Silvia Scavuzzo v. Wawanesa Mutual Insurance Company, 2009 ONFSCDRS 73

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2009 ONFSCDRS 73

FSCO A08-000836

BETWEEN:

SILVIA SCAVUZZO

Applicant

and

WAWANESA MUTUAL INSURANCE COMPANY

Insurer

and

LORETO ROMERO LLP

Third Party

MOTION DECISION

Before: Fred Sampliner

Heard: By telephone conference call on December 19, 2008

Appearances: Piera Segreto for Ms. Scavuzzo

Seth Kornblum did not participate for Wawanesa

Mark Koskie for Loreto Romero LLP

Issues:

An arbitration hearing to determine Ms. Silvia Scavuzzo’s claims for accident benefits¹ against Wawanesa Mutual Insurance Company (“Wawanesa”) respecting a January 4, 2006 motor vehicle accident is scheduled to commence on July 6, 2009 at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

Ms. Scavuzzo has been represented by Ms. Piera Segreto since her filing for arbitration, but Ms. Segreto left the law firm operated by Mr. Frank Loreto in June 2008 to form a new firm. The Loreto Romero LLP (“Loreto”) law firm retained custody of Ms. Scavuzzo’s file when Ms. Segreto and other lawyers departed.

At the time of the November 12, 2008 pre-hearing conference Ms. Scavuzzo did not have possession of her file, and shortly thereafter she filed a Third Party Motion against Loreto seeking an order to deliver possession.

Loreto transferred Ms. Scavuzzo’s file to Ms. Segreto the day before the December 19, 2008 hearing of this Third Party Motion. This decision solely concerns Ms. Scavuzzo’s claims for legal fees and disbursements of this Motion against Loreto, and that law firm’s similar counterclaim against her.

Issue:

Is Ms. Scavuzzo or Loreto Romero LLP entitled to expenses of this Motion? What is the amount of the successful party’s expenses?

Result:

Ms. Scavuzzo is entitled to $629.27 for her expenses of the Motion from Loreto Romero LLP.

EVIDENCE AND ANALYSIS:

There is no evidence contradicting that Mr. Frank Loreto, principal lawyer at Loreto Romero LLP, was served with Ms. Scavuzzo’s Motion Record and Book of Authorities on November 26, 2008 under Rule 67 of the Dispute Resolution Practice Code. I find that Loreto Romero LLP was properly served and joined as a third party in this proceeding under that Rule because at that time the firm held Ms. Scavuzzo’s accident benefits file, which contained documents reasonably necessary for her lawyer, Ms. Segreto, to continue effectively representing her in this arbitration.

Ms. Scavuzzo maintains Loreto is responsible for her unnecessary expense on this Motion because it delayed transfer of her file until the eve of the hearing. Loreto argues that this Tribunal has no jurisdiction over the transfer of Ms. Scavuzzo’s accident benefits file or expenses of this Motion because it is the subject of a pending court lawsuit between Mr. Frank Loreto’s law firm originally handling Ms. Scavuzzo’s accident benefits claims and those lawyers who split off to form a new law firm.

The Loreto lawsuit seeks economic damages and injunctive relief for breach of fiduciary duty, interference with economic relations and breach of contract between the named lawyers. The allegations in the pleadings do not provide a basis to interfere with the validity of Ms. Scavuzzo’s retainer with Ms. Segreto.

On December 16, 2008, Justice Brown made an interim Order setting out a specific date for file transfers from Loreto to Ms. Segreto’s new law firm. At the time of this Order Loreto had been served with and therefore knew about Ms. Scavuzzo’s pending Motion in this arbitration and request for her expenses. Yet, there is nothing in the Order to indicate Loreto requested the Court to take carriage of expenses on this Motion or it would be dealt with in the future by the Court.

I can accept that the Court will specifically determine the lawyers’ disputes between themselves about legal fees and disbursements, but the Order and pleadings do not indicate the outcome of the lawsuit will determine the expenses between the client, Ms. Scavuzzo, and Loreto on this Motion. Thus, I reject Loreto’s position that jurisdiction for the expenses of Ms. Scavuzzo’s Motion herein reside with the Court.

Loreto participated in the December 19, 2008 Motion Hearing, and both parties subsequently filed written submissions on costs of the Motion. Essentially, Loreto contends the firm met its obligations by transferring Ms. Scavuzzo’s accident benefits file to Ms. Segreto on December 18, 2008, and the hearing of the Motion was unnecessary. While I agree it was unnecessary to hear the Motion itself because of the file turnover, I do not agree that Ms. Scavuzzo’s expenses are automatically resolved.

Solicitors are obliged to promptly turn over a client’s documents in their possession to a new solicitor once their retainer is terminated and fees and/or disbursements are paid or protected. The prompt transfer of a client’s accident benefits file avoids unnecessary expenses and enhances the insured’s ability to prepare for a scheduled pre-hearing or hearing, and more importantly affording a better chance to settle their claims with an insurer.

Loreto acknowledges receiving Ms. Segreto’s July 10, 2008 initial request to transfer Ms. Scavuzzo’s file to her new law firm, along with her client’s authorization and direction protecting their reasonable fees and disbursements from any settlement or judgment. Shortly thereafter, Loreto filed its lawsuit against Ms. Segreto and the other members of her new firm.

Ms. Segreto reiterated Ms. Scavuzzo’s request in August 2008, explaining she needed the file to prepare for the November 12, 2008 pre-hearing in this matter. Two more request letters followed in September and October 2008. The next month Ms. Segreto threatened her client would file a motion with this Tribunal against Loreto.

I do not accept that Loreto has a legitimate defence for its delay after October 2008. On the one hand, two or three months is justifiable to allow Loreto Romero LLP to re-arrange workloads, review the file, make copies and prepare an accounting after Ms. Segreto’s and the other lawyers departed the firm. On the other hand, the actual file transfer on the brink of the hearing on Ms. Scavuzzo’s Motion convinces me that the long delay does not lie at Ms. Segreto’s or her client’s doorstep, but was primarily motivated by Loreto’s disputes with Ms. Segreto and her new law partners. I find Loreto had sufficient time to prepare Ms. Scavuzzo’s file and transfer it to Ms. Segreto by November 10, 2008.

I conducted the pre-hearing on November 12, 2008, and it was apparent that Ms. Segreto did not have Ms. Scavuzzo’s file to prepare² and had also been unable to meet her client’s document exchange obligations.³ The pre-hearing discussion in this matter was not productive on discussion of the issues or towards the main point of settlement.

Loreto’s failure to promptly transfer Ms. Scavuzzo’s accident benefits documents to Ms. Segreto from November 10 to December 17, 2008 leads me to find she is entitled to recover her expenses of this motion during that time period. I fix the amount of the lawyer/law clerk fees on this motion at $500 plus $25 GST and $104.27 disbursements. I dismiss Loreto’s claim for its expenses of this Motion.

June 12, 2009

Fred Sampliner

Arbitrator

Date