The written word carries the day

The insurer was precluded from bringing a claim for contribution and indemnity from its insured due to the waiver of subrogation in the policy, even though the insured was not covered by the policy.

Insurance law – Liability insurance – Wrap up policies – Additional named insured – Exclusions – Subrogation – Practice – Summary judgments

Scaffidi-Argentina v. Tega Homes Developments Inc., [2020] O.J. No. 4723, 2020 ONSC 6656, Ontario Superior Court of Justice, October 30, 2020, C.T. Hackland J.

The defendant developer settled with the plaintiff. The settlement was funded by the developer’s insurer pursuant to a wrap up liability policy, which then sought contribution and indemnity on the basis of subrogation from the subcontractor geotechnical engineer.  The geotechnical engineer was an additional insured to the policy as it had a contract with the developer pertaining to the insured project.  The policy included a waiver of subrogation against insureds.  However, the insurer took the position that the geotechnical engineer could not benefit from the waiver of subrogation because it was not covered with respect to the claims of negligence and nuisance which formed the basis for the claim for contribution and indemnity.  The Court held that it was bound to give effect to the clear and unambiguous wording of the waiver of subrogation which, as drafted, applied to insureds, the definition for which included additional insureds.  It would have been open to the insurer to alter the scope of the subrogation waiver but it was not for the court to do so.

This case was digested by Dionne H. Liu, and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter. If you would like to discuss this case further, please contact Dionne H. Liu at [email protected].

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