NEWMARKET

COURT FILE NO.: CV-11-105362 – A2

DATE: 20140829

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Grossi Consulting Services Limited
Plaintiff/Defendant by Counterclaim

– and –

Premier Salons Ltd.

Defendant/Plaintiff by Counterclaim

• and –

Al Grossi and Angelina Grossi

Third Parties

H. Syed, for the Plaintiff/Defendant by Counterclaim

M. Spence, for the Defendant/Plaintiff by Counterclaim

H. Syed, for the Third Parties

HEARD: May 28, 29, 30, June 2, 3, 4 and 5 2014

REASONS FOR JUDGMENT

HEALEY J.

Nature of the Case and Claims

[1] Grossi Consulting Services Limited (“Grossi Consulting”) is owned by Al Grossi and his spouse Angelina Grossi, and carries on business as an information technology consulting company. Its consulting services are provided by its principal, Al Grossi; Angelina Grossi has no active role in the company.

[2] Premier Salons Ltd. (“Premier”) is an Ontario corporation that operates hair salons and beauty spas in Canada and the United States. Premier’s head office is in Markham, Ontario, and it has a satellite office and warehouse near Minneapolis, Minnesota.

[3] This action arises out of a Professional Services Agreement (the “Agreement”) entered into by the parties. The Agreement is undated but references an effective date of June 1, 2009.

[4] Grossi Consulting claims damages for breach of contract occasioned by the termination of the Agreement on February 17, 2011, alleging that it is owed compensation due under the Agreement, including monthly fee, travel and car allowance, unaccountable days, and a termination payment, as well as unpaid bonus and equity payments. It also claims damages for bad faith termination, damage to reputation and loss of goodwill, special damages, and punitive and aggravated damages.

[5] Premier alleges that the Agreement was terminated for cause, due to fundamental breaches of the Agreement including misappropriation and/or theft of corporate assets, and breach of confidentiality and trust. These allegations are directed specifically toward Mr. Grossi.

[6] By counterclaim, Premier seeks a declaration that Grossi Consulting breached the Agreement, and seeks damages for losses alleged to have been sustained as a result of Grossi Consulting’s failure to deliver the contracted services. It also seeks the return of fees paid to Grossi Consulting, and compensation for improper conversion and use of Premier’s equipment, as well as punitive, exemplary and/or aggravated damages for independent actionable wrongs committed by its principals. By third party claim, Premier seeks the same relief against Mr. and Mrs. Grossi personally, along with a declaration that they are jointly and severally liable for all damages incurred by Premier arising from breaches of the Agreement and the personal misconduct of Mr. Grossi.

Issues for Determination

(1) What are the terms of the Agreement?

(2) Is Grossi Consulting entitled to payment of money arising from the Agreement, or was there non-delivery of services under the Agreement arising from negligence or breach of express or implied warranties such that Grossi Consulting is disentitled to such payment?

(3) Was the Agreement terminated for cause?

(4) Is Premier entitled to damages or compensation for any such negligence or breach of express or implied warranties by Grossi Consulting, Al Grossi or Angelina Grossi?

Terms of the Agreement

[7] Under its express terms, the Agreement took effect on June 1, 2009. According to the undisputed evidence of Paul Bernards, who was the signatory on behalf of Premier and who was Premier’s Chief Financial Officer at the time, it was signed just prior to that date. Although neither party has claimed that the Agreement, or any of its terms, is invalid, or seeks to avoid or rescind the Agreement, the court heard evidence regarding Premier’s knowledge and approval of its contents.

[8] The evidence of Mr. Bernards was that the Agreement was drafted by Bob Saunders, who was the Senior VP of Human Resources and Risk Management in Premier’s Minneapolis office. He testified that it was reviewed by Premier’s CEO, Brian Luborsky, before being delivered to Mr. Grossi for signature. Mr. Grossi testified that he recalled reading a prior version of the Agreement, from which various provisions related to insurance were deleted. There is no evidence that he was rushed to review or sign the agreement. He testified that he opted to not have it reviewed by a lawyer.

[9] Although Mr. Luborsky testified that he does not recall having approved the final version, there is no indication in the Agreement that it is conditional upon his approval. In a similar vein, the present Senior Vice President of Human Resources for Premier testified that not all of the final terms were in a form with which she or her predecessor, Bob Saunders, was familiar. However, the evidence is clear that Paul Bernards was tasked with filling the position eventually filled by Grossi Consulting, and that he was primarily responsible for negotiating its terms, subject to Mr. Luborsky’s final approval. At trial no one challenged Mr. Bernards’ authority to bind Premier to the Agreement, and I find that he was given such authority. I also infer and accept that Mr. Luborsky did have knowledge of its final terms, and that he gave his approval to Mr. Bernards to sign the Agreement on behalf of Premier. Accordingly, this court finds that the Agreement is valid, and its terms known to each party.

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