Executive Summary: Key Legal and Evidentiary Issues

• Dispute stems from a subcontract for excavation works on a public aqueduct project after the collapse of a temporary retaining wall and resulting site delays and damage.
• Central controversy concerns clause 50 of the subcontract and accompanying corporate resolutions, which allegedly make IAI’s shareholders and directors (the Iozzo family) personally liable as guarantors for IAI’s contractual faults.
• Personal liability of Amerigo, Bruno and Tania Iozzo is contested, including whether they actually signed or initialled the subcontract and resolutions, and whether any signature was purely in a representative corporate capacity.
• The court applies article 168 C.p.c. and related case law to hold that, at the preliminary stage, questions about the scope of clause 50, roles of the Iozzo family and factual construction deficiencies must be resolved at trial, not on a motion to dismiss.
• Allegations that the reconventional claim is abusive and manifestly ill-founded—particularly because the approximately $2.84 million claim far exceeds the subcontract price—are rejected for lack of sufficient proof of abusive intent or vexatious conduct.
• The incidental motion by the Iozzo defendants for inadmissibility and for a declaration of abuse is dismissed, with legal costs ordered against them and no damages quantified or awarded at this stage.

Facts of the case

Entreprise d’Excavation I.A.I. inc. (IAI) is a construction company specializing in excavation and grading work. It acted as a subcontractor to Construction Kingsboro inc. (Kingsboro), a general contractor active in formwork, concrete pouring and finishing. The project involved the construction of a new booster station (surpresseur Côte Terrebonne) and demolition of the existing structure for the Régie d’Aqueduc Intermunicipale des Moulins (RAIM). IAI commenced excavation work under a subcontract with Kingsboro. On 11 August 2023, IAI’s works were suspended after the collapse of a temporary retaining wall that it had erected adjacent to its excavation. The parties sharply dispute who bears responsibility for that collapse and the resulting remedial work, delays and financial consequences. Kingsboro alleges construction deficiencies, failure to remedy defects and delay impacts; IAI maintains it is not liable in the manner alleged. The dispute has both contractual and factual dimensions: whether IAI’s methods and execution were deficient, whether proper mitigation occurred, what damages truly flowed from the collapse, and whether delay on the project is attributable to IAI’s conduct.

Contractual framework and clause 50

The subcontract between Kingsboro and IAI includes a provision—clause 50—at the heart of this preliminary judgment. Under Kingsboro’s usual practice, where a new subcontractor is awarded contracts exceeding $500,000 and lacks an execution bond, Kingsboro requires a form of security. In this case, IAI was allegedly unable to provide a conventional performance bond. The parties therefore agreed that a personal guarantee by IAI’s administrators and shareholders would replace the standard execution bond. Clause 50 of the subcontract is worded to provide that the shareholders and directors of the subcontractor personally guarantee all shortcomings, damages and losses towards the owner and Kingsboro. This clause is backed by corporate documentation. At the time of contracting, Amerigo, Bruno and Tania Iozzo were the administrators and shareholders of IAI. They signed a corporate resolution attached to the subcontract, authorizing the execution of the contract and referencing the personal guarantee requirement. Within the contract and annexes, Bruno is identified as president of IAI, Amerigo as “surintendant en résidence” with full authority to bind IAI, and Tania as treasurer. Corporate registry records also depict Amerigo as the majority shareholder and president. Whether these roles and signatures suffice to bind them personally under clause 50, and whether they knowingly agreed to personal suretyship, are factual and legal issues reserved for the trial judge. The litigation also includes an insurance dimension, as L’Unique Assurances générales inc. is joined as a defendant, suggesting that liability coverage questions may arise, though this particular judgment focuses on the relationship between Kingsboro, IAI and the Iozzo family rather than on specific policy terms.

Procedural posture and reconventional claim

IAI initiated proceedings against Kingsboro and L’Unique, bringing an action on account and on suretyship, essentially to recover sums it considers owing and to engage the surety obligations. In response, Kingsboro filed a corrected reconventional demand (demande reconventionnelle corrigée) seeking substantial damages—approximately $2,838,760.60, “sauf à parfaire”—from IAI and, solidarily, from Amerigo, Bruno and Tania Iozzo. Kingsboro attributes to IAI and the Iozzo family responsibility for all damages linked to the retaining wall collapse, the necessary backfilling of the excavation, and the consequential project delays. It relies on clause 50 and the corporate resolutions to extend liability beyond the corporation to the individual shareholders and directors. The Iozzo defendants reacted with an incidental application seeking dismissal of the corrected reconventional demand for lack of a legal basis (irrecevabilité pour absence de fondement juridique) and, in the alternative, a declaration that the reconventional claim is abusive and manifestly ill-founded, to be rejected accordingly. They argued there was no direct contractual link with Amerigo and Tania, that Bruno signed the subcontract only as a corporate representative, and that holding them personally liable would improperly pierce the corporate veil. They also attacked the magnitude of Kingsboro’s damages claim as disproportionate and intimidating compared to the subcontract price and the total project cost.

Court’s analysis on inadmissibility and legal foundation

The Superior Court first addressed the request for dismissal based on article 168 of the Code of Civil Procedure (C.p.c.), which governs motions in irrecevabilité. Under article 168, the court considers only the facts alleged in the initiating pleading and its attached exhibits, treating them as true for the purpose of the motion and without weighing evidence. The judge recalled Court of Appeal guidance that, at this stage, the role is not to assess the likelihood of success or the truth of the facts, but solely to decide whether, if the alleged facts are proven, they could support the conclusions sought. Judicial restraint is particularly important where the issues depend on contested facts or complex questions like prescription, suspension or interruption, which generally should not be determined on a preliminary motion. Applying this framework, the court found that the Iozzo defendants’ objections could not be resolved on the face of the pleadings alone. Clause 50 explicitly states that the shareholders and directors of the subcontractor personally guarantee all shortcomings, damages and losses in favour of the owner and Kingsboro. The annexed resolutions show the Iozzo family signing in various corporate capacities, and the corporate records confirm their roles as administrators, officers and shareholders. The judge emphasized that the true effect of clause 50, the intent behind the signatures, and whether any of the Iozzo defendants actually undertook personal obligations are matters of mixed fact and law requiring a full evidentiary record. The existence and extent of IAI’s alleged construction deficiencies, causation of damages, and any failure to mitigate are likewise factual disputes that cannot be settled at the preliminary stage. Because the allegations in Kingsboro’s reconventional demand, taken as true, are capable of supporting a claim against both IAI and the Iozzo defendants, the court held that the reconventional claim has a sufficient legal foundation and refused to declare it inadmissible.

Court’s analysis on alleged abuse of procedure

The court then turned to the request that Kingsboro’s reconventional claim be declared abusive and rejected under articles 51 and 52 C.p.c. Abuse may arise from a claim that is manifestly ill-founded, or from vexatious or bad-faith conduct in the conduct of proceedings. The initial burden lies on the party alleging abuse to show, on a summary basis, that the legal action or procedural act might constitute an abuse before the burden shifts. The Iozzo defendants argued that the reconventional claim was abusive in both its scope and amount. They highlighted that Kingsboro sought approximately $2,838,760.60 in damages “sauf à parfaire” while the subcontract price was just $578,000.07 and the total project cost was about $3,884,877.28. In their view, the supporting exhibit did not adequately substantiate the quantum claimed, and the claim was filed to intimidate them personally and to exert undue settlement pressure. Unlike in the irrecevabilité analysis, the court examining an abuse motion under articles 51–53 C.p.c. may consider the pleadings and exhibits more broadly—and, where appropriate, additional elements of proof—to assess both the substantive merit of the claim and the conduct of the party advancing it. In response to the abuse allegation, Kingsboro produced an extract from the pre-trial examination of Amerigo Iozzo, in which he appeared to acknowledge having read and signed the contract despite disagreeing with its terms. The Iozzo side countered with a sworn declaration from Amerigo, filed with the court’s permission, in which he denied that the initials and signature on the contract pages were his and explained that he had misunderstood the examination questions, believing he was confirming only that he had read the document, not that he had signed it. The judge held that this conflict over who signed or initialled the contract—and in what capacity—does not, at this stage, render Kingsboro’s reconventional claim manifestly ill-founded or evidence bad faith. Kingsboro still bears the burden at trial to prove the damages and the personal obligations alleged, but its attempt to do so cannot be equated with an abusive or vexatious proceeding merely because the claim is large relative to the subcontract and project values. The court therefore concluded that the evidence presented did not demonstrate an abuse of procedure or vexatious conduct by Kingsboro.

Outcome and implications

The Superior Court dismissed the Iozzo defendants’ incidental application in its entirety. The corrected reconventional demand filed by Construction Kingsboro inc. against IAI and the Iozzo family remains in place and will proceed to be determined on the merits, alongside IAI’s original action against Kingsboro and L’Unique. The court found that the reconventional claim has a sufficient legal foundation when the alleged facts and contractual documents are taken as pleaded, and that it is not manifestly ill-founded or abusive under the Code of Civil Procedure. As a result, the successful party in this preliminary judgment is Construction Kingsboro inc., whose reconventional claim survives intact, while the incidental motion brought by Amerigo, Bruno and Tania Iozzo is rejected with legal costs ordered against them. The judgment, however, does not fix any specific dollar amount for those costs, nor does it award any substantive damages or quantify any monetary relief in Kingsboro’s favour at this stage, so the total amount ordered in favour of Kingsboro cannot be determined from this decision alone.