The sinkhole that engulfed a van on Rideau Street in 2016 has also opened up costly lawsuits between the city of Ottawa, the Rideau Transit Group and the insurance companies covering the first phase of light rail transportation construction in the nation’s capital.
A confidential memo sent on behalf of Ottawa’s Railway Construction Director Michael Morgan to city council members Monday night said the city is demanding $ 361 million in costs from insurance companies on Stage 1 LRT in connection with the sinkhole, which has been cited as a significant source of delays in opening of the Confederate line for transit riders.
The sinkhole opened on June 8, 2016 over a tunnel built under Rideau Street to the light rail track. No one was injured, but it swallowed a van, which was eventually left in the opening as it was filled with concrete.
New high-angle shot shows the size and depth of the massive Ottawa sinkhole
Ottawa hopes to recover so-called “soft costs” associated with the sinkhole, citing financial, legal, personnel and accounting costs incurred by the city plus lost revenue due to LRT delays. The city had filed a claim for these costs with the group of insurance companies that RTG knocked on to cover construction activity for Phase 1 LRT, but these claims were rejected.
The city claims that the insurance companies violated the policy by not paying insured losses in connection with the sinkhole.
The insurance companies covered the city’s previous claims in November 2018 for $ 1.7 million in “hard costs,” Mayor Steve Kanellakos said Wednesday to reporters who largely covered expenses such as police resources and traffic disruptions due to the sinkhole.
The confidential note, obtained by Global News and first reported by the Ottawa Citizen on Wednesday, said the city’s claim was filed in court on May 11.
Morgan’s memo, co-authored by the city’s external lawyer Sharon Vogel, indicated that the city’s evidence of loss was first filed with insurance companies in August 2020, but was denied in December of that year.
Included in these documents was a $ 230 million claim from RTG against the city that Ottawa would seek to recover from the insurance companies if found liable.
Kanellakos declined on Wednesday to provide details on what RTG’s claims against the city include, but said it generally relates to the cost of repairing the sinkhole and delays in the implementation of the overall project.
Ottawa is taking ‘proactive steps’ to avoid Phase 2 LRT delays
The city hopes to argue its case along with one filed by RTG in June 2019. The consortium tasked with building and maintaining Phase 1 LRT is also seeking $ 275 million in claims from insurance companies after being denied coverage for , what it claims is insured losses related to sinkholes.
Because both RTG and the city are seeking funds available under the policy, which includes a liability limit of up to $ 700 million for a single loss, Morgan said Ottawa is trying to consolidate its lawsuit with RTG’s to ensure a successful claim from the contractor does not edge the city out of its potential payout.
The city is raising its claim in the Ontario Superior Court in Toronto rather than Ottawa to streamline the process of merging the two actions.
Mayor Jim Watson would not comment on the details of the lawsuit Wednesday, but expressed his confidence in the city’s prospects.
“The legal action we take is, of course, to ensure the protection of our taxpayers. We feel we have a very solid case, ”he told reporters.
Earlier this year, the city council approved the addition of $ 15 million to the Emergency Fund for Phase 1 LRT, citing the need to cover additional attorney fees in connection with ongoing litigation on the project.
No sinkholes are expected on the second stage LRT tunnel, says the mayor of Ottawa
© 2021 Global News, a division of Corus Entertainment Inc.