Bottineau Farmers Elevator v. Woodward-Clyde Consultants

• Decision Date: 16 July 1992
• Docket Number: No. 90-5151,WOODWARD-CLYDE,90-5151
• Citation: 963 F.2d 1064
• Parties: BOTTINEAU FARMERS ELEVATOR, Appellee, v.CONSULTANTS, a foreign corporation, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1064

963 F.2d 1064

BOTTINEAU FARMERS ELEVATOR, Appellee, v. WOODWARD-CLYDE CONSULTANTS, a foreign corporation, Appellant.

No. 90-5151.

United States Court of Appeals Eighth Circuit.

Submitted Dec. 12, 1990.

Decided May 5, 1992.

Rehearing and Rehearing En Banc

Denied July 16, 1992.

Mart Daniel Vogel, Fargo, N.D., argued (Kermit Edward Bye, on the brief), for appellant.

Howard D. Swanson, Grand Forks, N.D., argued (Richard A. Clapp, on the brief), for appellee.

Before McMILLIAN and FAGG, Circuit Judges, and ARNOLD, ^* District Judge.

McMILLIAN, Circuit Judge.

Woodward-Clyde Consultants (WCC), a Nevada corporation licensed to do business in North Dakota, appeals from a final judgment entered in the District Court for the District of North Dakota, upon a jury verdict, in the amount of $277,626.70 in favor of Bottineau Farmers Elevator (BFE), a North Dakota agricultural cooperative. For reversal, WCC argues the district court erred in (1) holding BFE's cause of action was not barred by the applicable statute of limitations, (2) giving erroneous jury instructions and submitting a special verdict form, and (3) failing to reduce the damages award by 27% for damage caused by a wind storm and by 61% for damage caused by the negligence of others. For the reasons discussed below, we hold the applicable tolling statute is unconstitutional and accordingly reverse the judgment of the district court.

The parties stipulated to the following facts. In August 1981 BFE hired WCC to conduct a subsurface investigation and prepare a soil evaluation report to be used in connection with the design and construction of a concrete silo elevator addition to its grain elevator facility located in Bottineau, North Dakota. WCC performed the soil evaluation and submitted a written report to BFE. BFE thereafter hired Jacobson & Sons Construction Co. (Jacobson) to build the silo elevator addition. Construction began in the fall of 1981 and was completed during the late summer of 1982. In late July 1982 BFE employees began filling the silo elevator addition with grain. BFE employees subsequently noticed the silo elevator addition was tilting or leaning off center about six to eight inches. BFE general manager Dale Haberman discussed the tilting problem with the Jacobson employee who had designed the silo elevator addition. In September 1982 Jacobson consulted Solidification, Inc., a grouting contractor. Leonard Lindelof, the principal officer of Solidification, Inc., inspected the silo elevator addition, reviewed the WCC report and conducted an investigation. In October 1983 Lindelof advised Haberman and BFE's board of directors that the tilting of the silo elevator addition had been caused by "bad soil" but could be corrected, and that WCC should have warned BFE about that possibility in its report.

In the meantime, the silo elevator addition continued to lean off center. In April 1984 there was a severe wind storm, and the silo elevator addition tilted an additional eleven and one-half inches. The silo elevator addition eventually tilted a total of forty-one inches off center. In 1984 and 1985 Solidification, Inc., jacked the silo elevator addition upright. BFE later hired In April 1986 BFE filed this lawsuit in state court against WCC and BFE's insurer, Millers National Insurance Co. (Millers). (Jacobson, the contractor, had gone out of business.) BFE alleged WCC had negligently conducted the soils investigation and asserted claims of negligence and breach of contract. BFE sought declaratory relief against Millers to determine the extent of insurance coverage for the damage caused by the April 1984 wind storm. WCC removed the case to federal district court on the ground of diversity jurisdiction. WCC denied any negligence and alleged that the tilting had been caused either by the contractor's improper design or construction or by WCC's failure to follow its instructions in connection with the critical initial loading of the silo elevator addition. BFE later settled its insurance claim against Millers.

                independent consultants John Mercer and Kenneth Lafond to stabilize the foundation of the silo elevator addition and to investigate the cause of the initial tilting.   In September 1985 the independent consultants concluded, as had Lindelof, that WCC's testing procedures had failed to discover a weak layer of clay at the site and that, but for this undiscovered weak layer of clay, the silo elevator addition would not have tilted more than the minimal degree predicted by WCC
                

Shortly before trial, with leave of court, WCC amended its answer to assert several affirmative defenses, including statute of limitations defenses. WCC contended that the applicable statute of limitations was the two-year statute of limitations for malpractice claims, N.D.Cent.Code § 28-01-18(3). ¹ WCC argued that, under the discovery rule of accrual, BFE's claim accrued in October 1983 when Solidification, Inc., advised BFE that the cause of the tilting was poor soil and that WCC had not tested the site properly. WCC argued that because BFE did not file its lawsuit until April 1986, more than two and one-half years later, the lawsuit was thus time-barred. BFE argued, however, that soil classification was not a "profession" for purposes of the malpractice statute of limitations and the applicable statute of limitations was the ten-year statute of repose applicable to claims involving improvements to real property, N.D.Cent.Code § 28-01-44. ² In the alternative, BFE argued that even if the two-year malpractice statute of limitations applied, the running of any statutory period had been suspended, or tolled, by N.D.Cent.Code § 28-01-32 ³ because WCC was a foreign corporation, and thus out of The district court decided if the two-year statute of limitations applied, the running of the time had not been suspended, or tolled, by the amended tolling statute because WCC was amenable to service under the North Dakota long-arm statute. Bottineau Farmers Elevator v. Woodward-Clyde Consultants, Civil No. A4-86-84, slip op. at 2 (D.N.D. Nov. 17, 1989) (order granting motion to amend answer). The district court decided, however, that the applicable statute of limitations was the ten-year statute of repose applicable to claims involving improvements to real property and thus BFE's action was not time-barred. Id. at 3-4 (undisputed that action was filed within 10 years of substantial completion of construction).

the state, when BFE's cause of action accrued.

Immediately before trial began, WCC filed a motion for summary judgment and renewed its argument that BFE's lawsuit was barred by the two-year statute of limitations for malpractice claims and that the tolling statute was inapplicable. WCC further argued that if the tolling statute applied, it violated the commerce clause and the equal protection clause of the fourteenth amendment of the Constitution, as well as the equal protection provision of the state constitution. The district court denied the motion for summary judgment ⁴ and the trial proceeded. WCC filed a motion for directed verdict at the close of BFE's case and again at the close of all the evidence. The district court denied each motion. The case was submitted to the jury. The jury found in favor of BFE and against WCC and apportioned the fault as follows: 32% to WCC, 7% to BFE, and 61% to "others." The jury awarded BFE $224,773.11 for damages caused by negligence and pre-judgment interest at the rate of 6%. In a supplemental interrogatory, the jury found that 27% of the damage had been caused by the April 1984 wind storm.

WCC renewed its statute of limitations arguments in post-trial motions for judgment notwithstanding the verdict (JNOV) or in the alternative for new trial. The district court changed its analysis on the statute of limitations issue, found that WCC had provided "engineering services, which were clearly professional," and applied the two-year statute of limitations for malpractice claims instead of the ten-year statute of repose for claims involving improvements to real property. Id., slip op. at 2 (Mar. 5, 1990) (order denying post-trial motions). The district court decided, however, that BFE's claim was not time-barred because WCC, a foreign corporation, had been out of the state at the time the claim had accrued and had not returned to the state since that time, and the running of "any statute of limitations" had been suspended, or tolled, by the tolling statute in effect at that time, that is, before it was amended in 1989. Id. The district court also refused to reduce the damages award by 27% because it found that the jury had awarded damages for the wind storm in addition to damages for negligence. Id. at 1. Finally, the district court held that under North Dakota law WCC was jointly liable for the negligence of "others." Id. at 2. Accordingly, the district court reduced the damages award by 7% for BFE's contributory negligence and entered judgment in favor of BFE in the amount of $277,626.70 (93% of $224,773.11, plus 6% pre-judgment interest ($69,587.70)). This appeal followed.

WCC first argues the district court erred in holding BFE's cause of action was not time-barred by the two-year statute of limitations for malpractice claims. ⁵ WCC In response, BFE argues the two-year statute of limitations for malpractice claims is not applicable because soil testing is a licensed trade or occupation and not a learned profession. BFE argues the applicable statute of limitations is the six-year statute of limitations applicable to actions for non-professional negligence and breach of contract, N.D.Cent.Code § 28-01-16(1), (2). ⁶ BFE further argues that, even if the two-year statute of limitations applied, its complaint was timely filed in April 1986 because its cause of action, or claim for relief, did not accrue until September 1985, when BFE received the report from the independent consultants and learned what had caused the...