City launches $361M lawsuit over Rideau Street sinkhole

UPDATE |RTG released the city from its $230M claim on Mar. 24, 2022.The same day, the city filed to changed the amount it's suing its insurers to $131M.

The City of Ottawa is launching a $361-million lawsuit against its own insurers for lossesdue to the Rideau Street sinkhole, according to a confidential memo to city council.

In June 2016, a sinkhole just east of the intersection with Sussex Drive swallowed a massive piece of the roadway and a locksmith's van.

No one was injured, but the event was one of the factors that led to the east-west LRT line being delayed by more than a year.

Theconfidential memo, which was first reported by the Ottawa Citizen, and signed by rail director Michael Morgan and external lawyerSharon Vogel andsentto council members on Monday evening.

It said the city delivered its "proof of loss" statements to its insurers last August, seeking to be reimbursedfor "financial costs, legal and accounting expenses, anticipated lost gross revenue and additional staffing costs."

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However, the insurers denied the city's claim last December, which has led to the lawsuit that is being launched this week in Ontario Superior Court in Toronto.

Late Wednesday, the city released the 16-page statement of claim, in which it argued it was out of pocket $131 million, including$22.8 million for "consultant expenditures and wages and salaries of employees."

The even larger $361-million figure is due to the fact that the contractor, Rideau Transit Group (RTG), had made a claim for$230 million in losses against the city.

The municipality is including those costs in the lawsuit.

"In the event that RTG is successful in establishing its claimagainst the City for alleged losses in the amount of $230,000,000, which RTG claims is sustained as a result of the Sinkhole Event (all of which the City has denied), the City also is entitled to recover this amount under the Policy," the city argues in its statement of claim.