2017 ONSC 2198, 2017 ONSC 2198

CITATION : 1238915 Ontario Limited v. Ferri, 2017 ONSC 2198 COURT FILE NO.: 10024/08 DATE: 2017/04/07 ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: ) ) 1238915 Ontario Limited ) ) ) Martin E. Tiidus, for the Plaintiff (Responding Party) ) Plaintiff ) (Responding Party) ) - and - ) ) ) Andrew Adam Ferri, Inter-fund Mortgage Corporation, Universal Management Consultants Inc., Niagara Home Builders Inc. and Connie Nothdurft ) ) )) Andrew Ferri, Self-represented (Moving Party) ) Defendants (Moving Party – Andrew Ferri) ) )) ) )) LONG MOTION HEARD at WELLAND: April 4, 2017 The Honourable Justice T. Maddalena ENDORSEMENT ON MOTION [ 1 ] This is a

summary judgment motion brought by Mr. Andrew Ferri requesting a dismissal of the plaintiff’s claim. [ 2 ] Rule 20.04(2) of Rules of Civil Procedure reads as follows: The court shall grant

summary judgment if, (

a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence;

… Powers

(2.1) In determining under clause (2) (

a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial: 1. Weighing the evidence. 2. Evaluating the credibility of a deponent. 3. Drawing any reasonable inference from the evidence.

The Issues [ 3 ] The defendant/moving party (“Ferri”) submits that the plaintiff/responding party (“Mammoliti”) had no authority to commence the Statement of Claim in this action as Mammoliti was not, at all material times, an officer or director of the plaintiff corporation (“123 Limited”) entitled to commence this action on behalf of the corporation. [ 4 ] Ferri asserts that Mammoliti was at all times just an 80% bare trustee of 123 Limited and this does not permit him to commence any legal action on behalf of the plaintiff. [ 5 ] Ferri asserts the 80% principal shareholder of the plaintiff corporation and the officer and director was Nicholas James Krakana (“Krakana”) who, in an affidavit sworn September 13, 2012, allegedly asserted that he has never authorized Mammoliti to commence the within legal action on behalf of 123 Limited.

He further asserted that Krakana never executed any corporate resolutions permitting the claim. Krakana stated in that affidavit that the plaintiff corporation has no claims against the defendant. [ 6 ] Krakana died January 11, 2013.

Background [ 7 ] This litigation relates to land municipally described as 18 Classic Avenue, Welland, Ontario (“the property”). [ 8 ] The plaintiff corporation 123 Limited claims ownership of the property. [ 9 ] Mammoliti claims he maintained authority over 123 Limited since December 1997. [ 10 ] The property was sold by the defendant and all the proceeds of the sale were received by the defendant. The plaintiff claims it suffered losses and damages as a result. [ 11 ] The plaintiff submits all the issues in dispute require a trial and thus the

summary judgment motion should be dismissed.

Overview of the Evidence [ 12 ] On July 28, 1997 the plaintiff 123 Limited, through its sole shareholder Krakana, purchased the property at issue for $60,000. [ 13 ] 123 Limited also registered a first mortgage on the property for the sum of $60,000 in favour of Turf Pro Investments Inc. [ 14 ] Sometime later in 1997, the defendant Ferri introduced Mammoliti to Krakana. [ 15 ] Krakana was interested in acquiring property on Asher Street in Welland, which property was owned at the time by Mammoliti. [ 16 ] In the fall of 1997, Krakana, Mammoliti, and Ferri entered into a series of agreements which included Krakana transferring 80% of his shares of 123 Limited to Mammoliti in exchange for certain rights regarding the Asher Street property. [ 17 ] Krakana and Mammoliti executed a trust agreement dated December 8, 1997 prepared by lawyer Paul Leon (“Leon”). [ 18 ] As part of the trust agreement, Mammoliti agreed to hold the shares of 123 Limited as bare trustee for the beneficial owner. [ 19 ] Leon drafted, at the instructions of Ferri, a certified copy of a resolution of the board of directors of 123 Limited, dated December 8, 1997, which resolution was executed by Mammoliti as vice president, and with authority to bind 123 Limited. [ 20 ] This resolution authorized a second mortgage with Inter-Fund Mortgage Corporation as mortgagee on the property at issue in this litigation. [ 21 ] Inter-Fund Mortgage Corporation (“Inter-Fund”) is owned and controlled by Ferri. [ 22 ] Mammoliti, on behalf of 123 Limited, executed the second mortgage to Inter-Fund.

[ 23 ] Krakana had no involvement in the second mortgage. [ 24 ] It appears Ferri relied on Mammoliti to sign for 123 Limited in the registration of the second mortgage. [ 25 ] Further, Mammoliti performed construction work on Ferri’s personal residence during 1998 and 1999, and Ferri agreed to pay $17,000 for the work.

Through a series of agreements this would be accomplished through a new second mortgage on the property which Ferri and Mammoliti were to develop. [ 26 ] Ferri arranged the new second mortgage with the assistance of Leon. [ 27 ] As a result, a Certificate of Incumbency was prepared by Leon acknowledging Mammoliti as president, vice president, and secretary of 123 Limited. The certificate was dated the 18 th of November 1999.

By this time, it is alleged by Mammoliti that Krakana had defaulted on the Asher Street property and was no longer involved in managing the property or Asher Street. [ 28 ] There was also a resolution of 123 Limited prepared by Leon, dated November 18, 1999, and executed by Mammoliti authorizing a charge on the property to secure a loan offered by Inter-Fund. [ 29 ] Krakana by this time was no longer involved in any of these transactions. [ 30 ] On November 19, 1999 Inter-Fund discharged the second mortgage and a new second mortgage was registered on the property.

This new second mortgage was executed by Mammoliti on behalf of 123 Limited and accepted by Ferri. [ 31 ] On January 25, 2000 there was a fire at the property. [ 32 ] Mammoliti submitted a claim on behalf of 123 Limited. [ 33 ] Inter-Fund accepted a payment from Mammoliti on behalf of 123 Limited in satisfaction of the second mortgage claim. [ 34 ] Mammoliti asserts that Ferri at no time questioned Mammoliti’s sole authority to claim the insurance funds or to negotiate a settlement on behalf of 123 Limited. [ 35 ] On June 6, 2001 a transfer allegedly executed by Krakana as president of 123 Limited purported to transfer the property from Krakana to Connie Nothdurft, spouse of Ferri. [ 36 ] Mammoliti submits in his affidavit that he had no knowledge of the transfer.

Further, Mammoliti submits that on June 6, 2001 he only had the sole authority regarding 123 Limited and only he would have had the sole authority to transfer property on behalf of 123 Limited. [ 37 ] According to the evidence, the actual transfer/deed was actually registered on title September 7, 2007. [ 38 ] Mammoliti asserts he first learned that construction was under way on the property in October 2006 when he drove by. [ 39 ] Subsequently, the first mortgages and second mortgages were discharged and eventually various lots were sold by the defendant. [ 40 ] Mammoliti asserts in his affidavit that he met with Krakana on April 11, 2008.

Mammoliti states Krakana appeared in poor health but Mammoliti asserts Krakana understood all of Mammoliti’s inquiries. [ 41 ] According to Mammoliti, Krakana told him he had not signed the transfer and his signature on the document would therefore have been forged. He confirmed this in a written document executed April 1, 2008. [ 42 ] Ferri asserts that Krakana signed the transfer/deed because the mortgage was in arrears. [ 43 ] Mammoliti states that at the time of the transfer from 123 Limited to Ms.

Nothdurft, there were no mortgage arrears on the property. [ 44 ] Further, Mammoliti asserts Inter-Fund did not provided 123 Limited with any notice or opportunity to pay any outstanding balance on the new second mortgage. [ 45 ] Mammoliti asserts in his evidence that in late 2008 he became aware that 123 Limited had actually been dissolved. He instructed the preparation of Articles of Revival and on March 23, 2011, 123 Limited was issued Articles of Revival. [ 46 ] As part of the documentary evidence, Ferri has put forth an affidavit sworn by Krakana on September 13, 2012.

This affidavit alleges Krakana is an officer, director and 80% shareholder of 123 Limited. [ 47 ] It further alleges that Krakana never authorized Mammoliti to commence the within action. Further, Krakana states he never authorized any corporate resolutions and that the plaintiff corporation has no claims against the defendants. [ 48 ] Mammoliti asserts he never saw Krakana’s affidavit until Ferri delivered his pretrial brief on or about May 2013. [ 49 ] Mammoliti asserts the affidavit at issue, sworn the 13 th of September 2012, is either a forgery or obtained through misrepresentation or duress.

Conclusions [ 50 ] To be successful in a

summary judgment motion, the moving party must establish that there is no genuine issue for trial.

[ 51 ] After having reviewed the evidence in this motion, I have concluded that there are a significant number of triable issues which further cannot be determined at this motion by the weighing of evidence or determining credibility. [ 52 ] There are also a significant number of credibility issues which are completely unresolvable without a full trial. [ 53 ] The allegations regarding the forged transfer and/or issues of forgery, or misrepresentation, or coercion regarding the affidavit of Krakana are significant and, in the circumstances of this case, cannot be resolved at a

summary judgment motion. Order Made [ 54 ] Therefore, the motion of the moving party defendant for

summary judgment is dismissed. Costs [ 55 ] The parties shall make written costs submissions, limited to two pages plus a bill of costs, plus any offers to settle, if applicable. The plaintiff’s submissions are due April 14, 2017 and the defendant’s are due April 21, 2017. Motion Filing Fee [ 56 ] Through an inadvertent error on the part of the court filing office, Mr. Ferri was able to file this return of motion without payment of the necessary filing fee of $160.00. This was brought to the court’s attention by staff at the filing office on April 4, 2017. Mr.

Ferri was instructed by the court on April 4, 2017 that he must pay the motion filing fee of $160.00. Mr. Ferri advised he would do so. To date, court staff advised this has not been paid. [ 57 ] I further order as follows: Mr. Ferri shall have until April 12, 2017 to pay the $160.00 court filing fee for the motion, failing which he or any associated persons or corporations shall not be permitted to file any materials whatsoever with this court without leave of the court. ___________________________ Maddalena J. Released: April 7, 2017 CITATION : 1238915 Ontario Limited v.

Ferri, 2017 ONSC 2198 COURT FILE NO.: 10024/08 DATE: 2017/04/07

ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: 1238915 Ontario Limited Plaintiff (Responding Party) - and – Andrew Adam Ferri, Inter-fund Mortgage Corporation, Universal Management Consultants Inc., Niagara Home Builders Inc. and Connie Nothdurft Defendants (Moving Party – Andrew Ferri) ENDORSEMENT ON MOTION Maddalena J. Released: April 7, 2017