In a judgment rendered on February 10, 2020, Loue Froid inc. c. Ville de Longueuil, 2020 QCCS 447, the Superior Court dismisses the City of Longueuil’s demand [the “City”] that Compagnie d’assurance AIG du Canada [the “insurer”] take up its defence against a legal action instituted by Plaintiff Loue Froid Inc. [“Loue Froid”].
Following a call for tenders by the City for the rental of cooling units at its water waste management center of Île Charron, the Centre d’épuration Rive-Sud [“CERS”], the bid of Loue Froid is selected. Loue Froid and the City agree to a rental term from June 15, 2018 to November 26, 2018. On November 26, 2018, after being called to remove its equipment, Loue Froid arrives on site and notices its units are damaged. In its proceeding, the latter alleges that the damages to said units were caused by the freezing of its components which were shut off by the City before Loue Froid was contacted to remove them.
Defendant in warranty AquaCERS, Société de gestion du CERS inc. [“AquaCERS”] handles the operations of the CERS. Pursuant to the terms of the contract with the City, AquaCERS AquaCERS was bound to obtain liability insurance designating the City as an additional insured. Addendum 14 of the policy includes the City as additional insured, subject to certain restrictions.
The insurer refuses to take up the City’s defence since it considers that the damaged units are subject to the Damage to Property Rented exclusion which reads as follows:
| “Property damage” to:
Property you own, rent, occupy, including any costs or expenses incurred by you, or any other person, organization or entity for repair, replacement, enhancement, restoration or maintenance of such property for any reason, including prevention of injury to a person or damage to another’s property; [our translation; emphasis by the Court] |
The insurer adds that its denial of coverage is also well founded since the allegations of the proceeding do not present a claim within the scope of the coverage afforded.
The Court, having analyzed the plaintiff’s allegations and exhibits, including the rental invoices, finds that the action by Loue Froid against the City is based on the liability of the latter as lessee of the cooling units. The Court therefore concludes that the Damage to Property Rented exclusion is applicable in the present matter.
The City argues in its response that the scope of the exclusion distorts the policy coverage by annihilating, for all relevant purposes, its effects, therefore asking that it be set aside. The Court does not agree with the City’s position. The Court is of the opinion that the policy provides coverage for the City’s liability as a result of bodily injury and property damage arising out of the operations of the CERS by AquaCERS. The exclusion therefore does not prevent coverage and the insurer is well founded in refusing to take up the City’s defence in view of the pleadings.
Regarding the second ground raised by the insurer, the Court concludes that its sole purpose is to determine the scope of the insurer’s duty to defend, analysis which is not useful in the case at hand given the Court’s finding that the exclusion applies.