Executive Summary: Key Legal and Evidentiary Issues

• Defendants sought to remove or stay claims against individual and professional corporation defendants under Rule 5 of the Rules of Civil Procedure.

• Plaintiffs allege they were employees, not partners, despite entering into a “Partnership Agreement (Non-Equity)” signed by all parties.

• The Agreement allegedly created direct obligations for the individual and professional corporation defendants, not just Diamond LLP.

• Defendants argued the Agreement imposed no specific obligations on non-Diamond LLP parties and cited prior authority (Tataryn) to support their removal.

• The court found a factual and legal basis to keep all defendants due to the plaintiffs' uncertainty over who may be liable (Rule 5.02(2)(c)).

• Motion was dismissed, and defendants were ordered to pay $10,000 in costs to the plaintiffs.

Facts and Background

Zev Bergman and his professional corporation filed a lawsuit against Diamond & Diamond Lawyers LLP, individual lawyers Jeremy Diamond, Sandra Zisckind, and Isaac Zisckind, along with their respective professional corporations. Bergman worked with Diamond LLP from 2015 until his termination in 2024. He alleges wrongful dismissal, breach of contract, and related torts. The plaintiffs claim to have been employees and not partners of the firm.

A key document in the dispute is the "Partnership Agreement (Non-Equity)" effective January 1, 2019. This agreement was signed by all named defendants and the plaintiffs. While the defendants argue that only Diamond LLP was contractually obligated under this agreement, the plaintiffs contend the individual and professional corporation defendants directly contracted with them and assumed obligations under the enurement clause.

Legal Arguments and Motion

The defendants brought a motion under Rule 5 of Ontario’s Rules of Civil Procedure seeking:

• Deletion of the individual and professional corporation defendants under Rule 5.04(2), or

• A stay of the action against them under Rule 5.05(d), arguing that their inclusion would cause undue delay and prejudice.

Their position relied on the notion that a plaintiff cannot sue both a partnership and its partners for the same cause of action, and they cited Tataryn v 2398968 Ontario Inc. as authority, where claims against partners were stayed because no separate legal basis was alleged.

In response, the plaintiffs argued that:

• There is doubt about from whom relief may be obtained, justifying joinder under Rule 5.02(2)(c).

• The individual defendants personally signed the agreement, suggesting direct liability.

• The enurement clause extended obligations to the professional corporations.

Court's Analysis and Findings

Associate Justice La Horey emphasized that this was not a motion for summary judgment or under Rule 21. She did not interpret the agreement or assess the merits in full but focused on the procedural issues of joinder.

Key findings included:

• The Agreement was signed by the individual defendants personally, distinguishing this case from Tataryn, where individual lawyers were not direct signatories.

• The pleadings contained allegations supporting a claim against both the individual and professional corporation defendants.

• Rule 5.02(2)(c) was applicable due to uncertainty about which defendants are liable.

• The motion failed to demonstrate that naming additional defendants would cause sufficient prejudice or delay to justify removal.

• Allegations of reputational harm to the individual defendants did not outweigh the prejudice to the plaintiffs if those parties were removed prematurely.

Outcome

The court dismissed the motion to remove or stay proceedings against the individual and professional corporation defendants. It held that there was a sufficient legal basis to keep them as parties at this stage. The defendants were ordered to pay $10,000 in costs to the plaintiffs within 30 days. Remaining issues under Rules 25.06 and 25.11 were not argued and may be heard later if not resolved between the parties.