Poly-Flex Const., Inc. v. Neyer, Tiseo & Hindo, Case No. 1:07-cv-1090.

• Decision Date: 14 January 2009
• Docket Number: Case No. 1:07-cv-1090.
• Parties: POLY-FLEX CONSTRUCTION, INC., a Texas corporation, Plaintiff, v. NEYER, TISEO & HINDO, LTD., d/b/a NTH Consultants, a Michigan corporation, Defendant.
• Court: U.S. District Court — Western District of Michigan

600 F.Supp.2d 897

POLY-FLEX CONSTRUCTION, INC., a Texas corporation, Plaintiff, v. NEYER, TISEO & HINDO, LTD., d/b/a NTH Consultants, a Michigan corporation, Defendant.

Case No. 1:07-cv-1090.

United States District Court, W.D. Michigan, Southern Division.

January 14, 2009.

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Kristin Beals Bellar, David D. Grande-Cassell, Clark Hill PLC, Joshua K. Richardson, Richard C. Kraus, Foster Swift Collins & Smith PC, Lansing, MI, for Plaintiff.

Stephen P. Ormond, Kupelian Ormond & Magy PC, Southfield, MI, for Defendant.

OPINION and ORDER

Granting in Part and Denying in Part the Defendant's Motion for a Contractual Award of Attorney's Fees and Costs; Directing the Defendant to File Additional Documentation to Justify Hours and Hourly Rates

PAUL L. MALONEY, Chief Judge.

The defendant moved to dismiss the complaint for failure to state a claim. The motion was fully briefed, and the court heard oral argument on September 4, 2008. Pursuant to the court's September 5, 2008 order, the parties submitted supplemental briefs as to whether PFC's breach-of-contract and contractual-indemnification claims (counts one and three) are time-barred. By opinion and order issued October 4, 2008, the court held that all four claims were time-barred by Michigan's statute of limitations governing professional malpractice. Accordingly, the court granted defendant's motion and dismissed the complaint with prejudice.

The defendant now moves for an award of attorney's fees and costs pursuant to the contract. Plaintiff filed an opposition brief, defendant filed a reply, and both parties requested oral argument. The court does not see the necessity for oral argument at this time. For the reasons that follow, the court will grant in part and deny in part defendant NTH's motion for an award of attorney's fees and costs.

In defendant NTH's favor, the court holds that (1) PFC is equitably estopped from contending, prior to its position throughout this extensive litigation, that it is not a party to the NTH-Landfill contract; (2) PFC is treated as a party to the NTH-Landfill contract, which obligates the losing party to pay reasonable fees and costs; and (3) NTH's award is not limited to the expenses incurred in this court, but also includes the expenses it incurred in the Texas and Arizona courts.

However, in PFC's favor, the court will require NTH to submit far more detailed, itemized billing records as to the work done by its counsel in the Arizona courts, the Texas courts, and in this court. Also in PFC's favor, the court strongly advises NTH to fully justify the requested hourly rates of its Texas counsel—or submit lower requested rates. After NTH files the itemized bills, PFC will have two weeks to file a response, if it chooses, contesting the reasonableness of the hourly rates or the amount of time expended on each task.

For the facts of the underlying dispute, the court refers to its prior opinion. In December 2006, PFC sued NTH in Texas state court. NTH removed to the U.S. District Court and moved to dismiss based on lack of personal jurisdiction. After jurisdictional discovery, PFC voluntarily dismissed in June 2007. Shortly thereafter, PFC sued NTH in Arizona state court. NTH removed to the U.S. District Court, which dismissed without prejudice for lack of personal jurisdiction. PFC filed the complaint here in November 2007 and the amended complaint in March 2008.

LEGAL STANDARD: A FEDERAL COURT'S INTERPRETATION OF STATE LAW

The contract contains a clause providing that issues relating to the contract will be governed and construed in accordance with Arizona law. See Am Comp, Ex A § 4.14. NTH contended that under Arizona choice-of-law rules, an Arizona state court would apply Michigan's substantive law, MTD at 2 n.2, and NTH did not dispute that contention; the court applied Michigan law. The court also applies Michigan law to determine whether NTH is entitled to attorney's fees and costs.

"`In applying state law, we anticipate how the relevant state's highest court would rule in the case and are bound by controlling decisions of that court.'" Appalachian Railcar Servs. v. Boatright Enters., Inc., ___ F.Supp.2d ___, ___, 2008 WL 828112, *14 (W.D.Mich.2008) (Maloney, J.) ("ARS") (quoting NUFIC of Pittsburgh v. Alticor, Inc., 472 F.3d 436, 438 (6th Cir.2007) (Griffin, J.) (citation omitted)). If the state supreme court has not conclusively decided the issue, a federal court presumptively looks to the decisions of the state's appellate courts: "In anticipating how the state supreme court would rule, `we look to the decisions of the state's intermediate courts unless we are convinced that the state supreme court would decide the issue differently.'" ARS, ___ F.Supp.2d at ___, 2008 WL 828112 at *14 (citing US v. Lancaster, 501 F.3d 673, 679 n. 3 (6th Cir.2007) (Griffin, J.) (citation omitted)). In determining what is the controlling law of the State, a federal court also "may give weight" to the decisions of the State's trial courts, Bradley v. GMC, 512 F.2d 602, 605 (6th Cir.1975) (citing Royal Indem. Co. v. Clingan, 364 F.2d 154 (6th Cir.1966)), especially when the trial court's decision is consistent with state appellate decisions, Bradley, 512 F.2d at 605.

PRECEDENTIAL VALUE OF MICHIGAN DECISIONS

A federal court must accord the same precedential value to a state-court decision as that state's courts would. See ARS, ___ F.Supp.2d at ___, 2008 WL 828112 at * 14 (citing Mutuelle Generale Francaise Vie v. Life Ass. Co. of Pa., 688 F.Supp. 386, 397 n. 15 (N.D.Ill.1988) ("[O]ne Supreme Court decision (Fidelity Union Trust Co. v. Field, 311 U.S. 169, 61 S.Ct. 176, 85 L.Ed. 109 (1940)) ... required a federal court to ascribe the same precedential force to a New Jersey trial court decision that such a decision would receive in that state's court system under the peculiarities of New Jersey law.")). If a state court would not be bound by a particular state-court decision, then neither is this court. ARS, ___ F.Supp.2d at ___, 2008 WL 828112 at *14 (citing King v. Order of United Commercial Travelers of America, 333 U.S. 153, 161, 68 S.Ct. 488, 92 L.Ed. 608 (1948) ("a federal court adjudicating a matter of state law in a diversity suit is, in effect, only another court of the State; it would be incongruous indeed to hold the federal court bound by a decision which would not be binding on any state court.") (citation omitted)).

Michigan Court Rule 7.215(C)(2) states that "[a] published decision of the Court of Appeals has precedential value under the rule of stare decisis." This subsection makes no distinction based on when the decision was issued. ARS, ___ F.Supp.2d at ___, 2008 WL 828112 at *14.

However, Michigan Court Rule 7.215(J)(1) provides that "[a] panel of the Court of Appeals must follow the rule of law established by a prior published decision of the Court of Appeals issued on or after November 1, 1990, that has not been reversed or modified by the Supreme Court or by a Special Panel of the Court of Appeals as provided in this rule." ARS, ___ F.Supp.2d at ___, 2008 WL 828112 at *14 (emphasis added).

Synthesizing Michigan Court Rules 7.215(C)(2) and 7.215(J)(1), the Michigan Court of Appeals accords precedential value to all of its prior published decisions, regardless of when they were issued. ARS, ___ F.Supp.2d at ___, 2008 WL 828112 at *14. When a post-November 1, 1990 published Court of Appeals decision conflicts with a pre-November 1, 1990 published Court of Appeals decision, however, the post-November 1, 1990 decision prevails. Id.

When there is a conflict between two published decisions of the Court of Appeals that were both issued after November 1, 1990, Michigan courts must follow the first opinion that addressed the matter at issue. ARS, ___ F.Supp.2d at ___, 2008 WL 828112 at *15 (citing Novak v. Nationwide Mut. Ins. Co., 235 Mich.App. 675, 599 N.W.2d 546, 554 (1999) (citation omitted)).

By contrast, Michigan Court of Appeals panels are not bound by un published decisions of that same court, regardless of when they were issued. ARS, ___ F.Supp.2d at ___, 2008 WL 828112 at *15 (citing Iqbal v. Bristol West Ins. Group, 278 Mich.App. 31, 748 N.W.2d 574, 582 n. 5 (2008) (citing MICH. CT. R. 7.215(J)(1))). Nonetheless, this court may consider and follow unpublished state-court decisions, so long as they do not contradict published decisions of the Michigan Supreme Court or Michigan Court of Appeals. See Republic-Franklin Ins. Co. v. Bosse, 1996 WL 301722, *5 n. 4 (6th Cir. June 4, 1996) (although unpublished decisions are not generally controlling under Ohio law, "[w]e cite them, nevertheless, due to our sensitivity to state law in deciding diversity cases.") (citing Royal Indem. Co., 364 F.2d at 154 ("Although we are not bound in a diversity case by an unreported decision of a State court of original jurisdiction, we may give weight to this [unreported] decision of the chancery [court] in determining what is the controlling [state] law.")).

Finally, a federal court's interpretation of state law is not binding. ARS, ___ F.Supp.2d at ___, 2008 WL 828112 at *14 (citing Leavitt v. Jane L., 518 U.S. 137, 146, 116 S.Ct. 2068, 135 L.Ed.2d 443 (1996) (Stevens, J., dissenting o.g., joined by Souter, Ginsburg, & Breyer, JJ.) ("[T]he decision of a federal court (even this Court) on a question of state law is not binding on state tribunals....")); accord McGrath v. Toys `R' Us, Inc., 356 F.3d 246, 250 (2d Cir.2004) (citing Sargent v. Columbia Forest Prods., Inc., 75 F.3d 86, 90 (2d Cir.1996)); 20 AM.JUR.2d Courts § 225 (1965). Accordingly, this court will seriously consider our Circuit's interpretation of state law but is not bound by it. See ARS, ___ F.Supp.2d at ___, 2008 WL 828112 at *15.

This Court's Dismissal of PFC's Complaint as Time-Barred

Regarding count one (breach of contract) and count three (contractual...