On a scorching hot summer’s day in one of Canada’s driest climates, a roofing contractor attended a wood frame condominium development under construction. His purpose was to install roofing membrane on a section of the structure, using an open-flame propane torch. During the heat of the summer, construction paper attached to the walls of the structure had become dried out. In the course of the roofer’s work, the paper was ignited. Flames quickly spread up the exterior wall and ultimately engulfed the structure. In the end, the construction project was rendered a total loss, and significant damage had occurred to nearby buildings and other property.
The total value of the damage was alleged to be in the tens of millions of dollars, and the fire resulted in more than 15 actions, each of which raised a variety of liability issues against multiple parties. The circumstances of the loss also raised various insurance coverage issues. Indeed, several insurers denied coverage under their policies and were subsequently sued by their insureds.
As coverage counsel, Jonathan Hodes of Gascon represented the liability insurers of one of the primary defendants, who had been sued as a major contributor to the loss in all the actions. The insurer had denied coverage under certain warranty provisions in the policy, and the insured sought both indemnity and defence costs associated with the multiple actions in which it was a party. The actions, including the claims for coverage, were ultimately joined together, and extensive discovery and expert investigation on the coverage issues took place. Ultimately, the claims were settled at a mediation, which lasted three days and was attended by 69 parties. The coverage claim was resolved on very favourable terms for our client, as part of a global settlement of all claims, which avoided the cost and risks associated with a trial that had been scheduled to last three months.
