## United States Court of Appeals
FOR THE EIGHTH CIRCUIT

___________
No. 06-2209

___________ Immigration Law Group, LLP; * Visa Law Group, L.L.C., *

* Appellants, *

* v. * Appeal from the United States * District Court for the Danna McKitrick, P.C.; Danna * Eastern District of Missouri. Stockenberg, P.C.; Danna McNary * Stockenberg and Soraghan, P.C.; * Danna Soraghan Stockenberg and * McNary, P.C.; Dana Soraghan * Stockenberg and Shaw, P.C.; Danna * and Shaw, P.C.; Klamer Danna and * Shaw, P.C., *

* Appellees. *

___________ Submitted: December 14, 2006 Filed: April 4, 2007

___________ Before WOLLMAN, RILEY, and SHEPHERD, Circuit Judges.

___________ WOLLMAN, Circuit Judge.

The Immigration Law Group (ILG) alleges that Danna McKitrick, P.C. (Danna) breached its immigration services contr act with various former clients now represented by ILG by refusing to transfer un earned retainer fees to ILG as requested1 The Honorable Rodney W. Si ppel, United States District Judge for the Eastern District of Missouri.

2 For concision, we hereinafte r refer to these steps as st ep (a), step (b), and step (c), respectively.

3 The district court’s judgment addressed claims pertaining to the retainer fees of 106 client contracts. ILG appeals the di strict court’s ruling on seven of these.

-2- by the clients. After a bench trial, the district court 1 held, inter alia , that ILG was equitably estopped from pursuing its claims against Danna and that no contract had been breached. ILG appeals from the district court’s e quitable estoppel and breach of contract rulings. We affirm.

I. Background

American Immigration Services, Inc. (A IS), a for-profit corporation, connected clients with Danna for the provision of lega l services associated with an immigrant investor visa program established by AIS. The program allowed foreign investors to obtain permanent lawful United States re sident status under the Immigration and Naturalization Services’ (INS) EB-5 classifi cation. Gene McNary , who was a partner at Danna, the head of its immigration pr actice, a member of its executive committee, and a former commissioner of the INS, had a relationship with AIS and secured the retainer agreements from the various clie nts for the legal work. The legal work involved three steps: (a) preparing and f iling a “Petition for Immigrant Investor” form (I-526) with the INS; (b) atte nding a visa interview resulting in the issuance of a twoyear conditional green card; and (c) prep aring and filing a “Petition to Remove TwoYear Condition with the INS” (I-829). 2

Danna entered into different retainer agreements with different clients. 3 The various differences resulted from McNary’s revisions of a basic AIS contract. McNary considered the clie nts’ fees earned upon issuance of the conditional visa –-3- step (b) – for all of the agreements, a lthough not all of the agreements explicitly specify when fees are deem ed earned. Accordingly, once the conditional visas were issued, McNary had the associated fees tran sferred out of client trust accounts and into Danna’s general operating acc ount. From there, even though the clients had not yet become eligible for the rem oval of conditions under step (c ), the fees were treated as revenue and distributed among the partne rship – with a significant portion going to McNary under his compensation agreement.

McNary left Danna and joined ILG on March 31, 1998. Prior to his departure, David Morris, a partner at ILG, wrote a le tter to McNary in which he acknowledged that the legal retainer fees collected by Danna were eligible to be deemed earned as of the completion of step (b). In April 1998, after McNary ha d joined ILG, McNary and Morris met with Danna partners to di scuss the transfer of the EB-5 program’s clients to McNary’s new firm . The Danna partners “made it clear that there was not going to be any money” turn ed over to McNary from the retainer fees paid by the clients. In the face of this knowledge, Mc Nary and his new firm induced the clients to terminate their relationship with Danna. ILG agreed to complete the remaining legal services without charge, whereupon the clients sent letters to Danna stating that they were assigning to ILG their rights to any remaining legal retainer fees paid to Danna that had not yet been earned and inst ructing Danna to transfer the money and relevant case files to ILG. Because Danna c onsidered all of the fees earned and had already distributed them from its general operating account, Danna refused to remit any money to ILG. ILG, neve rtheless, completed the step (c) work for the clients. One client subsequently sent a letter to the Missouri Bar Association alleging that Danna had violated the Rules of Profe ssional Responsibility by treating the fees as earned prior to the completion of step (c). The Chief Disciplinary Counsel informed the complaining client that his “investig ation does not establish probable cause to believe that [there had been any viola tion of] the Rules of Professional Conduct.”4 It also held, in the alternative, that fo r all but two of the contracts, the statute of limitations had either laps ed or Danna had earned its retainer and had not breached the contracts. With respect to the remain ing two contracts, the court held that ILG could not recover on the contracts because ILG had introduced evidence suggesting that it had not completed the step (c) work for the contracts’ resp ective clients, despite a joint stipulation between the parties th at ILG had, indeed, completed the work.

-4- ILG brought this action, seeking remedies under breach of contract and quantum meruit theories. Danna assertedan equitable estoppel defense and also asserted that the statute of limitations had run on the claims. As stated above, the district court held, inter alia , that ILG was equitably estopped from asserting its claims. 4

II. Discussion

We review a district court’s factual findings for clear error and its legal conclusions de novo . Tamko Roofing Prods., In c. v. Smith Eng’g Co. , 450 F.3d 822, 827 (8th Cir. 2006). We apply Missouri law in this diversity action. Lindsay v. Safeco Ins. Co. of Am. , 447 F.3d 615, 617 (8th Cir. 2006). The doctrine of equitable estoppel prevents a party from taking inequ itable advantage of a situation it caused. Weiss v. Rojanasathit , 975 S.W.2d 113, 120 (Mo. 1998) (superseded by statute on other grounds). An equitable estoppel defe nse requires a showing of three elements: (1) an admission, statement, or act inconsis tent with the claim afterward asserted or sued upon; (2) action by the other party on th e faith of the admi ssion, statement, or act; and (3) injury to such other party resulting from allowing the first party to contradict or repudiate the admission, statem ent, or act. Stone v. Crown Diversified Indus. Corp. , 9 S.W.3d 659, 668 (Mo. Ct. App. 1999) (citing Missouri Highway & Transp. Comm’n v. Myers , 785 S.W.2d 70, 73 (Mo. 1990)).-5- A. Equitable Estoppel

In regard to the first element, ILG does not contest that McNary acted inconsistently with the claim in this suit by treating the clients’ funds as fully earned upon the issuance of a conditional visa when he transferred the fees out of client trust

accounts.

Instead, ILG contends that the second element is not satisfied because Danna failed to introduce sufficient evidence dem onstrating its reliance on McNary’s action and belief. It points out thatMcNary never shared his in terpretation of the agreements with anyone at Danna. It further argue s that because Danna knew it would incur additional costs completing step (c) for eachof McNary’s clients, it could not have justifiably relied on McNary’s conclusion. Additionally, it suggests that if Danna relied on McNary’s act of transferring the fees to the firm’s operating account, such reliance was misplaced because Danna had equivalent access to the agreements and could have made its own dete rmination as to when the fees were earned. We find these contentions unpersuasive.

First, removing the fees from the clie nt trust account demonstrated McNary’s belief that the fees were earned, even though he never menti oned his opinion on the matter to anyone at Danna. The firm relie d on the propriety of McNary’s shifting of the fees to the firm’s operating account wh en it thereafter distributed the operating account funds to it partners. SeeStone , 9 S.W.3d at 668 (noting that an action may be relied upon for equitable estoppel purposes).

Second, the mere fact that Danna knew potentially costly step (c) work remained does not render its reliance on McNary’s asse ssment unreasonable. After all, as ILG concedes, fourteen of the retainer agreements explicitly state that the fees would be deemed earned upon completion of step (b) even though Danna was obliged to complete step (c). Although many contr acts were silent on the matter, in these-6- circumstances it was not unreasonable for Danna to rely on McNary’s conclusion that the other contracts likewise permitted Danna to deem fees earned after the completion of step (b).

Third, Danna’s independent access to the text of the agreements does not render its reliance any less reasonable in this case. ILG contends that we should adhere to a proposition stated in Farmland Industries, Inc. v. Bittner , 920 S.W.2d 581, 583 (Mo. Ct. App. 1996), that “one cannot set up a nother’s act or conduct as the ground of an estoppel when [one] knew or had the same means of knowledge as the other to the truth.” ILG’s reliance on Bittneris misplaced. Unlike the situation in Bittner , in which the party seeking estoppel failed to re quest and adequately review an available agreement that would have clearly indicate d key information cont rary to what was relied upon, many of the retainer agreements here are not models of clarity and thus necessitated and justified Danna’s reliance on McNary’s opi nion. As the attorney of record who selected or modifi ed the relevant agreements a nd who, even if not in direct contact with the clients, was the Danna representative that worked with AIS in securing the clients’ consent, McNary was the closest thing Danna had to an authority for the purpose of construing the agreemen ts’ provisions based on the intentions of their signatories. See Burrus v. HBE Corp. , 211 S.W.3d 613, 616-17 (Mo. Ct. App. 2006) (“‘[t]he cardinal rule in the interpre tation of a contract is to ascertain the intention of the parties and to give effect to that intention’” (alteration in original) (quoting J. E. Hathman, Inc. v. Sigma Alpha Epsilon Club , 491 S.W.2d 261, 264 (Mo. 1973))). Accordingly, for the above reasons , we do not consider the district court’s finding that Danna justifiably relied on McNary’s action clearly erroneous.

Regarding the last equitable estoppel el ement, Danna would suffer damages had the district court allowed McNary and ILG to contradict or repudiate McNary’s prior acts because Danna would have to pay ILG (and, thus, McNary) a sum of money that included the sizeable sum already disbursed to McNary. Accordingly, the district court’s finding on the damage element was not clearly erroneous.5 “As stated in the standard retainer agr eement, legal fees are only eligible to be deemed as ‘earned’ AFTER initial conditional visa issuance. . . . According to the records you have provided our office, and those provided by AIS, . . . [f]or the above stated 200 cases, it is our understanding that [the] legal retainer fees were eligible to be deemed as ‘earned’ in a manner identif ied in the standard ‘Retainer Agreement.’” (Appellant’s App. at 362).

-7- B. The Nexus Between ILG and McNary

Finally, ILG submits that even if the facts discussed abovesupport equitable estoppel as to McNary, ILG itself ca nnot be equitably estopped by McNary’s inconsistent acts because McNary is not a pl aintiff in this action and was not an ILG partner when he originally acted. This dis tinction is of no conse quence here. It would be inequitable to disassociate the respectiv e roles of ILG and Mc Nary in inducing and maintaining Danna’s reliance on McNary’s c onclusion. David Morris, acting in the capacity of an ILG principal, sent a lette r to McNary while McNary was still a Danna partner, seeking to work out the details fo r transferring the clients to ILG. In this letter, Morris indicated that ILG cons idered the retainers earned by Danna. 5 Because ILG’s stated position in its correspondence implied that it would not be pursuing the money already earned and distributed to Danna partners after ILG took on the clients, McNary had no obligation in his role as a Danna fiduciary to take precautionary steps that would have insulate d Danna from potentially damaging liability resulting from his imminent departure and transfer of c lients to ILG. Additi onally, both McNary and ILG were well aware of the disposition of the fees when ILG agreed to take on McNary’s clients. ILG completed the step (c) work even after the Danna partnership had unequivocally indicated to ILG that it would remit no fees even should ILG do the work. In light of the extent to which ILG’s and Mc Nary’s combined and knowing actions created the potential liability underpi nning this suit, and given ILG’s decision to complete the work while knowing full we ll that Danna would forward no fees, ILG cannot disassociate its own involvement from McNary’s.-8- Because equitable estoppel bars its clai ms, we need not consider ILG’s breach of contract arguments. The judgment is affirmed.

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