Judge Awards $45 Million in Breach of Contract Case

A major Toronto law firm found itself on the wrong end of the gavel recently when a judge ordered the firm to pay a whopping $45 million in damages in a class action lawsuit that involved breach of fiduciary duty and professional negligence as well as breach of contract. Add conflict of interest to the mix and it became what one observer called a “perfect storm” of issues – hence the hefty judicial price tag.

The high powered case winds its way back to a lawsuit launched by Toronto GM dealers. Let’s simplify the complicated story;

  • In 2009, in the wake of the 2008 economic meltdown, some 200 GM dealers were terminated as part of the federal bailout of the auto industry.
  • The law firm accepted a retainer to represent the dealers in the restructuring talks after they had already accepted a similar retainer to represent the federal government through Industry Canada in the same proceedings.
  • The class action was launched by Toronto area dealers against the terms of the take-it-or-leave-it buyout offer made by GM – and named not only General Motors but also the lawn firm. Part of the suit against GM was based on the fact they had allegedly received substandard legal representation.
  • In his ruling, the judge noted that the law firm had breached their contractual duties to the dealers.

The law firm is appealing, citing legal errors among other issues.

Breach of Contract & Conflict of Interest

You may not have dealings at such a high and very public level, but the basic issues are relevant for any employment or service contract. Often the two principles of breach of contract and conflict of interest go hand in hand. The link between them boils down to simple logic:

  • The presumption that you cannot completely fulfill your obligations to two conflicting parties on a given issue;
  • Ergo, if you are unable to fulfill the obligations of both contracts, you will find yourself in breach of (at least) one of them.

You can’t equally serve two clients who have conflicting goals on the same issue, in other words. It’s an important concept that may not occur to casual contractors – and as today’s job market includes more and more freelancers and people who work on such contracts, the potential for this kind of conflict and breach of contract is increasing.

We Can Help

Contractual issues can get complicated, especially in today’s world of freelancing, contractual and temporary employment. We can help you sort out the issues and let you know of any potential trouble spots before they happen. The best time to consult a lawyer about your employment contract is before you sign on the dotted line. A full and complete understanding of your employment contract is your best protection against future problems.

If you are already working under a contract and issues have come up, don’t hesitate – you need expert legal advice. You’ll need the help of experienced breach of contract lawyers.  If you think your rights under a contractual agreement are being disregarded contact Petrillo Law today or call us (905) 949-9433 for a free consultation with an experienced contract lawyer.  We look forward to hearing from you.

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