Rogers v. Corrosion Products, Inc.

• Decision Date: 12 January 1995
• Docket Number: No. 94-30229,94-30229
• Citation: 42 F.3d 292
• Parties: Bankr. L. Rep. P 76,340 Celeste ROGERS and Ronald Glen Rogers, Plaintiffs-Appellants, v. CORROSION PRODUCTS, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 292

42 F.3d 292

Bankr. L. Rep. P 76,340

Celeste ROGERS and Ronald Glen Rogers, Plaintiffs-Appellants, v. CORROSION PRODUCTS, INC., Defendant-Appellee.

No. 94-30229.

United States Court of Appeals Fifth Circuit.

Jan. 12, 1995.

Perrin C. Butler, Robert C. Stern, Metairie, LA, for appellant.

Burke & Mayer, William Daniel Wellons, David L. Carrigee, New Orleans, LA, for appellee.

Appeals from the United States District Court for the Eastern District of Louisiana.

Before HIGGINBOTHAM, SMITH, and PARKER, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

Ronald Rogers ("Rogers") appeals the district court's dismissal of his diversity-based delictual action against Corrosion Products, Inc. ("CPI"), on statute of limitations grounds. He argues that the prescriptive period was suspended, either under Louisiana law or the Bankruptcy Code, when CPI was placed involuntarily into chapter VII bankruptcy. Concluding that this event did not stop the running of the prescriptive period, we affirm.

I.

Rogers, a worker for Chevron, allegedly was injured when working at a CPI facility in Belle Chasse, Louisiana, on June 20, 1991. On March 23, 1993, Rogers, basing his suit upon diversity of citizenship, filed a Louisiana delictual action in federal court.

Under Louisiana law, however, the period for bringing delictual actions is one year. LA.CIV.CODE ANN. art. 3492 (West 1994). Accordingly, CPI asserted the affirmative defense of liberative prescription and moved for summary judgment. Rogers opposed the motion, arguing that bankruptcy proceedings had suspended the running of the prescriptive period.

On February 10, 1992, bankruptcy proceedings had been instigated against CPI by the filing of a petition for involuntary relief by several of CPI's creditors. An automatic stay was put into effect until the petition was dismissed on December 3, 1992.

Notice of the dismissal was issued on December 7, 1992. Because Rogers could not bring suit during the period of the stay, he argued that this period should not be counted in determining the prescriptive period. The district court disagreed, however, and held that Rogers was time barred.

II.

Rogers argues that the running of the prescriptive period was suspended by either Louisiana law or the Bankruptcy Code. The questions presented are purely matters of law that we review de novo. FDIC v. Dawson, 4 F.3d 1303, 1308 (5th Cir.1993), cert. denied, --- U.S. ----, 114 S.Ct. 2673, 129 L.Ed.2d 809 (1994).

A.

The one-year prescriptive period of art. 3492 may be increased either by interruption, which restarts the prescriptive period, or by suspension, which only stops it for the applicable time. Compare LA.CIV.CODE ANN. art. 3466 (effect of interruption) with LA.CIV.CODE ANN. art. 3477 (effect of suspension). On the face of the Louisiana Civil Code, the exceptions that allow an extension of the prescriptive period are limited to those legislatively created. See LA.CIV.CODE ANN. art. 3467 ("Prescription runs against all persons unless exception is established by legislation."). ¹

Louisiana law, however, has long recognized a judicial doctrine, contra non valentem agere non currit praescripto, ² which suspends the running of the prescriptive period for a limited category of claimants who are unable to bring suit. This doctrine continues to be recognized as an implied doctrine of article 3467. See LA.CIV.CODE ANN. art. 3467 revision cmts.--1982 (d) (stating that the jurisprudence of contra non valentem continues to be relevant); Plaquemines Parish Comm'n Council v. Delta Dev. Co., 502 So.2d 1034, 1055 (La.1987).

Under Louisiana law, the contra non valentem doctrine has been parsed into four distinct categories. The doctrine may suspend the running of the prescriptive period where (1) there was some legal cause that prevented the courts or their officers from taking cognizance of or acting on the plaintiff's action; (2) there was some condition coupled with the contract or connected with the proceedings that prevented the creditor from suing or acting; (3) the debtor himself has done some act effectually to prevent the creditor from availing himself of his cause of action; or (4) the cause of action is not known or reasonably knowable by the plaintiff, even though his ignorance is not induced by the defendant. Whitnell v. Menville, 540 So.2d 304, 308 (La.1989); Plaquemines Parish, 502 So.2d at 1054-55; Corsey v. State Dep't of Corrections, 375 So.2d 1319, 1321-22 (La.1979).

At issue here are exceptions two and three. ³ Rogers argues that the bankruptcy proceeding is either "connected to the proceedings" so that Rogers could not sue, or CPI availed itself of the bankruptcy "safe harbor" and should not now be able to use it as a bar to Roger's suit. Rogers believes that the limited caselaw in this area is dispositive on the prescription issue.

Rogers cites two cases that moderately support his position on exception two. Both cases, however, discuss the issue only in dicta. In Cole v. Celotex Corp., 611 So.2d 153, 157-58 (La.App. 3d Cir.1992), rev'd, 620 So.2d 1154 (La.1993), the delictual plaintiff proceeded against a number of defendants, including Johns-Manville. The trial court, however, dismissed the action against the other defendants on prescription grounds. On appeal, the plaintiff argued that if the defendants were solidarily liable, suspension of the prescriptive period for one would apply to all of them. The prescriptive period was suspended for one, he argued, because defendant Johns-Manville filed for bankruptcy during the pendency of the suit, an act that the court assumed "clearly precluded [the plaintiff] from proceeding against Johns-Manville." Id. at 157. Nevertheless, the assumption was not essential to the conclusion, as the court found that only interruption, rather than suspension, would apply to all solidary obligors. Id. at 158.

In Cockerham v. Armstrong World Indus., 717 F.Supp. 433 (M.D.La.1989), a court faced the same issue as in Cole (as well as one of the same defendants). Again, the court assumed that under Louisiana law, bankruptcy proceedings would suspend, but not interrupt, the prescriptive period. See id. at 434 ("[Bankruptcy proceeding] may well amount to a suspension of prescription as to Johns-Manville under Article 3472 of the Louisiana Civil Code."). This assumption was not necessary to support the holding.

Other courts in Louisiana that have directly addressed this issue have reached a contrary result. In Christen v. Al Copeland Enters., 635 So.2d 596, 598 (La.App. 3d Cir.1994), the court, with little discussion, disavowed the Cole dictum, stating that the "[p]laintiff's claim for suspension of prescription because of the bankruptcy automatic stay is without merit." See also Lee v. Champion Ins. Co., 591 So.2d 1364, 1366 (La.App. 4th Cir.1991) (holding that "liquidation" does not bar filing of suit or suspend the prescriptive period).

In diversity cases, we apply substantive state law. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Louisiana's highest court, however, has not decided whether contra non valentem applies to proceedings stayed by bankruptcy filings. Therefore, we must make an "Erie guess" on how the court would rule. See Labiche v. Legal Sec. Ins. Co., 31 F.3d 350, 352 (5th Cir.1994); Transcontinental Gas Pipe Line Corp. v. Transportation Ins. Co., 953 F.2d 985, 988 (5th Cir.1992) ("When there is no ruling by the state's highest court, it is the duty of the federal court to determine as best it can, what the highest court of the state would decide.") (footnote omitted). The decisions of lower state courts should be given some weight, but they are not controlling where the highest state court has not spoken on the subject. Commissioner v. Estate of Borsch, 387 U.S. 456, 465, 87 S.Ct. 1776, 1782, 18 L.Ed.2d 886 (1967). " '[A]n intermediate appellate state court ... is datum for ascertaining state law which is not to be disregarded by a federal court unless it is convinced by other persuasive data that the highest court of the state would decide otherwise.' " Id. (ellipsis in original citation and emphasis omitted).

Here, on exception two of the doctrine of contra non valentem, we are faced with the holdings of two different Louisiana appellate courts that, albeit with sparse reasoning, refuse to apply contra non valentem to bankruptcy stays. The contrary authority is found only in dicta. Therefore, the jurisprudence here counsels us not to broaden suspension to include bankruptcy proceedings.

Moreover, as Louisiana's highest court has often noted, see, e.g., Plaquemines, 502 So.2d at 1057, the basic principle of the doctrine is equity. Rogers has failed to show how CPI has acted unfairly or taken advantage of him. CPI did not affirmatively seek to avoid suit by filing for protection under the Bankruptcy Code; rather, CPI was forced into bankruptcy when several of its creditors filed a petition for involuntary bankruptcy.

Rogers, on the other hand, failed to pursue his suit. Like any other creditor of a debtor, he could have petitioned the court to lift its stay. See 11 U.S.C. Sec. 362(d) (allowing a party in interest to petition the bankruptcy court to terminate, annul, modify, or condition a stay upon a showing "for cause"). If the bankruptcy court does not respond to the petition within [the prescribed period], the stay is automatically "terminated with respect to the party making the request...." Id. Sec. 362(e). Finally, under id. Sec. 108(c)(2), a party's right to sue is preserved for thirty days after the termination of the stay, regardless of the prescription period. Even without petitioning the bankruptcy court to lift the stay, Rogers could have filed suit within thirty days of the dissolution of the stay. Instead, he "slept on his rights."

Rogers does not cite any authority on the issue of exception three, which provides relief for plaintiffs who have been prevented from filing...