Executive Summary: Key Legal and Evidentiary Issues

• On May 29, 2018, Premier Dealer Services abruptly shut down its service portal, cutting off Tricor Automotive Group's dealerships from quoting and registering new warranty contracts without valid contractual authority.
• Central to the dispute was whether the 2014 agreement between Tricor and Premier was exclusive, which would have required Tricor to provide 12 months' notice before transitioning business to a new administrator.
• The court found the agreement was non-exclusive, as the contract lacked sufficiently clear language — such as the word "exclusive" or equivalent qualifiers — to constitute a restrictive covenant on Tricor's freedom to contract.
• Even assuming exclusivity, Premier's failure to follow the Art. IX two-step termination process (30-day cure notice followed by 30-day termination notice) rendered its shutdown of the portal a breach of contract.
• Premier's claim for disgorgement of Tricor's commissions related to the Loyalty Certificate Program was dismissed for lack of a pleaded statutory intellectual property cause of action and insufficient evidentiary foundation.
• Tricor's damages, including withheld commissions of $575,772, lost commissions, and dealer incentive payments, were assessed at $1,265,274.

Facts of the case

Tricor Automotive Group, Inc. ("Tricor" or "TAG") administers automotive warranty and service contracts for a network of Canadian car dealerships. For many years, Tricor used Premier Dealer Services, Inc. ("Premier" or "PDS") — formerly a subsidiary of Great American Insurance — to underwrite products and manage warranty claims. In October 2014, following Great American's exit from vehicle warranty underwriting and its sale of Premier to a private equity group led by Prairie Capital (which acquired a 60% stake), Tricor and Premier negotiated a new three-year agreement for Premier to serve as Tricor's subcontracted administrator, subject to automatic annual renewal.

By the end of the three-year term in 2017, Tricor sought to restructure the relationship by acquiring a minority equity stake in Premier, aiming to circulate dividends back to its member dealerships. Negotiations broke down over a disagreement regarding the capital value of Tricor's revenue stream. Feeling undervalued, Tricor turned to a competitor, Dealer VSC, Ltd., operated by Haytham Elzayn, and in early 2018 entered a non-binding letter of intent with Dealer VSC to establish a joint-venture subsidiary called Allegiance Administrators, in which shares would be held 49/51 in favour of Dealer VSC. Tricor made no secret of this plan. In a series of cordial emails in April 2018, Tricor's president Joe Campbell told Premier's president Lisle Greenweller that Tricor did not intend to formally terminate the agreement, but planned instead to "add a second administrator to the platform" and transition new business over time. Ms. Greenweller responded that Tricor had negotiated a one-year notice provision into the agreement and was expected to honour it. No resolution was reached, and by April 27, 2018, Premier retained Toronto counsel, who wrote to Tricor asserting anticipatory repudiation, rejecting that repudiation, and demanding a cure within 30 days. On May 29, 2018 — one of the busiest periods for vehicle sales — Premier shut down its service portal without prior notice, blocking Tricor dealers from quoting and registering new contracts. A termination letter arrived by mail several days later.

Contractual clauses at issue

The key contractual provision in dispute was the phrase in the 2014 agreement that "PDS shall serve as the administrator" of Tricor's Program Contracts. Premier argued that the definite article "the" signified exclusivity, meaning Tricor could not bring on another administrator without first giving 12 months' notice of termination. Tricor countered that this language was insufficient to constitute an exclusive restrictive covenant, pointing to a deleted draft clause that had originally read: "PDS shall be the exclusive administrator / obligor for PROGRAMS as described in Agreement marketed by COMPANY." The "Full Agreement" clause in Art. XIV was relatively weak, not excluding pre- or post-contractual evidence of surrounding circumstances unless it purported to amend the contract. Art. IX governed termination for material breach through a two-step process: a 30-day opportunity to cure, followed by a further 30-day notice of termination. Premier also relied on Art. X, which it claimed permitted it to withhold commissions as an offset for Tricor's alleged breach; the net value of withheld commissions was $575,772. The 2011 Private Label Marketing Agreement's Art. 5.2 was invoked by Premier in its proprietary rights claim, deeming certain process elements and forms "the exclusive property of Premier or its insurer."

Court's reasoning and analysis

On the exclusivity question, the court held that the 2014 agreement could not be read as exclusive without clearer language. Justice Akazaki applied the principle that restrictive covenants — which limit a party's freedom to contract — require express and unambiguous language, especially between commercially sophisticated parties. The deletion of an explicit exclusivity clause from the draft agreement, Premier's own post-contractual demand for exclusivity as a bargaining point in its share-purchase proposal, and the historical context of the parties' relationship (particularly the structural reset following Great American's sale of Premier) all pointed away from exclusivity. The court was further guided by the rule that interpreting the agreement as exclusive would amount to rewriting it, which courts will not do.

On the anticipatory breach issue, the court addressed the matter on an alternative basis. Even if the agreement had been exclusive, Premier did not properly follow the Art. IX termination process. Premier's April 27, 2018, letter had purported to reject Tricor's repudiation and called on Tricor to cure, but Premier never followed that letter with a formal 30-day notice of termination. Shutting down the portal on May 29 therefore constituted a unilateral withdrawal of performance while the agreement was still in force. The court found that Premier was the party in breach — not Tricor — for having refused to provide portal services for new business without having validly terminated the agreement.

On Premier's proprietary rights claim, the court dismissed it entirely. While Premier had successfully obtained a copyright judgment against Allegiance in Ohio on July 29, 2021, for infringement of its Loyalty Powertrain certificates, it did not sue Tricor for copyright infringement in the Ontario proceedings. Instead, Premier's claim was framed as a disgorgement of Tricor's commissions based on breach of the 2011 Private Label Marketing Agreement. The court found no pleaded statutory intellectual property cause of action and no common-law property right in an idea. The evidentiary basis for the claim was also underdeveloped: the Loyalty Certificate had been provided to vehicle purchasers and could not have been confidential, and the commissions at issue were funded by Tricor's member dealers rather than from vehicle purchasers, making the asserted profits illusory.

Ruling and overall outcome

Premier's action against Tricor was dismissed in its entirety. Tricor's action against Premier was partially successful. The court assessed Tricor's damages — comprising lost commissions of $452,845, dealer incentive payments of $359,450, and withheld commissions of $575,772 — at a total of $1,265,274, after accepting adjustments to the figures put forward by Tricor's expert valuator, Errol Soriano. Judgment was issued in favour of Tricor for $1,265,274, payable by Premier. Costs were not resolved in the judgment, with the parties encouraged to reach agreement; failing that, the court directed Tricor to file costs submissions within 14 days and Premier to respond within a further 14 days.