2013 QCCQ 5305, 2013 QCCQ 5305

Barnard c. Sheridan Books Inc. 2013 QCCQ 5305 COURT OF QUEBEC Small Claims Division CANADA PROVINCE OF QUEBEC DISTRICT OF MONRÉAL Civil Division No: 500-32-137374-130 DATE: May 24, 2013 ______________________________________________________________________ BY THE HONOURABLE SCOTT HUGHES, J.C.Q ______________________________________________________________________ TIMOTHY BARNARD Plaintiff v. SHERIDAN BOOKS INC.

Defendant ______________________________________________________________________ Judgment on a Motion to dismiss (Articles 165 (3) and (4) C.C.P. ) ______________________________________________________________________ [ 1 ] Does the Court of Québec have jurisdiction over a claim instituted in regard of a manufacturing contract with Sheridan Books Inc., a book manufacturer domiciled and operating in the state of Michigan, USA? . THE FACTS [ 2 ] Timothy Barnard is a translator and an author.

He wrote a book entitled "Introduction to a true history of cinema". [ 3 ] Caboose Inc. is a moral person (incorporated in virtue of the laws of Québec) carrying on business as a "book publisher". Mr. Barnard is the sole shareholder and administrator of Caboose. [ 4 ] Sheridan Books is a book manufacturer. [ 5 ] On December 5, 2011, Caboose opened an account with Sheridan. On December 6, Sheridan made a quote for the manufacturing of 1500 books. Mr.

Barnard accepted this quote signing as "owner" of Caboose. [ 6 ] The terms and conditions of Sheridan's contract state that the parties have chosen to submit all litigation to the laws and courts of the state of Michigan: Governing Law and Jurisdiction . Customer understands that Sheridan Books is a Delaware corporation with its principal place of business in Michigan and manufacturing facilities in Michigan and Virginia and further understands that customer's order may be manufactured either in Michigan or Virginia or in both.

Customer agrees that by entering into this agreement it is doing business in each state where any part of the manufacturing process, including administrative, may take place end agrees that each such state is a reasonably convenient place for the resolution of any suit which may be filed as a result of any controversy or claim arising under the terms of this agreement. Customer waives any claim of inconvenient forum, and any right to claim that an action between the parties should be litigated other than in Michigan or Virginia.

Customer further consents to the jurisdiction of any court of competent jurisdiction sitting in any such state of the resolution of any such dispute. This agreement shall be interpreted and the rights and liabilities of the parties shall be determined in accordance with laws of the state in witch suit is commenced . (Emphasis added) [ 7 ] Also, Mr.

Barnard has personally guaranteed the obligations of Caboose, the company he controls: PERSONAL GUARANTEE As an inducement for Sheridan Books, Inc.(SBI) to sell goods, services, and merchandise to Cabouse_( sic )________________________________ (hereinafter "Purchaser") the undersigned, jointly and severally agree(

s) to and to hereby guarantee the payment, in accordance with the terms of sale, by Purchaser to SBI of all monies due for goods, services and merchandise sold and delivered to Purchaser until this guarantee has been rescinded, in writing. The obligations hereunder are independent of the obligations of Purchaser and a separate action or actions may be brought and prosecuted against the undersigned Guarantor(

s) whether said Purchaser is joined in any such action or actions . The undersigned Guarantor (

s) waive any right to require

SBI to proceed against the Purchaser or proceed against or exhaust any security held by SBI from said Purchaser corporation or to pursue any other remedy on SBI's power whatsoever. The undersigned acknowledge that SBI is not obligated by accepting or receiving this Guarantee or otherwise to furnish any goods, services, or merchandise as may be sold by SBI to Purchaser. The undersigned Guarantor(

s) agree(

s) to pay reasonable attorneys fees all other reasonable costs and expenses which may be incurred by SBI in the enforcement of this Guarantee. (Emphasis added) [ 8 ] A deposit was made for an amount of $5,000 (US currency). [ 9 ] Mr. Barnard is not satisfied with the quality of Sheridan's work. [ 10 ] On February 22, 2013, Mr. Barnard, acting as Plaintiff (rather than Caboose), undertook an action against Sheridan before the Small Claims Division. He alleges faulty workmanship.

He claims reimbursement of the deposit, as well as an order that Sheridan destroy all copies of the book. [ 11 ] Sheridan undertook a civil recourse against Mr. Barnard in the state of Michigan on March 18, 2013. [ 12 ] Sheridan then filed this Motion to dismiss on April 3, 2013. [ 13 ] Its arguments are: a) "Lack of jurisdiction of the Québec Court and the authorities of the province of Québec (art. 163 C.C.P. )"; b) "Plaintiff has no interest in the suit (art. 165.3 C.C.P. )"; c) "Lack of jurisdiction of the Québec Court (art. 751 C.C.P.)". ANALYSIS [ 14 ] The facts show that Sheridan's client is Caboose.

A contract was signed by Caboose for the manufacture of the book it wished to publish. The author of this book is Mr. Barnard. At Sheridan's request, Mr. Barnard also guaranteed all of Caboose's obligations unto Sheridan, submitting himself to all the terms and conditions of the contract. [ 15 ] The Court concludes that Sheridan's first argument is well founded and will not delve further into the two others. [ 16 ] The clause submitting claims under the contract to the courts and the laws of the state of Michigan is clear. Also, Mr.

Barnard does not contest that normally in commercial matters, this clause would give full jurisdiction to the courts of Michigan. [ 17 ] This appears to be a case of application of

article 3148 of the Civil Code of Québec : 3148.

In personal actions of a patrimonial nature, a Québec authority has jurisdiction where (1) the defendant has his domicile or his residence in Québec; (2) the defendant is a legal person, is not domiciled in Québec but has an establishment in Québec, and the dispute relates to its activities in Québec ; (3) a fault was committed in Québec, damage was suffered in Québec, an injurious act occurred in Québec or one of the obligations arising from a contract was to be performed in Québec; (4) the parties have by agreement submitted to it all existing or future disputes between themselves arising out of a specified legal relationship; (5) the defendant submits to its jurisdiction.

However, a Québec authority has no jurisdiction where the parties, by agreement, have chosen to submit all existing or future disputes between themselves relating to a specified legal relationship to a foreign authority or to an arbitrator, unless the defendant submits to the jurisdiction of the Québec authority . (Emphasis added) [ 18 ] However, to avoid the application of this article, Mr. Barnard argues that he was acting as a consumer when he signed the contract with Sheridan.

Under the Consumer protection act (C.P.A) [1] , the contract is deemed concluded at the domicile of the consumer (art. 54.2 of the C.P.A .). The contract being deemed concluded in Québec gives this Court jurisdiction, according to Mr. Barnard.

He further argues that the jurisdictional clause does not apply because of other articles of the C.P.A .: 11.1 Any stipulation that obliges the consumer to refer a dispute to arbitration, that restricts the consumer's right to go before a court, in particular by prohibiting the consumer from bringing a class action, or that deprives the consumer of the right to be a member of a group bringing a class action is prohibited. 19. Any stipulation in a contract that such contract is wholly or partly governed by a law other than

an Act of the Parliament of Canada or of the Parliament of Québec is prohibited.

22.1 An election of domicile with a view to the execution of a juridical act or the exercise of the rights arising therefrom may not be set up against the consumer, except if it is made by notarial act. [ 19 ] Clearly, the client, in virtue of the contract, is Caboose. Mr. Barnard is guarantor of the company under the contract. The C.P.A. defines "consumer" as: e) “consumer” means a natural person, except a merchant who obtains goods or services for the purposes of his business; A moral person is not a consumer under the C.P.A .

Also, when a natural person, guarantees the obligations of the moral person he controls, as in this case, he is not acting as a consumer. [ 20 ] Mr. Barnard pleads that Caboose has no employees, no bank account, no taxable income. It is only "a trade name". He adds that the $5 000 deposit made on the contract came from his own personal bank account. Lastly, he contends that he made a mistake in incorporating and using Caboose in this transaction. [ 21 ] None of these arguments render

article 3148 C.C.Q . inapplicable to this situation. [ 22 ] Caboose is not simply "a trade name". It is a distinct legal entity from Mr. Barnard. The registry of enterprises demonstrates this. The quote for the contract in which Mr. Barnard admits that he is the "owner" of Caboose is also a confirmation. [ 23 ] The fact that Caboose is not flourishing financially does not change the reality of Mr. Barnard's choice to use this entity to publish his book. The financial reality of the company explains why Mr. Barnard was required by Sheridan to sign as its guarantor.

It also explains why the advance on the contract came from Mr. Barnard's personal account. [ 24 ] Mr. Barnard's allegation that he made a mistake in incorporating and using an unneeded moral person has no bearing on this case. Such an error, if it is one, does not change the binding nature of the contract. [ 25 ] In rebuttal, Mr.

Barnard argues that Sheridan, by undertaking a personal action against him before the courts in Michigan has confirmed that Caboose is nothing but a trade name. [ 26 ] Sheridan is correct in responding that it has the contractual right (see paragraph 7 above) to sue the guarantor, with or without Caboose. As well, Mr. Barnard has, in the past, indicated to Sheridan that they could do as they please as to Caboose since it has no assets. Mr. Barnard did not deny this at the hearing of the Motion. [ 27 ] In view of all of the above, neither Caboose nor Mr.

Barnard as its guarantor, are consumers within the meaning of the C.P.A. The Court concludes that the choice of jurisdiction made by Mr. Barnard in the contract binds the parties. The Court of Québec, Small Claims Division does not have jurisdiction over this matter. [ 28 ] The Motion to dismiss is granted. However, since there is litigation pending in Michigan, it will be so without costs. FOR THESE REASONS, THE COURT: GRANTS the Motion to dismiss; DISMISSES Timothy Barnard's application; THE WHOLE , without costs. __________________________________ Scott Hughes, J.C.Q. Date of hearing: May 13, 2013