2012 QCCQ 16462, 2012 QCCQ 16462

Goldberger c. Bermarco Furniture Inc. 2012 QCCQ 16462 COURT OF QUEBEC Small Claims Division CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL Civil Division No: 500-32-121614-103 DATE: November 30, 2012 ______________________________________________________________________ BY THE HONOURABLE SCOTT HUGHES, J.C.Q. ______________________________________________________________________ LOU GOLDBERGER and ESTHER GOLDBERGER Plaintiffs v.

BERMARCO FURNITURE INC. and DAVID MILLER Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] Lou and Esther Goldberger demand reimbursement of $5,000.00 paid to Bermarco Furniture Inc. (Bermarco) as an advance for the construction and installation of a wall unit for their home. Reimbursement is also demanded from the sole shareholder and administrator of Bermarco, namely David Miller.

They also seek judgment condemning Defendants to pay $200.00 for lawyer fees incurred. [ 2 ] In their joint contestation, Defendants allege that they owe nothing because the contract was cancelled after Bermarco had invested more than $5,000.00 in the project. AMENDMENTS [ 3 ] In the joint contestation, Bermarco pointed out a spelling error in its name. The Goldbergers identified the co-defendant as Bermaco instead of Bermarco. At trial, Mrs. Marilyn Grantham testified to show that Bermaco Furniture, of which she is sole shareholder and administrator, had nothing to do with the facts of this suit.

In fact, Bermaco was incorporated six months after the agreement with the Goldbergers. [ 4 ] Surprisingly, Bermaco and Bermarco, have their head office at the same address and operate the same type of business. However, Mrs. Grantham states that her company has never in fact been active and that the sublease discussed with Bermarco was never signed. She admits that she is a friend of Mr.

Miller and the evidence shows that she acted as "consultant" to him during the discussions with the Goldbergers concerning these facts. [ 5 ] Notwithstanding these confusing circumstances, the evidence shows that Bermaco is not the correct co-defendant. At trial, the Court indicated that an amendment would be made to the name of the parties in order that the co-defendant be identified as Bermarco. THE FACTS [ 6 ] A service contract intervened between the Goldbergers and Bermarco in April 2009. The contract was for the construction and installation of a wall unit.

On April 21, 2009, a sum of $5,000.00 was deposited as an advance for this contract. Mr. Miller, after some hesitation and questioning, admitted that his signature appears on the receipt for $5,000.00. [ 7 ] From April to December 2009, Bermarco and Mr. Miller repeatedly promised delivery and installation of the wall unit. On each occasion they failed to respect their undertakings.

[ 8 ] Mrs. Fraidy Spitzer is the Goldberger's decorator. She recommended that her clients retain the services of Bermarco. When the delivery and installation became a problem, she visited Bermarco's shop on numerous occasions to attempt to speed things up. She was told by Bermarco employees that the work had not yet begun. Mr. Miller was dismissive toward her on each of these occasions. Ultimately, Mrs. Spitzer told the Goldbergers to take care of Bermarco themselves, since she was getting no results. [ 9 ] Through November and December 2009, Mr.

Miller made further promises to Lou Goldberger both by telephone and by e- mail. When the installation date of December 22 nd was again ignored by Bermarco, Mr. Goldberger demanded reimbursement of the deposit. He sent a letter to this effect on December 29 th . Apparently, Bermarco agreed with this demand since on January 15 th , 2010, Mr. Miller wrote an e-mail to M. Goldberger stating: " Since Fraidy is the finance middleman I will settle this with her beforehand. Please have her call me ". [ 10 ] No meeting took place and Mr. Goldberger had his attorney send a second demand letter on January 26, 2010.

RESILIATION OF THE SERVICE CONTRACT [ 11 ] Articles 2125 and 2129 of the Civil Code of Québec read as follows: 2125. The client may unilaterally resiliate the contract even though the work or provision of service is already in progress. […] 2129 .

Upon resiliation of the contract, the client is bound to pay to the contractor or the provider of services, in proportion to the agreed price, the actual costs and expenses , the value of the work performed before the end of the contract or before the notice of resiliation and, as the case may be, the value of the property furnished, where it can be returned to him and used by him. For his part, the contractor or the provider of services is bound to repay any advances he has received in excess of what he has earned .

In either case, each party is liable for any other injury that the other party may have suffered . (Emphasis added) [ 12 ] Clearly, the Goldbergers had the right to act resiliate the service contract with Bermarco. In fact, they had been extremely patient up to that time. Bermarco and Mr. Miller do not question this. Reimbursement of the deposit [ 13 ] According to

article 2129 C.C.Q. , the Goldbergers have the right to the reimbursement of the whole of their deposit, unless Bermarco shows that it had "earned" anything or that it "suffered injury". [ 14 ] David Miller states that costs of more than $5,000.00 were incurred prior to the resiliation. These costs, according to him, could not be mitigated in any way. [ 15 ] Not a shred of documentary evidence has been filed to support this claim. [ 16 ] Mr. Miller claims that Bermarco spent $1,200.00 for the drawings of the wall unit. No bill to this effect, nor even the alleged drawings were filed.

This is remarkable since the joint contestation alleges that the initial contract was agreed upon only after the Goldbergers accepted the drawings. Both Mr. Goldberger and Mrs. Spitzer deny that drawings were ever accepted or even presented to them. In fact, they go so far as to suggest that such drawings were never made. [ 17 ] Mr. Miller also alleges that mouldings and ogees were cut and stained for this contract. He stated that these materials could not be reused and therefore were a complete loss. Mrs.

Spitzer contradicted him in her testimony when she states that nothing had been prepared according to what she learned when she visited the shop late in 2009. [ 18 ] Bermarco had the burden of proving, according to the preponderance of evidence that it had earned fees, incurred expenses or suffered the damages that it is alleging. It has not succeeded in doing so. [ 19 ] Over and above the fact that no documents were filed, the Court concludes that Mr. Miller's testimony is not credible.

He gave numerous versions of the facts in his testimony. [ 20 ] He first said that the drawings were prepared prior to the contract. He later changed this version and said that they were prepared after the initial contract was agreed upon. He also stated that the Goldbergers accepted these drawings; then changed this to state that Mrs. Spitzer hade done so. He was unable to provide a bill or the drawings themselves, stating that they were lost; then he stated they had been destroyed. The joint contestation alleges that the Goldbergers changed the design at the last minute.

No evidence whatsoever was offered to the Court to attempt to prove this. Mr. Miller states that the mouldings were wasted because they were not reusable. This claim appears unreasonable considering the fact that the mouldings were between 11 and 17 feet long. Surely, they could have been used on other smaller contracts. [ 21 ] The Court concludes that not only did Bermarco not prove the damages alleged but in fact, that the preponderance of evidence

shows that Bermarco never undertook any work for this project. That being said, the deposit should have been held in trust at all times.Therefore, in December 2009 when reimbursement was requested Bermarco should have paid forthwith. Consequently, BermarcoFurniture Inc. will be condemned to reimburse the deposit of $5,000.00 along with interest and special indemnity since service of theapplication. Personal liability of David Miller [22] Bermarco and Mr. Miller have separate legal personalities. However,

article 317 of the C.C.Q. states: 317. In no case may a legal person set up juridical personality against a person in good faith if it is set up to dissemble fraud, abuse ofright or contravention of a rule of public order. And in French: 317. La personnalité juridique d'une personne morale ne peut être invoquée à l'encontre d'une personne de bonne foi, dès lors qu'oninvoque cette personnalité pour masquer la fraude, l'abus de droit ou une contravention à une règle intéressant l'ordre public. (Emphasis added) [23] Can David Miller be held personally liable for the reimbursement of the deposit? [24] Mr.

Miller is the sole shareholder and administrator of the Bermarco. As such, he knows full well that the Goldbergers hadentered into a contract with Bermarco and remitted a $5,000.00 deposit. Both he and Bermarco had an obligation of good faith to theGoldbergers. Mr.

Miller's obligation was reinforced by the fact that, at all times, he was responsible for the financing and accounting ofBermarco. [25] The $5,000.00 deposited with Bermarco was not its to use except in execution of the service contract. [26] The Court has already concluded that Bermarco did not in fact, do any work to fulfill its obligations under the service contractwith the Goldbergers. Mr.

Miller knew this when he prepared and filed the joint contestation in March of 2010, as he did when hetestified. [27] Mr Miller's attempts to justify that work had been done were obviously a ploy to give Bermarco's refusal to reimburse asemblance of good faith. The implausible explanations, the absence of any documentation to corroborate his testimony and the cleartestimony of Fraidy Spitzer show that Mr. Miller was using the distinct juridical personality of Bermarco in order to benefit from thegenerous deposit received from the Goldbergers. This type of behaviour is exactly what the legislator prohibits in

article 317 C.C.Q.Bermarco and Mr. Miller abused of their rights, at the very least, when they did business with the Goldbergers. [28] Therefore, David Miller will be held liable on an extra contractual basis for the reimbursement of the $5,000.00 deposit. [29] Both Defendants will also be condemned to pay $200.00 for the lawyer fees incurred by the Goldbergers. Defendants' bad faithallows such a claim in accordance with the Court of Appeal decision in Viel c.

Entreprises immobières du terroir Ltée, (QCCA). [30] Consequently, the Court will condemn Bermarco Furniture Inc. and David Miller personally to the reimbursement. Thiscondemnation will be "in solidum" given their different basis of responsibility. FOR THESE REASONS, THE COURT: GRANTS the application; CONDEMNS Bermarco Furniture Inc., as well as David Miller personally to pay, in solidum, the sum of $5,200.00 to Lou Goldbergerand Esther Goldberger with interest at the legal rate, plus the additional indemnity provided for in

article 1619 of the Civil Code ofQuébec from the date of service of their application as well as legal costs in the amount of $157.00. __________________________________ Scott Hughes, J.C.Q. Date of hearing: September 11, 2012