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Cassels Brock Succeeds in Striking Claims Against Parent Companies

Published: 04/20/2018

Team: Peter Henein, Colin Pendrith, Christopher Horkins

Cassels Brock was recently successful in having a number of claims struck from a breach of contract claim which were improperly advanced against the alleged parent companies of the primary contracting defendant. In The Vinyl Company Inc. v Magnolia Windows and Doors, LLC, the plaintiff, The Vinyl Company Inc. (Vinyl), alleged that it entered into a multi-year supply agreement to sell vinyl extrusion products to Magnolia Windows and Doors LLC (Magnolia), a US-based manufacturer of residential windows and doors, and that Magnolia breached the alleged agreement when it opted not to make any orders. In addition to suing Magnolia, Vinyl advanced claims against Boral IP Holdings LLC (Boral) and Headwaters Incorporated (Headwaters), which it alleged to be the direct or indirect parent companies of Magnolia. Boral and Headwaters were not parties to the alleged supply agreement, but Vinyl alleged that they were liable in tort for intentional interference with economic relations, inducing breach of contract and loss of competitive advantage.
 
On behalf of the defendants, Cassels Brock brought a motion to strike the claims against Boral and Headwaters on the basis that the claims were insufficiently pleaded and failed to disclose any viable cause of action against Boral or Headwaters. In the face of this motion, Vinyl proposed an amended version of the claim seeking to remedy the deficiencies in the original pleading, the court ultimately found that even the proposed amended claim failed to disclose any viable cause of action other than the claim for inducing breach of contract against Boral, and struck the remainder of the claims advanced against the alleged parent companies. The defendants were awarded just over $20,000 in costs. The decision is an important warning to plaintiffs against tactically seeking to join parent or other affiliated entities to commercial disputes and provides an example of the benefits of moving to strike claims early in order to streamline the litigation process and remove unnecessary parties. The defendants are represented by Cassels Brock litigators Peter Henein, Colin Pendrith and Chris Horkins. Colin and Chris argued the motion and achieved this early success for the clients.

A copy of the court’s endorsement can be found here.