Bode & Grenier, LLP v. Carroll Knight

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 8, 2015 Decided October 23, 2015
No. 14-7104
BODE & GRENIER, LLP,
APPELLEE
v.
CARROLL L. KNIGHT, ET AL.,
APPELLANTS
Appeal from the United States District Court
for the District of Columbia
(No. 1:08-cv-01323)
Joseph Andrew Ahern argued the cause for appellants.
With him on the briefs was Ben M. Gonek.
Randell C. Ogg argued the cause and filed the brief for
appellee.
Before: ROGERS, BROWN and SRINIVASAN, Circuit
Judges.
Opinion filed for the Court by Circuit Judge BROWN.
2
BROWN, Circuit Judge: “Hell hath no fury like a lawyer
scorned.” Tom Gordon, Hell Hath No Fury Like a Lawyer
Scorned, WALL ST. J., (Jan. 28, 2015),
http://www.wsj.com/articles/tom-gordon-hell-hath-no-fury-
like-a-lawyer-scorned-1422489433. The problem with
scorning a lawyer is that lawyers tend to sue. So it is here. A
law firm based in the District of Columbia, Bode & Grenier,
LLP, provided legal services to three Michigan-based
companies owned and managed by Carroll Knight
(“appellants”). More than ten years into the relationship,
appellants stopped paying the bill. The predictable result?
Litigation. The law firm prevailed in the district court,
winning a judgment for $70,000 in overdue legal fees—plus
$269,585.19 in legal fees for having to litigate over $70,000
in legal fees. We affirm the district court.
I
Appellants offer petroleum fueling products and services,
ranging from service stations to large-scale petroleum storage.
Based in Michigan, the appellant companies operate in
multiple Midwestern states. Bode & Grenier represented
appellants between 1994 and 2008, advising on taxation,
gasoline contracts, petroleum futures and various regulatory
enforcement and litigation matters. Throughout most of the
relationship, no written agreement governed the terms of legal
representation or manner of payment. Appellants paid the law
firm monthly based on oral agreements.
On November 25, 2005, catastrophe struck.
Approximately 100,000 gallons of petroleum spilled out of
holding tanks owned by appellants in Toledo, Ohio.
Appellants stopped the leak, but were powerless to stop the
flood of regulatory actions that followed in its wake. A
month after the spill, Knight called Bode & Grenier’s
3
managing partner, William Bode, to request the firm’s
services. The firm soon tackled regulatory enforcement
proceedings in Ohio, a lawsuit in federal court in Ohio, and
counseled the company on other regulatory issues. As before,
the firm billed appellants monthly.
According to the complaint, appellants began paying
their legal fees sporadically between December 2005 and
January 2007. At some point, they stopped paying. Bode
issued an ultimatum: unless Knight and his companies agreed
to pay overdue legal fees, and signed a document setting out
the terms of prospective relations, the firm would
immediately withdraw from all pending cases. Knight
capitulated. On August 7, 2007, the parties executed three
agreements: a Retention Letter setting out the terms of future
relations; a Promissory Note (“Note”) obligating appellants to
pay $300,000 in past-due legal fees; and a Confession of
Judgment (“Confession”) authorizing the firm to instantly
secure judgment if appellants failed to satisfy the Note by
May 1, 2008.
The first of May came and went without appellants
satisfying the Note. Wasting no time, the firm entered the
Confession of Judgment in Michigan state court the next day,
May 2, 2008. Judgment issued that very day, without a
hearing or adversarial process, for $302,500 ($300,000 due
under the Note, plus $2,500 in attorney’s fees).
Three months later, in July 2008, Bode & Grenier filed
the instant federal case in the United States District Court for
the District of Columbia seeking $75,105.97 in unpaid legal
fees owed under the Retention Letter. The complaint brought
claims for breach of contract, unjust enrichment, guaranty,
and a petition to pierce the corporate veil. Appellants
counterclaimed, seeking disgorgement of all legal fees to
4
compensate for alleged disclosures of client confidences in
the complaint. Discovery closed in February 2009.
In March 2009, both parties moved for summary
judgment. Appellants argued the Confession of Judgment
filed in Michigan barred the federal suit under res judicata
principles. Bode & Grenier opposed the counterclaim as
baseless. In September 2011, the district court granted Bode
& Grenier’s motion for summary judgment on the
counterclaim, and denied appellants’ motion for summary
judgment based on res judicata. Bode & Grenier, LLP v.
Knight, 821 F. Supp. 2d 57, 59 (D.D.C. 2011).
In November 2011, Bode & Grenier amended its
complaint, adding a claim for attorney’s fees. Appellants
filed an amended answer in January 2012. That answer, like
their original answer, admitted Bode & Grenier’s basic
allegation that the law firm “provided legal services to
Defendants pursuant to the agreement” between the parties.
First Amended Complaint ¶ 33; Defendant’s Answer to First
Amended Complaint ¶ 33. Only one part of the answer was
new: an affirmative defense attacking the law firm’s fees as
unreasonable. With a new defense came further discovery,
opened in March 2012.
Trial was set for November 13, 2012. In September
2012, appellants filed a pretrial statement that raised multiple
defenses not included in their answer, including duress,
failure of consideration and failure to comply with a condition
precedent. The latter defense argued the law firm could not
recover because its legal services were not approved by the
“Litigation Committee” referred to in the Retention Letter. 1
1
Various clauses in the Retention Letter refer to the Litigation
Committee. Without defining the Committee’s composition, the
5
The court struck the added defenses but permitted appellants
to file a motion requesting leave to amend, which they filed
on October 11, 2012, barely four weeks before trial. In their
motion, appellants dropped the defense of duress, but stood
by the other two. The court denied the motion. Allowing
leave to amend, the court found, would unduly delay trial,
requiring a third round of discovery. It would also prejudice
the plaintiff, forcing them to face newly christened defenses
not raised over the course of four years of litigation.
Trial went forward as scheduled on November 13, 2012.
Bode & Grenier voluntarily dismissed all but the breach of
contract and attorney’s fee claims, the latter of which the
parties agreed to handle in post-trial proceedings. Following
a one-day bench trial, the court found in favor of Bode &
Grenier on the breach of contract claim, entering judgment for
$70,000, the amount of unpaid legal fees stipulated by the
parties. In subsequent proceedings, the court granted the law
firm’s claim for attorney’s fees, rejecting the contention that
the fees were either precluded by Michigan Law or limited by
the Promissory Note. Bode & Grenier, LLP v. Knight, 31 F.
Supp. 3d 111, 113–20 (D.D.C. 2014). Appellants timely
appealed. We have jurisdiction to hear this appeal under 28
U.S.C. § 1291.
II
We must first consider whether the Confession of
Judgment filed in Michigan state court precluded the current
suit under res judicata principles. The trial court rejected
Retention Letter notes that the “Firm’s role and scope of work in
these matters will be determined by the Litigation Committee . . . .”
J.A. 209. The Committee also “approve[s] the anticipated fees
incurred for the work to be performed.” Id.
6
appellants’ summary judgment motion seeking preclusion.
We review that decision de novo. See, e.g., Aka v. Wash.
Hosp. Ctr., 156 F.3d 1284, 1288 (D.C. Cir. 1998). “[A] party
is only entitled to summary judgment if the record, viewed in
the light most favorable to the nonmoving party, reveals that
there is no genuine issue as to any material fact.” Id.
Applying that framework, we affirm the decision.
Federal courts extend to state court judgments the same
preclusive effect those judgments would receive in the
originating state. See 28 U.S.C. § 1738 (requiring that state
“judicial proceedings . . . shall have the same full faith and
credit” in other courts as they had “by law or usage in the
courts of such State . . . from which they are taken”); see also
Thomas v. Wash. Gas Light Co., 448 U.S. 261, 270 (1980)
(plurality opinion) (noting that the requirement to award
preclusive effect to state court judgments, “if not compelled
by the Full Faith and Credit Clause [of the Constitution] . . . is
surely required by 28 U.S.C. § 1738”). Michigan state law
thus determines the preclusive effect of the Confession, if
any.
Michigan statute prescribes the procedure for procuring a
Confession of Judgment. MICH. COMP. LAWS § 600.2906.
Confessions of Judgment may take effect, “although there is
no suit then pending between the parties,” upon the filing of
the Confession, “signed by [a Michigan] attorney,” with the
local court. Id. § 600.2906. The document containing the
confession must be “distinct from that containing the bond,
contract or other evidence of the demand for which such
judgment was confessed.” Id. § 600.2906(1). The process “is
purely ex parte.” Gordon v. Heller, 260 N.W. 156, 157
(Mich. 1935). The party against whom judgment is entered
never appears, having already consented to judgment.
7
Michigan courts have not considered the precise
question before us: whether a Confession of Judgment
triggers claim preclusion, known as res judicata in Michigan.
“The doctrine of res judicata is employed” in Michigan “to
prevent multiple suits litigating the same cause of action.”
Adair v. State, 680 N.W.2d 386, 396 (Mich. 2004).
Subsequent actions are barred “when (1) the prior action was
decided on the merits, (2) both actions involve the same
parties or their privies, and (3) the matter in the second case
was, or could have been, resolved in the first.” Id. The party
invoking res judicata bears the burden to prove it applies.
Baraga Cnty. v. State Tax Comm’n, 645 N.W.2d 13, 16
(Mich. 2002).
Under either of Michigan’s “two alternative tests for
determining when res judicata will bar a claim in a second
lawsuit because the claim could have, with the exercise of
reasonable diligence, been brought in the first action,” Begin
v. Mich. Bell Tel. Co., 773 N.W.2d 271, 283 (Mich. Ct. App.
2009), overruled on other grounds by Admire v. Auto-Owners
Ins. Co., 831 N.W.2d 849 (Mich. 2013), preclusion through a
Confession of Judgment is unlikely. First, the “‘same
evidence’ test looks to ‘whether the same facts or evidence
are essential to the maintenance of the two actions.’” Id.
(quoting Jones v. State Farm Mut. Auto. Ins. Co., 509 N.W.
2d 829, 834 (Mich. Ct. App. 1993)). Claim preclusion blocks
a second action “between the same parties when the evidence
or essential facts are identical.” Id. (quoting Dart v. Dart, 597
N.W.2d 82, 88 (Mich. 1999)).
The second test casts a wider net by examining the
relevant transactions of events. “Whether a factual grouping
constitutes a transaction for purposes of res judicata is to be
determined pragmatically, by considering whether the facts
are related in time, space, origin or motivation, [and] whether
8
they form a convenient trial unit . . . .” Adair, 680 N.W.2d at
398; see also RESTATEMENT (SECOND) OF JUDGMENTS § 24(2)
(1982) (“RESTATEMENT”) (substantially the same).
Transaction-based preclusion “is justified only when the
parties have ample procedural means for fully developing the
entire transaction in the one action going to the merits to
which the plaintiff is ordinarily confined.” RESTATEMENT §
24 cmt. a.
Here, the Confession of Judgment entered in Michigan
state court had no preclusive effect. The Promissory Note
underlying the Confession was carefully drawn, and Michigan
Supreme Court precedent indicates that a Confession is a
judgment without expectation it will be joined with other
claims. See Gordon, 260 N.W. at 157.
The Confession rested on a narrowly tailored Promissory
Note obligating appellants to pay $300,000 in overdue legal
fees. In the event of default, the Confession allowed the law
firm to receive near-instantaneous judgment on the Note.
And that is precisely what happened: appellants defaulted,
and the firm executed the Confession in Michigan without a
hearing or adversarial process. Appellants appeared only
constructively. Judgment issued as a purely ministerial act:
no judge reviewed the substance of the dispute—the
underlying evidence that proved appellants had failed to pay
their bills. Under Michigan law, the court simply enforced
the clear language of the Confession and Note.
We have no difficulty concluding the present suit need
not have been brought earlier. Neither of the alternative tests
Michigan employs to determine whether a subsequent action
could have been brought in a prior case supports preclusion.
First, the Confession and the present action rely on different
9
evidence: the former on a Note for past debts, the latter on
prospective fees owed under the Retention Letter.
The same transaction test asks whether the suits share a
“single group of operative facts” and “form a convenient trial
unit.” Adair, 680 N.W.2d at 397–98. Here, the answer is no.
Michigan’s Supreme Court makes clear that Confessions of
Judgment are entered “purely ex parte,” which implies they
are entered without being joined to other claims. Gordon, 260
N.W. at 157. As the trial judge found, the mechanical process
of entering a Confession hardly “lend[s] itself well to adding
additional claims based upon the underlying debt.” Bode &
Grenier, LLP, 821 F. Supp. 2d at 63.
Michigan courts handle Confessions based on clear
statutory command: as long as the parties present the
appropriate paperwork and signatures, judgment issues
immediately. Almost nothing about that process resembles an
ordinary claim, which must be handled in the course of
adversarial litigation, and ultimately examined by a judge or
jury. These differences call to mind the Restatement’s
warning that the same transaction test applies only “when the
parties have ample procedural means for fully developing the
entire transaction” in the first action. See RESTATEMENT § 24
cmt. a. Requiring litigants to pile on every other available
claim when filing a Confession would transform the entire
process, hoisting the parties into adversarial litigation when
they only meant to settle one part of their dispute. See id. §
26(1)(a) (noting that preclusion should be unavailable when
“the parties have agreed in terms or in effect that the plaintiff
may split his claim, or the defendant has acquiesced therein”).
Because Confessions rest on mutual agreement, they will
often involve straightforward obligations, such as the payment
of a precise sum. Rigidly applying res judicata in this context
10
may deter parties from agreeing to Confessions in the first
place, an outcome counter to Michigan’s general preference
for the private settlement of disputes. See Galperin v. Dep’t
of Revenue of Mich., 42 N.W.2d 823, 825–26 (Mich. 1950)
(“The [Michigan Supreme] Court has often held that the
settlement of disputed matters and the compromise of
doubtful claims is favored by law. Efforts toward amicable
settlement of disputed claims to avoid litigation meet with
judicial approval.”).
Accordingly, we hold that the Confession did not bar the
current suit under principles of res judicata.
III
A
Appellants next challenge the denial of a motion to
amend their answer. Days before trial, appellants sought to
add two affirmative defenses—failure of a condition
precedent and failure of consideration—and remove their
earlier admission that the law firm provided legal services
pursuant to the “agreement.” Each of the new defenses took
aim at a clause in the Retention Letter calling for a “Litigation
Committee” (of unspecified membership) to approve legal
services and fees. The trial court denied the amendment,
finding the request was unduly delayed and would have
prejudiced the plaintiff.
We review the denial under an abuse of discretion
standard. See Firestone v. Firestone, 76 F.3d 1205, 1208
(D.C. Cir. 1996). The Federal Rules of Civil Procedure
permit parties to amend their pleadings “once as a matter of
course” within certain time periods. FED. R. CIV. P.
15(a)(1)(A). Otherwise, amendment requires “the opposing
11
party’s written consent or the court’s leave.” Id. § 15(a)(2).
Courts must “freely give leave when justice so requires.” Id.
“Although the grant or denial of leave to amend is committed
to a district court’s discretion, it is an abuse of discretion to
deny leave to amend unless there is sufficient reason, such as
‘undue delay, bad faith or dilatory motive . . . repeated failure
to cure deficiencies by [previous] amendments . . . [or] futility
of amendment.’” Firestone, 76 F.3d at 1208 (quoting Foman
v. Davis, 371 U.S. 178, 182 (1962)).
The district court did not abuse its discretion in denying
the belated addition of new defenses that would have required
additional discovery. The issues appellants sought to
interject—centering on the role of the Litigation Committee—
threatened to fundamentally reshape the landscape of the
litigation. Neither of two prior answers raised those issues.
Instead, both answers admitted the law firm provided legal
services pursuant to the parties’ agreement. Two rounds of
discovery focused, quite appropriately, on issues raised in the
original and amended complaints and answers. Accordingly,
the district court concluded the amendment would have likely
required additional discovery. Bode & Grenier, LLP v.
Knight, No. 08-1323, slip op. at 7 (D.D.C. Nov. 5, 2012).
The request simply came too late. The motion to amend
arrived four years after litigation began, one year after
summary judgment motions were decided, eight months after
filing an amended answer and only days before trial. That is
the very picture of undue delay. Cf. Elkins v. District of
Columbia, 690 F.3d 554, 565 (D.C. Cir. 2012) (finding undue
delay when a motion to amend arrived “five years after the
initial complaint and after discovery had closed”);
Williamsburg Wax Museum, Inc. v. Historic Figures, Inc., 810
F.2d 243, 247 (D.C. Cir. 1987) (finding undue delay on a
motion to amend filed seven years after litigation began, when
12
discovery had closed and the court had decided summary
judgment motions); Doe v. McMillan, 566 F.2d 713, 720
(D.C. Cir. 1977) (affirming a denial to amend a pleading
thirty-eight months after the filing of the complaint). Had the
motion been granted, discovery would have been reopened,
the scheduling order replaced and the trial date reset.
Appellants suggest they gave fair notice of the Litigation
Committee defense in deposition questions posed years before
they filed the motion to amend. That argument fails. If
anything, it proves only that the defenses they sought to raise
were “based on facts known prior to the completion of
discovery.” Anderson v. USAir, Inc., 818 F.2d 49, 57 (D.C.
Cir. 1987). Appellants had no reason to wait years before
addressing those defenses in their answer. Indeed, moving to
amend on the eve of trial bears the hallmarks of
gamesmanship, defeating the orderly character of litigation
the Federal Rules of Civil Procedure seek to foster. As this
court has emphasized, “Strategic or merely lazy
circumventions of a legal process grounded in a sound policy
have the effect of eroding the regularized, rational character
of litigation to the detriment of practitioners and clients
alike.” Harris v. Sec'y, U.S. Dep't of Veterans Affairs, 126
F.3d 339, 345 (D.C. Cir. 1997). The trial court did not abuse
its discretion in denying amendment.
B
Affirming the denial resolves two related issues. First,
appellants claim the district court improperly concluded the
Litigation Committee’s approval did not constitute a
condition precedent. We cannot decide this question because
the trial judge declined to rule on it. Before trial, appellants
offered a short motion seeking judgment as a matter of law.
That motion argued appellants should prevail because the
13
Litigation Committee constituted a condition precedent,
which the plaintiffs had failed to plead appropriately. The
court found that motion “plainly premature” and “decline[d]
to address it.” J.A. 341 n.2. During trial, the court again
declined to resolve the issue. See J.A. 494 (“I have made no
ruling regarding condition precedent . . . because I have no
occasion to make such a ruling. And that is because the
defendants admitted [in each of two answers filed] that the
plaintiff provided legal services pursuant to the agreement.”).
“It is the general rule, of course, that a federal appellate court
does not consider an issue not passed on below.” Singleton v.
Wulff, 428 U.S. 106, 121 (1976). That rule applies here.
“The issue before us is the denial of the leave to amend and
not the merits of [the] new theory” appellants attempt to raise.
Elkins v. District of Columbia, 690 F.3d 554, 565 (D.C. Cir.
2012).
Second, appellants’ opening brief intimates the district
court erred by granting a motion in limine precluding mention
of the Litigation Committee defense. But appellants’ papers
stop at suggestion: the issue is nowhere explained. Their
opening brief lists the motion in limine in the rulings under
review section, but does not explain how the judge erred in
granting the motion. “Simply listing the issues on review
without briefing them does not preserve them.” Terry v.
Reno, 101 F.3d 1412, 1415 (D.C. Cir. 1996); Democratic
Cent. Comm. v. Wash. Metro. Area Transit Comm’n, 485 F.2d
786, 790 n.16 (D.C. Cir. 1973) (finding waiver where
appellant provided “no argument whatever in support” of
certain issues). As the issue is waived, we do not address it.
IV
After trial, the district court awarded the plaintiff
$269,585.19 in attorney’s fees under a fee-shifting clause in
14
the Retention Letter. See Bode & Grenier, LLP, 31 F. Supp.
3d at 123. The court interpreted the Retention Letter, which
has no choice-of-law clause, in light of D.C. law, refusing to
incorporate a provision in the Promissory Note requiring the
application of Michigan law.
We confront two issues on appeal. First, appellants
suggest the district court erred in failing to incorporate the
Promissory Note’s choice-of-law and attorney’s fee clauses.
According to appellants, the court should have applied
Michigan law to the Retention Letter and limited the recovery
of attorney’s fees to fifteen percent of the debt. Second,
appellants contend that, under Michigan law, Bode & Grenier
cannot recover fees incurred while representing itself, which
the law firm did during much of the proceedings in district
court.
We review questions involving contract interpretation
and choice-of-law de novo. Essex Ins. Co. v. Doe ex rel. Doe,
511 F.3d 198, 200 (D.C. Cir. 2008); Chicago Ins. Co. v.
Paulson & Nace, PLLC, 783 F.3d 897, 901 (D.C. Cir. 2015).
Because both of appellants’ arguments lack merit, we affirm
the district court.
A
The Retention Letter did not incorporate the Promissory
Note’s choice-of-law and attorney’s fee clauses.
“Interpretation of a contract, like statutory and treaty
interpretation, must begin with the plain meaning of the
language.” Am. Fed. Gov. Employees, Local 2924 v. FLRA,
470 F.3d 375, 381 (D.C. Cir. 2006). Here, the inquiry begins
and ends with the text. This suit rests on the Retention Letter,
which contains no choice-of-law clause. Bode & Grenier
seeks to recover under the Retention Letter’s fee-shifting
15
clause, which makes appellants “responsible for [the
plaintiff’s] costs of collecting any fees due and owing,
including reasonable attorney fees and expenses . . . .” J.A.
210. The Retention Letter makes only brief mention of the
separate Promissory Note signed the same day:
Notwithstanding the above . . . this firm is owed the
amount of $446,566 for legal services previously
rendered in this matter. You have agreed to execute a
Promissory Note in the amount of $300,000, payable in
nine months, as a partial payment against that amount,
and also to pay $20,000 per month for the next eight
months as further partial payments of fees owed.
Id.
“It is a general rule” of contract interpretation “that
reference . . . to extraneous writings renders them part of the
agreement for indicated purposes” only. Md.-Nat’l Capital
Park & Planning Comm’n v. Lynn, 514 F.2d 829, 833 (D.C.
Cir. 1975). For that reason, a subcontract referencing the
terms of the prime contract only “insofar as they apply” and
“insofar as they relate . . . to the work undertaken herein” did
not incorporate the prime contract’s dispute clause. Wash.
Metro. Area Transit Auth. ex rel. Noralco Corp. v. Norair
Eng'g Corp., 553 F.2d 233, 234–36 (D.C. Cir. 1977). Such
nuanced language was “insufficiently specific to incorporate”
the dispute clause “by reference.” Id. at 235; see also
Johnson, Inc. v. Basic Const. Co., 429 F.2d 764, 775 (D.C.
Cir. 1970). A different situation exists where contractual
language clearly exhibits an intent to incorporate another
document. See, e.g., Tower Ins. Co. of N.Y. v. Davis/Gilford,
967 F. Supp. 2d 72, 80 (D.D.C. 2013). For instance, language
stating that another document is “hereby referred to and made
a part hereof” may support total incorporation. Id. at 75, 80;
16
see also Vicki Bagley Realty, Inc. v. Laufer, 482 A.2d 359,
366 (D.C. 1984) (finding a sales contract and a lease
incorporated where both documents specifically “referred to
the lease as an attachment or addendum to the sales
contract”).
In this case, the Retention Letter did not incorporate the
Promissory Note’s choice-of-law and attorney’s fees
provisions. The Retention Letter does not refer to the
Promissory Note as an attachment. Nor does it incorporate
the Promissory Note “insofar as it applies” like the contract at
issue in Washington Metropolitan Area Transit Authority.
See 553 F.2d at 234–36. Indeed, the sole mention of the
Promissory Note comes at the close of the Retention Letter,
“prefaced by the phrase ‘[n]otwithstanding the above.’” Bode
& Grenier, LLP, 31 F. Supp. 3d at 118. As the district court
concluded, the Retention Letter referenced the Promissory
Note “for the limited purpose of explaining the payment
schedule for ‘legal services previously rendered’ and amounts
already owed . . . .” Id. That outcome leaves the Retention
Letter without a choice-of-law clause. It also requires reading
the attorney’s fees clause without reference to the Promissory
Note’s language limiting such fees to “fifteen (15) percent of
the principal sum of this Note.” J.A. 212. That fees-cap
applies only to the Promissory Note, not the Retention Letter.
Appellants suggest the documents must be construed
together because they were signed simultaneously and
concern similar subjects. Appellant Br. 26–27. It is true that,
“Where two or more written agreements are
contemporaneously executed as part of one complete package,
they should be construed together and should be construed as
consistent with each other, even if not all the agreements are
signed by the same parties.” Trans-Bay Eng’rs & Builders,
Inc. v. Hills, 551 F.2d 370, 379 (D.C. Cir. 1976). Trans-Bay
17
held that three documents—a Construction Contract, a
Building Loan Agreement and a Regulatory Agreement—
were incorporated because they “were part of a package for a
single project.” Id. A different scenario exists here. As the
district court found, “although the documents were executed
on the same day, they address separate fees—fees already
owed and fees to be incurred.” Bode & Grenier, LLP, 31 F.
Supp. 3d at 118.
Considering the Note and the Retention Letter together
does not change our conclusion. The Promissory Note
carefully limits its reach to its four corners. “This note shall
be governed by” Michigan law, reads the choice-of-law
clause. J.A. 213 (emphasis added). “Any dispute, claim, or
cause of action arising out of or in connection with this note
shall be brought in a court sitting in the State of Michigan
without exception.” Id. (emphasis added). Likewise, the
attorney’s fee provision applies only “[i]n the event of default
in the payment of this Note, and if suit is brought hereon”; in
that case, recovery of fees is capped at “fifteen (15) percent of
the principal sum of this Note.” Id. (emphasis added). “Note”
clearly refers to the Promissory Note—not the separate
Retention Letter. Such carefully drafted clauses confirm the
parties knew how to choose the applicable law and cap
attorney’s fees when they saw fit. They chose not to do so in
the Retention Letter. Thus, even if we were to read the
documents together, the choice-of-law and attorney’s fee
clauses would not migrate to the Retention Letter.
Appellants also ask us to look beyond contractual
language and consider correspondence between the parties.
This we cannot do. Under both Michigan and D.C. law,
courts may only resort to extrinsic evidence in interpreting a
contract when the language admits of no clear interpretation.
See Burkhardt v. Bailey, 680 N.W.2d 453, 464 (Mich. Ct.
18
Ohio App. 2004) (“But when the language of a document is clear
and unambiguous, interpretation is limited to the actual words
used, and parol evidence is inadmissible to prove a different
intent.”) (omitting citations); In re Bailey, 883 A.2d 106, 118
(D.C. 2005) (substantially the same). In this case, the parties’
written agreements speak for themselves, and do not support
incorporation.
B
The second issue before us asks whether Michigan or
D.C. law applies to the Retention Letter. If Michigan law
applies, we must determine whether Michigan permits self-
represented law firms to recover attorney’s fees pursuant to
contract. The district court applied D.C. law and rejected the
argument that Michigan law precluded recovery. We affirm.
Because the Retention Letter neither contains nor
incorporates a choice-of-law clause, we must determine which
jurisdiction’s substantive laws to apply. “In a diversity case”
like this one, the “court follows the choice-of-law rules of the
jurisdiction in which it sits.” Stephen A. Goldberg Co. v.
Remsen Partners, Ltd., 170 F.3d 191, 193 (D.C. Cir. 1999).
“[I]n the absence of an effective choice of law by the
parties,” the District of Columbia employs “‘a constructive
blending’ of the ‘governmental interest analysis’ and the
‘most significant relationship test,’ the latter as expressed in
the Restatement (Second) of Conflicts of Law § 188 (1988).”
Id. at 193–94 (quoting Hercules & Co., Ltd. v. Shama Rest.
Corp., 566 A.2d 31, 41 n.18 (D.C. 1989)). The analysis
centers on five factors: “[1] the place of contracting, [2] the
place of negotiation of the contract, [3] the place of
performance, [4] the location of the subject matter of the
contract, and [5] the domicil, . . . place of incorporation and
19
place of business of the parties.” RESTATEMENT (SECOND) OF
CONFLICTS OF LAWS § 188(2)(a)–(e) (1988). For service
contracts, “the Restatement assigns presumptive weight to the
place where the services are to be rendered.” Stephen A.
Goldberg Co., 170 F.3d at 194; see RESTATEMENT (SECOND)
OF CONFLICTS OF LAWS § 196 (applying “the local law of the
state where the contract requires that the services, or a major
portion of the services, be rendered, unless, with respect to the
particular issue, some other state has a more significant
relationship”). If the scales of interest come out even, D.C.
generally employs its own law. See Kaiser-Georgetown
Cmty. Health Plan, Inc. v. Stutsman, 491 A.2d 502, 509 n.10
(D.C. 1985).
Here, the factors weigh in favor of applying D.C. law, not
Michigan law. The first two factors—the place of contracting
and place of negotiation—are inconclusive. Mr. Knight
negotiated from Michigan, and Bode & Grenier from D.C.
Likewise, the fifth factor—domicil—weighs evenly on both
ends.
In a dispute over a service contract, no factor matters
more than the place of performance. Nearly all of the legal
services at issue were performed in D.C. by attorneys licensed
to practice in D.C. See Appellee Br. 28–30. While the
representation required occasional travel outside D.C. (mainly
to Ohio), we find no evidence suggesting the firm’s attorneys
routinely practiced in Michigan. The firm managed the
representation from its sole office, located in D.C. The fourth
factor—the location of the subject matter of the contract—
supports applying D.C. law for the same reasons. This
contract called for legal services managed and performed in
D.C.
20
Though the Restatement factors lead us to apply D.C.
law, we must pause to independently consider “which
jurisdiction has the greatest interest in the subject.” Stephen
A. Goldberg Co., 170 F.3d at 194. Michigan had relatively
little connection to the services at issue. Though Knight’s
companies call Michigan home, the legal services here
concerned an oil spill in Ohio that triggered various
regulatory and legal actions. None of the relevant legal
services were performed in Michigan. That reality strongly
supports the application of D.C. law.
Because we hold that D.C. law applies to the Retention
Letter, we need not decide whether Michigan law bars the
plaintiff from recovering legal fees incurred while
representing itself. Michigan law simply does not apply.
As the trial court concluded, the plain language of the
Retention Letter permits the recovery of the “costs of
collecting any fees due and owing, including reasonable
attorney fees and expenses . . . .” J.A. 210; see Bode &
Grenier, LLP, 31 F. Supp. 3d at 119–20. The Retention
Letter nowhere precludes Bode & Grenier from recovering
fees incurred while representing itself. That is enough to
resolve the matter.
V
For the foregoing reasons the district court is
Affirmed.