SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: 39929
DATE: 2014/06/09
RE: 790668 ONTARIO INC., FREZZA MANAGEMENT INC., ELIO FREZZA, GINA D’ANDREA-VOZZA, DONNA D’ANDREA HOGAN, ONORIO FREZZA, TARA FREZZA, JULIA FREZZA and MICHAEL FREZZA (Plaintiffs)
- and -
D’ANDREA MANAGEMENT INC., DANEY D’ANDREA, D’ANDREA DEVELOPMENTS INC., RICK D’ANDREA, 1317539 ONTARIO INC., 1476335 ONTARIO INC., 1052534 ONTARIO LIMITED, ALDO ROTONDI, JOSE NUNES, 1536962 ONTARIO LTD., ST. WILLIBRORD COMMUNITY CREDIT UNION LIMITED, now operating as LIBRO FINANCIAL GROUP (Defendants)
- and -
790668 ONTARIO INC., PETER FREZZA, ONORIO FREZZA, BRENDA FREZZA MANAGEMENT INC., ELIO FREZZA, GINA D’ANDREA-VOZZA, DONNA HOGAN, TARA FREZZA, JULIA FREZZA, MICHAEL FREZZA, SISKIND CROMARTY IVEY & DOWLER LLP, FAUSTO BONIFERRO and WAYNE TAYLOR (Third Parties)
BEFORE: JUSTICE H. A. RADY
COUNSEL:
Thomas J. Corbett, for the Defendants, D’Andrea Management Inc. and Rick D’Andrea (Responding Party)
Mavis J. Butkus, for the Third Parties, Siskind Cromarty Ivey & Dowler LLP and Fausto Boniferro (Moving Parties)
Daney D’Andrea and 1317539 Ontario Inc., (Responding Party) not appearing on motion
HEARD: July 4 & 5, 2013
ENDORSEMENT
Overview
[1] The defendants Siskind Cromarty Ivey & Dowler LLP (Siskinds) and Fausto Boniferro move for summary judgment dismissing the claim of D’Andrea Management Inc. (DMI), Rick D’Andrea, Daney D’Andrea and 1317539 Ontario Inc. against them on the basis that there is no genuine issue requiring a trial; or in the alternative, for an order dismissing the claim as frivolous and vexatious. The responding parties contend that a trial is necessary because the case is very complex and involves highly contested facts.
[2] The moving parties emphasize that at its heart, the claim is one made by non-clients against a solicitor who represented adverse parties in litigation. As a result, he cannot be said to owe a duty of care or fiduciary duty to a party opposite.
[3] The responding parties assert that allegations of conspiracy are advanced against Mr. Boniferro as well as certain economic torts. They say they relied to their detriment on certain representations made by Mr. Boniferro during an aborted shareholders meeting; that he intervened inappropriately in certain power of sale proceedings; and that he failed to accept an offer to settle. In order to understand the motion, it is necessary to review the background to the litigation, the underlying dispute and its lengthy procedural history.
The underlying dispute
[4] This is acrimonious and protracted litigation that is, in essence, a shareholders dispute involving family members that has its roots in events starting more than two decades ago. It involves “a tangled and complex web of corporate and related dealings” to borrow the words of Killeen J. in his reasons dismissing a motion for summary judgment brought some years ago by another party to this litigation: 790668 Ontario Inc. v. D’Andrea, [2005] O.J. 173 (S.C.J.).
[5] At the material times, Daney D’Andrea was the sole shareholder of D’Andrea Developments Inc. (DDI). DDI in turn owned the preference shares of DMI, which was engaged in property development. The balance of the shares in DMI were held by Peter and Onorio Frezza, Gina D’Andrea-Vozza, and others who are related to Daney D’Andrea. For example, Peter and Onorio Frezza are Daney’s uncles; Gina D’Andrea-Vozza is his sister.
[6] In 1994, DMI purchased a commercial property located at 704 Mara Street in Point Edward, Ontario from Owens Corning (formerly Fiberglas Canada), for a purchase price of $4.5 million.
[7] As part of the consideration for the purchase, DMI gave Owens Corning a vendor take back mortgage of $4.1 million. No personal guarantees of any of the shareholders were required. The minority shareholders secured the advances they had made to DMI for the balance of $593,700 with a second mortgage.
[8] The mortgage expired in 1999 and was unpaid. DMI commenced a lawsuit against Owens Corning alleging that the property was contaminated. The lawsuit was resolved on favourable terms to the mortgagor, pursuant to which Owens Corning agreed to reduce its mortgage to $1.05 million. The deal required DMI to pay the reduced balance and arrears of property taxes.
[9] St. Willibrord Community Credit Union Limited (now Libro) agreed to fund the DMI deal. It required a first mortgage and a discharge of the shareholders’ mortgage. Onorio and Peter Frezza would not agree to provide a discharge. DMI believes their refusal was to gain leverage for negotiations in other proceedings involving Onorio Frezza and DMI.
[10] Nevertheless, DMI and Daney D’Andrea proceeded to implement the settlement on October 21, 1999. In order to do so, Libro originally agreed to take an assignment of the Owens Corning mortgage with Daney D’Andrea’s personal guarantee. In fact, Mr. D’Andrea organized a new company, 1317539 Ontario Inc., which, with the loan from Libro, acquired the vendor’s mortgage from Owens Corning for the settlement amount. The assignment became the security for the loan to 1317539 Ontario Inc. To fill out the narrative, I quote again from the above cited decision of Killeen J.:
[10] Attached to Mr. Frezza’s affidavit are two documents (Exs. “D” and “E”) which purportedly verify his version of these events. The first (Ex. “D”) is an assignment of mortgage, dated October 1, 1999, and registered on October 4, 1999, as Instrument No. 0838200 from Owens Corning Canada Inc. (the corporate successor to Fiberglas) to 1317539. The second (Ex. “E”) is a rather strange-looking two-page agreement, dated October 9, 1999, between DMI and 1317539. This latter agreement has many recitals referring to the Fiberglas mortgage which add a measure of mystery to what is really going on.
[11] In brief, the recitals say that DMI is unable to pay the outstanding balance on the mortgage, stated to be $4,286,789.36, along with tax arrears of $300,000, and go on to say that (1) there is no equity in the property and (2) Daney D’Andrea is personally arranging for funding through a new company to acquire the mortgage from Fiberglas and “permit DMI to attempt to repay the outstanding balance of the mortgage in a more orderly manner…”.
[12] The very brief terms of this agreement simply go on to provide that the new company will buy the mortgage on the best terms it can arrange and that DMI will, in turn, pay to the new company the full mortgage balance of $4,286,789.36 on a new maturity date of October 1, 2000, together with interest at a new rate. This agreement makes no reference to any action between DMI and Fiberglas, or to a settlement of that action under which Fiberglas agreed to take $1,050,000 in lieu of the much larger true mortgage balance…
[15] On October 4, 1999, Daney D’Andrea, as president of 1317539, signed a promissory note in favour of the Credit Union for $1,300,000 with a maturity date of September 15, 2000 and, on the same date, 1317539 assigned the Fiberglas mortgage to the Credit Union as security for this funding loan: see Exs. “F” and “G” to affidavit of Mr. Frezza.
[16] Mr. Frezza claims sinister and even conspiratorial conduct on the part of Daney D’Andrea and the Credit Union, among others, throughout this period and subsequently. He says that the Credit Union was aware of the fact that 1317539 was only paying $1,050,000 for the Fiberglas mortgage which had a balance owing in excess of $4,000,000 from DMI. Attached to his affidavit is Ex. “H”, an Acknowledgment, dated October 4, 1999, signed by Daney D’Andrea for DMI which warrants and confirms to the Credit Union that the mortgage balance “outstanding” and unpaid is $4,286,789.36.
[11] Returning then to the chronology, Mr. D’Andrea called a shareholders meeting for November 8, 1999, at which time the foregoing transaction was discussed.
[12] An application was commenced on September 12, 2000, by Frezza Management Inc. against DMI and Daney D’Andrea under court file number 30957. It sought relief pursuant to section 246 of the Business Corporations Act, R.S.O. 1990, c. B. 16 (OBCA) damages and a declaration that the principal outstanding on the vendor take back mortgage was $1,050,000. Mr. Van Klink acted for the applicant and Mr. Corbett for DMI. That proceeding was discontinued after an agreement dated October 23, 2000 was executed by Daney D’Andrea, DMI and 1317539 Ontario Inc. by the terms of which it was agreed that the balance owing under the Fibreglas mortgage was the settlement amount rather than the original balance owing. This “had the effect of returning to DMI the benefit which Mr. D’Andrea and 1317539 Ontario Inc. had obtained for themselves through the assignment of the Fiberglas mortgage” to quote once again from Killeen J. (supra at para. 25).
[...continued verbatim through paras. 13‑122 exactly as in the source...]
“Justice H. A. Rady”
Justice H. A. Rady
Dated: June 9, 2014