COURT FILE NO.: 07-CV-329139 PD2

DATE: 20120802

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Benjamin S. Johnson, Plaintiff

AND:
Edward F. Futerman and Messrs. Futerman & Futerman, Defendants

BEFORE: Carole J. Brown J.

COUNSEL:
J. Lester Davies , for the Plaintiff

Michael R. Kestenberg and David Silver , for the Defendants

HEARD: April 25 and April 26, 2012

ENDORSEMENT

[ 1 ] The defendants seek leave pursuant to Rule 48.04 (1) of the Rules of Civil Procedure , R.R.O. 1990, Reg. 194 (the " Rules ") to bring this motion for summary judgment pursuant to Rule 20 on the ground that the claim against the defendants discloses no genuine issue requiring a trial.

[ 2 ] The defendant solicitor, Edward M. Futerman ("Futerman"), and his law firm, Futerman & Futerman, acted for the plaintiff, Benjamin S. Johnson ("Johnson”) from September 30, 1988 to early 1993. Johnson retained Futerman to represent him in securing reinstatement as an amateur runner for Canada following his disqualification from the Seoul Olympics for having taken banned steroids. Following the plaintiff's reinstatement in September, 1990, Futerman continued to represent Johnson to review contracts which were brought to his attention by the plaintiff or his agent. It is undisputed that, by early 1993, Futerman had ceased to represent the plaintiff.

[ 3 ] On March 8, 2007, approximately 14 years after Futerman ceased acting for the plaintiff, Johnson commenced a Statement of Claim (the "original claim”) against Futerman and his law firm, seeking damages for negligence and breach of trust, alleging that Futerman received monies in trust for the plaintiff that he failed to remit to Johnson's Athletic Reserve Fund ("ARF"). The ARF is a Trust Fund in which amateur athletes must deposit their earnings in order to maintain eligibility. The deposited funds are controlled and administered by Athletics Canada. The funds deposited into the ARF account are not taxed until an athlete withdraws funds from the ARF, with the express approval of Athletics Canada.

[ 4 ] Futerman died on February 23, 2008. Approximately 9 months after Futerman’s death, on November 18, 2008, the plaintiff commenced a Fresh as Amended Claim (the “fresh claim”), withdrawing the only allegation in the original claim (that Futerman failed to remit funds held in trust to Johnson's ARF account) and raising a new set of facts and issues. The fresh claim alleged that Futerman had breached a fiduciary duty by failing to supervise Johnson's agents to ensure that all funds earned by Johnson were remitted to the ARF, as well as other new allegations as set forth below.

[ 5 ] The grounds on which this summary judgment motion are brought are that the plaintiff's allegations are not supported by the evidence; the action is statute-barred and there is no issue of discoverability; and the claims for breach of fiduciary duty and breach of trust are barred by the doctrine of laches and delay.

The Facts

Background

[ 6 ] Futerman was licensed to practice law in Ontario and was a partner with Futerman & Futerman in Toronto. He was called to the Bar in 1962 and was a LSUC certified specialist in civil litigation. He was retained by Johnson on September 30, 1988 to assist Johnson in being reinstated as an amateur runner for Canada following his disqualification from the Seoul Olympics in 1988 for taking banned steroids, for which he was stripped of his Olympic gold medal. Futerman represented the plaintiff at the Inquiry into the Use of Drugs and Banned Substances Intended to Increase Athletic Performance by Canadian Athletes (the "Dubin Inquiry"). The Inquiry was established to explore the use of banned practices in Canadian sports. The Inquiry commenced in January 1989 and was completed in October 1989. Following his disqualification, Canada banned the plaintiff from running competitively for life. The plaintiff maintained that he did not use banned steroids until the final days of the Dubin Inquiry, when he finally admitted to taking banned drugs at the Olympics. He had previously maintained to Futerman, as well, that he had not used banned substances.

[ 7 ] As a result of Futerman's efforts, the plaintiff was reinstated and permitted to resume his running career in September of 1990. Further, Futerman was successful in persuading the Canadian Olympic Association to abandon their policy of mandatory suspension for athletes testing positive for steroids, thus permitting the plaintiff to compete in the 1991 Pan American Games and the 1992 Summer Olympics.

[ 8 ] However, on January 17, 1993, Johnson was again found to have violated the anti-doping rules at the International Association of Athletics Federation ("IAAF") Grand Prix race in Montreal, following which Athletics Canada and the IAAF again banned Johnson from competition for life in accordance with the rules governing second doping offenses. In 1997, the plaintiff attempted an unsuccessful application, with the assistance of counsel (not Futerman) to overturn the lifetime ban. The plaintiff’s request for reinstatement before the Ontario Superior Court was dismissed and the dismissal upheld by the Ontario Court of Appeal. The plaintiff was ultimately reinstated for eligibility to run solely in Canada on April 19, 1999, but remained ineligible to compete under IAAF rules.

[ 9 ] There is no dispute that from early 1993, Futerman had no further dealings with the plaintiff until May 24, 2006, when Futerman received a Direction from the plaintiff to deliver the plaintiff's file to Di-anne Hudson for the purpose of preparing Johnson's biography and resolving a discrepancy involving payments by the plaintiff to his former manager, Kameel Azan. Eleven (11) boxes were picked up by Di-anne Hudson on July 6, 2006.

[ 10 ] Futerman received correspondence from Johnson on June 1, 2006, advising that he was “deeply concerned about the apparent duplication of payments and mismanagement of monies by Azan during our business relationship for the period of 1989 to 1992”. He further advised that research was "still underway regarding the disposition of race funds which do not appear to have been deposited into my ARF account". The plaintiff further confirmed that he was in possession of the ARF statements as at June 1, 2006, which he received from Athletics Canada.

[ 11 ] The plaintiff brought a claim against his former manager, Azan, alleging the taking of improper management fees and commissions. The claim was subsequently administratively dismissed when the plaintiff did not pursue the claim.

[ 12 ] Futerman did not retain the plaintiff's accounting and legal records beyond 10 years after Futerman's retainer was terminated (early 1993), consistent with the requirements of the Law Society of Upper Canada (“LSUC”) (see subsections 23(1) and 23(2) of By-Law 9 made pursuant to the Law Society Act , R.S.O. 1990, c. L.8). While the plaintiff alleges spoliation, such allegation was not advanced until November of 2008 when the fresh claim was served and filed.

Procedural history

[ 13 ] The plaintiff's original claim, issued on March 8, 2007, sought damages of $6 million plus punitive damages. However, the fresh claim dated November 18, 2008, issued pursuant to a court order of the same date, following Futerman’s death, raised new facts and claims and sought damages of $37 million.

[ 14 ] The defendants filed a Statement of Defence to the original claim on April 9, 2007 and moved for summary judgment on July 10, 2007. The plaintiff was successful in adjourning the motion in order to retain counsel. Following Futerman's death on February 23, 2008, the plaintiff obtained an Order to Continue as against Futerman's estate and, on November 18, 2008, obtained an Order to serve and file a fresh claim.

[ 15 ] The defendants argue that the fresh claim, which raises numerous new issues, is prejudicial to the estate, as Futerman died prior to the fresh claim and was unable to provide evidence in defence. Further, the defendants argue that several material witnesses, including George Gross, Kay Baxter and Gloria Johnson, the plaintiff's mother, have also died. Moreover, the defendants submit that there are no longer accounting or trust documents to be relied upon in defence of the claim, which is also prejudicial to the defendants.

[ 16 ] Following examinations for discovery of the plaintiff, Johnson abandoned five allegations in the Statement of Claim, leaving four (4) allegations remaining. The defendants served and filed their Trial Record in December of 2009 and subsequently obtained an Order dated March 26, 2010, requiring the plaintiff to answer undertakings. Thereafter, on April 29, 2011, the plaintiff was ordered to produce a supplementary affidavit of documents relevant to specific allegations, including documentation about the races, promotions and sponsorship revenue, in support of the plaintiff's allegation that monies were not remitted to his ARF account.

(End of excerpt continues exactly as provided in the source, maintaining identical wording and structure.)

Carole J. Brown J.

Date: August 2, 2012