MRL Dev. I, LLC v. Whitecap Inv. Corp.
| Decision Date | 17 May 2016 |
| Docket Number | No. 14–4738.,14–4738. |
| Citation | 823 F.3d 195 |
| Parties | MRL DEVELOPMENT I, LLC; Michael R. Lucht, Appellants v. WHITECAP INVESTMENT CORP. d/b/a Paradise Lumber ; Great Southern Wood Preserving, Inc.; Putnam Lumber and Export Company; Putnam Family Properties, Inc. |
| Court | U.S. Court of Appeals — Third Circuit |
823 F.3d 195
MRL DEVELOPMENT I, LLC; Michael R. Lucht, Appellants
v.
WHITECAP INVESTMENT CORP. d/b/a Paradise Lumber ; Great Southern Wood Preserving, Inc.; Putnam Lumber and Export Company; Putnam Family Properties, Inc.
No. 14–4738.
United States Court of Appeals, Third Circuit.
Argued Dec. 7, 2015.
Filed: May 17, 2016.
Jared D. Bayer, Esq., Thomas G. Wilkinson, Jr., Esq., [Argued], Cozen O'Connor, Philadelphia, PA, David A. Bornn, Esq., The Bornn Firm, St. Thomas, VI, for Appellants.
Chad C. Messier, Esq., Alex M. Moskowitz, Esq., [Argued], Lisa M. Komives, Esq., Dudley Topper & Feuerzeig, St. Thomas, VI, John S. Baker, IV, Esq., Lee M. Hollis, Esq., S. Andrew Kelly, Esq. [Argued], Lightfoot Franklin & White, Birmingham, AL, Daryl C. Barnes, Esq., Sunshine S. Benoit, Esq., Bryant Barnes Blair & Benoit, Christiansted, St. Croix, VI, Robert A. Carlson, Esq., [Argued], Lana M. Naghshineh, Esq., Ryan M. Charlson, Esq., Lee Hernandez Landrum Garofalo & Blake, Miami, FL, for Appellees.
Before: FISHER, KRAUSE, ROTH, Circuit Judges.
OPINION OF THE COURT
FISHER, Circuit Judge.
Michael Lucht (and his company, MRL Development I, LLC), purchased treated lumber for a deck on his vacation home in the Virgin Islands. The lumber allegedly decayed prematurely. After replacing rotten deck boards, Lucht brought suit against the retailer, wholesaler, and treatment company of the lumber.
Lucht purchased the lumber between 2002 and 2006. He began replacing deck boards in 2010, but he claims he did not discover the severity of the problem until the fall of 2011. Lucht and MRL filed suit in February 2013, alleging the following claims against the appellees: (1) a Uniform Commercial Code contract claim; (2) a common law contract claim; (3) a breach of warranty claim; (4) a negligence claim; (5) a strict liability claim; and (6) a deceptive trade practices claim under the Virgin Islands Deceptive Trade Practices Act (“DTPA”). The appellees are the retailer, Whitecap Investment Corporation, d/b/a Paradise Lumber (“Paradise”); the wholesaler, Putnam Lumber & Export Company and Putnam Family Properties, Inc. (“Putnam”); and the treatment company, Great Southern Wood Preserving, Inc. (“Great Southern”).
The District Court granted summary judgment against Lucht and MRL on the basis that all claims were time-barred. We agree, except that we will review the tort claims under the gist of the action doctrine, and will affirm on that basis.
I.
A.
The underlying product at the heart of this dispute, the lumber, was pressure treated by Great Southern. It offers various services, one of which is called Yellawood and one designated as “Treatment Services Only” (“TSO”). Under the TSO process, Great Southern does not purchase the lumber itself, but rather treats lumber purchased by the customer to the customer's requested treatment level. Great Southern does not test the lumber for retention or penetration levels when it fills a TSO lumber order. Yellawood is lumber that has been purchased and pressure treated by Great Southern. It is tested for retention and penetration levels and includes a warranty.
Great Southern supplied primarily TSO lumber to Putnam on a wholesale basis, order-by-order. The TSO lumber has a green tag. The appellees assert that the appellants purchased TSO lumber rather than Yellawood lumber, and Lucht stated on the record that he believes the tags on the lumber were green.
The lumber that the appellants purchased was for a home that MRL acquired in the Virgin Islands to serve as a vacation home for Lucht and a rental property for MRL. Lucht began renovating the home, a project which extended from 2002 to December 2006. As part of this project, Lucht added a deck which he constructed with pressure-treated lumber that was purchased from Paradise.
After finishing the deck, at the latest in December 2006, Lucht visited the home every three months. Lucht alleges that, starting in 2010, each time he visited the home he had to replace a few boards in the deck. A year after he started replacing the boards, in the fall of 2011, he asserts that he had a meeting with a carpenter friend who informed Lucht that he had been replacing bad lumber all over the island. Lucht contends that he then realized that the problem with his deck was widespread and would likely continue.
B.
The appellants filed their complaint in this action in the Virgin Islands Superior Court in February 2013. They amended their complaint on March 7, 2013. The appellees thereafter removed the case to the District Court of the Virgin Islands based on diversity jurisdiction. In addition, the appellees asserted various cross-claims against each other.
Putnam filed the first dispositive motion (pertinent to this appeal), requesting that the District Court dismiss the appellants' contract, breach of warranty, and DTPA claims. The District Court granted this motion.1 Thereafter, Great Southern and Putnam filed motions for summary judgment, and Paradise joined in each motion. The appellees also filed motions for summary judgment on the cross-claims. The District Court granted the appellees' motions for summary judgment against appellants, dismissed the motions regarding the cross-claims as moot, and entered judgment in favor of the appellees.
The District Court found that the appellants' contract claims were time-barred because (1) they were subject to the U.C.C.'s four-year statute of limitations; (2) the discovery rule is inapplicable under the U.C.C.; and (3) the statute of limitations had thus expired in December 2010 prior to the filing of the complaint. Similarly, the District Court found the warranty claim was time-barred. As to the negligence and strict liability claims, the District Court found that although the applicable two-year statute of limitations is subject to the discovery rule, Lucht discovered the rotting lumber in 2010, his investigation of the issue was insufficient, and he was therefore ineligible for tolling of the limitations period. Finally, the District Court found that the DTPA claims were subject to the two-year statute of limitations in the version of the DTPA in place at the time of filing the complaint, rather than under the amended statute (which provided a six-year statute of limitations) because the claims accrued at or before the time of purchase in 2006. Accordingly, the District Court held that the DTPA claims were time-barred.
The appellants timely appealed the District Court's dismissal.
II.
The District Court had jurisdiction under 28 U.S.C. § 1332(a) and 48 U.S.C. §§ 1612(a) and 1613 because the parties meet the requirements for diversity jurisdiction. This Court has appellate jurisdiction under 28 U.S.C. § 1291.2 The appellants appealed only the District Court's order granting summary judgment. We apply “a plenary standard in reviewing orders entered on motions for summary judgment, applying the same standard as the District Court.” Blunt v. Lower Merion Sch. Dist., 767 F.3d 247, 265 (3d Cir.2014). We must therefore consider “whether there are any genuine issues of material fact such that a reasonable jury could return a verdict for the
[appellants].” Banks v. Int'l Rental & Leasing Corp., 680 F.3d 296, 297 n. 1 (3d Cir.2012). In doing so, we must apply the substantive laws of the Virgin Islands, including its statutes of limitations. HOVENSA, 497 F.3d at 360 (“The fact that the District Court of the Virgin Islands is an Article IV court rather than an Article III court does not preclude the application of Erie .”).
The appellees have advanced some arguments that were not relied upon by the District Court in granting summary judgment. The appellants argue that this Court should not consider any grounds other than those considered by the District Court. New Castle Cty. v. Nat'l Union Fire Ins. Co. of Pittsburgh, 174 F.3d 338, 342 (3d Cir.1999) (“[A]s a general rule, we will consider only issues passed upon by the court below.”). However, “[i]nasmuch as our review is plenary, ‘we may affirm the District Court on any grounds supported by the record,’ even if the court did not rely on those grounds.” Blunt, 767 F.3d at 265 (quoting Nicini v. Morra, 212 F.3d 798, 805 (3d Cir.2000) ). Accordingly, this Court may consider the other arguments that have been advanced by the appellees.
III.
We will undertake a review of the appellants' claims in the order they appear in the appellants' amended complaint, starting with the breach of contract and warranty claims, moving next to the tort claims, and ending with the DTPA claims.
A.
The appellants asserted two breach of contract claims—one against Putnam and one against Paradise—pursuant to the U.C.C. and common law; and a breach of warranty claim against all of the appellees. Common law contract and warranty claims have a six-year statute of limitations under the Virgin Islands Code. V.I.Code tit. 5, § 31(3)(A). The parties agree that the discovery rule3 is applicable to common law claims. The parties disagree, however, about whether the U.C.C. supplants the common law claims in this action and precludes the...
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