Court of Appeal upholds agreement blocking brokerage from suing third party insurer in claim regarding underinsurance

Ontario's Court of Appeal has upheld an agreement blocking an independent insurance broker from claiming indemnification against a third party insurance company in a case in which the insured accused the brokerage firm of leaving it underinsured.
The Court of Appeal lifted a stay on an action between the company, Shoeless Joe's, and its brokerage firm, Insurance Portfolio Inc., meaning a court is now open to assess Shoeless Joe's allegations that Insurance Portfolio caused the company to be uninsured. The allegations have not been proven in court.
Insurance Portfolio arranged for loss insurance for Shoeless Joe's. When Shoeless Joe's called on that insurance, it as told there was insufficient coverage.
Without the broker's assistance, Shoeless Joe's settled with the third party insurer, the Dominion of Canada General Insurance Company, for less than the value of its loss. At that time, Shoeless Joe's signed a release in favour of Dominion, agreeing not to make a claim against anyone who might claim contribution or indemnity from Dominion.
Shoeless Joe's then sued Insurance Portfolio, which then sought indemnification against Dominion.
Dominion moved to stop (or "stay") Shoeless Joe's action and Insurance Portfolio's claim for indemnification, based on the release it signed with Shoeless Joe's.
The court lifted the stay on the main action, meaning Shoeless could proceed with its claim against the broker.
But the broker's indemnification action against Dominion couldn't succeed, the court ruled, not only because of the waiver, but because the broker was arguing Shoeless Joe's was actually properly insured, and that Dominion was negligent in paying less than what it should have.
"In our view, it is plain and obvious that [Insurance Portfolio's] third party claim [against Dominion] for indemnification arising from [Shoeless Joe's] underinsured claim cannot succeed," the court ruled.
If Shoeless Joe's was successful in proving it was underinsured, then the basis of Insurance Portfolio's third party indemnity claim against Dominion - i.e. that Shoeless Joe's was properly insured - fell away, the court noted.
Conversely, if Shoeless Joe's was unsuccessful in proving it was underinsured, it suffered no loss. Thus, the brokerage couldn't claim contribution or indemnity from Dominion.