Court File and Parties
COURT FILE NO.: CV-17-588825 DATE: 20210304 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
ROGER POIRIER Plaintiff
- and - JEREMY LOGAN, HILARY GOLDSTEIN, JERRY FRIEDBERG, MOREY CHAPLICK, M.C. CAPITAL CORP, and BUCHLI GOLDSTEIN LLP Defendants
Counsel: R. Paul Steep and Leah Ostler for the Plaintiff Marc Kestenberg and Hunter Norwick for the Defendants Hilary Goldstein and Buchli Goldstein LLP Maureen L. Whelton for the Defendant Jerry Friedberg Jeffrey Larry for the Defendant, Jeremy Logan
HEARD: February 10, 2021
PERELL, J.
Reasons for Decision
A. Introduction
1In this deceit action, the Plaintiff Roger Poirier settled with the Defendant Jerry Friedberg. Mr. Friedberg did not settle with the crossclaiming co-Defendants.
2Neither Mr. Poirier’s counsel nor Mr. Friedberg’s counsel immediately disclosed the settlement to the remaining Defendants. Relying on the Court of Appeal’s decisions in Laudon v. Roberts, 2009 ONCA 383, Handley Estate v. DTE Industries Limited, 2018 ONCA 324 and Aecon Buildings v. Stephenson Engineering Limited, 2010 ONCA 898, the co-Defendants/Crossclaimants, Jeremy Logan, Hilary Goldstein, Buchli Goldstein LLP, now bring motions to have Mr. Poirier’s action totally dismissed as an abuse of process.
3For the reasons that follow, I grant the motion and I dismiss Mr. Poirier’s action.
B. The Underlying Litigation
4The facts of the underlying litigation, which I take from the parties’ pleadings are as follows.
5Through holding corporations. the Defendants Jeremy Logan and Morey Chaplick along with his Mr. Chaplick’s brother, Ephram Chaplick, owned the Defendant M.C. Capital Corp, which through subsidiaries carried on a wholesale and retail business selling clothing. The primary operating company was Standard Apparel Inc.
6The Plaintiff Roger Poirier was a friend of Mr. Logan. In 2015, Mr. Logan approached Mr. Poirier and asked him to invest in the clothing business by buying out the Chaplicks’ shares.
7Mr. Logan, Mr. Chaplick, and the business’s accountant, the Defendant Jerry Friedberg, provided Mr. Poirier with the clothing business’s financial statements. Mr. Poirier alleges that the financial statements were fraudulent misrepresentations.
8Relying on the truth of the financial statements, Mr. Poirier purchased Mr. Chaplick’s shares in the clothing business and as a shareholder he signed guarantees of the business’s debts.
9To complete his share purchase, Mr. Poirier retained the Defendant Hilary Goldstein of the Defendant law firm Buchli Goldstein. Ms. Goldstein is the spouse of Mr. Logan.
10After Mr. Poirier had become a part owner of the clothing business, he alleges that Mr. Logan and Mr. Friedberg fraudulently misrepresented the financial health of the clothing business to Mr. Poirier and to trade creditors. Mr. Poirier alleges that Messrs. Logan and Friedberg deceitfully covered up that the clothing business was failing.
11In October 2017, the truth was revealed. The business became insolvent and Mr. Logan went into personal bankruptcy. Mr. Poirier lost his investment, and he has been called on his guarantees to pay the business’s debts.
C. The History of the Deceit Action
12On December 20, 2017, represented by Lax O’Sullivan Lisus Gottlieb LLP, Mr. Poirier commenced an action against Mr. Logan, Mr. Chaplick, Mr. Friedberg, M.C. Capital Corp., Ms. Goldstein, and Buchli Goldstein LLP.
13Mr. Poirier sued Logan, Chaplick, Friedberg, and M.C. Capital Corp. for $3.7 million for fraud, deceit, fraudulent misrepresentation, unjust enrichment, breach of contract, and breach of the duty of good faith. He sued Ms. Goldstein and Buchli Goldstein LLP for $3.7 million for breach of contract, negligence, negligent misrepresentation, and breach of the duty of good faith.
14On February 13, 2018, represented by Kestenberg Siegal Lipkus LLP, Ms. Goldstein and Buchli Goldstein LLP delivered a Statement of Defence.
15On February 15, 2018, represented by Fogler Rubinoff LLP, Mr. Chaplick and M.C. Capital Corp. served a Demand for Particulars.
16On February 16, 2018, represented by Paliare Roland Rosenberg Rothstein LLP, Mr. Logan delivered a Statement of Defence and a Crossclaim. The Crossclaim was against M.C. Capital Corp. and Mr. Chaplick for contribution and indemnity.
17On February 20, 2018, represented by Stevenson Whelton MacDonald & Swan LLP, Mr. Friedberg delivered a Statement of Defence and Crossclaim. The crossclaim was against M.C. Capital Corp., Mr. Chaplick, and Mr. Logan for contribution and indemnity.
18On February 22, 2018, Mr. Poirier delivered his Response to the Demand for Particulars.
19On February 27, 2018, M.C. Capital Corp. and Mr. Chaplick delivered a Statement of Defence and a Crossclaim. The Crossclaim was against Mr. Logan, Mr. Friedberg, Ms. Goldstein, and Buchli Goldstein LLP for contribution and indemnity.
20On February 28, 2018, Ms. Goldstein and Buchli Goldstein LLP delivered an Amended Statement of Defence and added a crossclaim against M.C. Capital Corp., Mr. Chaplick, and Mr. Friedberg for contribution and indemnity.
21On May 11, 2018, Mr. Poirier delivered a Reply.
22In December 2018, the parties agreed that Ms. Goldstein would be examined for discovery first followed by Mr. Chaplick, Mr. Logan, Mr. Poirier, and Mr. Friedberg.
23In January 2019, the Defendants’ counsel agreed that they would defer examining one another on the crossclaims. The purpose of this agreement was to avoid assisting Mr. Poirier in obtaining helpful admissions from the co-Defendants.
24In February 2019, counsel for the co-Defendants collaborated in preparing a plan for the examination for discovery of Mr. Poirier.
25Between February 25, 2019 and March 5, 2019, the examinations of Ms. Goldstein, Mr. Chaplick, and Mr. Logan were completed.
26Maureen Whelton, Mr. Friedberg’s counsel did not complete her examination of Mr. Poirier, and Mr. Friedberg’s examination did not proceed.
27On March 27, 2019, Mr. Kestenberg met with Ms. Whelton to discuss the strategy for the completion of Mr. Poirier’s examination. Counsel for the other co-Defendants were involved in subsequent correspondence about the completion of Mr. Poirier’s examination.
28On March 29, 2019, Ms. Whelton wrote to Mr. Poirier’s counsel, Matt Gottlieb and Philip Underwood, seeking dates to schedule the examinations of Mr. Poirier and Mr. Friedberg. The examinations were subsequently scheduled for July 15 and 18, 2019.
29On June 18, 2019, the continuation of Mr. Poirier’s examination and the examination of Mr. Friedberg, which had been scheduled for July 2019, was rescheduled at Ms. Whelton’s request because of personal issues. The examinations were rescheduled for October 28 and 29, 2019.
30In October 2019, Ms. Whelton for Mr. Friedberg and Matt Gottlieb for Mr. Poirier had settlement discussions.
31On October 24, 2019, without explanation to the co-Defendants and without disclosing the settlement discussions, Ms. Whelton advised counsel for the co-Defendants that she and Mr. Poirier’s counsel had agreed to adjourn the examinations.
32On October 28, 2019, Mr. Gottlieb, Mr. Poirier’s counsel sent Ms. Whelton, Mr. Friedberg’s counsel, the following email message:
As discussed, in order to conclude this agreement, the following will happen:
- I will notify counsel that we will not be proceeding tomorrow;
- We will provide a revised affidavit for your approval;
- If the affidavit is agreeable, Mr. Friedberg will provide a sworn statement of assets;
- If the above is acceptable, we will confirm an agreement to not continue against Mr. Friedberg and that the action will be dismissed or discontinued, without costs;
- Poirier will provide a Full and Final Release to Mr. Friedberg.
Please confirm.
33Later in the day of October 28, 2019, Mr Underwood, another counsel for Mr. Poirier, advised the co-Defendants’ counsel, without explanation, that the examination of Mr. Friedberg scheduled for the next day would not be proceeding. In the evening, Mr. Kestenberg, Mr. Logan’s counsel, wrote asking for an explanation. but his email received no response.
34On October 30, 2019, Mr. Underwood for Mr. Poirier and Ms. Whelton for Mr. Friedberg finalized the settlement between Mr. Poirier and Mr. Friedberg. Mr. Poirier’s counsel was provided with a sworn affidavit from Mr. Friedberg. Ms. Whelton for Mr. Friedberg sent the following email message to Mr. Underwood:
I confirm we have now resolved Mr. Poirier's action against my client. Please find attached sworn affidavit. I just tried to reach Mr. Gottlieb [Mr. Poirier’s counsel] but was not successful. I will write to counsel and advise that we have settled and ask that they consent to an order dismissing the action without costs. And I am sure that I will immediately receive three calls asking me for details of the settlement. My understanding is that the terms of the settlement are confidential. Please advise if I am mistaken. I think it would be easiest to speak to ensure that we're on the same page.
35On November 5, 2019, Mr. Underwood for Mr. Poirier replied to Ms. Whelton as follows:
We received the hard copy of the affidavit and statutory declaration. You can prepare documents for the dismissal of the claim for our review if you would like. Please do not write to counsel just yet – we will be back to you.
36Ms. Whelton for Mr. Friedberg and Mr. Gottlieb for Mr. Poirier deposed that there was no intention to keep the settlement secret, and they say that although they did believe that there was urgency, they anticipated that the documents would be prepared quickly without delay, which would have been the case but for unfortunate serious health problems experienced by Ms. Whelton and some miscommunications between the law firms about who was responsible for implementing the settlement.
37On November 13, 2019, in separate email messages, Mr. Underwood for Mr. Poirier emailed Mr. Logan’s counsel and Ms. Goldstein’s counsel asking for answers to undertakings. Mr. Underwood attached a chart of undertakings, under advisements, and refusals from the examinations for discovery. Mr. Underwood asked that the questions be answered by January 13, 2020.
38Also, on November 13, 2019, Mr. Underwood for Mr. Poirier asked Dan Rosenbluth, who along with Jeffrey Larry was acting for Mr. Logan, for information about an American Express credit card issued to Standard Apparel that had been used for $750,000 of purchases. This is significant because Mr. Logan’s use of this credit card was a matter addressed in Mr. Friedberg’s affidavit that was part of the settlement. Mr. Rosenbluth authorized Mr. Underwood to deal with American Express directly.
39A month and a half passed, and on January 3, 2020, Mr. Underwood for Mr. Poirier emailed Ms. Whelton for Mr. Friedberg, the following message:
As I recall, you were going to prepare materials regarding the dismissal of Roger’s claim against Jerry. Have you done so? We’d be happy to take a look and then for you to circulate them to the other counsel for their consent. I agree that the terms of the agreement should be confidential, at least for now. They will certainly ask, but I think it will be sufficient to tell them that we have reached an agreement under which we are agreeing to a no-costs dismissal of the claim against Jerry. Please let me know if you’d like to discuss.
40On February 11, 2020, Mr. Underwood for Mr. Poirier followed up with Mr. Kestenberg asking when he would receive the Goldstein Defendants’ answers to undertakings. Mr. Kestenberg responded with the following email message:
Hello Phil,
I will follow up with my client. Have you delivered your answers to undertakings, questions taken under advisement and refusals yet? I don’t believe I have seen them. Also, I did not receive a reply to my e-mail to you on October 28th. Have the examinations been rescheduled? What was the reason for the cancellation? I look forward to hearing from you.
41Mr. Underwood for Mr. Poirier did not reply to this email message and two and a half months passed.
42On April 30, 2020, in an email message to the co-Defendants, Mr. Underwood disclosed that Mr. Poirier had settled with Mr. Friedberg. The terms of the settlement were not disclosed. That evening, Mr. Kestenberg for the Goldstein Defendants’ wrote Mr. Underwood and asked when the Settlement Agreement had been reached. Mr. Kestenberg requested that documentation evidencing the Settlement Agreement be produced immediately.
43On May 4, 2020, Andrew Winton, yet another lawyer representing Mr. Poirier, sent an email to Mr. Kestenberg and other counsel for the co-Defendants advising that Mr. Poirier had reached a settlement on October 30, 2019 with the following terms:
a. Mr. Friedberg would provide a statement under oath setting out his knowledge of the facts relevant to the action; b. the Plaintiff would consent to dismiss the claim against Mr. Friedberg without costs and without payment of any damages; c. the Agreement was not conditional on the dismissal of the Crossclaims against Mr. Friedberg; and d. Mr. Friedberg was responsible for preparing materials for a motion to have the claim against him dismissed, with consent of the parties or an Order of the Court.
44Mr. Winton attached a copy of Mr. Friedberg’s affidavit to the email message, but he did not produce the documents memorializing the settlement and his email message failed to note that as an additional term of the settlement, Mr. Friedberg had agreed to provide a statement of assets.
D. The Disclosure of Settlement Agreements
45When there are co-defendants or co-respondents, and the plaintiff or applicant settles with one or more of them but not all of them, and the settlement changes the adversarial orientation of the proceeding, as for example, when the settling co-defendant agrees to co-operate in the plaintiff’s prosecution of the proceeding, the plaintiff or applicant must immediately disclose to the non-settling defendants or non-settling respondents that (a) there is a settlement and (b) the terms of the settlement that change the adversarial orientation of the proceeding. Handley Estate v. DTE Industries Limited, 2018 ONCA 324, rev’g 2017 ONSC 4349; Aecon Buildings, a Division of Aecon Construction Group Inc. v. Brampton (City) 2010 ONCA 898, leave to appeal refused [2011] S.C.C.A. No. 84; Laudon v. Roberts, 2009 ONCA 383.
46In Pettey v. Avis Car Inc., (1993) 13 O.R. (3d) 725 (Gen. Div.), Justice Ferrier explained why the settlement terms must be disclosed and how the adversarial orientation of a lawsuit can be changed by a settlement; he stated:
[…] The agreement must be disclosed to the parties and to the court as soon as the agreement is made. The non-contracting [non-settling] defendants must be advised immediately because the agreement may well have an impact on the strategy and line of cross-examination to be pursued and evidence to be led by them. The non-contracting parties must also be aware of the agreement so that they can properly assess the steps being taken from that point forward by the plaintiff and the contracting [settling] defendants. In short, procedural fairness requires immediate disclosure. Most importantly, the court must be informed immediately so that it can properly fulfil its role in controlling its process in the interests of fairness and justice to all parties.
47In Moore v. Bertuzzi, 2012 ONSC 3248, at paragraph 76, I discussed the principles elucidated by Justice Ferrier in Pettey v. Avis Car Inc., (1993) 13 O.R. (3d) 725 (Gen. Div.) as follows:
- The court needs to understand the precise nature of the adversarial orientation of the litigation in order to maintain the integrity of its process, which is based on a genuine not a sham adversarial system and which maintenance of integrity may require the court to have an issue-by-issue understanding of the positions of the parties. The adversarial orientation of a lawsuit is complex because parties may be adverse about some issues and not others. In these regards, it is worth noting from the above passage from Pettey v. Avis Car Inc. that Justice Ferrier explained the need for disclosure of the settlement agreement because of its "impact on the strategy" but he said: "most importantly, the court must be informed immediately so that it can properly fulfil its role in controlling its process in the interests of fairness and justice to all parties."
48Both the existence of the settlement agreement and the terms of it, other than terms that do not affect the adversarial orientation of the lawsuit, must be disclosed. Tallman Truck Centre Ltd. v. K.S.P. Holdings Inc., 2021 ONSC 984; Stamatopoulos v. Harris, 2014 ONSC 6313 (Div. Ct.); Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37. The failure to disclose immediately or the failure to disclose the terms of a settlement that changes the proceeding’s adversarial orientation is an abuse of process for which the only remedy is the dismissal of the proceeding. Handley Estate v. DTE Industries Ltd., 2018 ONCA 324, rev’g 2017 ONSC 4349; Aecon Buildings, a Division of Aecon Construction Group Inc. v. Brampton (City) 2010 ONCA 898 (Ont. C.A.), leave to appeal refused [2011] S.C.C.A. No. 84.
49The dismissal principle applies to what are known as Mary Carter agreements [Booth v. Mary Carter Paint Co., 202 So. 2d 8 (Fla. 1967)] and Pierringer agreements [Pierringer v. Hoger, 124 N.W. 2d 106 (Wis. 1963)], sometimes called a "Proportionate Share Settlement Agreement", and to other settlement agreements that like Mary Carter agreements and Pierringer agreements change the litigation landscape. Tallman Truck Centre Ltd. v. K.S.P. Holdings Inc., 2021 ONSC 984; Moore v. Bertuzzi, 2012 ONSC 3248. If there is a failure to promptly and properly disclose, it is no answer that the non-settling defendant or respondent was not prejudiced by the time that it learned of the settlement. Tallman Truck Centre Ltd. v. K.S.P. Holdings Inc., 2021 ONSC 984; Handley Estate v. DTE Industries Ltd., 2018 ONCA 324, rev’g 2017 ONSC 4349; Aecon Buildings, a Division of Aecon Construction Group Inc. v. Brampton (City) 2010 ONCA 898, leave to appeal refused [2011] S.C.C.A. No. 84.
E. The Parties’ Arguments
1. Jeremy Logan, Hilary Goldstein, and Buchli Goldstein LLPs’ Arguments
50Mr. Logan adopted the argument of Ms. Goldstein and her law firm Buchli Goldstein LLP.
51Ms. Goldstein’s argument was straightforward. She submitted that there was a settlement between Mr. Poirier and Mr. Friedberg. The terms of the settlement entirely changed the adversarial orientation of the lawsuit. The settlement was not immediately disclosed and when it was disclosed, the disclosure was inadequate and incomplete. The failure to disclose immediately or the failure to disclose the terms of a settlement that changes adversarial orientation of the action is an abuse of process for which the only remedy is the dismissal of the proceeding.
2. Mr. Poirier’s Arguments
52Mr. Poirier’s argument, much but not all of which I agree with, is as follows.
53Settlements are important to the administration of justice and settlement of litigation is to be encouraged. Communications in furtherance of settlement are categorically privileged and there is no obligation to disclose to other parties in a litigation that settlement is being discussed with an opposing party. However, immediate disclosure of a concluded settlement agreement is required in some circumstances. If immediate disclosure is not made, the action must be dismissed as an abuse of process.
54However, not all settlement agreements need to be disclosed immediately, only those settlement agreements that fundamentally alter the relationship among the parties to the litigation such that there has been an entire change in the landscape of the litigation. The settlement agreement in the immediate case between Mr. Poirier and Mr. Friedberg was not of the type that required immediate disclosure because it did not fundamentally change the litigation landscape.
55Mr. Poirier argued that the settlement agreement between Mr. Poirier and Mr. Friedberg did not fundamentally change the litigation because: (a) it was not conditional on the removal of Mr. Friedberg from the litigation and he remained exposed to the crossclaims; (b) Mr. Poirier did not agree to limit his claims against the non-settling defendants to their proportionate share of the damages nor agree to indemnify Mr. Friedberg for his liability on the crossclaims; (c) as soon as the settlement was implemented the action would be congruent with the pleadings; (d) Mr. Friedberg delivered an affidavit equivalent to his delivering a witness statement or testifying at his examination for discovery; (e) there was no disclosure of information by Ms. Whelton that she had received when Mr. Friedberg was co-operating with the co-Defendants and the rights of the Defendants have not prejudiced; and (f) an immediate disclosure obligation does not arise simply because an agreement is confidential or because a party is released from a claim.
56As for the co-operation alleged to have fundamentally altered the litigation landscape, Mr. Poirier argued that the agreement between him and Mr. Friedberg was not much different than the agreement among the co-Defendants in the immediate case for the discovery phase of the proceedings to refrain from taking steps which might create evidence for Mr. Poirier, which was a co-operation agreement. Such agreements are not uncommon and the defendants in the immediate case agreed that this type of agreement needs not to be disclosed.
F. Discussion and Analysis
57I agree with Mr. Poirier’s counsel that not all settlement agreements require immediate disclosure. I agree that the court should be cautious before dismissing Mr. Poirier’s potentially meritorious deceit action as an abuse of process. I also agree that it is only settlement agreements that fundamentally alter the relationship among the parties to the litigation such that there has been an entire change in the landscape of the litigation that must be immediately disclosed. Further, I agree that a settlement agreement by one litigant to co-operate with another litigant, be that other a friend or a foe, does not necessarily fundamentally alter the litigation landscape or the adversarial orientation of the litigation. A settlement agreement may and most often will change the litigation landscape but whether that change actually occurs will ultimately depend on the circumstances of each particular case.
58Where I part company with Mr. Poirier’s counsel is that, in my opinion, notwithstanding his valiant arguments to the contrary, the agreement in the immediate case between Mr. Poirier and Mr. Friedberg did fundamentally change the litigation landscape.
59It is easy enough to identify which settlement agreements must be disclosed at the extreme of Mary Carter agreements [9] and Pierringer agreements [10]; these must be disclosed because they manifestly alter the litigation landscape. It is not so easy to identify other settlement agreements that require immediate disclosure.
60On the argument of this motion, all the counsel agreed that there will be settlement agreements that do not immediately have to be disclosed. Perhaps, simple settlement agreements where a plaintiff just lets one of several defendants out of the litigation are an example where immediate disclosure is not required. I, however, say perhaps, because it will still depend on the facts of the particular case whether even a simple settlement agreement must immediately be disclosed.
61As a practice point, however, there is little reason not to disclose a settlement agreement immediately. Even if the agreement is of the type that does not have to be immediately disclosed, then - better to be safe than sorry. As the immediate case demonstrates, the risks of intentionally or unintentionally keeping the settlement agreement a secret are far too risky.
62In the immediate case, counsel knew the agreement needed to be disclosed, and while an explanation was provided for why drafting the incidental documentation was delayed, no explanation was provided why the settlement agreement between Mr. Poirier and Mr. Friedberg and its essential terms were not disclosed immediately after October 30, 2019.
63On October 30, 2019, Ms. Whelton was simply wrong in her understanding that the terms of the settlement are confidential, and Mr. Underwood was wrong in not accepting her invitation to tell her she was wrong. And he was very wrong in writing: “Please do not write to counsel just yet – we will be back to you.” The responsibility to get the disclosure made was on Mr. Poirier’s counsel, and there was no justification for letting this matter slip through the cracks. As it turned out the settlement agreement was not disclosed until over six months later, May 4, 2020. Much worse to be sorry than safe in the immediate case.
64The reasons why a plaintiff might agree to settle may provide insight as to whether the adversarial orientation or the litigation landscape has fundamentally changed. The reasons in the immediate case are not known but the factual background and the factors discussed below tend to suggest that it was an unexplained tactical and strategic decision for Mr. Poirier to settle with Mr. Friedberg.
65There are many possible reasons why a plaintiff might enter into a settlement agreement with a defendant in litigation that will proceed against other defendants. Some of those reasons are strategic, some tactical, some substantive, and some pragmatic. And depending upon the reasons for the partial settlement, there are many different ways to structure the settlement with or without contribution, compensation, or co-operation of the settling defendant and there are variations about the appropriate timing for a settlement with a defendant.
66Factors that are relevant to why a plaintiff might agree to settle with one or more co-defendants include: What role did the defendant play in the facts of the case? What is the strength of the case against the defendant? Was the defendant a necessary party or was it a mistake to even join the defendant in the first place? Was the joinder out of an abundance of caution or speculative as to the defendant’s liability? Is the defendant insured? Is the defendant judgment proof or a deep pocket? Was the defendant joined to tie down his or her evidence? How much does the defendant know and when did he or she know it? How formidable are the defendant’s counsel? Will the defendant be loyal to co-defendants or throw them under the bus? Are there crossclaims or third party claims? If there are crossclaims, then will the co-defendants let the defendant out of the action? Is there a counterclaim? How factual and legally strong are the crossclaims and counterclaims? Does the defendant to be released have the same or a different technical, evidentiary, or substantive defences as compared to the cohort of defendants? Is there several, joint, or joint and several liability amongst the defendants? Are the causes of action, the same or mutually exclusive against the co-defendants? And on and on it goes.
67Tribecca Finance Corp. v. Harrison, 2019 ONSC 1926, which was relied on by Mr. Poirier in the immediate case, is an example of a case where the court examined the circumstances of the particular case to conclude that the litigation landscape had not been affected by a settlement agreement that was not immediately disclosed to a non-settling litigant.
68In the Tribecca Finance case, the facts were that Ms. Downward was sued to enforce a mortgage loan. She defended the action and brought third party claims against Rajan Kaushal the principle of Tribecca, the mortgagee, for misrepresenting that she would not be liable on the loan, and in the third party proceedings she also sued Peter Grivogiannis, the lawyer she had retained to provide independent legal advice. In the main action, Ms. Downward settled with Tribecca. In that settlement, the parties intended but overlooked the matter of the third party claim against Mr. Kaushal, Tribecca’s principal. With no intention of pursuing Mr. Kaushal, Ms. Downward proceeded with her third party claim against Mr. Grivogiannis, who was not advised immediately about the settlement of the main action and the overlooked implementation of a settlement as against Mr. Kaushal. With pending examinations for discovery, when Mr. Grivogiannis learned about the settlement in the main action, he moved for a permanent stay of the third party claim on the basis that settlement with his co-third-party was not immediately disclosed.
69Justice Gray dismissed Mr. Grivogiannis’ motion. Justice Gray disagreed with the argument that the landscape of the third party proceeding had been changed. In this regard, it should be noted that there were no crossclaims between Mr. Kaushal and Mr. Grivogiannis and that the causes of action were mutual exclusive. How Mr. Grivogiannis would defend the solicitor’s negligence action was not affected by the circumstance that Mr. Kaushal was no longer a party to the third party claim. Justice Gray’s decision is sound, but for present purposes all it demonstrates is that the facts of the particular case will determine whether the litigation landscape has been fundamentally altered.
70The point of all this discussion about the circumstances of a settlement agreement is that the circumstances of each case will reveal whether the litigation landscape has actually changed. Thus, Mr. Poirier’s argument in the immediate case that in the circumstances of the immediate case, the litigation landscape had not fundamentally changed was a theoretically feasible argument. However, with respect, it is a failed argument.
71Mr. Friedberg was not a fringe player either as a party or as a potential witness to the events that are the source of Mr. Poirier’s action against him, Mr. Logan, Ms. Goldstein, and Buchli Goldstein LLP. His role was fundamental before the litigation and within the litigation. Mr. Friedberg’s co-operation and his delivery of an affidavit was not the same thing as being an innocent witness who provides a witness statement. He was a potentially culpable party who was being let out of the main action. Whether he was going to stand common cause with his co-defendants or to turn on them to divert or diffuse or escape blame in the crossclaims was not a small matter in the litigation landscape and the earth moved when he settled with the plaintiff while not settling with the crossclaiming co-defendants.
72As I noted in Moore v. Bertuzzi, 2012 ONSC 3248, the adversarial orientation of a lawsuit is complex because parties may be adverse about some issues and not others. That complexity was present in the immediate case as evidenced by the defendants’ arrangement to delay the examination for discovery in the crossclaims. In the immediate case, the settlement agreement between Mr. Poirier and Mr. Friedberg would impact on the tactics and the strategy, the line of questioning for examinations for discovery and how to assess the steps being taken from that point forward.
73While sometimes an undertaking to co-operate or assist may not change the litigation landscape, this was not one of those cases. The defendants had crossclaims, and they had manifestly agreed to hold their crossfire until later in the litigation. By delivering an affidavit that was vetted by plaintiff’s counsel as part of the settlement, Mr. Friedberg was charging into the fray of the crossclaims and assisting Mr. Poirier. That was a fundamental change in the litigation landscape.
74With respect, it was a mistake in analyzing the circumstances of the case for Mr. Underwood to tell Ms. Whelton on January 3, 2020 that he agreed with her that “the terms of the agreement should be confidential, at least for now.” Why “at least for now” was never explained to me.
75In any event, I repeat that the responsibility to disclose the settlement was on Mr. Poirier not on Mr. Friedberg. As it turns out, Mr. Friedberg has no reasons to be sorry. He is safely out of the litigation in every event.
76In short, I agree with the arguments of Ms. Goldstein, and Buchli Goldstein LLP, which were adopted by Mr. Logan. The arguments of Mr. Poirier are not made out on the facts of the immediate case.
G. Conclusion
77For the above reasons, I grant the motion and dismiss the action.
78If the parties cannot agree about costs, they may make submissions in writing beginning with all the defendants’ submissions within twenty days of the release of these Reasons for Decision followed by Mr. Poirier’s submissions within a further twenty days.
Perell, J.
Released: March 4, 2021
