Salpeter vs. Plewa

[1] The plaintiff Sydney Salpeter claims solidarily from defendants damages of $1, 693,587.66 plus interest, the additional indemnity and costs; $1,104,757.60 for the loss of his business; $250,000.00 for defamation; $250,000.00 for punitive and exemplary damages; $50,000.00 for mental anguish, stress and anxiety; and the sum of $38,830.06 owing to him by the defendant company. At trial plaintiff accepted defendants’ admission that the sum of money owing plaintiff was $31,363.29 representing his share on sales made to his customers.

[2] For their part, defendants 153986 Canada Inc., doing business under the style and name of Les Ventes Albert Enr/Albert Sales Reg’d (Albert Sales), Martin Levitt and Gerald Plewa filed a plea as well as a cross demand. They ask that plaintiff’s principal action be dismissed, and they claim damages of $360,309.90 plus interest and costs; $ 283,337.75 for loss of future profits over five years; lost profits of $ 3,160.52 on certain sales; $ 3,811.63 in costs incurred "in order to redo their alarm system, change their locks, travel expenses to Toronto to respond to false representations made about Albert Sales by Plaintiff”; $20,000.00 for the time and inconvenience incurred by defendants “in trying to counteract the false and misleading representations made against them by Plaintiff”; and, $50,000.00 in exemplary damages “for Plaintiff’s wilful and malicious actions in material and flagrant breach of its duties and obligations to its employer” as well as “for making false and malicious representations about” Albert Sales.

[3] There are two issues to be examined: the relationship between the parties, and the damages claimed by the parties.

1. The Relationship Between The Parties.

[4] Defendants claim that the plaintiff was an employee of Albert Sales. According to plaintiff he was self-employed, and Albert Sales was simply providing him with administrative services.

[5] Plaintiff worked as a salesman for over 30 years in the printing business, primarily selling business forms. Over the years he developed a lucrative and faithful clientele. In 1990, he sold two million dollars worth of printing and earned about $ 150,000.00.

[6] Albert Sales is a jobber or broker. It does not do printing. It contracts out orders to various printing companies, and it bills and collects the account from its customers. It also sells office supplies.

[7] In 1988, while employed by Southam Paragon, plaintiff entered into an unwritten agreement with Albert Sales to sell business forms and other printing. It was agreed that Albert Sales would receive 35% of the buying cost of the order or 50% of the gross profit if such profit was less that 70% of cost. Plaintiff determined the price to be charged to the customer. For example, if Albert Sales purchased for plaintiff’s client $1,000.00 worth of printing they would get $350.00. The price charged to the customer could be $3,000.00 so that plaintiff would earn $1,650.00. If the selling price to the customer was less than Albert Sales’ cost, the loss would be charged back to plaintiff.

[8] Plaintiff switched certain orders from his employer Southam Paragon to Albert Sales who would in turn order the printing material required from a variety of companies including Southam Paragon itself. Apparently, plaintiff’s managers at Southam Paragon disregarded such business practices.

[9] In December 1991, plaintiff was terminated by Southam Paragon. He took with him to Albert Sales his most profitable 25 or so accounts with whom he was doing about $700,000.00 worth of business. They continued to do business under their 1988 unwritten agreement or arrangement. By 1996, plaintiff’s sales had reached $ 900,000.00.

[10] Plaintiff was responsible for all his expenses including office furniture, stationery, car, travel, telephone and whatever other expenses he incurred. He was also charged back for all “employer contributions” including the employer’s portion of unemployment insurance, group insurance and medical insurance. If a customer did not pay Albert Sales, the total loss would be charged back to plaintiff.

[11] Moreover, plaintiff priced the printing that was to be ordered by Albert Sales, and determined the selling price to his customer. He would deliver a file to Albert Sales that set out what they were to buy, the cost, shipping instructions and the price to be charged.

[12] The only cost to Albert Sales were the administrative costs relating to the processing of the order, and the collection of the account. The accounts that represented 70% of plaintiff’s invoicing were excellent payers. More often than not Albert Sales collected the account before having to pay the supplier. Their risk was, if any, minimal. For this service Albert Sales received approximately $56,700.00 in 1996.

[13] In 1996, plaintiff’s gross income was $210,782.32 plus $51,200.00 that he had paid to his wife. He was earning more than Mr. Levitt or Mr. Plewa who were the principals and shareholders of the defendant company.

[14] During the summer of 1996, plaintiff wanted to discuss changes in his arrangement with Albert Sales. He testifies that Albert Sales was paying suppliers late and that consequently he was having problems with deliveries to certain of his customers. He wanted to set up his own company for whom Albert Sales would continue to provide administrative services. Albert Sales would continue to receive the same remuneration they had been receiving under the old arrangement.

[15] Mr. Plewa testifies that he did not want to change the arrangement. According to him, plaintiff had built up his sales under Albert Sales. Plaintiff testifies that Mr. Plewa gave him the “don’t bother” me impression.

[16] On or about February 12, 1997 Mr. Plewa learned that plaintiff had sold certain customers through his own company Marsh Business Forms Inc./Formules d’affaires Marsh Inc. (Marsh). As well, defendants found that plaintiff’s filing cabinet was empty – all plaintiffs’ dossiers were gone. That same day, Mr. Plewa telephoned plaintiff and told him “that he was dismissed and not to come into work” (Plea and Cross Demand, paragraph 54).

[17] Mr. Fred Peters testifies that Mr. Plewa told him that he could be his own boss in association with Albert Sales, that he could be self-employed like plaintiff Salpeter.

[18] On November 2, 1995 Mr. Peters and Mr. Plewa signed an agreement on behalf of their respective companies. This agreement reads as follows:

AGREEMENT BETWEEN LES VENTES TANPET & ALBERT SALES

Fred Peters acting on behalf of Les Ventes Tanpet will bring as part of his sales force Mr. Leonard Rogovin who will be paid by Les Ventes Tanpet. The remuneration between Albert Sales and Les Ventes Tanpet will be based on a 50-50 split of gross profit less transportation charges catalogues and bankruptcies which will also be shared half-half. All other overhead expenses will be assumed by Albert Sales. This agreement may be terminated at any time by either party by a thirty day written notice. Each party will have the right to take back their respective customers and each party agrees not to solicit each others accounts.

Fred Peters for Les Ventes Tanpet

Gerald Plewa for Albert Sales

After plaintiff’s relationship with Albert Sales ended, Mr. Peter’s status was changed from that of a self-employed sales agent to that of an employee.

[19] Mr. Plewa denies that he ever told Mr. Peters that he would be self-employed like plaintiff. In fact, Mr. Peters did have a self-employment agreement with Albert Sales. The Court retains Mr. Peter’s version of the facts.

[20] Mr. Claude Pierry the owner of Imprimerie C. Pierry Inc. (Imprimerie Pierry) testifies that Mr. Plewa had told him that plaintiff was a broker but that Albert Sales was doing his invoicing. Mr. Plewa denies ever having said that to Mr. Pierry. Imprimerie Pierry did billing and invoicing for brokers.

[21] Mr. Plewa would have the Court believe that once plaintiff came to Albert Sales he became an employee, and the accounts that he brought with him became Albert Sales’ accounts. Consequently, if Albert Sales would dismiss plaintiff some months later, all his accounts would be retained by Albert Sales. The Court cannot accept on the basis of the evidence that the parties entered into such an arrangement.

[22] Article 2085 C.C.Q. provides that:

Art. 2085. A contract of employment is a contract by which a person, the employee, undertakes for a limited period to do work for remuneration, according to the instructions and under the direction or control of another person, the employer.

According to Robert P. Gagnon[1]

L’élément de qualification du contrat de travail le plus significatif est celui de la subordination du salarié à la personne pour laquelle il travaille. C’est cet élément qui permet de distinguer le contrat de travail d’autres contrats à titre onéreux qui impliquent également une prestation de travail au bénéfice d’une autre personne, moyennant un prix, comme notamment le contrat d’entreprise ou de service maintenant régi par les articles 2098 et suivants C.c.Q. Ainsi, alors que l’entrepreneur ou le prestataire de services conserve, selon l’article 2099 C.c.Q., «le libre choix des moyens d’exécution du contrat» et qu’il n’existe entre lui et son client «aucun lien de subordination quant à son exécution», le salarié s’exécute sous la direction de l’employeur et dans le cadre établi par ce dernier.

Moreover, «La subordination se vérifie dans les faits»

[23] The Court is of the opinion that on the balance of probabilities plaintiff was not an employee of Albert Sales. He did not work “according to the instructions and under the direction or control” of the defendants. In the case at bar the facts are clear that there was no “subordination” of employee to employer.

[24] Plaintiff pleads that the relationship between the parties was one of mandate, plaintiff being the mandator of defendant company acting as a mandatory (Art. 2130 C.C.Q. and ff.). This very well may have been their relationship. However, the Court does not find it necessary to decide this point. It is sufficient to note that the arrangement between the parties was one whereby the defendant company was supplying plaintiff with administrative services for a commission.

2. Damages Claimed By The Parties.

[25] Plaintiff claims damages of $1,693,587.66 whereas defendants’ claim is for $360,309.90.

A. Plaintiff’s Claim for Damages

[26] Paragraph 30 of plaintiff’s Amended Particularised Declaration reads as follows:

30. Furthermore Plaintiff, who is presently fifty-nine (59) years old, is entitled to claim from Defendants solidarily the loss of his business representing an estimated loss of future net revenues … in the amount of ONE MILLION ONE HUNDRED AND FOUR THOUSAND SEVEN HUNDRED AND FIFTY SEVEN DOLLARS AND SIXTY CENTS ($1,104,757.60), detailed as follows:

a) Plaintiff’s average annual net revenue for the past 5 years is equivalent to $184,126.27 per year, the whole as more fully appears from Plaintiff’s T-4 statements for the years 1992 to 1996 inclusively, produced en liasse as Exhibit P-5 to avail as though more fully recited at length;

b) In additional to his income, Plaintiff caused his spouse to be paid over FIFTY THOUSAND DOLLARS ($50,000.00) per annum as appears from her T-4 statements;

Plaintiff’s claim is for loss of earnings over six years (6 x $184,126.27).

[27] Plaintiff testifies that Mr. Plewa called him twice on February 12, 1997. The second call was at about 10:30 p.m. Mr. Plewa told plaintiff that he would blackball him, bury him, run him out of town, make statements to the newspapers, and that he would create trouble for him with his clients.

[28] The next morning they met at a restaurant. Mr. Plewa was angry and he repeated what he had said the previous day. He added that he would sue plaintiff.

[29] Plaintiff wanted to come to an understanding with Mr. Plewa. However, Mr. Plewa did not even want to talk of a possible understanding. He was set to do what he had said he would do.

[30] Mr. Plewa was true to his word.

[31] Mr. Marc Pilosof is a retired salesman. He was at Southam Paragon at the same time as plaintiff. They reached an agreement whereby Mr. Pilosof would introduce his former clients to plaintiff and he would receive commission on whatever orders they would obtain. He was completely under plaintiff’s supervision and control. Moreover, it was plaintiff who told Albert Sales what to pay Mr. Pilosof who had little or no direct contact with Albert Sales.

[32] After Mr. Plewa “dismissed” plaintiff on February 12, 1997 he called Mr. Pilosof and told him to come in to see him the next day. Mr. Pilosof testifies that he learned that plaintiff had arranged for him to get less commission than he had been promised.

[33] Mr. Pilosof was a bitter and angry witness. He was extremely upset that he was supposedly being cheated by plaintiff. His commission came out of plaintiff’s earnings. Mr. Pilosof was in effect an employee of plaintiff. According to Mr. Levitt plaintiff controlled Mr. Pilosof.

[34] Mr. Pilosof testifies that plaintiff told two accounts that Albert Sales was going bankrupt and that the orders should be made out to Marsh. Mr. Pilosof did not contradict plaintiff in front of these clients.

[35] One client was Leviton of Canada Ltd. Mr. Jacques Désautels of Leviton corroborates Mr. Pilosof’s testimony that plaintiff told him that Albert Sales was in bankruptcy.

[36] Mr. Marcel Comtois is with Consoltex Inc. in Cowansville. He testifies that plaintiff told him that Albert Sales “s’est divisée” and that the printing orders should be given to Marsh.

[37] Mr. Terrence Chapman was with Consolatex Inc. in Alexandria, ON. He testifies that plaintiff told him that he had an accounting arrangement with Albert Sales. New purchase orders were to be made out to Marsh.

[38] Plaintiff was emphatic in his testimony that he never told Mr. Comtois or anyone else that Marsh was a division of Albert Sales, or that Albert Sales no longer existed or was going out of business or was closed. He testifies that unless a customer asked, he never mentioned Albert Sales.

[39] Plaintiff had successfully arranged that his clients from Southam Paragon have their orders processed by Albert Sales. He would undoubtedly have been able to switch them to Marsh. His clients were dealing with Sydney Salpeter and the proof is clear that they would have remained loyal to him had Mr. Plewa not interfered in an extremely aggressive manner.

[40] On February 13, Mr. Plewa and Mr. Stephen Schnaidman, the controller at Albert Sales, found about one half of a bag of shredded dockets or files. These dockets had contained information and documents relating to clients. They assumed that plaintiff had done the shredding or had otherwise appropriated his client’s dockets. Plaintiff denies he ever took or shredded such dockets.

[41] That same day, Mr. Plewa had Mr. Schnaidman file a complaint against plaintiff with the police accusing him of theft. He told the police that at least 26 dockets were missing.

[42] The police obtained a search warrant, and searched plaintiff’s home. They apparently did not find anything. They subsequently told Albert Sales that it was a civil and not a criminal matter.

[43] Mr. Plewa wrote two types of letters to plaintiff’s clients. These letters were accompanied by a table showing how much the client could save if it would do business with Albert Sales now that plaintiff had been “dismissed”.

[44] On February 21, 1997 Mr. Plewa wrote to Future Electronic Inc. on a Albert Sales letterhead as follows:

Future Electronique Inc.

237 Hymus Blvd

Pointe Claire, Québec

H9R 5C7

ATT: Robert Miller

President

Dear Mr. Miller,

I am writing to inform you of a situation I believe you should be made aware of. Our company has been servicing yours for the last 2 years for your printed business cards and various other stationary. Our salesman handling the account Sydney Salpeter has been dismissed by Albert Sales as of February 13, 1997. We are in the process of instituting criminal as well as legal action against him for theft and a variety of other charges.

As a result your account has now been made a house account. We appreciate your past patronage to our company and as such we are now prepared to offer future electronics lower pricing. All commissions previously paid will now be saved by your company. I tried to explain to Sybill Nash the situation however she only wants to deal with Mr. Salpeter. This has made me suspicious that she may be compromising your companies arms length position vis à vis suppliers. A good personal relationship with a salesman is enviable if it does not interfere with the profitability of your company. As president of my company I thought it my duty to inform you of the actions that have transpired. Your name and your company’s name are well regarded in the community and as such I felt you would be open minded to this letter.

If you choose not to do business with Albert Sales in the future I will understand regrettably, but I hope that you can use this information for your good. However it would be an honor to continue servicing your companies and I shall try to contact you shortly.

Mr. Plewa testifies that he received a letter from Future Electronic advising him that if he contacts them again about this matter they would sue him.

[45] The letter sent to Canon Canada Inc. is illustrative of the second type of letter sent by Mr. Plewa. It reads as follows:

Canon Canada

6390 Dixie Road

Mississauga, Ontario

L5T 1P7

Att: David Fotheringham

Vice president finance & accounting

Dear Mr. Fotheringham,

Please be advised that as of February 13, 1997 Sydney Salpeter is no longer employed by Albert Sales. The reason for his dismissal was for illegal if not immoral behavior. While employed by Albert Sales in good faith he chooses to open a competing company to divert sales from Albert Sales. While we are looking at all possible legal options we wish to inform yourself that Albert Sales appreciates your past patronage to our company.

The commission schedule for our salespeople was left at their discretion. Albert Sales marks our costs up a competitive amount. However the salesperson may sell for higher and as a general practice Mr. Salpeter, did such in dramatic fashion. With Mr. Salpeter’s dismissal we wish to pass on the savings due to your account becoming a house account. All new salespeople are on a salary basis so as to avoid these problems in the future.

Enclosed please find a copy of printing jobs done by us with our invoice number. The cost you paid per thousand and the cost that you would pay now. The savings are substantial. Our service and quality remain tops in the field. Our products are guaranteed just like before backed up by Albert Sales total commitment to service, quality and customer satisfaction. A salesperson will contact you shortly. If you have any questions that you would like answered please do not hesitate to contact me at your convenience. Hoping we can continue to service you in the future and look forward to meeting you personally.

[46] The Canon “ copy of printing jobs “ shows the description of the item ordered the invoice number, the old price, the new price and the savings under Albert Sales’ revised pricing policy. For example, an item purchased in January 1996 that was invoiced at $278.55/M would now be priced at $78.55/M and an item priced at $260.01/M would drop to $106.71/M. It is indicated that the savings to Canon over a three year period would have been $170,945.84.

[47] It takes chutzpah to write such a letter. Mr. Plewa explains that his employee was dramatically overcharging for years. However, now that he was “dismissed” Canon could enjoy substantial savings. Was Albert Sales blind as to the overcharging that was going on?

[48] Some accounts immediately stopped doing business with plaintiff when they received their letter. For example, Mr. John Camia, purchasing agent, at the City of Westmount testifies that the force of the letter resulted in the City not buying from plaintiff. However, they did continue to buy from Albert Sales.

[49] If the purchasing agent in a company was not receptive to his letter, Mr. Plewa would contact his superior as he did in the case of Future Electronic. Mr. Terrence Chapman testifies that he spoke to Mr. Plewa at two occasions in 1997. He introduced himself and went into the conflict he had had with plaintiff. He dwelled on the over charging aspect, and that he could now offer a cheaper price. On the second occasion he apologised for his aggressive behaviour during their first conversation but again became aggressive. He insisted that if Mr. Chapman did not place his orders with Albert Sales he would contact Consolatex’s head office.

[50] Sometime later, Mr. Chapman was told by the vice president of manufacturing to cease doing business with both plaintiff and Albert Sales. He apparently did not like the contents of Mr. Plewa’s letter.

[51] Plaintiff testifies that he was trained to offer service and quality, and to sell at list price. He had national accounts paying list price. The accounts he took with him from Southam Paragon were not paying discount prices.

[52] Mr. Plewa tried to blackball plaintiff as he had promised. He asked Imprimerie Pierry not to do business with plaintiff ostensibly because he would be in a position to see Albert Sales’ orders. When Mr. Pierry refused to do his bidding, Mr. Plewa refused to pay him an outstanding balance of $23,782.21 for printing. Imprimerie Pierry sued Albert Sales for this amount plus interest and costs. The suit was subsequently settled out of court.

[53] Albert Sales was successful in its campaign to deliberately destroy plaintiff’s business and livelihood. Marsh did $197,335.00 worth of business for the year ending January 31, 1998, $146,476.00 the next year, and $113,094.00 the following year. Salaries and benefits were $30,000.00 the first year, $9,700.00 the second, and $12,500.00 the third year. It had a deficit every year.

[54] Plaintiff’s arrangement was with the defendant company. The Court is of the opinion that the malicious behaviour of the company entitles the plaintiff to claim damages from 153986 Canada Inc. The Court evaluates such damages to be $350,000.00 considering plaintiff’s loss of future earnings.

[55] The evidence is clear that plaintiff was intentionally defamed by the defendant company as well as by Mr. Plewa personally. The Court fixes damages for defamation at $25,000.00.

[56] Moreover, the plaintiff is entitled to punitive and exemplary damages of $10,000.00. In Association des professeurs de Lignery c. Alvetta-Comeau[2] Mr. Justice Baudoin writes: «Les dommages exemplaires ne peuvent donc être accordés que s’il y a réunion de deux éléments: l’illicité de l’atteinte et son intentionnalité» (p. 136). Both these elements are present in the case at bar.

[57] Plaintiff did not prove his claim of $50,000.00 for mental anguish, stress and anxiety.

[58] Plaintiff asks for provisional execution notwithstanding appeal. The Court is of the view that only $31,363.29 should be allowed under this heading insofar as the parties agreed that this money was owed to plaintiff.

B. Defendants’ Claim for Damages.

[59] Paragraphs 71 and 72 of defendants’ Plea and Cross Demand read as follows:

71. That as a result of Plaintiff’s illegal and malicious actions in making false and misleading statements about Defendant Albert Sales, as stipulated previously herein above to try and appropriate for his personal benefit the accounts which had been serviced by Albert Sales for seven years, the latter has suffered damages in that certain of these accounts will no longer do business with Albert Sales despite its best efforts to retain these accounts and have continued to deal with Plaintiff/cross-defendant to the exclusion of Albert Sales, and for which it holds Plaintiff responsible for;

72. That these clients represented profits to Albert Sales over the course of a year in the amount of approximately $56,667.55, which sum is based upon the value of their last orders, not yet re-ordered, and which Defendants/cross-plaintiffs capitalised over five years and which thereby total $283,337.75, which sums Defendants are entitled to claim from Plaintiff/cross-defendant and which sum they do hereby claim from him; The whole as more fully appears from a LIST of clients and lost profits calculated from their last orders for the clients therein indicated and produced herewith as exhibit D-9;.

The Court has already determined that the above mentioned clients belonged to plaintiff and not to Albert Sales.

[60] Whatever loss Albert Sales incurred was due to the actions of Albert Sales. They admit that they abruptly “dismissed” their “best salesman” without even trying to reach some agreement with him. Now they blame him for future losses.

[61] It reminds one of the story of the young man who kills his mother and father and then laments that he is an orphan.

[62] The Court is of the opinion that this is a frivolous claim without a basis in either fact or law.

[63] Defendants’ claim for $3,160.52 “representing their lost profit from the sale of printing” to certain clients that “were diverted by Plaintiff to his own company Marsh Business Forms … while still in the employ of Albert Sales” is without merit. Plaintiff was not an employee of Albert Sales. He could very well sell to whomever he wanted.

[64] The claim of $3,811.63 was incurred in order to redo their alarm system, change their locks, and travel expense to Toronto to visit Canon Canada Ltd. When you “dismiss an employee” who has a key to the premises and the code to the alarm system you normally change the keys and the code to the alarm system. The trip to Toronto was to get plaintiff’s account. These are not expenses that can be claimed from plaintiff.

[65] Defendants’ claim $20,000.00 for the time and inconvenience in trying to counteract plaintiff’s false representations regarding Albert Sales. Even if plaintiff did make some remarks to three of his own clients, such statements were immediately clarified by Albert Sales. Moreover, there was no proof to justify the amount claimed by defendants.

[66] Lastly the claim for $50,000.00 for exemplary damages for plaintiff’s breach of duties and obligations to his employer cannot be granted. Plaintiff was not an employee of Albert Sales.

[67] For these reasons, the Court:

[68] Grants plaintiff’s action in part;

[69] Condemns defendant 153986 Canada Inc. to pay to plaintiff the sum of $350,000.00 plus interest and the additional indemnity provided by law all as of March 14, 1997;

[70] Condemns defendants 153986 Canada Inc. and Gerald Plewa solidarily to pay to plaintiff $25,000.00 plus interest and the additional indemnity provided for in law all as of March 14, 1997;

[71] Condemns defendants 153986 Canada Inc. and Gerald Plewa solidarily to pay to plaintiff $10,000.00 plus interest and the additional indemnity provided for in law all as of the date of this judgment.

[72] Condemns 153986 Canada Inc. to pay plaintiff $31,363.29 plus interest and the special indemnity provided by law all as of March 14, 1997, and Orders provisional execution for $31,363.29 plus interest and the special indemnity notwithstanding appeal;

[73] The whole of the above with costs;

[74] Dismisses the cross demand with costs.

________________________________

HERBERT MARX J.S.C.

Mtre Leon J. Greenberg and Mtre Harry Dikranian

(Sternthal Katznelson Montigny)

Attorneys for Plaintiff/Cross Defendant

Mtre Leon Maliniak

(Maliniak & Ironside)

Attorney for Defendants/Cross Plaintiffs

Field of law:CONTRACT

[1] Le droit du travail au Québec, (4^th ed. Cowansville : Y. Blais, 1999), page 51.

[2] [1990] R.J.Q. 130 (C.A.). See also, Charter of Human Rights and Freedoms, R.S.Q., c. C-12, S. 49