Mark Fairbanks Professional Corporation v T.G. Michelson Professional Corporation, 2023 ABKB 53

Court of King’s Bench of Alberta Citation: Mark Fairbanks Professional Corporation v T.G. Michelson Professional Corporation, 2023 ABKB 53 Date: 20230127 Docket: 2201 09277 Registry: Calgary Between: Mark Fairbanks Professional Corporation, Benjamin R. Fairbanks Professional Corporation and B. Fairbanks and T. Michelson Professional Corporation Plaintiffs - and - T.G. Michelson Professional Corporation, Troy Michelson and Charmaine Michelson Defendants _______________________________________________________ Reasons for Decision of the Honourable Justice R.A.

Neufeld _______________________________________________________ I. Introduction and Overview [ 1 ] On May 6, 2022, a settlement agreement was reached between a group of dentists practicing together under the name of Dimension Dentistry [“Dimension” or “Dimension Dentistry”]. The agreement resulted in the sale of Dr. Troy Michelson’s interest in the practice to Drs. Brent, Mark and Benjamin Fairbanks through their respective professional corporations. [ 2 ] Under the agreement Dr. Michelson’s ownership interest was acquired for approximately $1.6 million.

He was entitled to continue to practice dentistry, including servicing existing patients of the practice, but he promised not to solicit the patients of

Dimension for a period of two years. He also promised not to encourage any of Dimension’s employees to leave Dimension or hire any of Dimension’s employees unless and until they had been away from Dimension Dentistry’s employment for a period of six months. [ 3 ] The Plaintiffs allege that Dr. Michelson breached the agreement by soliciting Dimension Dentistry patients via a Facebook message posted by his wife following his departure, and by encouraging and indirectly arranging for the hiring of one of Dimension Dentistry’s former employees (Meagan Edwards) within weeks of his departure.

They also allege that he caused the company for whom he went to work (Passion Dental) to undertake a Google advertising campaign designed to ensure that when the term Dimension Dentistry was searched, an advertisement for Dr. Michelson would appear on the first search page. That advertisement had a headline referring to both Dr. Michelson and Dimension Dentistry. They say that in doing so Dr.

Michelson committed the tort of passing off. [ 4 ] Although Passion Dental is not a defendant in the action, Charmaine Michelson is named on the basis that she assisted her husband in soliciting Dimension Dentistry patients via Facebook. [ 5 ] Dr. Michelson and his wife deny any wrongdoing. They say that Ms. Michelson’s Facebook post was intended only to inform her Facebook followers that Dr. Michelson intended to resume practicing dentistry in the future. Dr. Michelson denies having recruited Ms. Edwards to join him. He says that the hiring was made by Passion Dental after it was made clear that Ms.

Edwards had no desire to stay with Dimension Dentistry. He also denies being involved in the use of Dimension Dentistry in the Google advertisement placed by Passion (which has since been taken down in any event), and points out that Dimension Dentistry’s own Google advertisement continues to refer to or show pictures of Dr. Michelson. [ 6 ] The Plaintiffs now apply for an interlocutory injunction that would among other things compel removal of Ms. Michelson’s seven month old Facebook post; prohibit the use of the name Dimension Dentistry in any advertising by or of Dr. Michelson; and compel Dr.

Michelson to cease practicing dentistry for a period of six months (less twenty days) at his current clinic or any other within the vicinity of the Dimension Dental clinic. The latter prohibition would allow Ms. Edwards to continue to work at the clinic while Dr. Michelson is in effect penalized for having indirectly arranged for her hire by Passion Dental. [ 7 ] To decide this application, I must apply the well-known tripartite test to each of the three allegations of misconduct.

That is, whether there is a serious issue to be tried (or alternatively a strong prima facie case where mandatory injunction is sought); whether the plaintiffs are suffering irreparable harm due to the alleged misconduct; and whether the balance of convenience favors the granting of injunctive relief. I must then determine whether on an overall basis the equities of the case warrant issuance of an injunction. [ 8 ] I have decided that injunctive relief is not appropriate at this time. The Facebook post complained of clearly did not constitute a breach of Dr.

Michelson’s contractual obligations; the injunctive relief sought in respect of the allegedly improper hiring of Ms. Edwards is wholly disproportionate to the harm alleged; and there is insufficient evidence to conclude that an actionable passing off occurred other than the original Google advertisement, which was immediately modified after a complaint was made and later removed. II. Is There a Serious Issue to be Tried? [ 9 ] Although the injunctive relief sought is both prohibitory and mandatory in nature, for the purpose of this decision I will adopt the lower standard of serious issue to be tried.

I turn to that next, followed by an assessment of irreparability of harm and balance of convenience. A. The Facebook Post [ 10 ]

Section 3.1 of the Non-Competition Agreement provides as follows: 3.1 Non-Solicitation – Patients The Restricted Parties shall not, and shall cause their respective Affiliates to not, for the duration of the Restricted Period, directly or indirectly, in any manner whatsoever:

a) communicate or deal with, other than at the request of the Principals any Person that is a patient of the Dental Business conducted at the Practice Location for the purpose of selling, servicing or promoting any products or services that are in whole or in

part competitive with the Dental Business;

b) otherwise induce, encourage or facilitate any patient of the Dental Business conducted at the Practice Location to alter, modify, vary, diminish or cease such relationship with the Principals or Dental Business in any way; or

c) in any manner, knowingly do or cause or permit it to be done, any acts which may reasonably be expected to impair the relationship between the Principals or Dental Business and their patients unless the Restricted Parties or one of their respective Affiliates is required to do so by Applicable Law, in which case the Restricted Party shall immediately notify the Principals upon becoming aware of such requirement. [ 11 ] The Plaintiffs argue that a Facebook posting on Ms. Michelson’s Facebook page in late May 2022, constitutes a breach of s. 3.1. In it, her Facebook followers were told (on behalf of Dr.

Michelson) that “I have left Dimension Dentistry and will be relocating my dental practice to another clinic in South Calgary where I will continue to offer the same services as before. Details will follow in another announcement in the near future.” [ 12 ] The Defendants argue that this post was simply to clear up confusion as to whether Dr. Michelson was going to continue to practice dentistry and was not done for the purpose of soliciting business. They point out that of the 800 or so Facebook followers of Ms. Michelson, only 95 were current or past patients of Dimension Dentistry.

Leaving aside friends and family, only two of those 95 ended up following Dr. Michelson to his new location.

[ 13 ] I agree that this posting (and similar messages on Instagram and LinkedIn) cannot properly be characterized as having been done for the purpose of solicitation of Dimension Dentistry patients. Nor can it properly be characterized as an attempt to alter or modify the relationship between such patients and Dimension Dentistry. The posting simply informs readers (a broad and diverse group of Facebook followers that included some members of the Fairbanks family) that Dr.

Michelson had not retired and at some point would be resuming the practice of dentistry somewhere in South Calgary. [ 14 ] The non-solicitation provisions of the agreement cannot reasonably be interpreted to require either Dr. Michelson or his wife to maintain “radio silence” as to his whereabouts and career plans. They were entitled to respond to inquiries from friends and family as to Dr. Michelson’s career plans and whereabouts as long as those responses did not cross the line and induce, encourage or facilitate them moving their business to him during the time period specified (24 months).

The Facebook post complained of clearly did not do so and does not constitute a serious issue for trial. B. The Hiring of Ms. Edwards [ 15 ] It is not unusual in situations such as these for a departing business partner to promise, on buy-out, that they will not hire employees of the business for a specified period of time. This is especially common where a small, client-oriented business is involved. For such businesses, staff members may have close relationships with the customer base, and may have detailed knowledge of the company’s finances, business plans, strengths and weaknesses.

The loss of this institutional knowledge and these personal relationships can be damaging to the business. The acquisition of them by a competitor can confer a corresponding competitive advantage. [ 16 ]

Section 3.3 of the Non-Competition and Non-Solicitation Agreement provides as follows: 3.3 Non-Solicitation – Employees, Independent Contractors, Consultants The Restricted Parties shall not, and shall cause their respective Affiliates to not, for the duration of the Restricted Period, directly or indirectly, in any manner whatsoever:

a) solicit or attempt to solicit any person who is then a principal, agent, contractor, subcontractor, shareholder, interest holder, investor, partner, director, or officer of the Principals or Dental Business, as applicable, to alter, vary, diminish, or cease its relationship with the Principals or Dental Business; b) [...];

c) in any manner, knowingly do or cause or permit it to be done, any acts which may reasonably be expected to impair the relationship between the Principals or Dental Business and their suppliers, employees, independent contractors, consultants, or any other Person, unless the Restricted Parties or one of their respective Affiliates is required to do so by Applicable Law, in which case the Restricted Party shall immediately notify the Principals upon becoming aware of such requirement; or

d) Notwithstanding anything to the contrary in this Agreement, nothing herein shall prevent or prohibit the Restricted Parties from making general solicitation advertisements that are not targeted at any employee or independent contractor of the Principals or any of their Affiliates, and hiring any such person that responds to the general solicitation advertisement provided that no person currently then employed or contracted with the Principals or any of their Affiliates may be hired, and (ii) no person formally employed or engaged by any of the Principals or any of their Affiliates may be hired until at least six (6) months have lapsed since such employee or contractor left such employment or engagement. [ 17 ] The Plaintiffs say there is overwhelming evidence that Dr.

Michelson participated in the recruitment of Ms. Edwards to work for Passion Dental’s Heritage Clinic in May of 2022. They say that Dr. Michelson was interested in hiring Ms. Edwards even before the settlement agreement was reached on May 6, 2022. He even went so far as to propose a carveout of Ms. Edwards from the non- solicitation obligation – offering to pay $10,000 for the right to solicit her services (along with keeping certain equipment). That offer was refused. [ 18 ] The Plaintiffs also say that Dr. Michelson admitted to having lengthy and heart to heart conversations with Ms.

Edwards when the buy-out deal was announced on May 6, 2022, and to having had a lengthy conversation with Ms. Edwards on the evening of May 25, 2022. The latter conversation took place shortly after Ms. Edwards had received an employment offer from Passion D ental, and while she was still undecided as to whether to accept that offer. [ 19 ] Ms. Edwards resigned from Dimension Dentistry on May 9, 2022 – the first business day after the deal was completed. She accepted the Passion Dental offer on May 26, 2022 – the day following her late evening conversation with Dr.

Michelson. [ 20 ] The Plaintiffs argue that the only logical conclusion is that Dr. Michelson solicited Ms. Edwards’ departure from Dimension, and later encouraged her to join Passion Dental. [ 21 ] Dr. Michelson denies having encouraged Ms. Edwards to leave Dimension Dentistry or having encouraged her to join him at the Passion Dental Heritage Clinic. He insists that he was always fully aware of his obligations under the agreement, going so far as to warn Passion Dental against extending an offer within the restricted period under the agreement for fear of him being accused of breach of contract.

He attests to having spoken to Ms. Edwards as her friend of many years and telling her only to do what was best for her. [ 22 ] To this point, neither party has elicited evidence from Ms. Edwards herself. Nor have they obtained affidavit or questioning evidence from Tracy Saunders – a former Dimension employee who left to work in a management position at Passion Dental in December 2021. Ms. Saunders was actively involved in Ms. Edwards’ hiring. [ 23 ] I agree with the Plaintiffs that the timing of Dr. Michelson’s conversations with Ms. Edwards is suspicious.

This is especially so with respect to the May 25, 2022 phone call. The only direct evidence as to what was said during the phone call is from Dr.

Michelson, who denies having solicited or encouraged Ms. Edwards to join Passion Dental in any way. At the same time however, he concedes that to that point, Ms. Edwards was undecided. It appears that whatever it was that Dr. Michelson said, it may have been sufficient to persuade her to come aboard with Passion Dental. [ 24 ] It is also unclear whether Ms. Edwards has ever been employed by Dr. Michelson (directly or indirectly) so as to engage the non-solicitation provisions of the agreement in the first place. They both work for Passion Dental at this point, although Dr.

Michelson is apparently in negotiations to become a shareholder in that company. The particulars of that relationship remain to be determined through pre-trial questioning and production. [ 25 ] In my view despite its limitations the evidence establishes that there is a serious issue regarding whether Dr. Michelson breached his promise not to hire any Dimension employees until at least six months after they had left Dimension’s employment. Whether there is a live issue for the purposes of an injunction application is another matter. That will be dealt with later in these reasons. C.

The Alleged Passing Off of the Dimension Trade Name [ 26 ] In Kirkbi AG v Ritvik Holdings Inc , 2005 SCC 65 , the Supreme Court summarizes the evolution of the tort of passing off and confirms the constituent elements that must be proven.

Tort liability protection is intended to protect both the public and the competitors from misleading information being disseminated regarding a trader’s goods and services – and, in particular, from being misled as to who will actually be providing the goods or services on offer. [ 27 ] To establish liability in tort, the plaintiff must show that (1) the goodwill exists in respect of its name or trademark; (2) the Defendant deceived the public due to a misrepresentation (either deliberate, negligent or careless) and (3) the plaintiff suffered actual or potential damage: Kirkbi at para 66. [ 28 ] The Plaintiffs allege that Google advertising placed by or on behalf of Dr.

Michelson after he went to work with Passion Dental was deceptive. A screenshot of a Google page search of “Dimension Dentustry” (sic) in July 2022 shows a large advertisement for Dimension Dentistry on the right hand side of the first page. On the left hand side is a small two line ad with the headline “Dr. Troy Michelson—Dimension Dentistry—Free Parking”, along with other ads below it. [ 29 ] Upon learning of the Google ad, the Plaintiffs complained to Dr. Michelson.

The reference to Dimension Dentistry was soon removed, but according to the Plaintiffs the modified version of the ad remained as the first result when a Google search of Dimension Dentistry was made. [ 30 ] Dr. Michelson attests that he did not encourage or authorize Passion Dental’s marketing service provider to use Dimension Dentistry in any advertisement of his services. In fact, he directed them not to do so (something that is corroborated by a text message from Dr. Michelson to the marketing company involved).

He also attests that even the modified ad was taken down after the website for the Heritage Clinic was created. He says that if there is any passing off currently via Google, it is in Dimension’s use of Dr. Michelson’s name or image in its own advertising. [ 31 ] It is clear that the initial Google advertisement juxtaposed Dr. Michelson’s services with those of Dimension Dental and implied that he remained associated with Dimension Dental. The Plaintiffs’ concerns were legitimate, and Dr.

Michelson quite properly took steps to bring the matter to the attention of Passion Dental and its marketers so that the ad could be modified. [ 32 ] It is not clear, however, that Dr. Michelson was responsible for the misleading advertising. On the evidence currently before the Court it appears that if anyone was liable for passing off it would be Passion Dental, who undertook the advertising campaign for the Heritage Clinic. [ 33 ] As for the modified ad, I do not consider that its appearance on the Dimension Dentistry Google search page constitutes passing off.

Absent the reference to Dimension in the ad, one is left only with an advertisement of Dr. Michelson’s services when Dimension Dentistry is searched, along with Dimension’s own (and much larger) ad, and others. This was not misleading or likely to confuse existing or potential patients. [ 34 ] In any event, the uncontested evidence of Dr. Michelson is that even the modified ad has been taken down. [ 35 ] In my view the passing off claim raises a serious issue for trial. There was clearly goodwill associated with the Dimension Dentistry name. That is demonstrated by the fact that Dr.

Michelson had only recently been well compensated for the sale of his share of the Dimension Dentistry practice. The initial advertisement appearing on Google juxtaposed Dr. Michelson’s name with Dimension Dentistry, implying an association that did not exist. [ 36 ] Once again, however, whether there is a live issue for the purpose of injunctive relief is another matter. III. Irreparable Harm [ 37 ] The Plaintiffs argued that the misconduct of Dr. Michelson and his wife have caused them irreparable harm.

They say that the loss of goodwill and competitive advantage (for which they paid handsomely) is not something that can be easily quantified and cannot therefore be compensated with damages. As proof of that proposition, they point to the settlement agreement itself, in which the parties agreed to that exact proposition. [ 38 ] The Defendants do not dispute the general proposition that breaches of non-competition and non-solicitation promises can be difficult to quantify. However, they say that in this case it would be a straightforward exercise to determine which patients left Dimension to follow Dr.

Michelson, and what revenue was therefore lost. They also argue that the plaintiffs have failed to show any damage whatsoever as a result of the departure of Ms. Edwards. She had already decided to leave Dimension prior to Dr. Michelson’s

departure; she was not replaced by a new hire after leaving; and her new role at Passion Dental was in an administrative capacity rather than a patient focussed capacity. The Defendants also argue that even if there was an actionable passing off of the Dimension trade name in the original Google ad, there is no evidence of actual damage upon which a finding of loss of goodwill or revenue could be made. [ 39 ] In analyzing irreparable harm, the Court must focus on the nature, rather than the magnitude of harm caused to the plaintiff: Enwave Corp v Dehydration Research LLC , 2022 BCSC 637 at para 46 .

The harm must not, however be speculative.

Clear evidence is required for the proposition that the type of harm alleged is in fact being suffered, or is likely to be suffered if the breach continues: Corus Radio Inc v Harvard Broadcasting Inc , 2019 ABQB 880 at para 75 , citing Modry v Alberta Health Services , 2015 ABCA 265 at para 82 . [ 40 ] Where the contract giving rise to the claim specifies that irreparable harm will be caused by a breach (which is commonplace in contracts containing non-competition and non-solicitation clauses) that can be taken into account, but is not determinative of the issue: Earth Drilling Co Ltd v Keystone Drilling Corp , 2022 ABKB 744 at para 120 . [ 41 ] The alleged harm in this case is the loss of competitive position and goodwill. [ 42 ] Given the nature of such losses, and the provisions of the non-competition and non-solicitation agreements concerning irreparability, for the purposes of this decision, I agree with the Plaintiffs that the hiring of Ms.

Edwards and the passing off of the Dimension Dentistry name in the original Google advertisement gave rise to irreparable harm in the form of loss of goodwill and competitive position when those actions took place. [ 43 ] As discussed, the Facebook post by Charmaine Michelson was entirely proper and did not contravene any obligation to the Plaintiffs.

Even if it did constitute a breach, the damages resulting from the post would be easily ascertainable as the followers are known and can be compared to the patient list compiled as part of the sale process to determine lost revenue and if appropriate the associated loss of goodwill. IV. Balance of Convenience [ 44 ] At this stage of the tripartite analysis the Court is called on to weigh the relative consequences of an injunction.

This ordinarily entails consideration of how the injunction will affect the two sides, but in some cases (including this one) it may also extend to potential impacts on parties who are not before the Court: J. Berryman, The Law of Equitable Remedies , 2nd Ed (Toronto, ON: Irwin Law, 2013) at p. 40. [ 45 ] The relief sought by the Plaintiffs includes a general prohibition against all of the wrongful conduct alleged in the Statement of Claim, and from any future breaches of the non-competition and non-solicitation agreement. It goes on to seek specific remedies as follows: . . . (

d) the Defendants shall delete from all social media accounts referred to in the Statement of Claim, the wrongful postings described in the Statement of Claim; (

e) the Defendants are prohibited and enjoined from any and all use of the Dimension Dentistry trade name: (

f) Dr. Michelson is prohibited and enjoined, for a period of six months less 20 days from the date of the Court’s Order, from practising dentistry at any Passion Dental Group dental office including but not limited to the Heritage Clinic; (

g) Any person, corporation or other entity with knowledge of the Court’s Order is prohibited and enjoined from in any way, directly or indirectly, on behalf of or in conjunction with any of the Defendants, carrying out any of the conduct against which the Defendants are enjoined by terms (

a) through (

f) above, of the Order. [ 46 ] The Plaintiffs assert that the Defendants have failed to provide any evidence as to any inconvenience that would be suffered by virtue of being prohibited from soliciting patients or employees of Dimension Dentistry; nor making use of the Dimension Dentistry name (directly or indirectly) in their advertising or marketing. They acknowledge that their request that Dr.

Michelson be prohibited from practicing dentistry with the Passion Dental Group for six months less twenty days would be an inconvenience, but say that he could practice elsewhere and other Passion Dental dentists could presumably service his Heritage clinic patients. They also note that unlike Dr. Michelson, they have made an undertaking to pay damages if unsuccessful at trial. [ 47 ] The Defendants say that specific evidence is not required. They argue that if the Plaintiffs’ position is accepted, Dr. Michelson would suffer severe and irreparable prejudice in his efforts to build a new practice.

He would be prohibited from using social media such as Facebook, Linked-In or Instagram to advise patients and potential patients of his whereabouts and contact information; he would not be able to post pictures on social media if taken at the Heritage clinic; he would be constrained in discharging his ethical duty to uphold the choice of his patients on who they will use as a provider of dental services. Both he and Charmaine Michelson would be constrained in their right of free expression by social media. The issuance of an injunction would be stigmatizing and professionally embarrassing. [ 48 ] Dr.

Michelson strongly opposes the remedy sought by the Plaintiffs in their written submissions in respect of the hiring of Ms. Edwards and in particular the request that he be prohibited from practicing dentistry with Passion Dental. He says that this would severely prejudice him from building a new practice with Passion Dental, and would be highly invasive to his existing patients, and the staff at the clinic who rely on him. [ 49 ] In my view the balance of convenience criteria strongly favours the Defendants.

[ 50 ] Even if the misconduct alleged was in breach of the agreement or constituted the tort of passing off, there is no evidence of any continuing breach of contract, or tortious activity. The Facebook post by Ms. Michelson is over 7 months old. It was not a breach of contract by Dr. Michelson to begin with, and it is certainly not a continuing breach of contract by Ms. Michelson today. [ 51 ] The six month restricted period for the hiring of Ms. Edwards has long since expired.

Even if her hiring constituted a breach of the agreement at the time, an injunction extending the hiring restriction by six months (less twenty days) from the date of the Order itself cannot be granted: City Wide Towing and Recovery Service Ltd v Poole , 2020 ABCA 305 at para 58 . The proposal to effectively suspend Dr. Michelson from practice for that period of time suffers from the same infirmity. It is also penal in nature, and would adversely affect parties not before the Court, including Dr.

Michelson’s patients. [ 52 ] As for the passing off allegation, given that the offending advertisement was modified and then removed from Google many months ago, no purpose would be served by ordering Dr. Michelson not to use Dimension Dentistry in any advertising. Interlocutory injunctions are an exceptional remedy. They are granted before the Court has heard the evidence and arguments required to fully and fairly adjudicate a dispute, and are intended to preserve the status quo until that time.

Where no evidence is provided of a continued breach, or a likelihood of repetition of one committed previously, the Court should be very reluctant to enjoin or restrain how people such as the Defendants go about their business and personal affairs. To do so without a demonstrated need is a severe inconvenience in its own right.

It is no answer to say that the restrictions would be easy to comply with. [ 53 ] For the same reason the balance of convenience militates against granting the general relief sought (prohibition against the wrongful conduct alleged in the Statement of Claim and prohibition from continuing to breach or in the future breaching the non- competition and non-solicitation agreement) as against Dr. Michelson and Charmaine Nicholson. There are no continuing breaches, and if any breaches occur in the future, they can and should be dealt with at the time. V.

Conclusion [ 54 ] When taken as a whole the evidence and circumstances of this case do not justify intervention by the Court by way of injunctive interlocutory relief. That conclusion is not intended to fetter any future determination of the merits of the claims advanced, with the benefit of additional pre-trial discovery of evidence. It is also not intended to endorse the manner in which the parties have behaved as the somewhat acrimonious buy-out was negotiated and implemented. It is clear that the Plaintiffs believe that Dr.

Michelson is disingenuous and that he improperly undermined the value of the asset they had purchased from him. In due course it is possible that they will prove their claim and be compensated for their loss notwithstanding that quantification of damages might be difficult. [ 55 ] At this point however equity does not favor injunctive relief. While certain aspects of the claim against Dr.

Michelson raise serious issues for trial in respect of past breaches, evidence of a continuing breach of duty in contract or tort is uncertain at best and the balance of convenience militates against issuance of an injunction against either of the Defendants. [ 56 ] The application is denied, with costs. [ 57 ] If the parties cannot agree on quantum costs within 30 days that matter may be remitted back to me for a determination by way of written submissions, not to exceed 5 pages, exclusive of authorities. Heard on the 16 th day of December, 2022.

Oral decision given on the 26 th day of January, 2023 Dated at the City of Calgary, Alberta this 27 th day of January, 2023. R.A. Neufeld J.C.K.B.A. Appearances: Patrick Fitzpatrick for the Plaintiffs

Randolph Mitchell for the Defendants