Legal Blog

Merger

Sherwood Steel Ltd. v. Odyssey Construction Inc. 2014 Alta CA

A sub owed $217,000 to its subsub. The subsub did not lien the project because, the subsub alleged, the general promised that if the subsub did not do so, then the general would come upon completion of the project, pay to the subsub the money that the sub owed it. The general ultimately refused to do so, either because it reneged on its promise or because it never made the promise. The subsub first sued the sub, obtained judgment, and presumably was unable to collect its debt. It then commenced an action against the general based on the alleged promise. The general moved for summary judgment and was successful. The motions judge held that the subsub’s cause of action against the general merged into its judgment against the sub. The Court of Appeal overturned. Before there can be merger, the parties to the first and second action, or their privies, must be the same. The general was not a party to the action against the sub. Further the causes of action must be the same. In this case, the cause of action against the sub was for beach of a construction contract whereas the cause of action against the general was for breach of a promise to pay. Just because the remedy is the same does not mean the causes of action are the same.

Written by Jonathan Speigel Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.