against him.

Counsel for the insured relied on RDF (Litigation Guardian of) v. Co-operators General Insurance Company, [2004] M.J. No. 382 (C.A.), and argued that in order to avoid a duty to defend the insurer had to establish that the insured’s son intended to set fire to the school.  Counsel for the insured submitted that the intention to light the fire was not necessarily the same as negligently allowing it to spread.

The Court declined to follow RDF (Litigation Guardian of) v. Co-operators General Insurance Company and further held that it did not address the issue of whether or not a parent of an alleged wrongdoer was covered under a policy of insurance.

With regard to the test that should be applied, the Court found that if an insured could demonstrate even a mere possibility that the claim could fall within the policy, then a prima facie duty to defend is established. The onus then falls on the insurer to negate the duty to defend by demonstrating that the claims fall outside the coverage due to a specific exclusion within the policy.

The Court found that the only allegations against the insured were for a failure to act. Such allegations were specifically caught by the above-noted exclusion clause. As a result, the insurer did not owe a duty to defend and the insured’s third party action was dismissed.

This case was digested by Aaron D. Atkinson and edited by David W. Pilley of Harper Grey LLP. If you would like to discuss this case further, please feel free to contact them directly at aatkinson@harpergrey.com or dpilley@harpergrey.com or review their biographies at http://www.harpergrey.com.

Sander v. Sun Life Assurance Co. of Canada, [2011] B.C.J. No. 5, January 6, 2011, British Columbia Court of Appeal, L.S.G. Finch C.J.B.C., M.E. Saunders and K.E. Neilson JJ.A.

At issue was whether the insured’s action was barred for being commenced outside the limitation period. At summary trial, the Supreme Court of British Columbia held that the action commenced by the insured was barred by s.22(1) of the Insurance Act, R.S.B.C. 1996, c. 266 (the “Act”) which mandates that, “…every action on a contract [of insurance] must be commenced within one year after the furnishing of a reasonably sufficient proof of loss or claim under the contract…”. The summary trial judge held that the one-year limitation period was triggered when the respondent insurer provided the insured with a notice of denial by letter dated June 29, 2001. The limitation period for issuing a Writ of Summons therefore expired and the Writ of Summons was issued out of time.

The insurance policy held by the insured stated that:

“No action or proceeding against the Company for recovery of a claim under this policy shall be commenced more than two years after the date the insurance money became payable or would have become payable if it had been a valid claim.”

The Court held that the limitation period in Part 2 of the Act guarantees a minimum level of protection. However, the Court held further that the insurer must be held to the terms of the contract it provided where they are more favourable to its insured than the provisions of the Act. The Court held that insurers are only prohibited from providing a less generous limitation period than that which is prescribed in Part 2. The Court held that nothing in s.3(a) prevents an insurer from stipulating for a limitation period greater than in the Act itself. As such, the Court held that the two-year limitation period as set out in the insurance policy prevailed over that set out in the Act.

The insured argued further that the wording in the policy limitation has been interpreted in cases involving continuous entitlement to benefits as creating a “rolling” limitation period where that cause of action accrues at each successive interval at which benefit instalments are to be paid. In other words, so long as the insured continues to be entitled to benefit payments as a result of a continuous disability, the cause of action against the insurer is renewed every time a benefit becomes payable.

The Court held that upon review of the insurance policy, it was clear that the insured had a right to monthly benefit payments so long as he met the conditions of the insurance policy with regard to total disability. The risk insured against was continuing total disability and in that sense, insurance money was also payable on a continuing basis after the prescribed elimination period. As such, the Court concluded that each benefit payment gave rise to its own limitation period and the insured had a continuing claim through the period of disability. That claim was not extinguished by the failure to sue within two years of the commencement of that continuum. The insured’s claim accrued monthly and therefore the limitation must be viewed as commencing a new on each successive entitlement.

The appeal was allowed and the order of the summary trial judge set aside. The action was remitted to trial for determination of whether the insured was entitled to benefits under the insurance policy for the period of two years preceding the date on which he issued the Writ of Summons and anytime thereafter.

This case was digested by Aaron D. Atkinson and edited by David W. Pilley of Harper Grey LLP. If you would like to discuss this case further, please feel free to contact them directly at aatkinson@harpergrey.com or dpilley@harpergrey.com or review their biographies at http://www.harpergrey.com

An insured homeowner sought insurance coverage for the damage caused by a marijuana grow-operation carried out by  the insured's tenants.  The insured argued that a grow-op falls within coverage for vandalism or malicious acts.   The insurer argued that mould and moisture damage caused by the grow-op fell outside of coverage. The British Columbia Supreme Court held that a tenant who has a grow-op shows a reckless disregard for the landlord's rights.   That disregard provides a sufficient basis to infer malice on the part of the tenant.  The Court held that the mould and moisture damage caused by the grow-op can therefore be considered damage caused by an act of vandalism.

Hanlon v. ING Insurance Co. of Canada, [2011] B.C.J. No. 84, January 24, 2011, British Columbia Supreme Court, R.J. Sewell J.

At the summary trial, the insurer sought a declaration that damages were limited to $5,435.33, while the insured sought a declaration that she was entitled to coverage under the policy for all damage.

The insurer recognized coverage for damage caused by the tenant such as cutting holes in walls, damaging carpeting and destroying plumbing. However, the insured’s home had significant mould and moisture damage and the insurer denied coverage for damage that was caused by excess humidity.

The insurer argued that the excess heat and moisture were caused by poor tenant maintenance and/or wear and tear and neither was covered under the policy. Further, the insurer argued that the mould and moisture damage could not be said to be caused by acts of vandalism because the tenants did not intend to cause such damage.

The insured argued that the marijuana grow operation was an unlawful act and that as a necessary part of that act the tenants created an excessively warm and moist environment. In doing so, the tenants acted with reckless disregard for the insured’s home. Essentially, a person who acts recklessly has the requisite intent to constitute his actions to be acts of vandalism.

The Court referred to and adopted Bowers v. Farmers Insurance Exchange, (2000) 99 Wash App. 41, 991 P. 2d 734, where the Court of Appeals of Washington State held at paragraph 4 that “malice can be inferred from the act of destruction. It is sufficient if the actor is guilty of wanton or intentional disregard of the rights of others.” The Court found that the tenants’ acts of turning the insured’s home into a grow op were clearly wanton in that they showed reckless disregard for the landlord’s rights.

The insurer also argued that coverage was only provided for damage caused directly by vandalism and the mould and moisture damage was not directly caused by vandalism but by a chain of events leading to the damage. The insured perils portion of the policy read as follows:

You are insured against direct loss or damage caused by the following perils as described and limited: …

7.         Vandalism Or Malicious Acts…

The court found that the word “direct” was used as an adjective to describe the damage or loss and not as an adverb to describe or modify the verb “caused”. Therefore, the Court saw no restriction on the application of the ordinary meaning of the word “caused”. As a result, the Court found that the mould and moisture damage was caused by the marijuana grow operation.  Accordingly, the insured’s declaration was granted.

This case was digested by Aaron D. Atkinson and edited by David W. Pilley of Harper Grey LLP. If you would like to discuss this case further, please feel free to contact them directly at aatkinson@harpergrey.com or dpilley@harpergrey.com or review their biographies at http://www.harpergrey.com

Danicek v. Alexander Holburn Beaudin & Lang, [2011] B.C.J. No. 78, January 21, 2011, British Columbia Supreme Court, S.F. Kelleher J.

The second action arose from a motor vehicle accident in which liability was admitted. The third action was commenced by Co-operators General Insurance Company (“Co-operators”) against Lombard for restitution or contribution with respect to the amounts that Co-operators paid for the defence and indemnity of the Defendant Poole in the First Action. Co-operators issued a tenants insurance package, under which the Defendant Poole was an insured.

The second phase of trial addressed two issues. First, a claim by the Defendant Poole for a declaration that the Defendant Lombard was obliged to defend and indemnify him. Second, the claim by Co-operators for restitution or contribution from Lombard. Both claims involved a determination of whether the circumstances of the Plaintiff’s injury fell within the policy of insurance issued by Lombard covering AHBL’s employees.

Prior to her injury, the Plaintiff Danicek was at the AHBL associates’ dinner at Rodney’s Oyster House. After dinner several of the associates, including the Plaintiff Danicek and the Defendant Poole, proceeded to Bar None. Later that evening, Mr. Poole fell on Ms. Danicek and she struck her head on the floor.

Lombard argued that there was neither a duty to defend nor a duty to indemnify because Mr. Poole was not an insured as the actions in issue were not within the scope of his employment. The definition of insured was set out in Part II as follows:

Part II - WHO IS AN INSURED

2.         Each of the following is also an insured:

a.         Your employees, other than your executive officer, but only for acts within their employment by you. However, none of these employees is an insured for

1) Bodily injury or personal injury to you or to a co-employee while in the course of his or her employment; or

…

b.         Any employee, or person under contract, or any person or personal corporation who provide or have provided services to or for the Named Insured under a personal services contract or personal services agreement or employees on loan from others working solely for and on behalf of the Named Insured or persons designated “Associate Counsel” or “of Counsel”, students or volunteers, but only with respect to their employment association, or their contract with the Named Insured.

Lombard argued that Mr. Poole’s claim fell within clause 2.a. and, since he was not acting within the scope of his employment, he could not be covered by the policy. Moreover, even if he was, Ms. Danicek was a co-employee and the claim was excluded under clause 2.a.1). Further, the parties could not have reasonably intended that a fellow employee could avoid the exclusion in 2.a.1) and invoke coverage under 2.b.

In contrast, Co-Operators argued that clause 2.b. was applicable with the relevant words being “any employee … with respect to their employment … with [AHBL]”. Further, Mr. Poole was an insured as long as there was some connection between his employment and the accident.

The Court found that Lombard had misapprehended the correct approach to assessing a duty to defend. Clearly, Mr. Poole, as an employee of AHBL, was an insured for acts within the scope of his employment. The allegations in the pleadings alleged that Mr. Poole was an employee and that his actions were within the scope of his employment. As a result, there was at least a mere possibility that Ms. Danicek’s claim fell within the scope of the Lombard policy. Thus, there was a duty to defend.

However, the Court held that there was no obligation to indemnify. The Court found that clause 2.a. was applicable and that Mr. Poole was not acting within the scope of his employment at the time of the fall. The after-work social event at Bar None was not performed in furtherance of AHBL’s business. The associates’ dinner had been paid for by AHBL but the attendance at Bar None was not an employer sponsored activity; therefore, Mr. Poole’s actions were not within the scope of this employment and there was no obligation to indemnify.

This case was digested by Aaron D. Atkinson and edited by David W. Pilley of Harper Grey LLP. If you would like to discuss this case further, please feel free to contact them directly at aatkinson@harpergrey.com or dpilley@harpergrey.com or review their biographies at http://www.harpergrey.com

Economical Mutual Insurance Co. v. Lapalme, [2010] N.B.J. No. 421, December 2, 2010, New Brunswick Court of Appeal, J.E. Drapeau C.J.N.B., M.E.L. Larlee and K.A. Quigg JJ.A.

Following the automobile accident, Lapalme applied for CPP disability benefits. Her claim was approved. More than a decade later, Economical filed a Notice of Motion seeking a determination of whether the CPP benefits, past and future, were properly included in the calculation of “aggregate amount” as set out in paragraph 4(b) of the NBEF 44 Family Protection Endorsement and whether the CPP benefits, past and future, were to be deducted from the amount payable by Economical under the terms of the NBEF 44 Family Protection Endorsement.

Through the NBEF No. 44 endorsement, automobile insurers carrying on business in New Brunswick provide coverage against losses sustained by an eligible claimant by reason of the fault of an underinsured motorist. While the coverage is excess to all “amounts” actually recovered by an eligible claimant from all sources, when it comes to “amounts” the eligible claimant has not actually recovered but is entitled to recover, the coverage is only excess to those “amounts” provided by a finite number of specified sources.

The parties agreed that CPP benefits received to date were deductible but questioned whether benefits to be received in the future would also be deductible.

The salient parts of Clause 4(a) provide that the amount payable under the NBEF 44 to any eligible claimant is to be ascertained by determining the amount of damages the eligible claimant is legally entitled to recover from the inadequately insured motorist and deducting from that amount the aggregate of the amounts referred to in Clauses 4(a). Clause 4(b) stipulates that the amount payable under the NBEF 44 is excess to any amount actually recovered by the eligible claimant from any source, while Clause 4(b)(vii) goes on to provide that the amount payable under the NBEF 44 is also excess to any amounts the eligible claimant is entitled to recover from any “policy of insurance” providing disability benefits.

In Somersall v. Friedman, 2002 SCC 59, [2002] 3 S.C.R. 109, the Supreme Court of Canada, by a majority, held the date of a motor vehicle accident giving rise to the underlying losses was the relevant date for the determination of legal entitlement to recover under the underinsured motorist for the purposes of Clause 2 under an SEF 44 (the predecessor NBEF No. 44). The New Brunswick Court of Appeal (the “Court”) in this case held that this decision does not inform the interpretation of Clause 4, which provides the formula to quantify the amount payable by the NBEF 44 insurer. By that formula, the aggregate of the amounts actually recovered by the eligible claimant from all sources and the amount he or she is entitled to recover from specified sources must be deducted from the amount of damages assessed against the inadequately insured motorist. Clause 4(b)(vii) provides for the deduction of amounts that an eligible claimant has not actually recovered but is nonetheless entitled to recover under “any “policy of insurance” providing disability benefits” does not capture disability benefits under the Canada Pension Plan. Only actually recovered CPP disability benefits are deductible pursuant to Clause 4.

The Court cites with approval the Ontario Court of Appeal’s decision in Gignac v. Neufeld, [1999] O.J. No. 1295 (C.A.) when it was held that the Ontario Legislature intended to cover CPP disability benefits by its resort to the expression “policy of insurance” in the statutory provision at issue. Further, the Court held that the ruling in Melanson v. Co-operators General Insurance Co. [1997] N.B.J. No. 364 (CA) confirmed the non-deductibility of future disability benefits under Clause 4(b) is consistent with the principle that entitlement to those benefits is invariably conditional upon the insured meeting qualifying conditions which only arise during the future period to which the benefit relates. As such, there can be no finding of liability for future disability against the insurer which provides disability insurance coverage, since disability is a matter of proof which remains with the insured to demonstrate from time to time on an ongoing basis.

The Court held that the wording of Clauses 4 and 5(b) confirms that the relevant date for Clause 4 purposes is the date of adjudication of the amount payable by the insurer. Clause 4(b)(vii), which provides for the deduction of amounts that an eligible claimant has not actually recovered but is nonetheless entitled to recover under “any policy of insurance providing disability benefits”, does not capture disability benefits under the Canada Pension Plan. Only actually recovered CPP disability benefits are deductible pursuant to Clause 4. As such, Clause 4 of the NBEF 44 requires the deduction of all CPP disability benefits actually recovered by the insured during the period between the accident and the adjudication by a judge of the amount payable to Lapalme under the NBEF 44; and, Clause 4 does not, however, provide for any other deduction of CPP disability benefits, including unrecovered preadjudication CPP disability benefits that the insured is entitled to recover or CPP disability benefits that Lapalme might be entitled to recover in the future.

The appeal was allowed in part.

This case was digested by Katherine E. Linton and edited by David W. Pilley of Harper Grey LLP. If you would like to discuss this case further, please feel free to contact them directly at klinton@harpergrey.com or dpilley@harpergrey.com or review their biographies at http://www.harpergrey.com

Graham v. Ontario (Superintendent, Financial Services Commission), [2010] O.J. No. 5602, December 21, 2010, Ontario Superior Court of Justice, K.B. Corrick J.

The main issue was whether the plaintiff fell within the definition of a “dependent relative” in s.1.2 of the OPCF 44R. If so, she was an insured person under the policy. To make a claim under the provisions of the OPCF 44R, the plaintiff had to be a dependent relative of the named insured which, pursuant to the policy, required her to reside at the same dwelling premises as the named insured. However, the policy also stated that where the person could only be a “dependent relative” where the person is not an insured person as defined in the family protection coverage of any other policy of insurance or does not own, or lease for more than 30 days, an automobile which is licensed in any jurisdiction of Canada where family protection coverage is available.

The insurer submitted that the plaintiff did not meet the definition of “dependent relative” because at the time of the accident she owned an automobile that was licensed in Nova Scotia. The Court held that the plaintiff not only did not have insurance on her car but that as Nova Scotia does not offer coverage for accidents involving unidentified drivers such that, she could not have a Nova Scotia standard automobile policy to which she could add family protection coverage. Thus, family protection coverage was not “available” to the plaintiff. The Court found that as the plaintiff did not own an automobile that was licensed in a jurisdiction in Canada where family protection coverage was available, she qualified as a “dependent relative” and was an “insured person” for the purposes of coverage under the OPCF 44R endorsement.

The Court held that as the plaintiff was able to claim under the OPCF 44R endorsement, there was no recourse to the Fund as that Fund is the payer of last resort.

The Court dismissed the action as against the Superintendent.

This case was digested by Katherine E. Linton and edited by David W. Pilley of Harper Grey LLP. If you would like to discuss this case further, please feel free to contact them directly at klinton@harpergrey.com or dpilley@harpergrey.com or review their biographies at http://www.harpergrey.com

Wagner v. Saskatchewan Government Insurance, [2011] S.J. No. 10, January 5, 2011, Saskatchewan Provincial Court (Civil Division), B.M. Singer Prov. Ct. J.

One of the insureds was worried that the extension pipe would freeze and therefore he habitually removed the extension pipe during periods of freezing and replaced it during periods of melt. One morning, the insured forgot to replace the extension pipe and the water exiting the sump pump re-entered the home through a basement window, causing water damage.

The insurer argued that the loss was excluded under several exclusions in the policy and that the loss or damage was not due to a sudden, unexpected event. Three other exclusions were relied upon:

a)         [We do not cover loss or damage] … caused by flood, surface water, waves, overflow of streams or other bodies of water, spray, ice or waterborne objects whether any of the former are driven by wind or not.…

b)         [We do not cover loss or damage] … caused by water below ground level including that which exerts pressure on or flows, seeps or leaks through any opening in a sidewalk, driveway, foundation, wall or floor….

h)         [We do not cover loss or damage] … caused by continuous or repeated seepage, or leakage of water or steam from plumbing, heating, fire sprinkler, or air conditioning system, household appliance, a swimming pool or its attached equipment, or a public watermain ….

The underwriter called by the insurer testified at trial that the exclusions were meant to exclude damage caused by inevitable occurrences that only require simple preventative measures or ordinary maintenance. However, the underwriter testified that there would be coverage if a toilet bowl suddenly cracked or a person inadvertently overfilled his or her bath tub.

The Court found that the policy was a comprehensive policy and that if a particular loss was not excluded it was included. The policy stated “if the peril that causes loss or damage is not one of the perils shown below, then you are covered." The Court held that none of the exclusions applied in the circumstances. The water damage was unexpected and sudden. It was not caused by a flood as contemplated in paragraph a), nor was it caused by water below ground as contemplated in paragraph b). Lastly, the water damage was not caused by continuous or repeated seepage or leakage of water.

Thus, the Court granted judgment against the insurer for the full amount of the claim less the deductible.

This case was digested by Aaron D. Atkinson and edited by David W. Pilley of Harper Grey LLP. If you would like to discuss this case further, please feel free to contact them directly at aatkinson@harpergrey.com or dpilley@harpergrey.com or review their biographies at http://www.harpergrey.com

Lafarge Canada Inc. v. JJM Construction Ltd., [2010] B.C.J. No. 2610, December 24, 2010, British Columbia Supreme Court, C. Lynn Smith J.

Lafarge brought a motion before the arbitrator arguing that the Supreme Court of Canada “trilogy” of Cummer-Yonge, Pyrotech and T. Eaton (Agnew-Surpass v. Cummer-Yonge, [1976] 2 S.C.R. 221; Ross Southward Tire v. Pyrotech Products, [1976] 2 S.C.R. 35; T. Eaton Company v. Smith et al., [1978] 2 S.C.R. 749) a line of commercial lease cases, governed the interpretation of the charter party agreements. Lafarge took the position that those principles dictated that because Lafarge had agreed to obtain certain insurance with respect to the barges, the risk of damage to the barges passed to JJM. The arbitrator, J. M. Buchan, ruled that the intention of the parties was that the risk of loss or damage to the barges rested with Lafarge and that JJM could proceed with its claim for damages.

The central issue before the Court was whether the arbitrator was correct in concluding that Lafarge did not acquire “tort immunity” by virtue if its agreement to insure the barges. To determine this issue, the Court considered whether it was the intention of the parties, objectively determined, that the owner of the barges would have no recourse to the charterer for the cost of repairs of damages to the barges, but instead would be limited to recovery from the insurer.

Pursuant to the charter party agreements, the charterer was required to procure at its sole expense, and maintain during the term of the charter party insurance over the hull and machinery as well as protection and indemnity insurance. The charter party agreement provided that all insurance shall name the owner as an additional insured.

When a claim was made by JJM with respect to damages to the barges, the insurer of Lafarge took the position that it would pay only minimal amounts, insufficient in JJM’s view, to repair the barges.

The arbitrator held that the cases in the Supreme Court of Canada trilogy dealt with subrogated claims by landlords’ insurers to recover monies paid by way of indemnity to landlords following fire damage which was caused by the tenants’ negligence. These cases involved landlords covenanting to insure the property and to obtain insurance and in such circumstances the tenants were immunized against claims by the landlords for losses that were or should have been as contemplated by the landlords’ covenants. In that circumstance, the tenants intended to shelter under the umbrella of the landlords’ insurance coverage and had paid consideration therefore. The arbitrator decided that Lafarge and JJM did not contemplate or agree under the charter agreement that Lafarge would shelter itself under JJM’s insurance.

On appeal to the Court, Lafarge argued that the only reasonable interpretation of Lafarge’s covenants to repair is that JJM would effect repairs and then seek reimbursement from Lafarge, and that since the contract must be read as a whole, such reimbursement is satisfied by Lafarge having arranged and paid for insurance. In other words, in Lafarge’s view, the covenant regarding insurance qualifies the obligation to repair.

On appeal, JJM submitted that the purpose of the provision requiring Lafarge to obtain insurance coverage was not to modify the repair covenants; rather, its purpose was to ensure that JJM could recover for damage to the barges even if Lafarge got into financial difficulty.

The Court held that the relevant facts in the Supreme Court of Canada trilogy on which Lafarge relied were distinguishable from the facts in this case. The Court held that the first distinction relates to the identity of the parties seeking to shelter under the covenant. In the trilogy and in other cases upon which JJM relies, Party A covenanted to insure, or in fact insured, with Party B paying the insurance premiums, and Party B sought exoneration from responsibility for damage covered by the insurance. None of these cases involves the situation here, where the very party that covenanted to insure seeks to shelter behind the existence of the insurance in denying responsibility for damage caused by its own acts. The Court held that Lafarge, not JJM is the party that covenanted to insure and that chose both the insurance and the insurer; JJM, not Lafarge, is the beneficiary of that covenant.

The appeal from the arbitrator’s decision and award was dismissed.

This case was digested by Katherine E. Linton and edited by David W. Pilley of Harper Grey LLP. If you would like to discuss this case further, please feel free to contact them directly at klinton@harpergrey.com or dpilley@harpergrey.com or review their biographies at http://www.harpergrey.com