Court File and Parties

COURT FILE NO.: CV-19-630254 DATE: 2020-12-18 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Eastern Financial Mortgage Corporation, Responding Party/Plaintiffs AND: George Mr. Athanasoulis, Moving Party/Defendant

BEFORE: Pollak J.

COUNSEL: Carly Cohen & Jonathan Shepherd, for the Responding Party/Plaintiffs John Polyzogopoulos & Megan Hodges, for the Moving Party/Defendant

HEARD: September 30, 2020

Endorsement

[1] This is a motion by the defendant, Mr. George Athanasoulis (“Mr. Athnasoulis”), to permanently or, in the alternative, temporarily stay this action in favour of proceedings in Florida, USA.

[2] The Plaintiff, Eastern Mortgage Corporation (“Eastern”), is a Florida mortgage lender corporation, that purchases mortgages and loans from other mortgage lenders. Its principle place of business is in Florida.

[3] The Defendant, Mr. Athanasoulis, is the principal of Athanageo, LLC (“Athanageo”), lives in Toronto, Ontario.

[4] Mr. Athanasoulis signed a Personal Guaranty guaranteeing the mortgage obligations of Athanageo on a condominium in Florida

[5] Eastern commenced this action (“Ontario Action”) against Mr. Athanasoulis to enforce the personal gurantee that he signed in Toronto.

[6] Mr. Athansoulis asks this court to permanently or, in the alternative, temporarily stay this action in favour of proceedings in Florida.

[7] The issues on this motion are:

i. Whether the Ontario Action should be permanently stayed in favour of the proceeding before a Florida Court.

ii. In the alternative, whether the Ontario Action ought to be temporarily stayed pending the outcome of the proceeding in a Florida Court.

[8] The parties agree that this Court has jurisdiction to hear the Ontario Action. Eastern’s position on this motion is that there is no basis to grant either a permanent or temporary stay in favour of proceedings in Florida. It emphasizes that there is no proceeding pending in Florida between Eastern and Mr. Athanasoulis. The only proceeding between these parties is this Ontario Action. Granting a stay would have the effect of depriving Eastern of its right to commence an action against Mr. Athanasoulis.

[9] When Athanageo defaulted on the Mortgage, Eastern commenced an action against Athanageo (not Mr. Athanasoulis) in Florida for breach of contract and foreclosed on the Mortgage (“Florida Action”).

[10] On April 17, 2019 and May 8, 2019, Eastern obtained a first priority foreclosure judgment and supplemental judgment against Athanageo (“Foreclosure Judgements”).

[11] A Deficiency Motion to determine the amount of damages in Eastern’s foreclosure judgments is anticipated to be heard by end of 2020 and will conclude the Florida Action.

[12] Mr. Athanasoulis alleges that he has been the victim of fraud by Peter and Gregory Galanis (the “Galanis Brothers”), who live in Toronto and Brazil.

[13] There are no proceedings in Florida regarding the enforcement of the Guaranty between Eastern and Mr. Athanasoulis. The only action with respect to the guarantee between these parties is the Ontario Action.

[14] Mr. Athanasoulis relies on the fact that he has been granted intervenor status in the Florida deficiency proceeding and on the fact that he commenced an action in Florida against alleged fraudsters the Galanis brothers (“Galanis Action”) as being duplicative or impacting the Ontario Action.

[15] Eastern emphasizes that Mr. Athanasoulis is not a party to the Florida Action and the relief on the personal guarantee is not being sought in that action. Mr. Athanasoulis counters that he has been granted limited intervener status on the Deficiency Motion on behalf of Athanageo (not personally) to dispute the final amount owing by Athanageo, but the parties agree that he is not entitled to raise the defence of fraud in that action.

[16] Eastern is not a party to the Galanis Action, only Mr. Athanasoulis is a party. The Galanis Action is based on the presumption that Mr. Athanasoulis is liable under the Guaranty.

[17] Eastern submits that the proceedings are not the same. The Florida Action is almost at its conclusion as the final stage is the Deficiency Motion. It is anticipated that it will be heard by end of year, well before a trial or summary judgment hearing in the Ontario Action. Further, the Deficiency Motion will have little impact on the Ontario Action. It will only quantify Eastern’s damages. The Galanis Action has just been started and it is argued that it was only commenced in June 2020 as an attempt to support this stay motion.

[18] I agree with all of Eastern’s submissions. Eastern cannot obtain the relief it seeks against Mr. Athanasoulis in the Florida proceedings.

[19] For the reasons that follow, I agree with Eastern’s position on this motion and find that:

i. Mr. Athanasoulis has not met his burden of establishing that Florida is the clearly more appropriate forum.;

ii. A permanent stay ought not be granted as Ontario is the proper forum for the claim against Mr. Athanasoulis.

iii. The Court ought not exercise its discretion to grant a temporary stay pending the outcome of the Deficiency Motion.

A. Permanent Stay

[20] The parties agree that the burden of proof is on Mr. Athanasoulis to convince this court that this court should decline to exercise jurisdiction in favour of a “clearly more appropriate” forum. (Forum non conveniens)

[21] This court has jurisdiction over the parties or the subject-matter of a dispute, but retains the residual power and discretion to decline jurisdiction in an appropriate case. The decision to decline jurisdiction is governed by the doctrine of forum non conveniens, to ensure fairness to the parties and the efficient resolution of the dispute.” [emphasis added]

[22] On this motion, Mr. Athansoulis must establish that Florida is clearly the more appropriate forum, to satisfy his burden of proving that a permanent stay should be granted. A non-exhaustive list of factors for a court to consider includes the following:

i. the comparative convenience and expense for the parties to the proceeding and for their witnesses, in litigating in the court or in any alternative forum. This would involve a consideration of, among others, the following factors:

i. the domicile or residence of the parties and the relative strengths of the connections of the two parties to the two competing forums;

ii. the locations of parties, witnesses and of pieces of evidence;

iii. the cost of transferring the case to another jurisdiction or of declining the stay;

ii. the law to be applied to issues in the proceeding;

iii. the desirability of avoiding multiplicity of legal proceedings. This would involve a consideration of, among others, the following factors:

i. the existence and nature of parallel proceedings;

ii. the impact of a transfer on the conduct of the litigation or on related or parallel proceedings;

iv. the desirability of avoiding conflicting decisions in different courts;

v. the enforcement of an eventual judgment. This would include a consideration of any anticipated problems related to the recognition and enforcement of judgments; and

vi. the fair and efficient working of the Canadian legal system as a whole. This would involve a consideration of, among others, the following factors:

i. juridical advantage;

ii. the interests of both parties; and

iii. the interests of justice.

[23] In this case a consideration of these factors reveals that:

i. The majority of the key witnesses live in Ontario;

ii. Mr. Athanasoulis lives in Toronto;

Ms. Wendy Dunlop notarized the Note, Mortgage, and Guaranty. She is a lawyer practicing in Ontario;

Mr. Jim Koumarelas, a lawyer in Ontario, was involved in the signing of other relevant documentation relating to the Guaranty; and

Mr. Peter Galanis resides in Toronto.

iii. The key documents were signed in Toronto. Mr. Athanasoulis disputes only that he executed the addenda to the Note and riders to the Mortgage – he does not deny signing the main pages. There is, therefore, a reasonable basis to determine that Easterns’ version of the facts that Mr. Athanasoulis signed the Guaranty in Toronto.

[24] Eastern argues that Florida is not the “clearly more appropriate forum”:

• there is no duplication of proceedings as there is no action pending in Florida between Eastern and Mr. Mr. Athanasoulis;

• the majority of the key witnesses, including the defendant and his assets, are located in Ontario;

• the relevant contracts were signed in Ontario;

• the factual matrix, including the alleged fraud that Mr. Mr. Athanasoulis raises as a defence, arose in Ontario between Ontario residents; and

• Eastern will be prejudiced by further delay if a stay is granted.

• The location of the other witnesses, this is a neutral factor:

o Gregory Galanis resides in Brazil (not in Florida); and

o The President of Eastern will travel to Ontario.

• The existence of a jurisdiction clause is a factor to be weighed in the forum conveniens analysis. In this case, the Jurisdiction Clause in the Guaranty provides that “each of the parties hereto irrevocably submits to the jurisdiction of the courts of the State of Florida”. The non-exclusive jurisdiction clause in the Guaranty permits an action in Ontario to proceed. The undisputed expert evidence on Florida law of Eastern confirms that Florida law, like Ontario, stipulates that non-exclusive jurisdiction clauses do not exclude other forums as the permissible jurisdiction for litigation. I agree that if a jurisdiction clause is non-exclusive, it is a consent to jurisdiction in the named forum. It does not exclude the jurisdiction of any other forum. In our jurisprudence, with considering cases with similar jurisdiction clauses, our courts have declined to stay the proceedings. In Hayes v. Peer 1 Network Inc, 2007 CanLII 65614 (ON SCDC), 228 OAC 348 (DC), the Divisional Court found that Washington was not the clearly more appropriate forum despite the existence of a non-exclusive jurisdiction clause. I agree that I should put minimal weight on the Jurisdiction Clause.

• The Guaranty provides that the law of Florida is the governing law. This is a neutral factor as this court can apply foreign law relevant to the main issues in this Action, namely, the enforceability of the Guaranty against Mr. Athanasoulis occurred in Ontario, where the contract was signed.

• The alleged fraud against Mr. Athanasoulis is claimed to have occurred in Ontario by the Galanis Brothers. This court has jurisdiction to enforce contractual rights affecting land in other jurisdictions where the defendant lives in Canada. This Court has jurisdiction to enforce the Guaranty’s terms.

• Eastern will lose a legitimate juridical advantage if the Ontario Action is stayed. Most importantly, a stay will deprive Eastern of its ability to seek a remedy against Mr. Athanasoulis as it is the only action seeking recovery against Mr. Athanasoulis. Eastern cannot obtain this remedy in the Florida action.

• There is no juridical loss to Mr. Athanasoulis if the Ontario Action proceeds. There are third party production procedures and other remedies in Ontario for production of documents.

• The enforceability of judgments is an important factor in the forum non conveniens analysis. Mr. Athanasoulis has assets in Ontario. There is no evidence that he has assets in Florida. Eastern could not recover on the Foreclosure Judgments in Florida against Athanageo, which necessitated this action.

[25] I agree that upon an evaluation of all of the above noted factors, the request for a permanent stay ought to be denied, as I find that Ontario, not Florida, is the clearly more appropriate forum. Mr. Athanasoulis has not met his burden of proof on this motion.

B. Temporary Stay

[26] In the alternative to a permanent stay of the Ontario Action, Mr. Athanasoulis requests that the Ontario Action be temporarily stayed pending the outcome of the Deficiency Claim and the ongoing third party discovery taking place in the Galanis Action before the Florida Court.

[27] The parties agree that a temporary stay should only be granted if:

i. Another proceeding is pending between Eastern and Mr. Athanasoulis regarding the same subject matter;

ii. The continuation of the Ontario Action would cause substantial prejudice or injustice (beyond inconvenience and expense) because it would be oppressive or vexatious or would otherwise be an abuse of the process of the court; and

iii. The stay would not cause an injustice to Eastern. Factors relevant to the prejudice include:

i. the likelihood and effect of the two matters proceeding in tandem;

ii. the possibility and effect of different results;

iii. the potential for double recovery; and

iv. the effect of possible delay.

[28] “Temporary stays pending resolution of a foreign proceeding are usually granted when the foreign proceeding would ‘substantially reduce the issues to be determined’ or if success in the foreign proceeding could render the local proceeding ‘substantially moot’ or otherwise have a ‘material’ impact on the outstanding issues in the case.”

[29] Our Courts have considered the following issues in deciding to exercise their discretion in issuing a temporary stay pending the resolution of another proceeding:

i. “whether there is substantial overlap of issues in the two proceedings;

ii. whether the two cases share the same factual background;

iii. whether issuing a temporary stay will prevent unnecessary and costly duplication of judicial and legal resources; and

iv. whether the temporary stay will result in an injustice to the party resisting the stay.”

[30] The Moving Party submits that as an intervenor in the Florida Action, he is a party to that action. The Florida Court’s order granting George leave to intervene makes this clear when it states that “Mr. Athanasoulis is hereby granted leave to intervene in this action as a party defendant…” and submits that in the event the Court is not satisfied that there is clear evidence of Florida law on the point, the court can assume that Florida law is the same as Ontario law.

[31] He submits that under Ontario law, a person granted intervenor status becomes a party to the proceeding. Subrule 13.01(1) of the Rules of Civil Procedure provides that a person “who is not a party to a proceeding may move for leave to intervene as an added party” if the person satisfies one or more of the following criteria:

i. they have an interest in the subject matter of the proceeding;

ii. the person may be adversely affected by a judgment in the proceeding; or

iii. there exists between the person and one or more of the parties to the proceeding a question of law or fact in common with one or more of the questions in issue in the proceeding.

[32] However, I agree with the submissions of Eastern that there are no matters proceeding in tandem with the same subject matter. The Ontario Action is to enforce the Guaranty against Mr. Athanasoulis. The Florida Action is for recovery on a defaulted Mortgage against Athanageo, not Mr. Athanasoulis and the Galanis Action is for contribution and indemnity.

[33] I agree that these actions are separate and distinct. Mr. Athansoulis could have defended the Ontario Action by adding the Galanis Brothers as third parties. Rather, he commenced a new action in Florida (where none of the parties reside).

[34] Mr. Athanasoulis argues that the determination of the Deficiency Claim in the Florida Action could have a significant impact on the Ontario Action, as Eastern will, at a minimum, set a ceiling of the amount of Eastern’s claim in the Ontario Action, which may eliminate some issues, and therefore leave fewer for determination in the Ontario Action.

[35] As well, if Mr. Athanasoulis can complete his third party discovery in Florida before permitting the Ontario Action to proceed, Mr. Athanasoulis will be able to make a final determination of which third parties to pursue by way of third party claim (and whether to do so in Florida or in Ontario). Once any third parties are added to the Ontario Action, documentary discovery will have already been effectively completed, and the Ontario Action will be further along, with a much reduced risk of being delayed by the need to add or remove third parties or amend pleadings.

[36] He submits that Eastern will not be prejudiced by a temporary stay. In fact, Eastern will benefit from a temporary stay for the same reasons that Mr. Athanasoulis will benefit. Issues may be narrowed with the proper third parties.

[37] On the basis of the above noted factors, I am of the view there is no basis for the Ontario Action to be temporarily stayed pending a determination on the Deficiency Motion. The Deficiency Motion in Florida determines only the quantum of damages that Eastern will seek against Mr. Athanasoulis in the Ontario Action. The issue in the Ontario Action is whether Mr. Athanasoulis is personally liable under the Guaranty.

[38] I find that as the subject-matter of the various actions are different, there is no possibility of competing results.

[39] For the above noted reasons, this court will not grant a temporary stay of the Action. This motion is therefore, dismissed.

Costs

[40] The parties have reached an agreement on costs to be awarded on a partial indemnity basis to the successful party on this motion at the hearing of this matter. The successful party, the Responding Party/Plaintiffs, are therefore awarded costs on a partial indemnity basis equal of $54,389, in accordance with the agreement of the parties.

Pollak J.

Date: December 18, 2020