SUPERIOR COURT OF JUSTICE

Court File No. 5013/12

B E T W E E N:

NATIONAL FIRE ADJUSTMENT CO. INC.

Plaintiff

v.

SHAFEK HANNA, WANDERLEIDA ASSUNCAO,

STATE FARM FIRE AND CASUALTY COMPANY,

ROLF PIEHLER AND BOGHOSIAN & ASSOCIATES

PROFESSIONAL CORPORATION

Defendants

RULING ON SUMMARY JUDGMENT MOTION

BEFORE THE HONOURABLE JUSTICE C.D. BRAID

on March 6, 2015 at WELLAND, Ontario

Appearances:

D. MacFarlane Counsel for the Plaintiff

M. Tiidus Counsel for the Defendants

FRIDAY, MARCH 6TH, 2015

RULING ON SUMMARY JUDGMENT MOTION

BRAID, J. (Orally):

This is a motion for summary judgment.

The plaintiff, National Fire Adjustment Co. Inc.(NFA), (move for summary judgment). Three of the defendants, namely: State Farm Fire and Casualty Company (State Farm), Rolf Piehler and Boghosian and Associates Professional Corporation (Boghosian and Associates), have also brought motions seeking summary judgment.

This court has previously struck the statement of defence and counterclaim of the defendants, Shafek Hanna (Hanna) and Wanderleida Assuncao(Assuncao). All parties agree that this is clearly a case where summary judgment is appropriate in the manner and upon the terms thought proper by this court who has a full appreciation of the issues and is in a position to determine them. Pursuant to Rule 20.04(2) and 2.1 this court can weigh evidence, evaluate credibility and draw reasonable inferences on the motion.

This court has been provided with an extensive evidentiary record in support of the motions including the following:

(a) Motion record of the plaintiff NFA which contains the affidavit of David LeBlanc, Vice-President of NFA;

(b) Transcript of the examination of David LeBlanc of NFA;

(c) Transcript of the examination of Rod Hammond, Adjuster for NFA;

(d) Motion record of State Farm which contains the Statement of Claim, Statement of Defence and the affidavit of Keith Dyson, Claims Team Manager for State Farm;

(e) Transcript of the cross-examination of Keith Dyson of State Farm;

(f) Motion record of Piehler and Boghosian and Associates, which contains the affidavit of the defendant Rolf Piehler; and

(g) Transcript of the examination of the defendant Rolf Piehler.

In the case of Pizza Pizza v. Gillespie 1990 CanLII 4023 (ON SC), [1990] 75 O.R. 2d 225, the Ontario Court (General Division) provided helpful guidance regarding a motion for summary judgment and reached the following conclusions:

(a) Rule 20 contemplates a radically new attitude to motions for judgment. The objective is to screen out claims, that, in the opinion of the court, based on evidence furnished as directed by the role, ought not to proceed to trial because they cannot survive a “good hard look”.

(b) There is no arbitrary or fixed criterion that the motion judge must apply. It is a case-by-case decision to be made on the law and on the facts that he is able to find (on the evidence submitted to him in support of the claim or defence), whether the defendant has laid a proper foundation in his affidavit and other evidence to sustain the defence alleged.

(c) The defendant must set out specific facts and coherent evidence organized to show that there is a genuine issue for trial.

(d) Apparent factual conflict in evidence does not end the inquiry.

(e) The court may, on a common-sense basis, draw inferences from the evidence.

(f) The court may look at the overall credibility of the defendant’s defence, i.e. does it have the ring of truth about it such that it would justify consideration by the trier of fact.

(g) Matters of credibility requiring resolution in a case of conflicting evidence ought to go to trial; however, that depends on the circumstances of the case. The court, in taking a hard look at the merits, must decide if any conflict is more apparent than real, i.e. “whether there is really an issue of credibility that must be resolved in order to adjudicate on the merits.”

Admissions

The following facts are admitted by the parties:

(1) Hanna and Assuncao were both named insured under the State Farm policy and they were joint owners of the property.

(2) There was a fire at the residence of Hanna and Assuncao on April 12, 2011.

(3) There was a retainer agreement between Hanna and NFA. NFA adjusters assist individuals whose properties have been affected by fire with obtaining reimbursement from insurance companies.

(4) All parties to this action were aware that the agreement existed.

(5) NFA represented Hanna as their adjuster and, in consideration of that representation, Hanna gave a direction containing the following language: “You are irrevocably directed to include the name National Fire Adjustment Co. Inc. as a payee on all payments made hereafter and deliver the payments to NFA and you shall be held liable to NFA upon your failure to do so.”

(6) No contract or other agreement existed between State Farm and NFA.

(7) The amount at issue in this case is $112,097.46, which is the fee owing to NFA.

Liability of State Farm

NFA argues that the agreement and irrevocable direction between Hanna and NFA should have been followed by State Farm. In addition, NFA argues that the agreement created an equitable assignment and that State Farm ignored that equitable assignment. In October 2011, State Farm issued cheques that were not payable to NFA. NFA raised an issue and the cheques were replaced and re-issued.

NFA argues that this is an indication that State Farm knew to pay NFA but failed to do so in future payments. However, at some point NFA directed State Farm to pay Boghosian and Associates in trust. This was admitted by Mr. Hammond during his cross-examination. This represented a clear direction to amend the terms of the agreement between Hanna and NFA and to amend the direction. It was reasonable for State Farm to act on that direction.

For purposes of this application I decline to make a finding as to whether an equitable assignment existed. However, if one did exist, the direction of NFA to pay Boghosian and Associates, in trust, amended the terms of the equitable assignment. It therefore cannot be said that State Farm breached the terms of the irrevocable direction and/or the equitable assignment (if it existed).

As a result, I find that State Farm is not responsible to the plaintiff for the loss. I therefore grant summary judgment in favour of the defendant State Farm Fire and Casualty Company on the grounds that there is no genuine issue requiring a trial.

Liability of Piehler and Boghosian and Associates

In the case of Hudson v. Foster [2010] ONSC 3417, a decision of the Ontario Superior Court of Justice, the court set out a helpful discussion and definition of an undertaking, beginning at paragraph 19:

19. Black’s Law Dictionary, 7th Edition, “undertaking” is defined it as a “promise, pledge or engagement”.

20. The nature of an undertaking is quoted by G.B. Smith in Professional Conduct for Canadian Lawyers at page 203 as follows:

“An undertaking is the promise given by a solicitor through a written statement, a verbal communication or inferred from his acts, or any combination thereof; in reliance on which promise the recipient of the undertakings gives up to the solicitor or to another party a document or right; or performs an act which that recipient would not have done were it not for the receipt of the promise from that solicitor.”

21. An undertaking binds the lawyer to do something that the circumstances of the pledge do not permit him or her to do immediately. It may be to supply documents, make inquiries, answer a question, discharge a mortgage or act in a way promised in the undertaking. It is an exception to the general principle that a promise made without consideration is unenforceable. No particular form of words is required to form an undertaking.

22. The nature of an undertaking was described by the court in Bogoroch & Associates v. Sternberg (2007) 2007 CanLII 41889 (ON SCDC), 229 O.A.C. 284 (Div.Ct.) at paragraph 23 as follows:

“Solicitor’s undertakings are matters of utmost

good faith. They are traditionally given to

expedite and facilitate the furtherance or

conclusion of matters upon which solicitors

are engaged on behalf of their clients. These

efficiencies result in savings of lawyers’

time that can be passed onto clients. Time is

spent more efficiently and work is done more

smoothly.”

The plaintiff states that Piehler and his firm undertook to protect NFA’s fees, which undertaking was breached when the final settlement funds were paid to Hanna without reimbursing NFA’s fees. Piehler, on the other hand, argues that the onus lies with the plaintiff; that NFA must show that it was a personal undertaking and that the undertaking applies to all fees owed. Piehler argues that the plaintiff has not met this onus.

It is important to consider the wording of the undertaking at issue in this case which can be found at Tab D in the plaintiff’s motion record. In an e-mail dated October 20, 2011 Piehler made the following statement: “I will provide NFA with a formal undertaking to protect your fee.” That statement was made in an e-mail to Mr. Hammond, representative of NFA.

On this application, Mr. Piehler stated in evidence that the undertaking was with respect to a specific cheque in October 2011, only. He argues that he is not bound by this undertaking in respect of all fees and that it was only to apply to the one payment. He also argues that subsequent events demonstrate that NFA knew there was no undertaking to pay all of NFA’s fees.

The context of the October 2011 e-mail and undertaking is important. The e-mail exchange leading up to the undertaking demonstrates that there were issues with a deposit into a bank account when the funds were addressed to NFA and Mr. Piehler made the undertaking in that context.

In addition, there is a letter at Exhibit G in the plaintiff’s motion material which also reflects the state of mind at the time of Mr. Piehler. The letter is dated February 1, 2012 and in the final paragraph of that letter Mr. Piehler said the following: “In an effort to expedite the processing of State Farm’s payment on the building claims to the insured, please advise your client to make the cheque payable to Boghosian and Associates in trust. As a result of stricter deposit rules imposed by the banks on multiple endorsed cheques, previous cheques issued by State Farm had to take a circuitous route encompassing further delay in order to be deposited. We understand NFA, a named payee on the cheques, had already notified you of its consent to have cheques made payable to our firm in trust.” This letter was copied to Rod Hammond, representative of NFA.

The e-mail undertaking of October 20, 2011 changed the landscape and changed the manner in which Mr. Hammond dealt with this issue. From the actions of NFA it is clear that it perceived Piehler’s undertaking to protect their fees going forward. The evidence demonstrates that, in February of 2012, Hammond (on behalf of NFA) reviewed the draft settlement which directed that the funds be paid to Boghosian and Associates in trust. He received a copy of that letter, that I read a moment ago, to State Farm from Mr. Piehler dated February 1st stating that NFA had agreed for the money to be paid to the law firm. He was copied on e-mail correspondence from State Farm’s counsel which made it clear that Hammond knew the money would be paid directly to Boghosian and Associates.

No objection was raised to this method of proceeding. In fact, the letter dated February 1, 2012 from Mr. Piehler, sets out the circumstances regarding the issues of depositing cheques. NFA had a good business reason to agree to allow the money to allow the money to be deposited to Boghosian and Associates in trust to avoid these bank issues. As I said earlier, Mr. Hammond (under cross-examination) acknowledged that NFA had agreed to have cheques payable to Boghosian and Associates in trust, and that can be found on page 71 of his transcript.

On a plain and ordinary reading of the undertaking it is clear that the meaning and purpose of the undertaking was to protect NFA’s fees in their entirety. I make this statement not as a credibility finding, but as a finding of fact. If Mr. Piehler had wished to limit the undertaking to one payment he should have said so. He did not limit the undertaking. NFA relied on the undertaking and did so reasonably. Mr. Piehler should not have preferred the instructions of Mr. Hanna over the undertaking that he had given to NFA as he was bound to pay NFA their fees first, before paying his client, pursuant to his undertaking.

The law firm Boghosian and Associates is vicariously liable for the actions of Mr. Piehler. As a result I find that the two defendants, Mr. Piehler and Boghosian and Associates, are responsible to the plaintiff for the loss. I therefore grant summary judgment in favour of the plaintiff, National Fire Adjustment Co. Inc. as against the defendants Rolf Piehler and Boghosian and Associates Professional Corporation on the ground there is no genuine issue requiring a trial.

The following shall be the disposition:

The defendants Shafek Hanna, Wanderleida Assuncao, Rolf Piehler and Boghosian and Associates Professional Corporation, shall pay damages of $112,097.46 on a joint and several basis. And, as I indicated earlier, I’ve granted summary judgment in favour of State Farm essentially dismissing the action against State Farm in this matter.

FORM 2

CERTIFICATE OF TRANSCRIPT (SUBSECTION 5(2))

Evidence Act

I, Monica Beattie, certify that this document is a true and accurate transcript of the recording of National Fire Adjustment Co. Inc. v. Shafek Hanna et al in the Superior Court of Justice held at 102 E. Main Street, Welland, Ontario, on March 6, 2015, taken from Digital Recording No. 4521_CRT5_20150306_091714, which has been certified in Form 1.

April 24, 2014 ______________________________

Monica Beattie,

Certificated Court Reporter