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 it of failing to make sure the company was properly insured at the time of the blast.

Eastway Tank Pump and Meter filed the civil suit against Gifford Carr Insurance Group last week in Ottawa's Ontario Superior Court of Justice.

Eastway alleges it has lost approximately $13 million because Gifford Carr failed to ensure the 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 its Merivale Road yard, 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-explosion claims process with its insurer and lays the blame at Gifford Carr's feet.

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

The allegations have not been tested in court.

Gifford Carr declined to comment on its behalf and for the account executive named in the suit. CBC reached out to Eastway and its lawyer and did not hear back.

Lawsuit filed ahead of trial 

The lawsuit comes fewer than two months before Eastway and owner Neil Greene are scheduled to stand trial in the Ontario Court of Justice over alleged workplace safety violations the day of the explosion.

The province's Ministry of Labour charged Greene and the company with three counts each 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 deadliest workplace disaster in decades.

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

Clockwise from top left: Matt Kearney, Etienne Mabiala, Danny Beale, Rick Bastien, Russell McLellan and Kayla Ferguson were killed by the Eastway Tank explosion. (Submitted photos)

'Lack of attention and diligence'

At the time of the blast, Eastway had commercial insurance through Travelers 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 blast about the renewal of Eastway's insurance coverage, the company went on to state.

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

Eastway didn't receive a package related to the renewal until 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.

The Ottawa Police Service provided this photo in the days after the explosion. Eastway says the blast left the business 'devastated.' (Ottawa Police Service)

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, Eastway also 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, they have to make sure people buy adequate insurance."

Police investigation into blast continues

Ottawa police are also looking at the explosion and that investigation continues, a spokesperson told CBC last week.

Transport Canada confirmed it has not received an application from Eastway to operate at a different location.

Eastway has not 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 consists of a photo memorializing the "never forgotten" victims of the explosion.

Eastway's website features this memorial to the victims of the explosion. (CBC)