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Squamish Terminals lawsuit against longshoremen reveals complexities of insurance law

Insurance company backs out of lawsuit filed under terminal’s name
Terminals fire
Squamish Terminals' name was attached to a lawsuit that blamed dockworkers for causing the massive fire in 2015.

You might call it the lawsuit that didn’t believe in itself.

A peculiar civil suit involving the Squamish Terminals and the union representing its dockworkers is casting a spotlight on the ability of insurance companies to launch lawsuits in their clients’ names – even if their clients aren’t happy with that.

The terminal has disavowed the lawsuit, saying it was in fact the work of its insurer, the Zurich Insurance company, even though the notice of civil claim lists Squamish Terminals as the plaintiff.

A notice of discontinuance has just been made visible on the Vancouver court registry, signalling the end of the litigation. 

It began when a notice of civil claim was filed in court this month, alleging the International Longshore and Warehouse Union may have been to blame for the massive fire that engulfed the port in April 2015.

The civil claim alleged that a longshoreman may have flicked a cigarette onto creosote-covered wood, sparking the blaze.

It also went on to state that, alternatively, it could’ve been a crewmember from the Star Atlantic, a ship docked at the port, who could’ve disposed of the cigarette improperly.

As a result, Griegstar, the company that owns the Star Atlantic, was also listed as a defendant.

But there was another wrinkle – Griegstar also owns Squamish Terminals. 

Shortly after the claim was filed, Squamish Terminals released a written statement saying “the cause of the fire was never determined and likely never will be.”

“We believe the claim is without merit,” wrote Kim Stegeman-Lowe, president of the terminal.

Stegeman-Lowe went on to explain the terminal filed an insurance claim for the loss of the dock that was destroyed in the April 2015 blaze, and it settled the matter with its insurer, Zurich Canada.

However, said Stegeman-Lowe, Zurich then filed a claim against the longshoremen union, listing Squamish Terminals as the plaintiff.

“We are working with Zurich’s legal counsel to resolve that issue,” she said at the time.

She also said that Griegstar was not included in the suit. However, in the notice of civil claim, that company was listed as a defendant.

But while Squamish Terminals appeared to have raised its displeasure at having its name on the suit, it seemed the terminal did not have the final say on the issue.

In an email sent to The Chief, Stegeman-Lowe wrote: “Zurich controls the lawsuit. We have given Zurich our views on the matter but ultimately Zurich will decide whether to withdraw.” 

Such legal wrangling highlights a form of insurance law known as subrogation. This refers to the ability of an insurance company to sue any third parties it believes to be at fault in an incident after the company has paid out its insured clients.

One consequence many people may be unaware of, says lawyer Scott Stanley, is that companies often have the right to sue someone under your name.

“I think people need to be aware that when an insurance company pays you, they have the right to do this,” said Stanley, who handles insurance cases in the Vancouver area.

“They have the right to use your name. A lot of people don’t understand that.”

And it’s not limited to high-profile cases such as this one.

“The same could happen to a person who had a simple homeowner’s claim,” Stanley said. “[Your neighbour’s] kid throws a ball into your window and you make an insurance claim, and the next thing you know, you’re suing your neighbour and good friend.”

Stanley added that customers usually don’t have a right to stop the insurance company from filing lawsuits in their name, as it is a common stipulation in insurance contracts, though there are some exceptions.

“In addition to it being in the contract of insurance, it’s also a statutory right under the Insurance Act,” added Michelle Tribe, a lawyer who handles claims against insurance companies.

“It is common practice for insurers to do that,” she said. “The insurer has to sue in the name of the insured because it’s the insured who has the cause of action, not the insurer.”

Under the laws of negligence, insurance companies can go after third parties they believe to have caused the loss, she said.

Part of the reasoning behind the procedure is that it keeps insurance premiums down, Tribe explained.

But another curious aspect of the longshoremen case is the fact that Zurich filed the lawsuit even though the terminal had openly said the cause of the fire was never determined, and probably will never be found.

When prompted about why such a suit might be filed, given what appears to be a lack of any evidence against the longshoremen, the lawyers took note of the timing.

The suit, filed this month, comes around the two-year anniversary of the terminal fire. 

When an incident happens, typically there is a two-year period in which lawsuits can be started.

In this case, Stanley said, it’s probably a move by the insurance company to extend the deadline, because if a suit is filed within the two-year period, the case can be pursued beyond the time limit.

In this way, the lawsuit serves as a placeholder just in case any actual evidence against the longshoremen turns up, he said.

Tribe also agreed the deadline was a big factor, but also said it’s probable the insurance company made its own investigation before filing a claim as serious as this one.

“It would be foolhardy to commence a lawsuit if you did not know you could prove the material facts in your notice of civil claim,” said Tribe. 

“I expect the insurance company has something that says a cigarette butt started the fire.”

The terminal, she noted, may have disagreed on this conclusion.

However, now that a discontinuance has been filed, the suit will not be allowed to proceed forward.

It’s still possible for another lawsuit to be filed – though it would have to be about minutiae not directly related to the blaze.

“They’d have to have a different cause of action than the fire in order to commence a separate lawsuit,” said Tribe. “So if they had a cause of action like breach under a policy, or something.”

 Rob Ashton, president of the International Longshore and Warehouse Union of Canada, would not comment for the story, save for a brief email that read: “ILWU Canada and Squamish terminals are working together to sort this issue out.”

After the notice of discontinuance was filed, Zurich Canada issued a brief statement to The Chief: “This is to confirm that the action in question has been discontinued in its entirety. Zurich will not be commenting further on this matter.”

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