In Moore Equipment Ltd. v. Temple Insurance Company, Justice Smith considers an insurer’s duty to defend and indemnity an “Unnamed Insured.”
In this case, the 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 lease between Moore and Bondfield specified that Bondfield would assume all risk and was responsible for all damages and losses incurred while leasing the Skyjack scissor lift. Bondfield also agreed to obtain all risk liability insurance for the construction project, naming Moore as an insured party.
Bondfield obtained a specific Commercial General Liability Policy (“CGL”) for the project with the Respondent, Temple Insurance Company (“Temple”), but they failed to name Moore as an insured party under the policy. An action for damages was commenced against Bondfield and Moore after an individual was injured while using the Skyjack scissor lift to inspect the installation of the solar panels.
Moore brought an application seeking a declaration that Temple is obligated to insure and indemnity them for any damages claimed in the action as a result of Bondfield’s CGL insurance policy. Moore claims that they are either an additional insured or an “Unnamed Insured” under the policy.
On the other hand, Temple submits that Bondfield failed to name Moore as an additional insured under its policy and that as a result, they have no duty to indemnify or defend Moore in the action.
Justice Smith considered whether Moore was an “Unnamed Insured” entitled to insurance coverage pursuant to Endorsement no.13 of Temple’s policy and concluded that Moore’s application should be dismissed.
Endorsement 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.
Legal Test
Justice Smith references the cases of Papapetrou v. 1054422 Ontario Ltd. and Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada. In Papapetrou v. 1054422 Ontario Ltd, 2012 ONCA 506 at paragraph 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.
However, the Supreme Court in Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2010 SCC 33 stated that if the insurer can demonstrate that the claim falls outside of the policy’s grant of coverage, or is excluded by an exclusion clause, the insurer’s duty to defend does not arise.
Is Moore Considered an “Unnamed Insured?”
Bondfield and Moore were under the impression that the scissor lift lease stated that Bondfield would assume all risk with respect to the operation and use of the scissor lift, while it was in its control. Bondfield would be responsible for all damages and losses. Bondfield also agreed to indemnify and hold Moore harmless, supporting the finding that both parties believed that Bondfield would assume all risks with respect to the operation and use of the scissor lift.
The first sentence of paragraph 5 of the lease states the following:
“Any person … corporation (hereafter referred to as an “Unnamed Insured”) in whose name the “Named Insured” has, by written agreement (“the lease”) contracted to effect insurance as provided by this policy.”
As Bondfield contracted, in writing, by signing the lease, to effect insurance as provided by Temple’s CGL policy, Moore meets the definition of an “Unnamed Insured.”
The second sentence of paragraph 5 of the lease states the following:
“However, the insurance provided for the “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 the contract performed for the “Unnamed Insured.”
The insurance coverage for an “Unnamed Insured” such as Moore is limited to operations performed by or on behalf of the “Named Insured,” Bondfield, in connection with contracts performed for Moore. The question that remains is whether or not the use of the scissor lift to inspect the installation of the solar panels was in connection with a contract “performed for” Moore.
The contract between Moore and Bondfield was for the lease of the scissor lift to be used on a construction project to install solar panels on the roof of a building. The contract between Bondfield and Potentia Solar Inc. was to install the solar panels, including electrical inspection. The insurance coverage for an “Unnamed Insured” is restricted to liabilities arising out of the operations performed by Bondfield “in connection with the contract(s) performed for Moore.”
The electrical inspection and use of the scissor lift to inspect the solar panels was not an operation performed by Bondfield in connection with the contract performed for Moore, but rather performed for Potentia Solar Inc.
As the scissor lift was being used in connection with the contract performed by Bondfield for Potentia Solar Inc., the limitation of Endorsement no. 13 does not allow for Moore to be considered an “Unnamed Insured” under the lease.
Justice Smith concluded that the restriction of liability insurance coverage for an “Unnamed Insured” solely for liability arising out of operations performed by or on behalf of Bondfield for Moore was unambiguous. The liability in this case arose out of the operations performed by Bondfield, but did not arise in connection with the contract performed “for Moore.” For those reasons, Justice Smith concluded that Moore was an “Unnamed Insured,” but subject to the restriction on coverage in Endorsement no. 13, Moore’s application should be dismissed.