Tar Heel Investments Inc. v. H.L. Staebler Company Limited et al, 2025 ONSC 240

Court File and Parties

Court File No.: CV-19-69132
Date of Judgment: January 10, 2025
Ontario Superior Court of Justice

Between:
Tar Heel Investments Inc.
Applicants, represented by S.F. Gleave and B. Needham

-and-

H.L. Staebler Company Limited, Lisa Arseneau, and Debbie Sutton
Respondents, represented by P.A.N. Gupta and M. Van Vliet

Heard: November 27, 29, 30, December 1, 4, 5, 6, 7 and 8, 2023; and March 4, 5 and 6, 2024 in Hamilton

Judge: J. MacNeil

Introduction

[1] The plaintiff, Tar Heel Investments Inc. (“Tar Heel”), is the corporate successor and assignee of Pearson Dunn Insurance Inc. (“PDI”) and advances “wrongful competition” claims as against the defendants. Tar Heel asserts an ownership, confidentiality, and proprietary interest in the transportation insurance book of business that was worked by the defendants, Lisa Arseneau (“Arseneau”) and Debbie Sutton (“Sutton”), from 2009 to 2015, while both were employed by PDI. At its core, the plaintiff’s claim is that Arseneau, supported by Sutton and in cooperation with the defendant, H.L. Staebler Company Limited (“Staebler”), sold the PDI transportation insurance book of business to Staebler using PDI’s confidential business information. Various causes of action are pleaded in the statement of claim.

[2] The defendants deny that PDI owned the transportation insurance book of business as alleged. They submit that Arseneau always owned her book of business and was entitled to deal with it as she saw fit, both before and after her departure from PDI. They also argue that there were no restrictions on Arseneau’s ability to solicit the transportation insurance clients or compete with PDI after she left its employ, and that Staebler was entitled to enter into the transactions it did with Arseneau and Sutton.

[3] The action originally came on for trial commencing in November 2019 before another judge, with the trial decision being released on July 19, 2021. The findings and conclusions made therein are summarized in the decision of the Ontario Court of Appeal allowing the appeal and cross-appeal from that judgment and directing a new trial.

[4] A twelve-day trial was then held before me. After the close of evidence, the parties submitted written closing submissions.

The Parties

[5] PDI was an independent brokerage that offered a full range of insurance and risk management services to its personal and commercial clients. It had offices in Stoney Creek, Hamilton, Mississauga and Woodbridge. PDI had a number of branch locations and its head office was in Hamilton. It had approximately 70 employees. A third of those employees were in a sales or producer role. PDI had a senior vice president in charge of operations, a vice president of finance, and several vice presidents responsible for various divisions of the company.

[6] George McCarter (“McCarter”), who was a witness at the trial for the plaintiff, was the principal of PDI at the material time. McCarter began working in the insurance brokers industry in 1984. In or around 2008, he bought out the partners of PDI and became owner, sole shareholder, and president of the business. In 2015, PDI was sold to Jones Brown Inc. (“Jones Brown”). McCarter’s PDI shares were converted to shares in Jones Brown and he became a member of the board of directors and an executive of the company. Jones Brown was subsequently purchased by a different company in January 2019. McCarter did not have any further involvement after that purchase. He then began working for the plaintiff, Tar Heel. By an agreement dated December 20, 2018, Tar Heel was assigned the within litigation.

[7] The defendant Arseneau became involved in the transportation insurance sector in 1987 and is a specialist in trucking insurance. She began working with Kimberley & Associates in 1999 as a producer/salesperson but she had no written agreement. While there, Arseneau had a guaranteed salary and the company took off all source deductions and taxes. Russ Elliott (“Elliott”) became an owner of Kimberley & Associates in or about 2004. Arseneau and Elliott decided to “strike up a partnership”. The defendant Sutton, who also worked at Kimberley & Associates, and Arseneau became the “boots on the ground” and Elliott a “silent partner”. Arseneau testified that she owned the clients in the book of business that she directly serviced at Kimberley & Associates. She left the company in 2009 to join PDI after some concerns with the financial viability of Kimberley & Associates came to her attention.

[8] Arseneau joined PDI as Manager of the Transportation Division commencing on June 1, 2009. She was employed in its Mississauga office until December 14, 2015, when she submitted a notice of resignation. That same day, she was walked out of the office with her access to PDI and its computer systems removed, and told that she would not be required to work the two weeks’ notice she had provided. The next day, December 15, 2015, Arseneau joined Staebler as an employee. She then worked at Staebler’s for 8 years producing trucking insurance policies, finding trucking clients, and servicing their insurance needs. Arseneau was called as a witness at the trial for the defendants.

[9] Sutton became an insurance broker in 1997 and has worked in the industry ever since. Around 2000, Sutton went to work at Kimberley & Associates doing predominantly transportation insurance, as a client service representative working with clients and underwriters. When Sutton joined Kimberley & Associates, Arseneau was already working there as a transportation producer. After Arseneau moved to PDI, Sutton also decided to join PDI assisting Arseneau in the transportation insurance division. Sutton was employed by PDI in its Mississauga office commencing June 1, 2009. She resigned on December 18, 2015. Her last day of work at PDI was January 1, 2016. Sutton joined Staebler as an employee effective January 4, 2016. Sutton was called as a witness at the trial for the defendants.

[10] Staebler is an Ontario insurance broker. Kim Philpott (“Philpott”) was the President of the company for about 12 or 13 years before retiring. As of her testifying at the trial, she had been retired from Staebler for about 3-4 years. Philpott also testified at trial on behalf of the defendants.

Credibility

[11] The court heard testimony from four fact witnesses and two experts. Generally, I found all of the witnesses who testified to be credible. There were some reliability issues that arose which I find primarily stemmed from the degradation of memories due to the passage of time, as this was the second trial of this matter and took place more than eight years after the events in question.

[12] The plaintiff raised a number of challenges to the credibility of Arseneau and the other fact witnesses who testified on behalf of the defendants. The defendants also challenged the credibility and reliability of McCarter in many aspects of his evidence. Very few of the findings of fact on which the outcome of the case depends required an assessment of credibility. In those instances in which a particular finding of fact required resolution of a credibility issue, I have indicated whose evidence I preferred and why.

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