61 F.3d 608 (8th Cir. 1995), 94-3063, Kansas Public Employees Retirement System v. Reimer & Koger Associates, Inc.

Docket Nº:94-3063.
Citation:61 F.3d 608
Party Name:KANSAS PUBLIC EMPLOYEES RETIREMENT SYSTEM, Plaintiff-Appellee, v. REIMER & KOGER ASSOCIATES, INC., a Kansas corporation; Ronald Reimer, an individual; Kenneth H. Koger, an individual; Clifford W. Shinski, an individual; Brent Messick, an individual; Robert Crew, an individual; Defendants, Frank Morgan, an individual; Sherman Dreiseszun, an individu
Case Date:July 27, 1995
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
 
FREE EXCERPT

Page 608

61 F.3d 608 (8th Cir. 1995)

KANSAS PUBLIC EMPLOYEES RETIREMENT SYSTEM, Plaintiff-Appellee,

v.

REIMER & KOGER ASSOCIATES, INC., a Kansas corporation;

Ronald Reimer, an individual; Kenneth H. Koger, an

individual; Clifford W. Shinski, an individual; Brent

Messick, an individual; Robert Crew, an individual; Defendants,

Frank Morgan, an individual; Sherman Dreiseszun, an

individual; Leland Gerhart, an individual; I.I. Ozar, an

individual; Raymond Gifford, an individual; Harry S.

Jonas, an individual; Ralph E. Kiene, an individual;

Randall M. Nay, an individual; Defendants-Appellants,

Frank Sebree, an individual; Defendant,

Tony Salazar, an individual; Philip Pistilli, an

individual; Defendants-Appellants,

Michael K. Russell, an individual; Gage & Tucker, a law

partnership; Peat, Marwick, Mitchell & Co., an accountancy

firm; KPMG Peat Marwick, an accountancy firm; Robert

Spence, an individual, Defendants,

Frank Morgan; Sherman Dreiseszun; Leland Gerhart; I.I.

Ozar; Raymond Gifford; Ralph E. Kiene; Randall

M. Nay; Tony Salazar; Philip Pistilli,

Third-party plaintiff,

Resolution Trust Corporation, Third-party defendant.

No. 94-3063.

United States Court of Appeals, Eighth Circuit

July 27, 1995

Submitted Oct. 12, 1994.

Rehearing and Suggestion for Rehearing En Banc Denied Sept. 6, 1995.

Page 609

Charles Walter German, Kansas City, MO, argued (Brant M. Laue and Robert J. Campbell, on the brief), for appellants.

Kenneth Philip Ross, Chicago, IL, argued (Robert F. Coleman, Eugene J. Schiltz, Eugene I. Pavalon, Geoffrey L. Gifford, and Robin R. LaFollette, on the brief), for appellee.

Before MCMILLIAN, Circuit Judge, JOHN R. GIBSON, Senior Circuit Judge, and HANSEN, Circuit Judge.

JOHN R. GIBSON, Senior Circuit Judge.

The former directors of Home Savings Association, a savings and loan now in receivership, appeal from a district court order denying their motion for summary judgment on the claims of Kansas Public Employees Retirement System, a creditor of Home Savings. The directors argue that KPERS' claims are barred by the statute of limitations. The district court held that Kansas limitations law applied, that the relevant Kansas statute of limitations, Kan.Stat.Ann. Sec. 60-522 (1994), was ten years, and that the claims were not time-barred. We reverse.

KPERS sued the former Home Savings Association directors, 1 alleging common law fraud and other torts and violations of the Kansas Securities Act in connection with KPERS' 1986 purchase of $65 million in debentures from Home Savings. After Home Savings was placed in receivership in March 1991, KPERS filed suit in state court in Kansas, joining the directors as defendants in December 1991. KPERS claimed, among other things, that the directors made misrepresentations in selling KPERS the debentures. The directors impleaded the RTC, asserting that the RTC's negligence caused the debentures to become worthless after the RTC took over as receiver for Home Savings. Acting under special authority granted it in 12 U.S.C. Sec. 1441a(l )(3) (Supp. V 1993), the RTC removed the case from the Kansas state court to the federal district court for the Western District of Missouri, Home Savings' principal place of business. 2

The directors moved for summary judgment on the theory that KPERS' claims against them were barred under the Missouri law of limitations, which they argue became the applicable law at the time the RTC removed the case to the Missouri federal court, there being no applicable federal statute of limitations. The directors also argued that even if the law of Kansas should apply, the claims were still barred. At the time KPERS brought its suit, Kansas law prescribed a two-year statute of limitations for torts, Kan.Stat.Ann. Sec. 60-513(a), and a three-year statute for statutory claims, Kan.Stat.Ann. Sec. 60-512(2). While still in state court, the directors had moved to dismiss on the basis of the statute of limitations. The Kansas legislature promptly passed a ten-year statute of limitations applicable to civil actions brought by KPERS. Kan.Stat.Ann. Sec. 60-522, L.1992, ch. 321, S. 21. After the directors raised the argument that the new statute was inapplicable to causes that were already barred, the legislature amended the ten-year statute to provide that it should be "construed and applied retroactively." Kan.Stat.Ann. Sec. 60-522(c), as amended by 1993 Kan.Sess.Laws ch. 227 (H.B. 2211). The directors argued that the added language was not sufficient to revive KPERS' lapsed claims. They also argued that the ten-year statute violated the Kansas Constitution and the federal Equal Protection clause.

Regarding the choice of law question, the district court considered the effect of 12 U.S.C. Secs. 1441a(l )(1) and (3)(A). 3 Under

Page 610

section 1441a(l )(1), any suit to which the RTC is a party is "deemed to arise under the laws of the United States," and the district courts therefore have original jurisdiction over such suits. This grant of jurisdiction includes the entire suit, even though the RTC was only a third-party defendant. KPERS v. Reimer & Koger, 4 F.3d 614, 619, 620 (8th Cir.1993) (KPERS I ), cert. denied, --- U.S. ----, 114 S.Ct. 2132, 128 L.Ed.2d 862 (1994). Under section 1441a(l )(3)(A), the RTC can remove any action to which it is a party to its choice of three district courts: (1) the district with jurisdiction over the place where the case was pending before removal; (2) the district that was the principal place of business for the failed savings and loan in the case; or (3) the District of Columbia. The directors argued that whichever of these three districts the RTC chose became the "forum" for choice of law purposes. KPERS, on the other hand, argued that section 1441a(l )(3) is merely a venue provision, and that federal law dealing with change of venue retains the original place of filing as the "forum" for choice of law purposes.

The district court ruled in favor of KPERS, reasoning that to interpret section 1441a(l )(3) as permitting the RTC to select the "forum" for choice of law purposes from three possibilities would have three ill results, not intended by Congress. First, such an interpretation would make it impossible for the plaintiff to ascertain the applicable statute of limitations before filing suit. Second, the directors' interpretation would nullify the plaintiff's customary prerogative of choosing the forum, with the attendant control over choice of law. Finally, the directors' interpretation would frustrate one of the goals of Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), by preventing Kansas state law from governing what are essentially Kansas causes of action. The district court concluded these ill results would be avoided by treating section 1441a(l )(3) as a venue provision, and therefore applied rules used in administering 28 U.S.C. Sec. 1404(a) (1988), a change of venue statute. Under section 1404(a), state law causes of action transferred to a new venue take with them the statutes of limitation applicable in the transferor jurisdiction. See Van Dusen v. Barrack, 376 U.S. 612, 635-37, 84 S.Ct. 805, 819-20, 11 L.Ed.2d 945 (1964); Ferens v. John Deere Co., 494 U.S. 516, 526, 110 S.Ct. 1274, 1281, 108 L.Ed.2d 443 (1990). The district court considered this "look back" rule to be applicable to section 1441a(l )(3) cases, and therefore applied the statute of limitations of Kansas, the transferor jurisdiction.

The district court also held that under Kansas law, the ten-year statute was intended to revive KPERS' claims, and that the statute did not violate equal protection or the Kansas Constitution. The district court thus denied the directors' motion for summary judgment, holding that KPERS' claims were not time-barred.

The district court then dismissed the directors' claim against the RTC, reasoning that the RTC owed the directors no duty of care in its management of Home Savings, and therefore the directors could not sue the RTC for negligence. The directors moved for reconsideration, and the court granted the RTC permission to intervene for the limited purpose of responding to the directors' reconsideration motion. The district court then reaffirmed its earlier order dismissing the directors' third-party complaint.

Once the RTC was out of the suit, KPERS moved to remand the case to the state courts

Page 611

in Kansas. The district court denied the motion, retaining the case in exercise of the court's supplemental jurisdiction under 28 U.S.C. Sec. 1367 (Supp. V 1993).

The district court then certified the denial of summary judgment for interlocutory review under 28 U.S.C. Sec. 1292(b) (1988), and this court granted permission to appeal.

I.

In order to determine whether KPERS' claims are time barred, we must decide the threshold choice of law question. According to the directors, the choice of law analysis is utterly simple: this is a removal case; in removal cases not governed by a federal statute of limitations, federal courts apply the limitations laws of the forum; therefore, Missouri limitations law governs this case. KPERS responds that 12 U.S.C. Sec. 1441a(l )(3) really presents a unique hybrid procedure--part removal and part change of venue. KPERS argues that we must invent new choice of law rules to deal with this situation by analogizing to the Van Dusen- Ferens doctrine developed in section 1404(a) change of venue cases, which (at least in state law cases) 4 retain the original forum's choice of law rules after transfer to a new venue.

Generally, in federal courts the limitations provisions of the forum state apply where the issue is not governed by federal statute. In diversity cases, this is because the forum state's limitations law governs, see Guaranty Trust v. York, 326 U.S. 99, 110-12, 65 S.Ct. 1464,...

To continue reading

FREE SIGN UP