Centra, Inc. v. Estrin, 07-1680.

Citation538 F.3d 402
Decision Date15 August 2008
Docket NumberNo. 07-1680.,07-1680.
PartiesCENTRA, INC.; Detroit International Bridge Co., Plaintiffs-Appellants, v. David ESTRIN; Gowling Lafleur Henderson, LLP, Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)

ARGUED: Craig L. John, Dykema Gossett, Bloomfield Hills, Michigan, for Appellants. Eugene Driker, Barris, Sott, Denn & Driker, Detroit, Michigan, for Appellees. ON BRIEF: Craig L. John, Joseph A. Doerr, Thomas J. Murray, Dykema Gossett, Bloomfield Hills, Michigan, for Appellants. Eugene Driker, Sharon M. Woods, Kevin Kalczynski, Melonie L.M. Stothers, Barris, Sott, Denn & Driker, Detroit, Michigan, for Appellees.

Before: MERRITT, DAUGHTREY, and MOORE, Circuit Judges.

MOORE, J., delivered the opinion of the court, in which DAUGHTREY, J., joined. MERRITT, J. (p. 424), delivered a separate concurring opinion.

OPINION

KAREN NELSON MOORE, Circuit Judge.

The Detroit International Bridge Company ("DIBC") and its Michigan-based parent CenTra, Inc. (collectively "CenTra"), believed that more divided them from Windsor, Ontario than united them. For one thing, the Detroit River separates Windsor from Michigan. For another, Windsor and CenTra disagreed as to the future of the Ambassador Bridge, the CenTra-owned bridge that spans the Detroit River; while CenTra sought to add a second span to the bridge, Windsor wanted to stop that expansion. Yet CenTra was wrong in concluding that more divided than united. It turns out that Windsor and CenTra were both employing the same law firm, Gowling Lafleur Henderson, LLP ("Gowlings"): while Windsor hired Gowlings to help the city oppose the second span, CenTra hired Gowlings to help the company raise money to fund the construction of that same span. Although CenTra wanted to expand its connection to Windsor, it was hoping to do so with an additional bridge, not by sharing legal counsel; thus, CenTra sued Gowlings for damages, alleging breach of contract, breach of fiduciary duties, and legal malpractice. The district court granted summary judgment for Gowlings, holding that CenTra impliedly consented to any conflict of interest in Gowlings's simultaneous representation of adverse clients regarding the construction of the second span of the Ambassador Bridge. The district court found implied consent because it concluded that CenTra was aware that Gowlings had previously represented parties (including Windsor) directly adverse to CenTra in cases where Gowlings was not representing CenTra. We believe that the district court erred in its granting of summary judgment. CenTra established genuine issues of material fact regarding not only whether it impliedly consented to the conflict of interest, but also whether it could even consent to the conflict in the first instance. Furthermore, the district court abused its discretion in granting summary judgment prior to discovery. We, therefore, REVERSE the district court's judgment and REMAND the case to the district court for further proceedings consistent with this opinion.

I. BACKGROUND
A. Factual Background

"[T]he Ambassador Bridge (the `Bridge') which spans between Windsor, Ontario and Detroit, Michigan is owned jointly by related parties of CenTra. . . ." Joint Appendix ("J.A.") at 246 (Pls.' Br. in Opp'n to Defs.' Mot. for Summ. J. at 3) (internal quotation marks omitted) (citation omitted). DIBC, along with its wholly-owned subsidiary, the Canadian Transit Company ("CTC"), "owns, operates and maintains the Ambassador Bridge, the busiest and single most important commercial border crossing between Canada and the United States." J.A. at 23 (First Am. Compl. ¶ 7). Dan Stamper is president of both DIBC and CTC.

Between 1985 and 2006, Gowlings had consistently represented CenTra in a variety of matters. "Gowlings is one of Canada's largest law firms, with eight offices throughout Canada and one in Moscow." J.A. at 83 (Defs.' Br. in Supp. of Mot. for Summ. J. at 3). Despite CenTra's longtime association with Gowlings, Gowlings's Toronto-office partner David Estrin ("Estrin") has occasionally taken adverse positions to CenTra. For example, in 2001, Estrin began to represent the Buffalo and Fort Erie Public Bridge Authority, and through that representation Estrin learned that CenTra planned to build a competing bridge in close proximity to the one that the Buffalo and Fort Erie Public Bridge Authority operated. In order to defend his client's interests, on May 22, 2003, Estrin wrote a letter to Stamper on Gowlings letterhead on behalf of the Buffalo and Fort Erie Public Bridge Authority. In that letter, Estrin declared of Gowlings that "[w]e are the solicitors for The Buffalo and Fort Erie Public Bridge Authority." J.A. at 113 (Letter from Estrin to Ambassador Bridge (May 22, 2003)). Estrin sent a letter to the same effect on September 9, 2004.

In 2002, Estrin accepted another client whose interests would soon turn adverse to CenTra: the City of Windsor. According to CenTra, Windsor has long worked to frustrate CenTra's plans, having "opposed and hindered the development, maintenance and operation of the Ambassador Bridge." J.A. at 27 (First Am. Compl. ¶ 34). Yet when Windsor first hired Estrin and Gowlings, it was to help the city resolve problems with the high volume of traffic from the Ambassador Bridge, a role not directly adverse to CenTra. According to Estrin, however, the "general representation of Windsor gradually turned adverse to CTC[, a CenTra subsidiary]." J.A. at 105 (Jan. 9, 2007, David Estrin Decl. ¶ 8). What prompted the turn toward adversity was CenTra's filing of two plans involving the Ambassador Bridge: "In June 2004, CTC applied to Windsor for site plan approval for more toll booths as well as a `bridge deck extension' (the `Site Plan []') for the existing Ambassador Bridge. A month later, CTC filed a Preliminary Review Permit Application . . . with the United States Coast Guard for `twinning' the Ambassador Bridge (the `Bridge Plan')." J.A. at 105 (Estrin Decl. ¶ 9). "[T]winning" the Ambassador Bridge refers to building a second bridge (a twin) alongside the original.

Estrin, on behalf of Windsor, opposed the Site Plan but did not explicitly take a position as to the Bridge Plan. On September 14, 2004, Estrin sent a letter to Stamper in response to the Site Plan, and the letter included notice of Gowlings's role: "[a]s you know, we are the solicitors for the City of Windsor concerning this matter." J.A. at 165 (Letter from Estrin to Stamper (Sept. 14, 2004)). Estrin and Gowlings's involvement in opposing CenTra's Site Plan was even clearer to CenTra on September 30, 2004, when Windsor officials, Estrin, Stamper, and other CenTra representatives met to negotiate a resolution regarding the Site Plan.

Estrin believed that the Bridge Plan and the Site Plan were directly related; therefore Estrin claims that his opposition to the Site Plan also served as opposition to the Bridge Plan. Stamper, however, viewed the Site Plan as a matter totally separate from the Bridge Plan: "The Plaza Deck Expansion has absolutely nothing to do with and is not part of or dependent upon the development of DIBC's proposal to build a second span at the Ambassador Bridge. . . ." J.A. at 274 (Mar. 9, 2007, Dan Stamper Decl. ¶ 5). Whether or not the parties initially believed that the Site Plan and Bridge Plan were related, the Site Plan settlement between CenTra and Windsor explicitly disentangled the two plans:

The Corporation [Windsor] confirms and the Owner [CenTra] acknowledges that the Corporation's approval of the development contemplated by the subject site plan application does not constitute an endorsement by the Corporation of the proposal by the Owner to twin the existing Ambassador Bridge as proposed in the Owner's July 14, 2004 Preliminary Review Permit Application, or a waiver by the Corporation of the Corporation's right to require an Official Plan/Zoning By-law amendment or otherwise object to or deny the Corporation's approval for a second Ambassador Bridge span or twinning (including any works or undertakings required or to be used for the purpose), nor shall the Corporation's approval of the development contemplated by the subject site plan application or any associated or corollary approval or agreement be pleaded as an estoppel of the Corporation in that regard.

J.A. at 124-25 (Site Plan Control ¶ S-21).

Furthermore, in 2005 and 2006, Estrin defended against CenTra's objections Windsor's proposed regulations regarding transportation infrastructure, which specifically mentioned the Ambassador Bridge as subject to the regulations. Thus, CenTra was aware that Gowlings and Estrin were representing Windsor's adverse interests in several matters in which Gowlings was not representing CenTra, but CenTra allegedly was not aware of any of Gowlings's and Estrin's work on behalf of Windsor in opposing the Bridge Plan.

Despite awareness of Gowlings's occasional representations of other clients with interests adverse to CenTra, CenTra continued to employ Gowlings, which had been one of its law firms for over twenty years. For instance, in June 2005, Stamper sought Gowlings's assistance in certain tax work. Before accepting the work, a Gowlings attorney searched for any potential conflicts of interest but did not identify any. Then again, most importantly for the case at hand, in November 2005, CenTra sought Gowlings's assistance in creating a $700- to $800-million bond offering by which to finance the twinning of the Ambassador Bridge. Shortly thereafter, Windsor employed Gowlings to help the city oppose the Bridge Plan. On September 14, 2006, Estrin sent a letter to the U.S. Coast Guard opposing the construction of the twin bridge. According to CenTra, as a result of Estrin's letter, the Coast Guard demanded an environmental assessment from CenTra that will cost CenTra $500,000 on the United States side of the bridge and $300,000 on the...

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