Washburn v. Soper

• Citation: 319 F.3d 338
• Decision Date: 11 February 2003
• Docket Number: No. 02-1323.,02-1323.
• Parties: Terrence WASHBURN, Patricia Washburn, Penelope L. Nicol, Individually and as Trustees of The 727 Realty Trust; The 727 Realty Trust, Appellants, v. Jerry SOPER, Individually and as a Partner of Soper and Tyler, Defendant, The Soper Law Firm, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

319 F.3d 338

Terrence WASHBURN, Patricia Washburn, Penelope L. Nicol, Individually and as Trustees of The 727 Realty Trust; The 727 Realty Trust, Appellants, v. Jerry SOPER, Individually and as a Partner of Soper and Tyler, Defendant The Soper Law Firm, Appellee.

No. 02-1323.

United States Court of Appeals, Eighth Circuit.

Submitted: December 13, 2002.

Filed: February 11, 2003.

George A. Kiser, argued, St. Louis, MO (Beth C. Boggs, on the brief), for appellants.

Timothy G. Shelton, argued, Chicago, IL (Peter D. Sullivan and Elizabeth Staruck, on the brief), for appellee.

Before WOLLMAN, HEANEY, and MAGILL, Circuit Judges.

WOLLMAN, Circuit Judge.

In this diversity action, the district court¹ granted summary judgment against the appellants (collectively, the Washburns), concluding that their malpractice claim was barred by Illinois' two-year statute of limitations. We affirm.

I. Background

In 1992, George and Janis Garlock purchased an eighty percent interest in the Kwik-Kleen Limited Trust, which owned the Kwik-Kleen Laundromat business. The remaining twenty percent interest was held by the 727 Realty Trust (727 Trust), which owned the laundry equipment and held title to the real property. Appellants Penelope Nicol and Patricia Washburn were joint trustees of the 727 Trust, and appellant Terrence Washburn was the beneficiary of this trust.

After the relationship between the Garlocks and the Washburns deteriorated, Nicol and Patricia Washburn sued the Garlocks in Illinois state court on behalf of the 727 Trust. The Garlocks filed a third-party complaint against Patricia Washburn and Nicol, as trustees of the 727 Trust, and against Terrence Washburn, individually and as a beneficiary of the 727 Trust. Glen Washburn also filed an action against the same three individuals, alleging that Nicol and Terrence Washburn had misrepresented, concealed, and failed to disclose material facts regarding the ownership of the real property held by the 727 Trust. This action was consolidated with the suit involving the Washburns and the Garlocks. All of the individuals involved in these suits were Illinois residents.

Jerry Soper represented the Washburns in the above-described proceedings. Soper, licensed to practice law in both Illinois and Iowa, maintained his office in Davenport, Iowa. On June 25, 1996, Soper participated in a hearing on the consolidated suits. During this hearing, the trial court encouraged the parties to settle, and Soper engaged in settlement discussions on behalf of his clients. By the next day, the parties' attorneys reached an agreement regarding all of the pending claims. According to the Washburns, Soper coerced them into agreeing to the terms of this settlement.

The Illinois trial court entered an order dismissing both cases pursuant to the settlement agreement. On January 10, 1997, the Washburns, through new counsel, moved to vacate this order. The Washburns' motion was denied, and their subsequent appeals were also unsuccessful.

On December 22, 1999, the Washburns brought a malpractice action against The Soper Law Firm (Firm) in the United States District Court for the Southern District of Iowa. The Firm moved for summary judgment, arguing that the Washburns' claim was barred by Illinois' two-year statute of limitations. The district court agreed and granted the Firm's motion.

II. Analysis

"We review de novo a grant of summary judgment, applying the same standard as the district court." Forrest v. Kraft Foods, Inc., 285 F.3d 688, 691 (8th Cir.2002) (citation omitted). In this diversity case, we also review the district court's interpretation of state law de novo. Walk v. Starkey Mach., Inc., 180 F.3d 937 939 (8th Cir.1999) (citing Salve Regina Coll. v. Russell, 499 U.S. 225, 231, 111 S.Ct. 1217, 113 L.Ed.2d 190 (1991); Kaplon v. Howmedica, Inc., 83 F.3d 263, 266 (8th Cir.1996)).

In granting the Firm's motion for summary judgment, the district court determined that (1) the Iowa Supreme Court would apply the revised version of Restatement (Second) of Conflict of Laws (Restatement) section 142 if presented with the issue; (2) in accordance with revised section 142, Illinois' two-year statute of limitations governs the Washburns' malpractice claim; and (3) this statute bars the Washburns' claim. On appeal, the Washburns contend that Iowa's conflict of law rules require us to apply Iowa's five-year statute of limitations to their claim, and that, even if Illinois' two-year statute of limitations governs, it does not bar their claim as a matter of law.

A. Applicable Choice of Law Rule

The Washburns first argue that the district court applied the wrong choice of law provision. In this diversity case, we apply Iowa's choice of law principles. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496-97, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Iowa's rules generally "require[] the application of local law to matters of procedure." Cameron v. Hardisty, 407 N.W.2d 595, 596 (Iowa 1987) (citing Brooks v. Engel, 207 N.W.2d 110, 113 (Iowa 1973)). Iowa courts have historically viewed statutes of limitations as procedural, and therefore a local matter. Harris v. Clinton Corn Processing Co., 360 N.W.2d 812, 814 (Iowa 1985). The Iowa Supreme Court recognized that this approach was consistent with the general rules set forth in Restatement section 142 (1971), which provided as follows:

(1) An action will not be maintained if it is barred by the statute of limitations of the forum, including a provision borrowing the statute of limitations of another state.

(2) An action will be maintained if it is not barred by the statute of limitations of the forum, even though it would be barred by the statute of limitations of another state, except as stated in § 143.

Id. The Iowa Supreme Court also adopted the "exception" to the general rule of section 142(2), as found in section 143: "[A]n action will not be entertained in another state if it is barred in the state of the otherwise applicable law by a statute of limitations which bars the right and not merely the remedy." Restatement (Second) of Conflict of Laws (Restatement) § 143 (1971); see Harris, 360 N.W.2d at 816.

In 1988, sections 142 and 143 were revised and replaced with the following provision:

Whether a claim will be maintained against the defense of the statute of limitations is determined under the principles stated in § 6. In general, unless the exceptional circumstances of the case make such a result unreasonable:

...

(2) The forum will apply its own statue of limitations permitting the claim unless: (a) maintenance of the claim would serve no substantial interest of the forum; and (b) the claim would be barred under the statute of limitations of a state having a more significant relationship to the parties and the occurrence.

Restatement § 142 (1988). Iowa's appellate courts have not yet had the opportunity to consider this revision.

The Washburns contend that the district court erred in using the revised version of section 142 to determine the applicable statute of limitations. They assert that there was no need for the district court to "predict" what the Iowa Supreme Court would do, as that court has already addressed the issue. Referring us to the Harris and Cameron cases, the Washburns contend that Iowa law requires application of the "right-remedy" analysis embodied in the pre-1988 version of sections 142 and 143. We disagree.

The Supreme Court has stated that "[w]hen [the highest court of a state] has spoken, its pronouncement is to be accepted by federal courts as defining state law unless it has later given clear and persuasive indication that its pronouncement will be modified, limited or restricted." West v. Am. Tel. & Tel. Co., 311 U.S. 223, 236, 61 S.Ct. 179, 85 L.Ed. 139 (1940) (citation omitted); see Gillette Dairy, Inc. v. Mallard Mfg. Corp., 707 F.2d 351, 354 (8th Cir.1983). As the Firm notes in its brief, the Iowa Supreme Court has repeatedly turned to the Restatement in analyzing choice of law issues. See, e.g., Veasley v. CRST Int'l., Inc., 553 N.W.2d 896, 897 (Iowa 1996) (noting, in the context of a personal injury case, that "[w]e now follow the Restatement's `most significant relationship' methodology for choice of law issues" (citations omitted)); Gabe's Constr. Co., Inc. v. United Capitol Ins. Co., 539 N.W.2d 144, 146 (Iowa 1995) ("We determine choice-of-law issues in insurance policy cases by the intent of the parties or the most significant relationship test." (citation omitted)); Cole v. State Auto. & Cas. Underwriters, 296 N.W.2d 779, 781 (Iowa 1980) ("We think it is clear that choice-of-law questions [involving contract issues] are now to be determined under the Restatement (Second) test: intent of the parties or the most significant relationship."); Cameron, 407 N.W.2d at 597 ("Iowa has adopted the `modern' choice of law rules [with respect to tort issues]...."); see also Grove v. Principal Mut. Life Ins. Co., 14 F.Supp.2d 1101, 1106 (S.D.Iowa 1998) ("Iowa has adopted the Second Restatement of Conflicts as its choice-of-law provision." (citing Cole, 296 N.W.2d at 781)); Harlan Feeders, Inc. v. Grand Labs., Inc., 881 F.Supp. 1400, 1405 (N.D.Iowa 1995) ("Iowa applies the `most significant relationship test' to conflict-of-laws or choice-of-law questions involving either contract or tort claims." (citations omitted)). The Iowa Supreme Court's commitment to the Restatement supplies the requisite "clear and persuasive indication" that it will modify its approach to conflicts involving statutes of limitations when presented with the issue. Accordingly, we conclude that the district court applied the correct choice of law rule.

B. Interest Analysis under Revised Section 142

Next, the Washburns contend that even if the district court was correct in concluding that the Iowa Supreme Court would adopt the revised version of section 142, the court erred in applying this provision. Under revised section 142(2),...