Atkins v. Schmutz Manufacturing Company

Citation435 F.2d 527
Decision Date10 December 1970
Docket NumberNo. 11566.,11566.
PartiesDonald L. ATKINS, Appellant, v. SCHMUTZ MANUFACTURING COMPANY, Incorporated, Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (4th Circuit)

James A. Eichner, Richmond, Va. (George E. Allen, Jr., and Allen, Allen, Allen & Allen, Richmond, Va., on brief), for appellant.

Frank O. Meade, Danville, Va. (Meade, Tate & Meade, Danville, Va., on brief), for appellee.

Before HAYNSWORTH, Chief Judge, and SOBELOFF, BOREMAN, BRYAN, WINTER, CRAVEN and BUTZNER, Circuit Judges sitting en banc on resubmission.

HAYNSWORTH, Chief Judge:

When this troublesome case first came before this court, a divided panel upheld its summary dismissal on the ground that its maintenance was barred by Virginia's statute of limitation. Treating the law of Virginia as controlling, a majority of the panel held that the running of the statute was not tolled by the filing and pendency of a previous action in the Western District of Kentucky.1

Subsequent reconsideration by the court en banc resulted in a conclusion by a majority of a divided court that equitable considerations partially foreclosed assertion of the bar of the statute.2

There followed a petition for further reconsideration and a conclusion by the members of the court that proper disposition of the appeal required treatment by the full court of the initial issue.

We conclude that the tolling effect of the pendency of an identical suit in another federal court is to be determined as a matter of federal, rather than state, law and that the Virginia statute of limitations was tolled by the action brought by Atkins in the Western District of Kentucky. Our conclusion rests principally upon a consideration of the unitary nature of the federal court system. It draws strong support from the fact that in the analogous situation of transfers from one district court to another, after the period of limitation has run, we look to federal law to reach the conclusion that the pendency of the action in the transferor district tolls the running of the statute. By whatever procedural means prosecution of the claim is transferred from one district court to another, the tolling effect of the action in the first district should be determined under the same body of law.

The plaintiff, Atkins, a resident of Virginia, was severely injured while working for his employer in Virginia when his feet were caught in a machine manufactured by the defendant, Schmutz Manufacturing Company. He alleges that the accident was caused by design and construction defects in the machine. Schmutz is a Kentucky corporation with its sole place of business in that state.

At the time of the accident, Virginia had no long-arm statute, and Atkins' counsel reasonably concluded that personal jurisdiction of Schmutz could not be obtained in Virginia. Consequently, he filed a personal injury action in the United States District Court for the Western District of Kentucky, where Schmutz had its principal place of business. That action was commenced within Virginia's two-year period of limitation for tort actions, but not within Kentucky's one year period of limitation. Extensive discovery and other pre-trial proceedings followed, for everyone reasonably assumed that the applicable limitation period was that of Virginia (the state where the cause of action arose) and not that of Kentucky (the forum state).3 That assumption was sharply upset, however, when the Kentucky Court of Appeals held that Kentucky's limitation period was applicable in actions brought in the courts of that state if the limitation period of the state where the cause of action arose was longer.4

Applying Kentucky's new rule, the District Court for the Western District of Kentucky dismissed the action as time-barred. The Sixth Circuit affirmed,5 considering itself bound to follow Kentucky's choice of law6 and thus to apply Kentucky's one year period of limitation,7 and to do it even in cases previously filed in reliance upon Kentucky's earlier choice of law rule.8 The Supreme Court denied a writ of certiorari.9

In the meantime, Virginia had enacted a long-arm statute under which plaintiff believed personal jurisdiction of the defendant could be obtained in Virginia.10 Before the Sixth Circuit's mandate became final, this action was commenced in the Western District of Virginia. Dismissal followed upon the ground that Virginia's two year limitation period had run before this action was filed and was untolled by the proceedings in the federal courts in the Sixth Circuit.11

In this diversity case, Guaranty Trust Co. v. York, 326 U.S. 99, 65 S.Ct. 1464, compels adoption of the requirement, applicable in the state courts of Virginia, that actions for personal injuries "be brought within two years next after the right to bring the same shall have accrued."12 Atkins' action against Schmutz accrued when he was injured, Caudill v. Wise Rambler, Inc., 210 Va. 11, 168 S.E.2d 257, and he brought an action within two years of that date. But that action was terminated without any decision on the merits, and Schmutz, relying on its interpretation of Virginia law, asserts that its pendency had no tolling effect.

If, in determining the tolling effect of the pendency of the action in the federal courts of Kentucky, we were required, as we are in determining the applicable period of limitation, to follow the state law of Virginia, it is possible, although not certain, that we would uphold the time-bar. Few cases involving the tolling effect of prior actions have been decided by the Virginia Supreme Court of Appeals, but in a case decided in 1938, Jones v. Morris Plan Bank of Portsmouth, 170 Va. 88, 195 S.E. 525, that court dealt with a situation somewhat similar to the one before us.

The plaintiff in Jones had filed an action against the defendant in the Circuit Court of the City of Suffolk to recover damages for alleged malicious abuse of civil process. Fourteen months later, it was dismissed "for lack of proper venue duly pleaded."13 Later, Jones asserted the same cause of action against the same defendant in the Circuit Court of the City of Portsmouth. By then, the two year period of limitation had run, unless its running was interrupted by the pendency of the action in the Circuit Court of the City of Suffolk. Construing § 5826 of the Virginia Code (now § 8-34), the Virginia Supreme Court of Appeals found no basis for granting relief to a plaintiff whose prior suit was brought in the wrong forum or was dismissed otherwise than upon the merits.14

We cannot be confident, however, that the result in Jones would necessarily compel the Virginia Supreme Court of Appeals to reach the same result if it were called upon to decide the case before us. Some indication that it might not may be found in the more recent case of Weinstein v. Glens Falls Insurance Co., 202 Va. 722, 119 S.E.2d 497. An action was brought within the one year period of limitation to recover on a policy of insurance. During its pendency it was discovered that recovery was unavailable unless the policy were reformed. Reformation could be accomplished only by bringing a separate suit in equity. The equity suit was brought in the same court before dismissal of the law action but more than one year after the loss occurred. The Virginia Supreme Court of Appeals rejected the company's contention that the statute barred the institution of the reformation suit, holding that, as a matter of judicial treatment, the newly filed suit in equity was a continuation of the earlier action at law. There was no reference to the tolling statute, which would not have saved the case.

Virginia's Supreme Court of Appeals has recently indicated its reluctance in deciding statute of limitation questions to reach results which are unjust and inequitable. Caudill v. Wise Rambler, Inc., supra. Clearly it would be unjust and inequitable in the circumstances of this case not to give a tolling effect to the prior action. Enforcement of the time-bar here would serve none of the underlying purposes of the statute of limitation and equitable considerations, absent in the Jones case, cry for mitigation of the statute's harshness.

Atkins has been diligent and without fault in his efforts to prosecute his claim against Schmutz. His belief that the Western District of Kentucky was the correct forum for litigating the merits of his claim and his belief that he had two years in which to commence his action were entirely reasonable and consistent with established precedents in Kentucky and in the Sixth Circuit.

Nothing Atkins has done or failed to do has prejudiced in any way Schmutz's ability to defend this suit on the merits. This is not a case where a time lapse between the end of one suit and the commencement of another might cause the defendant to think that the litigation has come to an end. From the initial filing of the complaint in the District Court in Kentucky, these parties have been continual adversaries before one federal tribunal or another pressing their respective claims. More importantly, Atkins asserted his claim in a court of competent jurisdiction within the period prescribed by Virginia and both parties prepared for litigation on the merits.15 Allowing Atkins to litigate the merits of his claim would not frustrate the oft-stated purpose of statutes of limitation to compel the assertion of a right of action promptly while the evidence is available and still relatively fresh.16 Allowing Atkins to litigate the merits of his claim at this time would be consistent with the basic purpose reflected in the tolling rule — saving the right of action for plaintiffs who, without fault, have been unable to obtain an adjudication on the merits.

This, then, is a case where the parties have obtained the full protection the statute of limitation was designed to afford, and they have obtained it in the precise manner required by the statute — institution of a suit within the prescribed...

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