Portage LaPrairie Mutual Insurance Company (“Portage”) insured Green Thumb Farmers Market. The defendant MacLean was an employee of Green Thumb when a fire occurred while MacLean was cooking at the market. Portage paid out its insured’s fire loss claim and commenced a subrogated action against MacLean. MacLean successfully brought an action for summary judgment against Portage on the basis that the circumstances of the case did not allow for the insured employer to sue MacLean. Since, based on the principles of subrogation, Portage could have no greater rights than its insured, Portage could not then recover from MacLean.

Although the court found that there was no right of the employer/insured to sue MacLean, and therefore no subrogated right of Portage to bring the claim, the court also considered the insurance contract and found that Portage had specifically contracted out of the right to sue an employee of its insured. MacLean relied upon a provision of the commercial general liability portion of the policy in which Portage named employees as insured for negligent acts in the course of employment causing bodily injury and property damage to third parties. MacLean argued that because employees are “insured” for the purposes of the CGL portion of the policy, Portage specifically agreed not to bring a subrogated claim against employees under the Property, Business Interruption and Extra Expense portion of the policy (under which payment was made for the fire loss). The Property portion of the policy contained the following provision:

11. The Insurer, upon making any payment or assuming liability therefor under this Form, shall be subrogated to all rights of recovery of the Insured against others and may bring action to enforce such rights. Notwithstanding the foregoing, all rights of subrogation are hereby waived against any corporation, firm, individual or other interest with respect to which insurance is provided by this Policy.

The Declarations portion of the policy made it clear that the term “policy” included both the Property portion and the CGL portion. The court found that on a plain reading of the policy, the rights of subrogation against employees were specifically waived by Portage. Further, the court found that a clause waiving subrogation rights against the employer for loss arising from what will normally be conduct contemplated by the contracting parties to be performed by the employer’s employees should also apply for the benefit of the employees.