Pounders v. Enserch E&C, Inc.

• Decision Date: 21 August 2013
• Docket Number: No. CV–12–0173–PR.,CV–12–0173–PR.
• Citation: 232 Ariz. 352,667 Ariz. Adv. Rep. 29,306 P.3d 9
• Court: Arizona Supreme Court
• Parties: Vicki L. POUNDERS, Individually, and as Surviving Wife of Dudley W. Pounders, Deceased, Plaintiff/Appellant, v. ENSERCH E & C, INC. nka EECI, Inc.; Riley Power, Inc. fna Riley Stoker Corporation; BW/IP, Inc., and its Wholly Owned Subsidiaries, Defendants/Appellees.

232 Ariz. 352

306 P.3d 9

667 Ariz. Adv. Rep. 29

Vicki L. POUNDERS, Individually, and as Surviving Wife of Dudley W. Pounders, Deceased, Plaintiff/Appellant,

v.ENSERCH E & C, INC. nka EECI, Inc.; Riley Power, Inc. fna Riley Stoker Corporation; BW/IP, Inc., and its Wholly Owned Subsidiaries, Defendants/Appellees.

No. CV–12–0173–PR.

Supreme Court of Arizona.

Aug. 21, 2013.

Steven I. Leshner, Steven I. Leshner, P.C., Phoenix and Charles S. Siegel, Mark A. Linder (argued), Waters & Kraus, L.L.P., Dallas, TX, for Vicki L. and Dudley W. Pounders.

Edward M. Slaughter, Robert Brooks Gilbreath (argued), Hawkins Parnell Thackston & Young LLP, Dallas, TX, and Larry J. Wulkan, Stinson Morrison Hecker LLP, Phoenix, for Enserch E & C, Inc., nka EECI, Inc.

Larry J. Crown (argued), Hillary P. Gagnon, Jennings, Haug & Cunningham, L.L.P., Phoenix, for BW/IP, Inc.

David P. Herrick (argued), Herrick & Associates, P.C., Dallas, TX, and Larry J. Crown, Travis A. Pacheco, Jennings, Haug & Cunningham, L.L.P., Phoenix, for Riley Power, Inc., fna Riley Stoker Corporation.

Stanley G. Feldman, Haralson, Miller, Pitt, Feldman & McAnally, P.L.C., Tucson, and David L. Abney, Knapp & Roberts, P.C., Scottsdale, for Amici Curiae Arizona Association for Justice and Arizona Trial Lawyers Association.

J. Michael Low, Low & Cohen, PLLC, Phoenix and Mark A. Behrens, Shook, Hardy & Bacon, L.L.P., Washington, D.C., for Amici Curiae Coalition for Litigation Justice, Inc., et al.

Charles M. Callahan, Christian Dichter & Sluga PC, Phoenix and Andrew J. Petersen, Humphrey & Petersen, P.C., Tucson, for Amicus Curiae Arizona Association of Defense Counsel.

Justice BRUTINEL, opinion of the Court.

[232 Ariz. 353]¶ 1 We consider whether a wrongful death claim based on exposure to asbestos in New Mexico, which resulted in mesothelioma diagnosed thirty years later in Arizona, is subject to the substantive law of New Mexico or Arizona. Because New Mexico has the more significant relationship to this claim, that state's law applies.

I.

¶ 2 Dudley Pounders, a New Mexico resident, worked as a welder for Arizona Public Service (“APS”) at the Four Corners Power Plant in New Mexico from approximately 1969 to 1974 and again from 1979 to 1983. While performing repair and maintenance work on valves and other equipment at the Plant, he inhaled asbestos fibers.

¶ 3 Mr. Pounders moved to Arizona in the late 1980s. In May 2008, he was diagnosed with mesothelioma, a type of cancer associatedwith asbestos exposure. The following month, Mr. and Mrs. Pounders filed suit in Arizona against Enserch E & C, Inc., the successor-in-interest to the architect and construction manager for three units at the Plant; BW/IP, Inc., a parent company to the manufacturer, designer, and supplier of ten of the pumps used at the Plant; and Riley Power, Inc., the designer and manufacturer of industrial boilers used at the Plant (collectively “Enserch”). After Mr. Pounders died in August 2008, Mrs. Pounders amended the complaint to assert claims for wrongful death.

¶ 4 The trial court granted Enserch's motion to apply New Mexico substantive law to Mrs. Pounders' claims, including New Mexico's statute of repose. Based on that statute, which bars actions arising from improvements to real property filed more than ten years after their completion, N.M. Stat. Ann. § 37–1–27, the court granted summary judgment in favor of Enserch.

¶ 5 The court of appeals affirmed. Pounders v. Enserch E & C, Inc., 229 Ariz. 433, 444 ¶ 33, 276 P.3d 502, 513 (App.2012). Applying § 175 of the Restatement (Second) of Conflict of Laws (the “Second Restatement”), the court concluded that New Mexico was the place of injury, id. at 436–39 ¶¶ 9–17, 276 P.3d at 505–08, and had the “most significant relationship” to the litigation under the factors listed in the Second Restatement §§ 145 and 6, id. at 439–41 ¶¶ 18–24, 276 P.3d at 508–10. As a result, the court agreed with the trial court that New Mexico's statute of repose applied to Mrs. Pounders' wrongful death claim and affirmed summary judgment. Id. at 441 ¶ 25, 444 ¶ 34, 276 P.3d at 510, 513.

¶ 6 We granted review to consider issues of statewide importance regarding the choice of law in wrongful death actions involving long-latency diseases. We declined, however, to review the ruling that the New Mexico statute of repose, if applicable, bars the wrongful death claim. We have jurisdiction pursuant to Article 6, Section 5(3) of the Arizona Constitution and A.R.S. § 12–120.24. We review choice-of-law questions de novo. Swanson v. Image Bank, Inc., 206 Ariz. 264, 266 ¶ 6, 77 P.3d 439, 441 (2003).

II.

¶ 7 The choice of law is dispositive because New Mexico and Arizona differ in their limitation periods for bringing certain personal injury claims. New Mexico's statute of repose, N.M. Stat. Ann. § 37–1–27, bars personal injury claims arising out of construction of improvements on real property when such claims are brought more than ten years after the completion of the improvement. This bar applies even if the injury has not yet been discovered. In contrast, Arizona does not have a similar statute of repose; instead it has a statute of limitations, which bars personal injury claims asserted more than two years after the claim is discoverable. SeeA.R.S. § 12–542(1); see also Doe v. Roe, 191 Ariz. 313, 322 ¶ 29, 955 P.2d 951, 960 (1998).

¶ 8 Arizona is the forum state, and thus its law will govern both procedural issues and the choice of law regarding substantive issues. See Cardon v. Cotton Lane Holdings, Inc., 173 Ariz. 203, 206, 841 P.2d 198, 201 (1992). Statutes of repose are matters of substantive law. Albano v. Shea Homes Ltd. P'ship, 227 Ariz. 121, 127 ¶ 24, 254 P.3d 360, 366 (2011). Hence, Arizona's choice-of-law rules will determine whether New Mexico's or Arizona's substantive law applies.

¶ 9 Arizona follows the Second Restatement. Jackson v. Chandler, 204 Ariz. 135, 136 ¶ 5, 61 P.3d 17, 18 (2003). Section 175, entitled “Right of Action for Death,” initially directs us to look to

the “local law of the state where the injury occurred ... unless, with respect to the particular issue, some other state has a more significant relationship under the principles stated in § 6 to the occurrence and the parties, in which event the local law of the other state will be applied.

¶ 10 Thus, we must first determine whether the injury occurred in Arizona or New Mexico. Enserch urges us to find that the place where the plaintiff was exposed to harmful materials is the place of injury. It relies, in part, on the fact that mesotheliomais a dose-response disease in which each inhalation of asbestos dust “takes effect” on the lungs causing tissue damage. See Ins. Co. of N. Am. v. Forty–Eight Insulations, Inc., 633 F.2d 1212, 1222 (6th Cir.1980). According to Enserch, each inhalation of asbestos fibers began damaging Mr. Pounders' lung tissues; thus he was injured in New Mexico.

¶ 11 Mrs. Pounders counters that a “manifestation” theory better comports with Arizona's case law regarding compensability of asbestos-related claims. Citing Burns v. Jaquays Mining Corp., 156 Ariz. 375, 376–78, 752 P.2d 28, 29–31 (App.1987), and DeStories v. City of Phoenix, 154 Ariz. 604, 605, 744 P.2d 705, 706 (App.1987), she maintains that Arizona does not recognize mere exposure to a toxic substance, without apparent effects, to be an actionable “injury,” even if such exposure produces cellular changes. Because Mr. Pounders developed the requisite compensable injury, mesothelioma, while residing in Arizona, Mrs. Pounders argues that Arizona is the place of injury.

¶ 12 As the court of appeals noted, courts that have considered this question have reached opposing conclusions. See Pounders, 229 Ariz. at 438 ¶ 13, 276 P.3d at 507. In Rice v. Dow Chemical Co., the Washington Supreme Court rejected the plaintiff's manifestation argument and held that the plaintiff was “injured” in Oregon, where he was primarily exposed to dangerous pesticides, rather than in Washington, where he eventually developed leukemia. 124 Wash.2d 205, 875 P.2d 1213, 1217–18 (1994); see also Celotex Corp. v. Meehan, 523 So.2d 141, 145–46 (Fla.1988) (applying New York law where decedent was exposed in New York, but manifested asbestos-related disease in Florida). Conversely, in Wyeth v. Rowatt, the Nevada Supreme Court held that the plaintiffs were injured “where the slow-developing disease [was] first ascertainable,” because before manifestation, “there is no legally compensable injury to sue upon.” 244 P.3d 765, 776–77 (Nev.2010). The Wyeth court emphasized the compensability of the injury because a plaintiff's damages are not based on subcellular injuries occurring at exposure, but rather arise from the development of a diagnosable disease. Id. at 776 (discussing Renfroe v. Eli Lilly & Co., 686 F.2d 642, 647 (8th Cir.1982)).

¶ 13 We agree with Mrs. Pounders that the state where the disease first manifests is the “place of injury,” but our reasoning rests on tracing the Restatement's evolution in analyzing conflict-of-laws questions and the “elements of continuity [between the First and Second Restatements].” See 1 Second Restatement (Introduction) IX.

¶ 14 The First Restatement adopted the rule of lex loci delicti, or “place of wrong,” as the controlling factor when determining which state's law applied. It defined the “place of wrong” as where the “last event necessary to make an actor liable for an alleged tort takes place.” Restatement (First) of Conflict of Laws § 377. Note 1 to § 377 explains that the place of wrong is where the “harmful force takes effect upon the body.” Read in conjunction with § 377's last-event-necessary rule, Note 1 clarifies that the harmful force takes effect upon the body when the force takes legal effect. Comment (a) to § 377 confirms this view, explaining:

Although by statute, the state in which any event in the train of consequences, starting with the act of the wrongdoer and continuing until the final...