Goad v. Celotex Corp.

• Decision Date: 16 October 1987
• Docket Number: No. 86-3540,86-3540
• Citation: 831 F.2d 508
• Parties: Wiley GOAD, Plaintiff/Appellee, and Nomia Goad, Plaintiff, v. CELOTEX CORPORATION; Eagle-Picher Industries, Inc.; Owens-Corning Fiberglass Corporation; Keene Corporation; H.K. Porter Company, Inc.; Fibreboard Corporation, Defendant/Appellant, and Johns Manville Sales Corporation; Armstrong Cork Company; GAF Corporation; Unarco Industries, Inc.; Pittsburgh Corning Corporation; Owens-Illinois, Inc.; Forty-Eight Insulations, Inc.; Mundet Cork Corporation; Crown Cork & Seal Company, Inc.; Raybestos-Manhattan, Inc., Defendant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 508

831 F.2d 508

Wiley GOAD, Plaintiff/Appellee, and Nomia Goad, Plaintiff, v. CELOTEX CORPORATION; Eagle-Picher Industries, Inc.;

Owens-Corning Fiberglass Corporation; Keene

Corporation; H.K. Porter Company, Inc.;

Fibreboard Corporation,

Defendant/Appellant,

and

Johns Manville Sales Corporation; Armstrong Cork Company;

GAF Corporation; Unarco Industries, Inc.; Pittsburgh

Corning Corporation; Owens-Illinois, Inc.; Forty-Eight

Insulations, Inc.; Mundet Cork Corporation; Crown Cork &

Seal Company, Inc.; Raybestos-Manhattan, Inc., Defendant.

No. 86-3540.

United States Court of Appeals, Fourth Circuit.

Argued Jan. 8, 1987.

Decided Oct. 16, 1987.

Archibald Wallace, III (Nathan H. Smith, Allan M. Heyward, Jr., Sands, Anderson, Marks & Miller, Richmond, Va., on brief) for appellants.

Charles Alan Wright, Austin, Tex. (Robert R. Hatten, Patten, Wornom & Watkins, Newport News, Va., Richard S. Glasser, Glasser & Glasser, Norfolk, Va., Joel I. Klein, Richard G. Taranto, Onek, Klein & Farr, Washington, D.C., Gary Wheeler Kendall, Michie, Hamlett, Donato & Lowry, Charlottesville, Va., on brief) for appellee.

Before WIDENER and HALL, Circuit Judges, and SENTELLE, United States District Judge for the Western District of North Carolina, sitting by designation.

WIDENER, Circuit Judge:

The defendants in this case, manufacturers of asbestos products, brought this interlocutory appeal from the decision of the district court granting the plaintiffs' motion to apply the Texas statute of limitations to this action. We affirm the order of the district court.

The plaintiffs, Wiley and Nomia Goad, instituted this diversity action in federal district court for the Eastern District of Texas, seeking recovery for injuries sustained by Wiley Goad from exposure to the defendants' products. Goad worked as an insulator for more than 20 years, and he claims to have been exposed to asbestos in at least seven eastern states, ¹ plus the District of Columbia. He has never worked in Texas, and is a resident of Virginia. Upon learning of Goad's injuries, the Goads brought suit in the Texas federal district court. Texas applies what is called the discovery rule to actions for personal injury, so that a cause of action does not accrue until a person knows or reasonably could become aware of his injury. Plaintiffs conceive that, had this action been brought in Virginia, it would have a better chance to be barred, since the applicable Virginia statute did not embrace a discovery rule until 1985. ² We need not decide that question, however. All of the defendants have marketed their products in Texas, and there is no question that they are all subject to personal jurisdiction in Texas. In addition, venue was proper under 28 U.S.C. Sec. 1391(c). ³ Nevertheless, the case was transferred, over plaintiffs' objection, to the Western District of Virginia under 28 U.S.C. Sec. 1404(a), which permits transfers "[f]or the convenience of parties and witnesses, in the interest of justice."

Upon the transfer from Texas to Virginia, plaintiffs filed their motion, asking that the district court apply the Texas statute of limitations. The district judge granted the motion, and defendants appeal that order.

In arguing that the Virginia statute ought to apply to this action, rather than the Texas statute, defendants' maintain that both the due process clause of the Fourteenth Amendment and the full faith and credit clause ⁴ require that every choice of law decision made by a state court be supported by "significant contacts" between the litigation and the state whose law is chosen. Their position is in direct opposition to the traditional rule that, in considering the appropriate statute of limitations in a case such as this, the law of the forum applies. The defendants assert that the precise question in this case, the constitutionality of what defendants call a contactless forum state's application of its own longer statute of limitations, has never been addressed by the Supreme Court. However, they say a recent Supreme Court case has cast doubt upon the traditional rule, and they urge us to find that the choice of Texas' statute of limitations in this case violates the federal Constitution. For the reasons set forth below, we find the defendants' argument to be without merit.

Aside from the defendants' constitutional claim, there is no dispute but that the Texas statute of limitations applies to this action. The case was filed in a federal district court in Texas, where both personal jurisdiction and venue were proper. Subject-matter jurisdiction was based on diversity of citizenship, 28 U.S.C. Sec. 1332. The district court in Texas was then obliged to make the same choice of law as would a Texas state court, Klaxon v. Stentor Electric Manufacturing Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941), including the choice of a statute of limitations. Guaranty Trust Co. v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945). When venue was transferred to the Western District of Virginia, the district court in Virginia was obliged to apply the same law that would have been applied by the Texas district court; only a change of courtrooms was effected. Van Dusen v. Barrack, 376 U.S. 612, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964). ⁵ Since the Texas state courts would apply Texas' own statute of limitations to this action, ⁶ under the traditional rule that the law of the forum applies to matters of procedure, the federal court in Virginia was required to apply the Texas statute.

Defendants do not contest the correctness of the preceding analysis, nor do they challenge the continuing vitality of the cases supporting it. Therefore, defendants' claim resolves itself to the proposition that the federal Constitution would prohibit a Texas state court from applying Texas' statute of limitations to this action. ⁷ We think defendants' arguments, however, rest on a fundamental misunderstanding of the nature of statutes of limitation.

Statutes of limitation represent a public policy judgment by a State as to the time at which an action becomes too stale to proceed in its courts. States rightly may be concerned about the prosecution of fraudulent claims and reliability of judgments rendered upon old claims, where memories may have faded, witnesses may have died, and evidence may have been lost. It has also been said that statutes of limitation also serve the interest of allowing defendants to rest assured that, after a certain period of time, their exposure to liability has ended. See, e.g., Wilson v. Johns-Manville Sales Corp., 684 F.2d 111, 118-19 (D.C.Cir.1982). It is felt, and we agree, that the principal purpose of limiting statutes is the prevention of stale claims, and that the repose of defendants is merely an incidental benefit of such statutes. See Chase Securities Corp. v. Donaldson, 325 U.S. 304, 314, 65 S.Ct. 1137, 1142, 89 L.Ed. 1628 (1945). Statutes of limitation, then, are primarily instruments of public policy and of court management, and do not confer upon defendants any right to be free from liability, ⁸ although this may be their effect. ⁹

In contrast to statutes of limitation, statutes of repose serve primarily to relieve potential defendants from anxiety over liability for acts committed long ago. Statutes of repose make the filing of suit within a specified time a substantive part of plaintiff's cause of action. See, e.g., Bolick v. American Barmag Corp., 306 N.C. 364, 293 S.E.2d 415 (1982). In other words, where a statute of repose has been enacted, the time for filing suit is engrafted onto a substantive right created by law. The distinction between statutes of limitation and statutes of repose corresponds to the distinction between procedural and substantive laws. Statutes of repose are meant to be "a substantive definition of rights as distinguished from a procedural limitation on the remedy used to enforce rights." Bolick, 293 S.E.2d at 418, quoting Stevenson, Products Liability and the Virginia Statute of Limitations--A Call for the Legislative Rescue Squad, 16 U.Rich.L.Rev. 323, 334 n. 38 (1982). Statutes of limitation serve interests peculiar to the forum, and are considered as going to the remedy and not the fundamental right itself. See Chase Securities Corp. v. Donaldson, 325 U.S. 304, 314, 65 S.Ct. 1137, 1142, 89 L.Ed. 1628 (1945). ¹⁰ Virginia treats its relevant statute of limitations as bearing on the remedy and not on the plaintiff's right itself. Burk's Pleading and Practice, Sec. 231 (1952).

Contrary to defendants' assertion, this distinction does not exalt form over substance, nor does it subject the Constitution to the whims of the States in labeling their laws. Certainly, the labels applied by States do not control the outcome of constitutional adjudication. But, as the Supreme Court has recognized, the labels serve a useful purpose in describing the various interests underlying the two types of laws. "The abstract logic of the distinction between substantive rights and remedial or procedural rights may not be clear-cut, but it has been found a workable concept to point up the real and valid difference between rules in which stability is of prime importance and those in which flexibility is a more important value." Chase Securities Corp. v. Donaldson, 325 U.S. at 314, 65 S.Ct. at 1142.

Procedural rules protect the interest of the courts in the reliability of judgments, and in managing the progress of cases before them. They express the public policy of the forum State in granting or denying access to its courts. Substantive laws reflect a State's determination of the proper relationship between the people and property within its boundaries. The States are not strangers to the use of statutes of repose as a means of protecting manufacturers from liability for remote acts. Viewed in this light, defendants' argument fails on both points.

Full Faith and Credit

There is no authority to support the theory that the full...