Court of Appeal for Ontario

Date: 20220309 Docket: C69098

Fairburn A.C.J.O., Thorburn and Favreau JJ.A.

BETWEEN

Joe Maio and Lidia Maio Plaintiffs (Respondents)

and

Kapp Contracting Inc., Mer Mechanical Inc. and The Corporation of the City of Vaughan Defendants

and

Lori Morris Design Inc., B.K. Consulting Inc., Amati Plumbing Supply Ltd. and Horus S.A.S. Third Parties (Appellant)

and

Ross H. Barber & Associates Fourth Party

Counsel: Dana Eichler and Erin L. Crochetiere, for the appellant Michael R. Kestenberg, for the respondents

Heard: March 3, 2022 by video conference

On appeal from the order of Justice Sean F. Dunphy of the Superior Court of Justice, dated January 13, 2021, with reasons reported at 2021 ONSC 304.

Reasons for Decision

[1] In 2010, the respondents, Joe and Lidia Maio, brought an action against three defendants arising from damage caused by a flood. The defendants in the action crossclaimed against one another and issued third-party claims, including against the appellant, Horus S.A.S. In turn, the third parties issued a fourth-party claim.

[2] In 2017, the respondents settled the action against one of the defendants, the City of Vaughan (the “City”). As part of the settlement, the respondents and the City entered into a Pierringer Agreement. The Pierringer Agreement included the following term:

THE PLAINTIFFS AND THE SETTLING DEFENDANT AGREE AND CONSENT to the dismissal of the action commenced in the Superior Court of Justice at Toronto under Court File No.: CV-10-410508 (the “Action”) on a without costs basis as against the Settling Defendant. It is understood and agreed that, should the Plaintiffs so choose, the Plaintiffs may continue to pursue their claims against the Remaining Defendants, but that such claim will only be pursued solely with respect to the several liability of the Remaining Defendants. [Emphasis added.]

[3] Following the settlement, the respondents obtained an order from Myers J. that dismissed both their claim against the City and the remaining defendants’ crossclaims against the City (the “Order”). The Order included a term that the respondents were to amend their statement of claim to restrict their claims against the remaining defendants to each defendant’s several liability.

[4] The respondents subsequently agreed to a dismissal of the claim against one of the two remaining defendants, Kapp Contracting Inc. (“Kapp”). The only remaining defendant to the action is Mer Mechanical Inc. (“Mer”).

[5] At the direction of the pre-trial judge, the motion judge heard a motion under r. 21 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, to determine the effect of the Pierringer Agreement and the Order on the third- and fourth-party claims.

[6] In his decision, the motion judge rejected the appellant’s argument that the Pierringer Agreement and the Order precluded Mer from pursuing its third-party claims. In doing so, the motion judge reasoned that the Order has no bearing on Mer’s ability to seek contribution from third parties for any damages Mer is required to pay:

The plaintiffs did not sue those third or fourth parties and will never receive a judgment in its favour naming them. The main action – the one that the plaintiffs are a party to – is not concerned with determining the degree of responsibility of any of those third and subsequent parties for the damages allegedly suffered by the plaintiffs. That is the object of the third and fourth party claims which are quite unaffected by the order of Myers J.

If Mer is found liable for any amount in the main action, it may succeed in pinning all -or - none of that liability on those behind it in the chain in the third party claims. The questions are quite distinct from each other.

[7] We see no error in the motion judge’s reasoning and conclusion. While the Pierringer Agreement and the Order prevent the respondents from recovering damages against Mer that may be attributable to the City or to Kapp, this in no way affects Mer’s ability to seek contribution from the appellant. This conclusion is well supported by the wording of the Order, which only addresses the limits on the respondents’ ability to recover against Mer; it does not circumscribe or limit Mer’s ability to recover from the appellant or any other third or fourth parties.

[8] While the motion judge did not specifically refer to any case law dealing with this issue, nor was he required to, his decision is consistent with this court’s decision in Endean v. St. Joseph's General Hospital, 2019 ONCA 181, where the court dealt with a similar Pierringer Agreement. In Endean, the court explained the general rule that plaintiffs are entitled to recover one hundred percent of their damages from any tortfeasor who is found liable for damages, even if other tortfeasors are also responsible for the same damages. A tortfeasor can then avoid paying all damages by making crossclaims or third-party claims. The court explained that the effect of a Pierringer Agreement must be understood in the context of these principles. As the court held, at para. 52, “the purpose of a Pierringer Order is to facilitate a settlement between a plaintiff and a defendant who wishes to settle (a settling defendant), while maintaining a level playing field for the remaining (non-settling) defendant against whom the plaintiff wishes to proceed to trial”.

[9] Accordingly, a Pierringer Agreement that limits a plaintiff’s ability to recover for the several liability of remaining defendants does not limit a plaintiff’s recovery to only those damages directly attributable to the remaining defendants. Rather, unless the agreement is specifically worded otherwise, the effect of such an agreement is to ensure that the plaintiff does not recover any damages attributable to the defendant released in the Pierringer Agreement.

[10] In this case, at the time the respondents and the City entered into the Pierringer Agreement, everyone was aware that there were third- and fourth-party claims. As is typical when parties enter into Pierringer Agreements, and as discussed in Endean, the concern was to ensure that the plaintiff could not recover damages attributable to the City from other parties. Otherwise, the settlement would be prejudicial to the remaining defendants – and, by extension, to the third and fourth parties – because they would be unable to recover any damages attributable to the City from the City through crossclaims. However, there is no basis for finding that the parties to the Pierringer Agreement intended to reduce the respondents’ damages to those that could only specifically be attributed to the remaining defendants, which by now is only Mer. The appellant was not a party to the agreement and there is no basis for finding that the Pierringer Agreement and the Order were meant to benefit the appellant, nor any other third or fourth parties, in this way.

[11] The appellant argues that the motion judge erred in failing to follow this court’s decision in Taylor v. Canada (Health), 2009 ONCA 487. It is worth noting that Taylor did not involve a Pierringer Agreement. As the court explained in Endean, at para. 66, Taylor involved a unique situation where the plaintiff intended to avoid any third-party claims by only seeking damages attributable to the defendant. This is not the case here. By entering into the Pierringer Agreement, the respondents sought to settle their claim against the City and to pursue their claims against the remaining defendants. There is no evidence that, by doing so, they intended to recover only those damages specifically attributable to the remaining defendants, thereby releasing all third and fourth parties from any potential liability.

[12] The appellant further argues that the motion judge’s reasons are insufficient. We disagree. The motion judge was asked to address a discrete issue, namely the effect of the Pierringer Agreement and the Order on the third- and fourth-party claims. The motion judge rejected the appellant’s argument in clear and succinct reasons. The basis for his decision is readily understandable. He was not required to address every argument made by the appellant.

[13] Accordingly, we dismiss the appeal.

[14] Pursuant to the agreement between the parties, the respondents are entitled to costs of $25,000, all inclusive.

“Fairburn A.C.J.O.”

“J.A. Thorburn J.A.”

“L. Favreau J.A.”