CITATION: Kuzyk v. Lofranco, 2007 ONCA 57
DATE: 20070130
DOCKET: C43627
COURT OF APPEAL FOR ONTARIO
LASKIN, BORINS and FELDMAN JJ.A.
B E T W E E N :
TERRY KUZYK
Arie Gaertner for the appellant
(Plaintiff/Appellant)
- and -
FIREMAN LOFRANCO
Jesse T. Glass, Q.C. and Kerri Kamra
for the respondent
(Defendant/Respondent)
Heard: December 15, 2006
On appeal from the judgment of Justice Todd L. Archibald of the Superior Court of Justice dated May 3, 2005.
BORINS J.A.:
[1] The appellant, Terry Kuzyk, appeals from the judgment of Archibald J. dismissing his claim for damages against the law firm, Fireman LoFranco, arising out of the firm’s representation of him in the settlement of a lawsuit. The trial judge allowed the respondent’s counterclaim for its fees and disbursements. The appellant also appeals from the judgment on the counterclaim.
[2] This case has its genesis on December 24, 1988 when the appellant was injured in a motor vehicle accident. Between the date of the accident and October 2000, the appellant retained and discharged four lawyers or law firms. He discharged them because he disagreed with how they were handling the case, or because he felt that they were negligent and incompetent. In October 2000 the appellant retained the respondent to represent his interests with respect to his long outstanding claim. The retainer provided that the respondent was to represent the appellant on a contingency fee basis. Although at this time the appellant had received accounts from three of his previous lawyers, he had not paid them. He had not received an account from the fourth lawyer. The respondent was not instructed by the appellant to pay, or to assume responsibility for the payments of the fees of his previous lawyers.
[3] The events giving rise to this action took place over a four day period from January 18 to January 21, 2002. On Friday, January 18 a voluntary mediation was held. The trial was fixed to commence about two weeks later. The appellant was present with his counsel, Mr. Solomon and Mr. Fireman. Consequent to a settlement offer made by the defendant during the mediation, the appellant signed the following authority to settle:
I, Terrance Kuzyk, authorize my lawyers Fireman LoFranco, to settle my actions against [A & B], for a total of $630,000 for claim and fees, plus disbursements to be payable by the defendants. From this settlement, I will receive $525,000.00 net.
[4] For reasons that are not clear, at the end of the day the case had not settled. A revised settlement offer was left on the table by the defendants, A & B, for the sum of $650,000.00 all inclusive. It was open until the end of the day on Monday, January 21.
[5] On January 21 a lengthy meeting was held involving Mr. Kuzyk and his lawyers – Mr. Solomon, Mr. Fireman, and Mr. LoFranco. The settlement offer and the appellant’s options were discussed in detail. Mr. Fireman repeatedly emphasized that the offer of $650,000.00 included the appellant’s damages and the respondent’s fees and disbursements, but did not include the fees and disbursements payable to the appellant’s previous lawyers. He made it clear to the appellant that the payment of those fees remained the appellant’s responsibility. He advised the appellant that his options were to accept the settlement, or to go to trial, and in any event that he would be required to pay the fees of his previous lawyers out of his net recovery. Indeed, Mr. Fireman testified that he considered the offer to settle to be excellent, and expressed his concern about going to trial as he had concerns about how a jury would viewthe appellant’s credibility.
[6] At the end of the meeting, the appellant instructed the respondents to conclude a settlement for $650,000 inclusive of disbursements, costs and interest. He signed an authority to settle similar to the one that he had signed on January 18. However, this time the authority to settle provided that from the settlement proceeds of $650,000, the appellant would receive $500,000 net. It is acknowledged by the appellant and his counsel that the $650,000.00 settlement negotiated by the respondent was exceptionally good and that the appellant had no complaint concerning the amount of the settlement.
[7] Central to the appellant’s claim against the respondent was his assertion that his instructions to the respondent were that the net settlement amount to him was to be over and above, not only the fees of the respondent, but also the fees of all of his previous lawyers. The appellant alleged that the authority to settle was a contract pursuant to which the law firm agreed that the $500,000.00 to be received by him was to be net of its fees and those of all previous lawyers. In addition, he claimed that the respondent was negligent in its estimate of the likely fees of one of the previous lawyers, that it was in breach of its fiduciary duty to him and that it had exerted undue influence upon him.
[8] The trial judge stated that if he were to accept the appellant’s testimony and his interpretation of the authority to settled, it would follow that he would find for the appellant. However, the trial judge rejected the appellant’s testimony. Following a thorough review of his testimony, including correspondence between the parties that preceded the settlement, the trial judge concluded that the appellant’s testimony was not credible. He provided extensive reasons in support of his conclusion. In particular, the trial judge stated:
Mr. Kuzyk asserted that he was not informed about the gross terms of settlement and was largely not informed about the settlement and how the net settlement amount was derived. I do not, whatsoever, accept Mr. Kuzyk’s evidence on that point. It is in direct contrast to the evidence of Messrs. Solomon, LoFranco, and Fireman. Further, his assertion defies common sense and logic; Mr. Kuzyk would have had to sign the releases upon settlement and those releases would have necessarily set out the gross settlement number. Given that reality, the conclusion is inescapable that Messrs. Fireman, LoFranco, and Solomon would have disclosed to Mr. Kuzyk, with nicety, all of the terms of the settlement. Moreover, having heard their testimony, I completely accept their evidence on this issue.
[9] After clearly rejecting the appellant’s testimony, and concluding that the testimony of Messrs. Solomon, LoFranco and Fireman was credible, trustworthy and persuasive, the trial judge found as follows in paras. 16 and 18:
I have concluded based upon their testimony that Messrs. Solomon and Fireman made it very clear to Mr. Kuzyk that whatever the net settlement would be, Mr. Kuzyk, himself, would be responsible for paying his prior lawyers’ accounts. Mr. Solomon testified that the issue arose on many occasions in his discussions with Mr. Kuzyk and that during all of those discussions, he stressed that the settlement of the case would be net of Fireman LoFranco’s fees only, not net of the prior lawyers’ fees, which Mr. Kuzyk would have to pay out of his settlement proceeds. I accept the evidence of Mr. Solomon, which is also supported by Mr. Fireman’s testimony.
Finally, as I have stated previously, Mr. Kuzyk is a very sophisticated and intelligent businessman. There is no question in my mind, based upon the totality of the evidence, that he was fully aware of his obligations to pay the fees of his prior lawyers and that this obligation would have to be fulfilled out of his net settlement proceeds. That conclusion substantially leads to the dismissal of the plaintiff’s case.
[10] The trial judge, correctly in my view, rejected the appellant’s contention that the authority to settle that he signed on January 21, 2002 was a binding contract between himself and the respondent. In the evnet that this finding might be found to be incorrect, the trial judge went on in para. 24 to interpret the document:
In my view, the intention of the parties is plainly expressed by the language of this agreement. Specifically, the contract is between Mr. Kuzyk and Fireman LoFranco. The authorization concerns a potential settlement of the personal injury case on behalf of Mr. Kuzyk and the defendants are [A & B]. These are the only individuals mentioned in the Authority to Settle. In staying within the four corners of the authorization, it is my conclusion that the word “net” means net of Fireman LoFranco’s bill and any other costs legitimately arising out of Fireman LoFranco’s prosecution of the personal injury claim on behalf of Mr. Kuzyk. I do not agree with Mr. Gaertner that any reasonable interpretation would allow for the importation into the document of the expenses of the four lawyers who are unnamed in the Authority to Settle in any fashion, direct or otherwise, and who are not signatories to the retainer between the plaintiff and the defendant dated October 16, 2000. In interpreting the authorization within its four corners, one cannot conclude that the word net would naturally encompass the fees of the prior four lawyers. In my view, the terms of the authorization are free of ambiguity, and it can only be read in favour of the defendant’s position.
[11] In my view, the trial judge clearly and forcefully explained his determination of the credibility of the parties, interpreted the authority to settle and concluded that the appellant was aware of his obligation to pay the fees of his prior lawyers. The appellant has provided no grounds on which I can interfere with those findings.
[12] The trial judge also rejected the appellant’s claim that the respondent was negligent in respect to the advice he was given about the account of his fourth lawyer, Daniel Daly, that had not been rendered at the time of the settlement. He accepted Mr. Fireman’s testimony that he never left the appellant with any impression other than that he would attempt to convince Mr. Daly to reduce his account, and that he advised the appellant that the appellant would be responsible for the payment of the account, whatever its amount, from his net settlement proceeds. The trial judge concluded that the respondent was not negligent in proceeding with the mediation and the settlement in the absence of Mr. Daly’s account. Moreover, had the appellant gone to trial he would have continued to be responsible for the payment of Mr. Daly’s account when rendered, subject to assessment, regardless of the outcome of the trial. As well, the appellant did not establish that had he gone to trial, he would have been in a better position in respect to the payment of Mr. Daly’s account, as well as the accounts of his other lawyers, than had he settled. In my view, the trial judge did not err in rejecting the appellant’s claim in negligence.
[13] Finally, the appellant submits that the trial judge erred in rejecting his claim that the respondent had breached his fiduciary duty to him. It was contended, inter alia, that the respondent had preferred its own self‑interest over that of the appellant in urging him to accept the settlement and that it had coerced the appellant into accepting a reduced net settlement. In the trial judge’s view, the evidence did not support any of the appellant’s arguments that the respondent breached its fiduciary duty to him. He stated: “Mr. Kuzyk’s evidence that he was uniformed of the details of the settlement and that he was coerced into settling is simply unbelievable.”
[14] In concluding that none of the alleged breaches of fiduciary duty by the respondent had been established, at paras. 58 and 59 the trial judge made these findings:
The evidence of the three lawyers was that Mr. Kuzyk accepted the settlement offer on the basis that if he had gone to trial, the likelihood of greater success was minimal. This was a very generous settlement proposal and one that was significantly higher than the other offers which the four prior lawyers had previously achieved. Importantly, Mr. Gaertner concedes that the settlement offer attained by Mr. Fireman at the mediation was exceptionally generous in all of the circumstances.
Having listened carefully to the evidence of Mr. Kuzyk and all three of the lawyers who participated in the meeting of January 21, 2002, I have come to the conclusion, based upon the specific facts of this case, that there was no apparent conflict between the interests of the lawyers and Mr. Kuzyk. Mr. Kuzyk was fully advised of all of the negotiations and the potential settlement and, if he wished, he could have rejected the settlement proposal. The lawyers suggested to him that the settlement was reasonable in all of the circumstances and probably constituted a better result than he could have achieved at trial. Fully apprised of all of the important factors and details, Mr. Kuzyk made an informed and voluntary decision which was in his best interests.
[15] I would not give effect to this ground of appeal.
[16] The appellant stressed that in three letters that he wrote to the respondent prior to the mediation of January 18, 2002 he indicated that it was his wish to settle his claims on the basis that he would net $600,000.00 after the payment of the accounts of his four previous lawyers. However, it is one thing for the appellant to have wanted to achieve this result, but it is another thing to have been able to achieve that result given the value of his claim. Mr. Solomon had advised the appellant that his damages fell within the range of $400,000.00 to $600,000.00. This was confirmed by Mr. Fireman. Based on this advice, it was unrealistic for the appellant to have believed that had he gone to trial, he could have achieved a result that would have produced a payment to him of $600,000.00 net of the fees of his previous lawyers, as well as the respondent’s fees. Moreover, as I have indicated, both at the opening of trial and before this court, the appellant conceded that the settlement negotiated by the respondent was extremely favourable. As well, it would have been unrealistic for an experienced lawyer such as Mr. Fireman to have recommended the settlement of the appellant’s claim based on the appellant’s interpretation of the authority to settle that he signed.
[17] However, I am obliged to express my concern regarding Mr. Fireman’s failure to provide the appellant with a written explanation of the effect of the authority to settle on his responsibility to pay his previous lawyers’ fees. It would have been the better practice had Mr. Fireman required the appellant to sign an acknowledgement that although he was to receive $500,000.00 net of the respondent’s fees and disbursements, he would continue to be responsible for the payment of the fees of his previous lawyers. However, based on the trial judge’s assessment of credibility and his findings of fact, nothing turns on this omission.
[18] The appellant has provided no grounds for interference with the result of the respondent’s counterclaim awarding it its fees and disbursements for representing the appellant.
[19] For the foregoing reasons, I would dismiss the appeal with costs on a partial indemnity basis fixed at $25,000.00, inclusive of disbursements and GST.
RELEASED: January 30, 2007 (“JL”)
“S. Borins J.A.”
“I agree John Laskin J.A.”
“I agree K. Feldman J.A.”