BACKMAN v. WILCOXON (2020)

MEMORANDUM AND ORDER PURSUANT TO RULE 23.0

This case involves a question about the statute of limitations with respect to a contract to which, the parties agree, the law of Ontario applies. In a thoughtful opinion entered after trial, a judge of the Superior Court concluded that this contract constitutes a “specialty contract,” under Ontario law, and that, consequently, a twenty-year statute of limitations applies. We agree with his analysis, and therefore affirm.

Factual background. Between 1987 and 1989, defendant Wilcoxon, who has never resided in Massachusetts, was involved in a venture mining for gold and other precious metals in Nevada. Plaintiffs Serafini and Backman, both residents of Massachusetts, were investors in this venture. During this period, they brought suit against Wilcoxon, as well as a second individual and a Nevada-based corporation, in the United States District Court for the District of Nevada asserting claims for fraud, civil conspiracy, securities law violations, Federal law racketeering, State law racketeering, and breach of contract. Eventually, the parties entered into a settlement agreement, which called for a stipulated entry of judgment that was entered on November 23, 1987. The United States District Court in Nevada entered an amended judgment on March 31, 1988.

Wilcoxon subsequently became the president of a company in Nevada known as Ashurst Technology Corporation. Wilcoxon began negotiating a merger between Ashurst Technology Corporation and Emtech Ltd., a Canada-based company with a primary place of business in Ontario, in 1992.

Wilcoxon then contacted Serafini and Backman seeking to modify the Nevada judgment. Specifically, Wilcoxon sought to create a contract that would protect Serafini and Backman's interests in the judgment, while eliminating the judgment itself so that references to Serafini's and Backman's allegations would not have to be filed with Canadian authorities in relation to the proposed merger.

Serafini, a practicing lawyer in Massachusetts, drafted documents in an effort to incorporate and finalize the agreements reached between the parties. These documents included a release agreement, section ten of which states: “The laws of California, Nevada, or of Ontario, Canada, shall apply to the interpretation of this Agreement at the election of Backman and Serafini.” On appeal, the parties agree that the law of Ontario applies.

Above the signature line where Wilcoxon signed the release agreement it states that “[t]he parties have set their hands and seals” to the agreement. There were also two notes for sums of money which Wilcoxon also signed, as he was required to do under provisions of the release agreement. These contain similar language above the signature line stating each of the notes is to “take effect as an instrument under seal.”

The trial judge found that Backman and Serafini intended that their agreement take effect as a sealed instrument. Serafini understood that, under Massachusetts law, the recitation in the agreement was sufficient to render it a sealed instrument making the statute of limitations for suit thereon twenty years. Serafini sent four copies of the documents to Attorney Brian Neill, Wilcoxon's Canadian counsel. Wilcoxon executed these documents, witnessed by Attorney Neill. When Serafini received signed copies back from Attorney Neill in August, 1993, each of the four sets of contract documents had a self-adhering circular red dot seal next to Wilcoxon's signature on the last page of the release agreement and the same type of seal next to Wilcoxon's signature on Exhibit D of the release agreement, which was the agreement for judgment.

The trial judge found that Attorney Neill personally witnessed Wilcoxon sign the contract documents in his presence in Toronto, Ontario. Attorney Neill signed them as a witness to Wilcoxon's signature. Following Wilcoxon's execution of the four sets of contract documents, Attorney Neill, while in his office and outside Wilcoxon's presence, affixed red dot seals to the four duplicate original sets of contract documents. He placed a seal next to Wilcoxon's signature on the last page of the release agreement and next to his signature on the agreement for judgment. Attorney Neill did so because the contract documents recited that they were signed and sealed and were to take effect as sealed instruments, and it was his normal custom and practice with respect to such contracts to affix these seals.

The judge found that no one told Wilcoxon a seal of any kind would be affixed to the documents. Wilcoxon did not expressly authorize Neill to affix a seal to the documents and no one explained to Wilcoxon the legal significance of placing a seal on a document. Nonetheless, as Wilcoxon's attorney, Neill intended the seal to represent Wilcoxon's solemn, conscious, and deliberate act, and he intended the seal to create a sealed contract in conformity with the recitation and stated intent in the documents.

Discussion. The sole question before us is whether the release agreement between Serafini and Backman, on the one hand, and Wilcoxon, on the other, was a “specialty” contract under Ontario law, to which a twenty-year statute of limitations applies. See Limitations Act, 2002, S.O. 2002, c. 24 Schedule B, § 24(5) (Can.); Limitations Act, R.S.O. 1990, c. L.15, § 45(1)(b) (Can.). We review the judge's findings of fact, none of which are contested, for clear error. Our review of the legal question is de novo. See Chaar v. Chehab, 78 Mass. App. Ct. 501, 505 n.9 (2010) (in this Commonwealth, “[a] court's determination of foreign law is treated as a ruling on a question of law”).

We cannot improve on the trial judge's explication of the law. Under the applicable statute, the Limitations Act, R.S.O. 1990, c. L.15 (Can.), which is applicable to causes of action discovered before January 1, 2004, where the limitation period set forth in that Act has not expired, an action on a “specialty” contract must be brought within twenty years after the cause of action arose. We must decide whether the release agreement is a “specialty” contract as a matter of Ontario law. If it is, the twenty-year limitation period has not expired. If not, the current action is time barred.

Under the case 872899 Ont. Inc. v. Iacovoni, [1998] 40 O.R. 3d 715 (Can. Ont. C.A.), the Ontario Court of Appeal held that language in a contract indicating that it was given under seal or that it was “signed, sealed and delivered” was not adequate to create a sealed instrument. Rather, certain formalities are required as a matter of Ontario law. “[M]ere recitals are not sufficient to create a contract under seal.” Id., quoting Royal Bank of Can. v. Kiska, [1967] 2 O.R. 379 (Can. Ont. C.A.) (Laskin, J., dissenting). According to the Canadian Supreme Court, the relevant question is “whether the parties intended to create an instrument under seal,” the court holding in part that “[t]o create a sealed instrument, the application of the seal must be a conscious and deliberate act.” Freidmann Equity Devs. Inc. v. Final Note Ltd., [2000] 1 S.C.R. 842, 867 para. 36 (Can.).

It is clear from their text that these documents were intended to constitute sealed instruments. It is immaterial whether Wilcoxon knew the full significance of executing a contract under seal. He signed these documents immediately next to the statement indicating that they are intended to create a sealed instrument.

The question remaining is whether the party's intent to create a sealed instrument was effective. We agree with the trial judge that Wilcoxon's attorney's action in affixing the red dot seals can be considered Wilcoxon's conscious and deliberate act of sealing. As Wilcoxon's attorney, Attorney Neill had “ostensible” authority to act on his behalf, what we would describe as “apparent authority.” As a matter of Ontario law, having represented that Neill was his attorney with authority to act on his behalf, Wilcoxon is bound by Neill's acts with respect to anyone dealing with Neill as Wilcoxon's agent in reliance on Wilcoxon's representation, “to the same extent as if [Neill] had the authority that he was represented to have.” 713860 Ont. Ltd. v. Royal Trust Corp. of Can., [1996] 27 O.R. 3d 559 (Can. Ont. C.A.), quoting Bowstead on Agency, 15th ed. (London: Sweet & Maxwell, 1985) at 284. Indeed as the trial judge concluded in his opinion, there is Ontario authority indicating that the placement of a seal by a solicitor on his or her client's behalf after the client has signed the document is effective to bind the client to a contract under seal. See Horvath v. Young, [1980] O.J. No. 1185 para. 49-51 (Can. Ont. High Court of Justice). In the absence of any argument by Wilcoxon supported by legal authority that as a matter of Ontario law an agent may not validly affix the required seal after his client's signature and not in his presence, the judgments therefore are affirmed.

Backman's and Serafini's request for an award of their reasonable appellate attorney's fees and costs, as provided for in the underlying contracts, is allowed. In accordance with the procedure specified in Fabre v. Walton, 441 Mass. 9, 10-11 (2004), Backman and Serafini may, within fourteen days of issuance of this memorandum and order, submit an application for attorney's fees and costs with the appropriate supporting materials. Wilcoxon shall have fourteen days thereafter to file a response to that application.

Judgments entered November 16, 2018, affirmed.