Eastway Tank lodges $14.4 million lawsuit against insurer two years after explosion that killed six workers

Eastway Tank, Pump and Meter is suing its insurance broker for $14.4 million, alleging “negligence and breach of contract” that left the company “underinsured” at the time of the explosion that killed six people on Jan. 13, 2022.

Lawyers for Eastway filed the lawsuit on Jan. 11 against local insurer Gifford Carr Insurance Brokers, claiming the tanker truck manufacturer has incurred $12.9 million in business income underinsurance losses in the two years since the explosion.

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The blast killed six employees in one of the worst workplace incidents in the province in the last 50 years.

Eastway and its president, Neil Greene, are set to face trial in March on charges laid under Ontario’s Occupational Health and Safety Act, alleging the company failed to take adequate precautions during the testing of trucks at its Merivale Road facility.

According to Eastway’s civil lawsuit, Gifford Carr acted as Eastway’s insurance broker for more than 20 years and the company had been engaged in annual policy renewal discussions with an agent in the months prior to the explosion.

Greene met with the agent, Kevin O’Donoghue, in December 2021, but the process was not completed by the annual renewal date of Dec. 25, 2021, court documents state.

According to the lawsuit, the policy renewal documents only arrived by email on Jan. 14, 2022 — the day after the explosion.

“This process was late and delayed due to a lack of attention and diligence on the part of (the agent) who provided assurances to Eastway that he would attend to its insurance needs and that the policy would be renewed,” the lawsuit alleges.

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No statement of defence has been filed on behalf of Gifford Carr or O’Donoghue and the allegations contained in the lawsuit have not been tested in court.

“We do not have any comment or statement at this time and will respect the ongoing legal proceedings,” said company president Matthew Carr in a statement this week.

“I too have no comment,” O’Donoghue wrote in an email.

According to the lawsuit, the Jan. 14 email and the attached cover letter, which confirmed the policy renewal and outlined premium costs, was “not timely or of any utility to Eastway, because it was not delivered in a reasonable timeframe before renewal.

“In fact, the letter was delivered by email on the day after the (explosion), at a time when the buildings at the Eastway yard were damaged beyond repair and in need of rebuilding and replacement.”

The lawsuit further claims that the opportunity had already passed for Gifford to warn Eastway about the “pervasive and serious problem” of underinsurance for commercial properties. It also alleges that O’Donoghue “knew that underinsurance is a pervasive and serious problem for commercial property owners, leaving them vulnerable to absorb large economic losses,” and made no effort to warn Eastway until after the explosion.

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The statement of claim was lodged nearly two years after the explosion that killed six workers: Matthew Kearney, 36, a service supervisor and calibration technician; electrician and airplane engineer Etienne Mabiala, 59; welder Kayla Ferguson, 26; electrician Danny Beale, 29; mechanic and welder Rick Bastien, 57; and Russel McLellan, 43, Eastway’s plant manager. A seventh worker pulled from the fire by coworkers suffered serious burns.

The Ministry of Labour filed charges near the one-year anniversary of the blast, alleging Eastway Tank and Greene failed to take reasonable precautions in the workplace during the “wet testing” of tanker trucks.

The wet test of a fuel tanker is used to determine the volume of liquid it can carry and is typically carried out before a tanker is put into service.

The ministry alleges Eastway and Greene failed to take reasonable precautions by, among other things, ensuring that the diesel fuel to be used in the wet test was not contaminated with gasoline or any other flammable substance. It also alleges Greene and the company failed to ensure the truck tank was free of gasoline or any other flammable substances, and that flammable vapours in the tank were not exposed to a potential source of ignition.

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The ministry further alleges Eastway and Greene failed to provide adequate instruction and supervision to workers on safe fuel storage, and safe fuel handling during the wet testing of trucks.

The judge-alone trial is set for March 4 and is scheduled to sit until mid-June.

“As the matter continues to be before the court, it would be inappropriate for the ministry to offer further comment,” the ministry stated this week.

-With files from Andrew Duffy. 

ahelmer@postmedia.com

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