Alabama Great Southern R. Co. v. Allied Chemical Corp., 71-3534.

• Citation: 467 F.2d 679
• Decision Date: 23 August 1972
• Docket Number: No. 71-3534.,71-3534.
• Parties: ALABAMA GREAT SOUTHERN RAILROAD COMPANY, Plaintiff-Appellant, v. ALLIED CHEMICAL CORPORATION et al., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

467 F.2d 679 (1972)

ALABAMA GREAT SOUTHERN RAILROAD COMPANY, Plaintiff-Appellant, v. ALLIED CHEMICAL CORPORATION et al., Defendants-Appellees.

No. 71-3534.

United States Court of Appeals, Fifth Circuit.

August 23, 1972.

Tally D. Riddell, Quitman, Miss., Lewis T. Booker, Robert F. Brooks, Richmond, Va., for plaintiff-appellant.

Sherwood W. Wise, Thomas G. Lilly, W. F. Goodman, Jr., Junior O'Mara, Jackson, Miss., for defendants-appellees.

Before WISDOM, THORNBERRY and GODBOLD, Circuit Judges.

THORNBERRY, Circuit Judge:

This diversity case presents troublesome questions of state law. On January 25, 1969, a number of cars of one of appellant-Railroad's trains derailed in Laurel, Mississippi, allegedly because of the collapse of one of the wheels on a "jumbo tank car." The derailment caused the tank car and others like it filled with propane gas to explode and burn. A number of people were killed or injured and there was extensive property damage. Appellant immediately began settling claims, thinking itself to be technically liable under Mississippi law.¹ Appellant then filed this suit for $10,000,000 April 23, 1969, alleging common law negligence, strict product liability, and breach of warranty in the design and manufacture of the tank car and the wheel. Appellees are the manufacturer of the wheel (Armco), the builder of the tank car (General American Transportation), and the owner of the tank car (Allied Chemical).

The derailment occurred in Mississippi, the injured parties resided in Mississippi, the damaged property had its situs in Mississippi, and seemingly all other significant incidents of this action were centered in Mississippi. The suit was brought, however, in the Eastern District of Virginia. Subsequently, it was transferred to the Southern District of Mississippi for the convenience of the parties and witnesses pursuant to 28 U. S.C.A. § 1404(a).² After extensive discovery and taking of depositions, appellees moved for summary judgment on various grounds, including the six year Mississippi statute of limitations, Miss. Code Ann. § 722.³

The district court granted the motion in favor of all defendants, concluding that the suit was untimely. The court specifically deferred "ruling on any other aspects of the motions for summary judgment now pending before the Court." The court apparently based its holding on the Mississippi rule that a cause of action in tort generally accrues at the time of the negligent or otherwise wrongful act or omission rather than when the act or omission is discovered or causes harm. Since the car and wheel were sold in 1962, and were initially turned over by Allied to appellant in 1962, the court concluded that the six year statute began to run in 1962 and thus barred appellant's suit filed in 1969.

This appeal presents two difficult questions: first, whether Virginia or Mississippi law on limitation of actions applies; and secondly, how the applicable state law affects the outcome of this lawsuit. Appellant contends that under Van Dusen v. Barrack, 376 U.S. 612, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964), Virginia law applies. Under Virginia law a tort action accrues when injury is sustained rather than when the wrongful act, here the manufacture and design of the defective car and wheel, occurs, Caudill v. Wise Rambler, Inc., 210 Va. 11, 168 S.E.2d 257 (1969). Thus the instant suit filed three months after the derailment would be timely. Appellee replies that whether or not Van Dusen controls, Mississippi law applies.

Van Dusen stands for the proposition that a change of venue pursuant to 28 U.S.C.A. § 1404(a), see note 2, supra, is nothing more than a judicial housekeeping measure for the convenience of the parties and witnesses. Section 1404(a) was not intended to result in a change of law to the prejudice of either party.

We conclude, therefore, that in cases such as the present, where the defendants seek transfer, the transferee district court must be obligated to apply the state law that would have been applied if there had been no change of venue. A change of venue under § 1404(a) generally should be, with respect to state law, but a change of courtrooms.

Van Dusen v. Barrack, supra, at 639, 84 S.Ct. at 821.

In Van Dusen the plaintiffs brought suit in Pennsylvania for damages resulting from a plane crash in Massachusetts. Plaintiffs included personal representatives of the estates of a number of Pennsylvania residents who had died in the mishap. Defendants moved for a change of venue to Massachusetts. Plaintiffs resisted vigorously since they were not qualified to sue under Massachusetts law. The transfer of the case would thus have had the effect of dismissing their suit. The Supreme Court concluded that the case might be transferred but that the move must not result in prejudice to the plaintiffs; Pennsylvania law must control whether the case was to be heard in Massachusetts or Pennsylvania.

Van Dusen thus dictates that the district court should have viewed this case as if it were sitting in Virginia where the suit was filed. Under Erie Railroad v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), the Virginia district court would apply the substantive law of the forum state. A state's substantive law includes its conflict of laws rules, Klaxon Company v. Stentor Electric Manufacturing Company, 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Consequently, to determine whether to apply the Virginia or the Mississippi statute of limitations, we must look to Virginia conflicts law.

In choice of law cases, Virginia sometimes applies its own statute of limitations and sometimes that of the foreign jurisdiction. Virginia considers its limitation law procedural, Owens v. Combustion Engineering Incorporated, 279 F.Supp. 257 (E.D.Va.1967), and thus generally controlling in a Virginia forum.^3A However, when the right sued upon is created by a foreign statute that contains a "built in" limitation period, as in a wrongful death statute that establishes the right to sue and the time within which suit must be brought, Virginia courts adhere to the foreign limitation statute. See, Sherley v. Lotz, 200 Va. 173, 104 S.E.2d 795 (Va.1958); Norman v. Baldwin, 152 Va. 800, 148 S. E. 831 (Va.1929). The rationale of the Virginia courts for this approach is that the "built in" limitation provision affects the right asserted as well as the remedy, while a foreign jurisdiction's general statute of limitations affects only the remedy and is thus procedural and not applicable in a case tried in Virginia. See Sherley v. Lotz; Norman v. Baldwin, supra.

Regrettably, Virginia jurisprudence does not definitively resolve our choice of law problem. Since the instant case is grounded on common law, not a statutory basis, Sherley and Norman, supra, are not controlling. We think, however, that they provide substantial guidance. The criterion used in both cases in determining whether to apply the Virginia limitation period or that of the foreign jurisdiction was whether the foreign statute affected the right at issue or only the remedy. In the instant case, the foreign jurisdiction's statute, Mississippi's, clearly bars not only the remedy but the right itself. Miss. Code Ann. § 743.

§ 743. Completion of limitation extinguishes right.

The completion of the period of limitation herein prescribed to bar any action, shall defeat and extinguish the right as well as the remedy; . . ..

See Hawkins v. Southern Pipe and Supply Company, 259 So.2d 696 (Miss. 1972).

We conclude, therefore, that even though the Mississippi period of limitation is not part of a statute creating the right sued upon, Virginia courts would apply it in the instant case since it bars the right of action and not merely the remedy. The approach we predict the Virginia courts would take is that set forth in Restatement (Second) of Conflict of Laws § 143:

§ 143. Foreign statute of limitations barring the right.

An action will not be entertained in another state if it is barred in the state of the otherwise applicable law by a statute of limitations which bars the right and not merely the remedy.

See generally Ramsay v. Boeing Company, 432 F.2d 592 (5th Cir. 1970). Mississippi is the "state of the otherwise applicable law," since Virginia applies the law of the place of the wrong in tort cases. Atlantic Coast Line Railroad v. Withers, 192 Va. 493, 65 S.E.2d 654 (Va.1951). Having decided that Virginia would look to Mississippi law we must now determine what the Mississippi law is.

A number of Mississippi cases hold that a cause of action in tort accrues at the time of the wrongdoing or "time of delivery" rather than when the wrong is discovered or causes harm, e. g., M. T. Reed Const. Co. v. Jackson Plating Co., 222 So.2d 838 (Miss.1969); Wilder v. St. Joseph Hospital, 225 Miss. 42, 82 So.2d 651 (Miss.1955); Johnson v. Crisler, 156 Miss. 266, 125 So. 724 (Miss. 1930). Appellees urge that these cases establish an ironclad "time of delivery" rule barring this suit that was filed more than six years after the sale of the wheel and tank car alleged to be defective. Appellant responds that the cited cases are distinguishable from the case at hand and should be limited to then facts.

Again, as with the question of whether a Virginia court would apply its own statute of limitations or look to Mississippi's, we do not have clear guidance from the state court decisions. Mississippi's courts have apparently never been called upon to interpret the state's statute of limitations in a products liability case. In Wilder, supra, the Mississippi Supreme Court held that the statute of limitations barred a medical malpractice suit filed in 1954 seeking recovery for negligence that occurred during a 1939 operation. The plaintiff alleged that sponges and other medical paraphernalia had been left inside her after the incision had been sewed up. The court, after stating that in malpractice cases the majority rule is that a cause of...