An Insurer had a Duty to Defend a Municipality

The insurer was obligated to assume the defence of an additional named insured because all the plaintiff’s claims potentially arose out of or were related to the primary insured’s operations.

Sinclair v. Markham (Town), [2014] O.J. No. 4202, 2014 ONSC 1550, Ontario Superior Court of Justice, September 10, 2014, E.P. Belobaba J.

The plaintiff allegedly slipped and fell on a municipal sidewalk and subsequently brought an action against the municipality and the insured. The insured was a contractor employed by the municipality for winter sidewalk maintenance. The municipality third partied the insurer because it was an additional named insured under the insured’s policy. The insurer brought an application seeking a determination as to whether it had a duty to defend the municipality.

The insured’s contract with the municipality provided that the insured was to maintain city sidewalks and promptly respond to the municipality’s directions. Importantly, the insured was also obligated to maintain a “contract-coordinator” who would monitor the condition of municipal sidewalks and notify the municipality if conditions were such that directions to act should be given to the insured.

The plaintiff’s allegations were based in negligence and occupier’s liability, including allegations that the municipality and the insured were negligent in the inspection and reporting of unsafe conditions.

The insurer made two arguments. First, the duty to defend did not arise because the pleadings did not allege that the fall was caused by snow or ice, or that the fall occurred on a sidewalk. Second, in the alternative, if there was a duty to defend, it was limited to the defence of claims which arose out of the operations of the insured.

The court held in favour of the municipality on both points. First, the plaintiff’s response to the demand for particulars clearly established that she fell on a snow-covered or icy municipal sidewalk. Once delivered, the particulars formed part of the pleadings. The duty to defend was therefore engaged. Second, with respect to the extent of the duty to defend, the insurer was obligated to assume the municipality’s defence because all of the plaintiff’s claims could potentially arise out of or were related to the insured’s operations, including the alleged negligent inspection and reporting of unsafe conditions due to the role of the “contract-coordinator.”

This case was originally summarized by Michael J. Robinson and originally edited by David W. Pilley.

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