Eastway Tank, where blast left 6 dead, suing insurance broker for $14M

The Ottawa tanker manufacturer where a 2022 explosion left six workers dead is suing its insurance broker for $14.4 million, accusing itof failing to make sure the companywas properly insured at the time of the blast.

Eastway Tank Pump and Meterfiled the civil suit againstGifford Carr Insurance Group last week inOttawa's Ontario Superior Court of Justice.

Eastway alleges it has lost approximately $13 million because Gifford Carr failedto ensurethe company had adequate business interruption coverage at the time of the explosion on Jan. 13, 2022.

The company claims it was also "underinsured"for "employee tools" and the buildings at itsMerivale Roadyard, which were damaged"beyond repair" after the blast that left the decades-old business"devastated."

Eastway said it became aware of the alleged inadequate insurance coverage during the post-explosionclaims process with its insurerandlays the blame at Gifford Carr's feet.

The brokerage firm, which was founded in Ottawa and dates back to 1948, wasEastway's broker for over 20 years before the blast.

The allegations have not been testedin court.

Gifford Carrdeclined to comment on its behalf andfortheaccount executive named in the suit.CBC reached out to Eastway and its lawyer anddid not hear back.

Lawsuit filed ahead of trial

The lawsuit comes fewer than two months before Eastway and owner Neil Greeneare scheduled tostand trial in the Ontario Court of Justiceover alleged workplace safety violations the day of the explosion.

The province's Ministry of Labour charged Greene and the company withthree countseach under the province's Occupational Health and Safety Act, including allegedly failing to take reasonable precautions to protect workers.

The explosion left six employees dead and became Ottawa's deadliestworkplace disaster in decades.

Rick Bastien, Etienne Mabiala, Danny Beale, Kayla Ferguson and Russell McLellandied in the blast while asixth employee, Matt Kearney, succumbed to his injuries in hospital the next day.

'Lack of attention and diligence'

At the time of the blast, Eastwayhad commercial insurance throughTravelers Insurance Company of Canada.Gifford Carr provided"assistance and administration,"according to the statement of claim.

Gifford Carr was "engaged" with Eastway during the months before the blastabout the renewal of Eastway'sinsurance coverage, the company went on to state.

Theprocess was late and delayed "due to a lack of attention and diligence" from the Gifford Carraccount executive assigned to the account, Kevin O'Donoghue.

Eastway didn't receive a package related to the renewaluntil O'Donogue sent the company an email on Jan. 14, 2022, the day after the blast, according to Eastway. The cover letter was dated the day of the explosion.

"Eastway pleads that the shortfall between actual losses and damages caused by the[explosion]and the insurance limits contained in the Travelers policy constitute damages caused by the negligence and/or breach of contract of Gifford and Mr. O'Donoghue," according to the statement of claim.

When the limit of Eastway's building coverage was eventually increased in March 2022, it was due to Eastway's having requested the increase"with no input, advice or recommendation from Mr. O'Donoghue,"according to the statement of claim.

Gifford has not helped Eastway"in any material way"with its claims process since the blast, Eastwayalso alleged.

Alf Kwinter, a Toronto lawyer whose key areas of practice include insurance law, said there's a heavy onus on brokers to make sure clients are properly insured.

"They just can't collect premiums," he said of brokers in general. "They have to find out what the business is all about, theyhave to make sure people buy adequate insurance."

Police investigation into blast continues

Ottawa police arealsolookingatthe explosion and thatinvestigationcontinues, a spokesperson told CBClast week.

Transport Canada confirmed it hasnot received an application from Eastway to operate at a different location.

Eastwayhasnot conducted regular operations as part of its registration with Transport Canada since the explosion, the agency added in an emailed statement.

There is no record of bankruptcy for Eastway, the federal Office of the Superintendent of Bankruptcy said last week.

The company's website currently consistsof a photomemorializing the "never forgotten" victims of the explosion.