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Westerlund Log Handlers, LLC v. Esler

United States District Court, D. Oregon

June 24, 2019

WESTERLUND LOG HANDLERS, LLC, et al., Plaintiffs,
v.
MICHAEL J. ESLER, et al., Defendants.

          Judy Danelle Snyder and Holly Lloyd, Law Offices of Judy Snyder, OR 97205. Of Attorneys for Plaintiffs Westerlund Log Handlers LLC and David Westerlund.

          Matthew J. Kalmanson, Gordon L. Welborn, and Jason R. Poss, Hart Wagner LLP, OR 97205. Of Attorneys for Defendants Michael J. Esler, Kim T. Buckley, and Esler Stephens & Buckley LLP.

          OPINION AND ORDER

          Michael H. Simon United States District Judge.

         Plaintiffs are Westerlund Log Handlers, LLC (“WLH”) and David Westerlund (“Westerlund”). Westerlund owns 60 percent of WLH. Roger Nance (“Nance”), who originally also was a plaintiff in this lawsuit, owns the remaining 40 percent of WLH. ECF 1 at ¶ 3.[1](WLH, Westerlund, and Nance are collectively referred to as the “Westerlund Group.”) Defendants are attorney Michael J. Esler (“Esler”) and the law firm of Esler, Stephens & Buckley, LLP (“ESB”). Plaintiffs allege claims of legal malpractice and breach of fiduciary duty, premised on the alleged existence of an attorney-client relationship between Plaintiffs and Defendants. Defendants deny the existence of an attorney-client relationship with Plaintiffs. On January 29, 2018, the Court granted in part and denied in part Defendants' motion for summary judgment. ECF 90. A jury trial is scheduled to begin February 3, 2020.

         Under Rules 26(a)(2)(B), 26(e), 37(b), and 37(c) of the Federal Rules of Civil Procedure, Defendants have moved to strike the following expert reports (or portions thereof) disclosed by Plaintiffs: (1) Wm. Randolph Turnbow's expert report dated January 4, 2019; (2) Michael Greene's initial expert report dated January 2, 2019 and supplemental expert report dated February 11, 2019; and (3) all references in William V. Mason II's expert report dated January 3, 2019 to an undated multi-million dollar offer supposedly made to Plaintiffs to purchase a 50 percent interest in WLH. For the reasons that follow, the Court grants the motion in part and denies it in part.

         BACKGROUND

         Westerlund and Nance formed WLH in 2009. In 2013, WLH was providing log handling services for China National Building Materials Import and Export Corporation (“CNBC”). At various timed in 2013, Nance and Westerlund met with Dennis J. Murphy, Sr. (“Murphy”) and other representatives of Murphy Overseas U.S.A. Timber and Land Development, LLC and Murphy Overseas U.S.A. Holdings, LLC (collectively, “the Murphy Group”).[2] During some of these meetings, Westerlund and Nance discussed with the Murphy Group the possibility of working together.

         In late December 2013, Westerlund and Nance met with members of the Murphy Group at the office of the Murphy Group's accountant, Craig Vagt. Attorney Esler attended the meeting. According to Esler, he and his law firm, ESB, represented only the Murphy Group at this meeting. The attendees discussed and reviewed several documents relating to WLH's business operation and its contracts with CNBC. According to Plaintiffs, the meeting lasted several hours, during which the Westerlund Group, on the one hand, and the Murphy Group, on the other, agreed to form a joint venture sometime in the future. The joint venture would involve the creation of a new company, ownership of which would be split between the Westerlund Group and the Murphy Group. According to Plaintiffs, the Murphy Group would own 70 percent of the new company to be formed because it would be paying all legal costs and investing money in the new venture, and the Westerlund Group would own the remaining 30 percent of the new venture.

         Before the late December meeting, the Westerlund Group believed that WLH's log handling agreement with CNBC required an exclusive relationship between WLH and CNBC. (The written contract between WLH and CNBC was one of the documents reviewed and discussed at the late December meeting.) The Westerlund Group believed that WLH owed a duty to CNBC to “stick it out” during the duration of that agreement. According to Plaintiffs, however, Esler told the attendees the meeting that if the Murphy Group decided to do business with WLH, the Murphy Group could “coexist” with CNBC as a customer of WLH. Also according to Plaintiffs, Esler said that WLH could work with both CNBC and the Murphy Group. In addition, while Esler was out of the room, an officer of the Murphy Group reiterated to the Westerlund Group that “our lawyer” thinks that WLH's contract with CNBC is not exclusive.

         Also at this meeting, Esler stated that the WLH agreement with CNBC was unfavorable to WLH and that before the Murphy Group and the Westerlund Group could work together on the future joint venture under discussion, WLH needed to “disentangle” itself from its contract with CNBC. There was no explicit discussion during this meeting of who Esler or the ESB law firm represented. Plaintiffs assert that they believed that Esler was representing the interests of the anticipated future joint venture that was under discussion, while also orchestrating a plan to help get WLH disentangled from CNBC to further the interests of that contemplated future partnership. According to Plaintiffs, Esler explained that he did not want a formal or written agreement regarding the anticipated joint venture prepared at this time because that might later be used by CNBC to support a claim that the Murphy Group was tortiously interfering with the business relationship between WLH and CNBC.

         Between the meeting in late December and January 13, 2014, Esler drafted an agreement that ultimately became the written Log Handling Agreement (“LHA”) between the Westerlund Group and the Murphy Group. The LHA was signed on January 13, 2014. The LHA expressly states:

It is not the intent of the parties to create a partnership or joint venture hereunder and no party to this Agreement shall contend to the contrary. No. party shall hold himself or itself out to any person as the agent of-the other with authority to bind the other.

LHA at ¶ 10.

         At some point in January, Nance asked Esler whether Esler would be representing WLH in its dispute with CNBC. Esler told Nance that he would not, but that he would “hire someone” to represent WLH in that matter. On approximately January 12, Esler spoke with attorney Gordon Carey about representing WLH.

         On January 15, 2014, WLH terminated its contract with CNBC. In late January or early February 2014, Esler contacted attorney Richard Miller about also representing WLH. According to Plaintiffs, Esler hired Miller to represent WLH as their business or transactional lawyer, while Carey would represent WLH in its dispute with CNBC. Esler told Miller that Esler represented the Murphy Group, that WLH would be Miller's client, and that the Murphy Group would pay Miller's legal bills for work done by Miller for WLH.

         On February 17, Miller spoke with Carey about WLH. Carey states that he told Miller that the lawsuit regarding the CNBC contract with WLH was filed to help both the Westerlund Group and the Murphy Group become free from the limitations in the WLH contract with CNBC. In November 2014, the Murphy Group paid $2.55 million to CNBC to settle all claims by and against CNBC, including claims asserted by CNBC against WLH.

         DISCUSSION

         The role of an expert is to “help the trier of fact to understand the evidence or to determine a fact in issue.” Fed.R.Evid. 702. In other words, an expert should “address an issue beyond the common knowledge of the average layman.” Mukhtar v. Cal. State Univ., Hayward, 299 F.3d 1053, 1065 n.9 (9th Cir. 2002). An expert opinion on an ultimate issue of fact may be admissible. Fed.R.Evid. 704(a) (“An opinion is not objectionable just because it embraces an ultimate issue.”). But an expert witness may not opine about a legal conclusion, including an ultimate issue of law. Hangarter v. Provident Life and Acc. Ins. Co., 373 F.3d 998, 1016 (9th Cir. 2004). In addition, an expert witness may not instruct the jury about the applicable law. Nationwide Transp. Fin. v. Cass Info. Sys., Inc., 523 F.3d 1051, 1058 (9th Cir. 2008).

         A. Turnbow Expert Report

         Defendants argue that the entirety of the Turnbow expert report should be stricken. Defendants acknowledge that there “are some appropriate opinions in his report” that they do not challenge, but they argue that these opinions are “so intertwined with the report's numerous flaws that the report must be stricken in its entirety.” ECF 102. The Court addresses the various defects in the Turnbow report alleged by Defendants.

         1. ...


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