A court victory against an insurance company has helped a little Ontario pickle maker get itself out of a four-year-old, well, pickle.
In a summary judgment, Mr. Justice David Brown of Ontario Superior Court has ruled that Lombard General Insurance Co. of Canada must pay a claim of $160,156.86 filed against it by Caneast Foods Ltd. in connection with losses the Richmond Hill, Ont., firm suffered as a result of the great power blackout of Aug. 14, 2003, that left 50 million people in Ontario and eight U.S. states in the dark for well over a day.
Adding to the sting, the judge dismissed as “most convoluted” some of the arguments the insurer used to try to avoid having to pay up.
It is not clear whether Lombard plans to appeal the decision.
Neither officials of the insurer nor Caneast proprietor Graham McConnell could immediately be reached for comment Thursday.
However, according to Judge Brown's June 29 written ruling, pickle production was at its peak at Caneast's Holland Landing plant when the blackout struck and left it without electricity for about 27 hours.
“Cucumbers used in making pickles are very perishable and must be pickled and packed quickly after they are harvested,” he said in the ruling. “If they are not, they spoil and must be discarded.”
What is more, as well as making standard pickles, Caneast was at the time producing kosher dill pickles, which spoil quickly unless they are refrigerated after processing.
The blackout shut down the plant's refrigeration system and processing equipment, with the result that a large quantity of cucumbers at various stages of processing spoiled and had to be thrown out, the judge said.
In addition, Caneast incurred costs to clean up the mess caused by the spoiled pickles, and, when power was eventually restored, “the voltage was lower than normal, resulting in damage to some equipment.”
In all, this led to the plant being out of operation for four to five days, during which the company was “unable to fill several pickle orders with a resulting loss of profits.”
Caneast filed a proof of loss with Lombard in December 2003 and again in August 2004 under the “comprehensive business policy” it had taken out with the insurer in March 2003, the ruling says.
However, Lombard rejected the claim.
It argued that it should not have to pay up because the way it saw things, the damage Caneast suffered was caused not only by the blackout, but also by a “mechanical or electrical breakdown or derangement.” Such an event, it contended, was specifically mentioned in the list of “excluded perils” contained in the policy – that is, exceptional risks or events that would not be covered.
But Judge Brown rejected the insurer's argument.
“Caneast's equipment did not stop because of some defect or internal problem; the machines stopped because the power was cut,” he said in his ruling. “In effect, the blackout ‘pulled the plug' on Caneast's equipment.”
He fired a final shot at the insurer's legal strategy.
“To rely on the ‘mechanical or electrical breakdown or derangement' exclusion strikes me as a most convoluted way by which to attempt to remove blackouts from covered perils,” he wrote. “I doubt that it would be apparent to a typical insured that blackouts would be caught by the exclusion.”
