Miles v. A.O. Smith Harvestore Products, Inc., 92-3183

• Decision Date: 07 May 1993
• Docket Number: No. 92-3183,92-3183
• Citation: 992 F.2d 813
• Parties: Telois MILES, Appellant, v. A.O. SMITH HARVESTORE PRODUCTS, INC.; A.O. Smith Corporation, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 813

992 F.2d 813

Telois MILES, Appellant, v. A.O. SMITH HARVESTORE PRODUCTS, INC.; A.O. Smith

Corporation, Appellees.

No. 92-3183.

United States Court of Appeals,

Eighth Circuit.

Submitted March 18, 1993.

Decided May 7, 1993.

John R. Elrod, Siloam Springs, AR, for appellant.

John C. Dods, Kansas City, MO, Roger A. Glasgow and Troy A. Price, Little Rock, AR, on the brief), for appellees.

Before McMILLIAN, JOHN R. GIBSON and WOLLMAN, Circuit Judges.

McMILLIAN, Circuit Judge.

Telois Miles appeals from a final order entered in the United States District Court ¹ for the Western District of Arkansas granting summary judgment to appellees A.O. Smith Corp. and A.O. Smith Harvestore Products, Inc. (hereinafter referred to collectively as Harvestore), holding that her cause of action is barred by the applicable statute of limitations. Miles v. A.O. Smith Harvestore Products, Inc., No. 91-3069 (W.D.Ark. Aug. 21, 1992) (order and letter opinion). For reversal, appellant argues that the district court erred in granting summary judgment because an issue of material fact remains unresolved. For the reasons discussed below, we affirm the judgment of the district court.

I

Because this is an appeal from a grant of summary judgment, we relate the facts in the light most favorable to appellant as the non-moving party. Appellant operates a dairy farm near Berryville, Arkansas. Her late husband Lee also participated in the operation of the farm until his death in 1990. In 1973, appellant and her husband purchased two Harvestore silos in which to store feed for their animals. These silos were designed to store feed in an oxygen-free, glass-lined environment. This system was supposed to keep the feed from being contaminated or spoiled for years.

The Harvestore sales representatives who sold the silos to appellant promised that the Harvestore system would yield benefits to appellant's operation, including increased milk production, lower labor and feed costs, and higher profits. Appellant put one of the Harvestore silos into operation in 1974. In early 1975 appellant and her husband noticed that the feed that had been stored in the silo was contaminated by mold. Harvestore's agents made repeated visits to appellant's farm to try to remedy the situation, but the contamination continued to recur. The problems were never alleviated. Appellant put the second Harvestore silo into service in 1981. ² This silo was filled only once, and by 1982 it exhibited the same symptoms as the first silo.

During the entire period that the Harvestore silos were in service, appellant's cattle suffered such maladies as sudden death, decreased milk production, spontaneous abortions, and other reproductive problems. Appellant also claims to have had higher operating costs during this time. Both silos eventually became so clogged with mold-contaminated feed that appellant discontinued their use. Since 1985 the silos have gone unused, still partially full of feed. ³

Evidence obtained by appellant during discovery reveals that Harvestore was aware of the deficiencies in the Harvestore silo system, but continued to sell them. After the sale to appellant, Harvestore continued to send her (and other Harvestore owners) a magazine called "Harvestore Farming/Farmer." This in-house periodical extolled the virtues of the Harvestore silo system, despite Harvestore's knowledge that many users had experienced problems with it.

In April of 1990, appellant's son read an article in a different magazine detailing the similar problems faced by other users of the Harvestore silo system. The article recounted the successful litigation that farmers situated similarly to appellant had brought against Harvestore.

Appellant instituted the present diversity action on August 27, 1991. Appellant alleged fraud and conspiracy to defraud. Harvestore moved for summary judgment on the ground that appellant's cause of action was barred by the applicable three-year statute of limitations. The district court ruled that appellant's cause of action accrued in 1985 at the very latest, for that was when she abandoned the silos as wholly useless. The district court noted that appellant was aware almost as soon as the silos were erected on her property that they did not live up to the representations of Harvestore, and that there was no effort by Harvestore to conceal appellant's cause of action so as to toll the statute of limitations. The district court found that the facts giving rise to the cause of action were plainly visible from the time appellant put the silos into service, and that appellant had actual knowledge that the representations of Harvestore were false; she certainly had reason to know that she had been defrauded. She did not file her complaint until 1991, more than six years later. The district court granted summary judgment in favor of Harvestore. This appeal followed.

II

This court reviews a grant of summary judgment de novo, without deferring to the decision of the district court. The question before the district court, and this court on appeal, is whether the record, when viewed in the light most favorable to the non-moving party, shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. St. Paul Fire & Marine Ins. Co. v. FDIC, 968 F.2d 695, 699 (8th Cir.1992).

Arkansas law is applicable in this diversity case. We review de novo the district court's determination of state law. Salve Regina College v. Russell, 499 U.S. 225, ----, 111 S.Ct. 1217, 1221, 113 L.Ed.2d 190 (1991). The applicable statute of limitations requires that an action for fraud be brought within three years from the date the cause of action accrues. Ark.Code Ann. § 16-56-106; Dupree v. Twin City Bank, 300 Ark. 188, 777 S.W.2d 856, 858 (1989). A cause of action accrues the moment the right to commence an action comes into existence. Courtney v. First Nat. Bank, 300 Ark. 498, 780 S.W.2d 536, 537 (1989). Affirmative action on the part of the defendant charged with fraud to conceal a plaintiff's cause of action will toll the running of the statute of limitations. Hughes v. McCann, 13 Ark.App. 28, 678 S.W.2d 784, 786 (1984). Fraud does suspend the running of the statute of limitations, and the suspension remains in effect until the plaintiff discovers the fraud or should have discovered it by the exercise of reasonable diligence. Id. 678 S.W.2d at 786-87. The widely quoted language on the tolling of the statute of limitations in Arkansas is:

No mere ignorance on the part of the plaintiff of his rights, nor the mere silence of one who is under no obligation to speak, will prevent the statute bar. There must be some positive act of fraud, something so furtively planned and secretly executed as to keep the plaintiff's cause of action concealed, or perpetrated in a way that it conceals itself. And if the plaintiff, by reasonable diligence, might have detected the fraud, he is presumed to have had reasonable knowledge of it.

Wilson v. General Elec. Capital Auto Lease, Inc., 311 Ark. 84, 841 S.W.2d 619, 620-21 (1992).

Appellant argues that her cause of action did not accrue until 1990 because she did not become aware that Harvestore had knowingly misled her until her son read the magazine article detailing the litigation involving the Harvestore silos. Appellant claims that "before she could have known that she had a fraud action she must have known what defendants knew, i.e., that they themselves had knowledge that their representations were false.... She never knew what defendants knew internally about their product until ... April, 1990." (Appellant's Reply Brief at 2 (emphasis in original)).

This argument is groundless. A plaintiff's ignorance of his or her right to sue does not toll the running of the statute of limitations. Wilson v. General Elec. Capital Auto Lease, Inc., 841 S.W.2d at 620. The argument depends on the idea that appellant did not know that Harvestore intended to deceive her, despite ample evidence that...