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Credit union employees granted intervenor status in insurers’ appeal against credit union


April 29, 2008   by Canadian Underwriter


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The Ontario Court of Appeal is currently picking its way through a difficult fraud case that has pitted a credit union suffering substantial losses against its two insurers.
The Iroquois Falls Community Credit Union, represented at the appeal court by its liquidator, claimed it had suffered substantial losses “due to the dishonest and/or fraudulent acts of one or more of its employees,” according to an April 28 Court of Appeal endorsement.
The credit union’s insurers, Co-operators General Insurance Company and Cumis General Insurance Company, did not accept the credit union’s characterization of the cause of losses and denied coverage under the terms of the insurance policy.
The credit union sought a motion for summary judgment against the insurers, arguing that it should have been covered under the policy.
The credit union’s motion for summary judgment against the insurers expanded to include multiple parties, including one party made up of some of the credit union’s employees.
In its motion, the credit union did not seek an order against these employees, who chose not to participate in the credit union’s motion and have never admitted to liability.
The motions judge granted summary judgment against Co-operators and Cumis, which are now appealing the case.
The credit union’s employees, even though they opted out of the initial motion against the insurers, have now sought standing in the insurers’ appeal against the credit union. They felt the motions judge “made unanticipated, unwarranted and impermissible findings of credibility and fact against them,” the appeal court noted.
The court recognized the credit union employees who are still involved in separate litigation with the credit union had a right to participate as intervenors in the insurers’ appeal, because they were entitled to uphold the motions judge’s direction that his summary judgment decision was not binding on them.
The court recognized it will be argued on appeal that the motion judge erred in finding his summary judgment did not bind the employees and other parties to the action.


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