Building Erection Services, Inc. v. Jlg, Inc., 03-2766.

• Decision Date: 16 July 2004
• Docket Number: No. 03-2766.,03-2766.
• Citation: 376 F.3d 800
• Parties: BUILDING ERECTION SERVICES, INC., Plaintiff/Appellant, v. JLG, INC., Defendant/Appellee, Terex Corporation, Inc.; Powerscreen International, PLC; Powerscreen Holdings USA, Inc.; Powerscreen USA, Inc., Third Party Defendants/Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

376 F.3d 800

BUILDING ERECTION SERVICES, INC., Plaintiff/Appellant, v. JLG, INC., Defendant/Appellee, Terex Corporation, Inc.; Powerscreen International, PLC; Powerscreen Holdings USA, Inc.; Powerscreen USA, Inc., Third Party Defendants/Appellees.

No. 03-2766.

United States Court of Appeals, Eighth Circuit.

Submitted: January 12, 2004.

Filed: July 16, 2004.

Appeal from the United States District Court for the Western District of Missouri, Fernando Gaitan, J Alok Ahuja, argued, Kansas City, MO (Peter F. Daniel and Dale T. Smith, Kansas City, on the brief), for appellant.

George P. Coughlin, argued, Kansas City, MO (Patrick J. Kaine, Kansas City, on the brief), for appellee Powerscreen.

Kurt D. Maahs, argued, Kansas City, MO (James C. Morrow and Matthew J. Hempy, Kansas City, on the brief), for appellee JLG.

Before BYE, LAY, and SMITH, Circuit Judges.

BYE, Circuit Judge.

Building Erection Services, Inc. (BES) brought several claims against JLG Industries, Inc., (JLG) arising out of the failures of two cranes owned by BES and manufactured by JLG. Although the crane failures occurred in Missouri, the district court concluded BES's causes of action "originated" in Kansas under Missouri's borrowing statute, Mo.Rev.Stat. § 516.190, and were barred by a two-year Kansas statute of limitations. BES contends its causes of action originated in Missouri, a five-year Missouri statute of limitations applies, and its claims are timely under Missouri law. We affirm in part, reverse in part, and remand for further proceedings.

I

BES is a Kansas corporation that erects structural steel and metal buildings, and employs cranes to do so. JLG is a Pennsylvania corporation that designs, manufactures, and sells boom truck cranes. In October 1991, BES purchased a new 1991 model JLG crane (the new crane). In February 1992, BES purchased a used 1990 model JLG crane (the used crane).

On December 18, 1995, the eyebolt on the used crane failed while operating at a job site in Kansas City, Missouri. The incident caused damage to the crane, the truck bed on which the crane was mounted, and the load of steel joists being moved by the crane at the time. Concerned about the cause of the failure, BES sent the failed eyebolt to Sherry Laboratories for an inspection by a metallurgical engineer. On January 8, 1996, Sherry sent a report to BES concluding the cause of the failure was a brittle fracture due to a crack likely present in the metal during the manufacturing process.

On September 30, 1999, the new crane malfunctioned at a job site in St. Joseph, Missouri. The crane was lifting two painters in a personnel basket when the boom suddenly retracted, causing the basket to drop on the roof of a home. The incident caused damage to the home and personal injuries to the two painters, both of whom have since sued BES.

BES filed suit against JLG on November 21, 2000, for damages arising from the December 1995 failure of the used crane and the September 1999 failure of the new crane. BES asserted claims for strict liability, negligence, and breach of warranty. BES sought to recover the economic damages caused by the crane failures, as well as indemnity or contribution for any liability BES may have to the homeowners or the painters as a result of the new crane's failure.

JLG filed a third-party complaint against Powerscreen USA, Inc., alleging Powerscreen was responsible for BES's claims pursuant to an Asset Purchase Agreement between JLG and Powerscreen. Powerscreen thereafter moved for summary judgment on all of BES's claims on statute-of-limitations grounds. Powerscreen relied upon Missouri's borrowing statute, Mo.Rev.Stat. § 516.190, which applies the laws of another state when a cause of action "originate[s]" in that state. Powerscreen argued BES's claims originated in Kansas and were therefore subject to Kansas's two-year statute of limitations, Kan. Stat. Ann. § 60-513.

BES opposed the summary judgment motion, arguing the causes of action originated in Missouri because the cranes failed in Missouri, and therefore the claims were timely under Missouri's five-year statute of limitations, Mo.Rev.Stat. § 516.120(4). In the alternative, BES argued the claims relating to the second crane failure were timely even under Kansas law, because those claims accrued on the day the new crane failed in September 1999 and the suit was filed within two years.

The district court agreed with Powerscreen's position on all points, and granted summary judgment in favor of both JLG and Powerscreen. The district court held all the claims originated in Kansas in January 1996, when and where BES received the metallurgical report describing the brittle fracture in the used crane's eyebolt. The district court applied Kansas's two-year statute of limitations, held the statute ran as of February 1998, and barred all claims arising from either crane failure. BES brought a timely appeal.

II

We review the district court's grant of summary judgment on statute-of-limitations grounds de novo. United States v. Godbout-Bandal, 232 F.3d 637, 639 (8th Cir.2000).

Missouri's borrowing statute provides "[w]henever a cause of action has been fully barred by the laws of the state, territory or country in which it originated, said bar shall be a complete defense to any action thereon, brought in any of the courts of this state." Mo.Rev.Stat. § 516.190. The term "originated" means "accrued." See, e.g., Nettles v. Am. Tel. & Tel. Co., 55 F.3d 1358, 1362 (8th Cir.1995) (citing Thompson v. Crawford, 833 S.W.2d 868, 871 (Mo.1992) (en banc)). Under Missouri law, a cause of action accrues when "the damage resulting therefrom is sustained and is capable of ascertainment." Mo.Rev.Stat. § 516.100. "Damages are sustained and capable of ascertainment when the fact of damage can be discovered or made known." Rajala v. Donnelly Meiners Jordan Kline, P.C., 193 F.3d 925, 928 (8th Cir.1999) (internal quotations and citations omitted).

The district court held "the fact of damage was capable of ascertainment by BES when it received the Sherry Laboratories report at its offices in Olathe, Kansas and realized that the Eye Bolt anchor was defective." Add. at 12. Because that event occurred in Kansas, the district court held the claims originated in Kansas and the statute of limitations began running upon BES's receipt of the metallurgical report. We respectfully disagree.

A. The Tort Claims

We first address when the tort claims accrued. BES knew it had been damaged by the used crane's failure on December 18, 1995, the day the used crane failed in Kansas City, Missouri. The failure caused obvious damage to the used crane itself, the truck bed on which the crane was mounted, and the load of steel joists being moved by the crane. Thus, BES's damages were sustained and capable of ascertainment at that time. Likewise, BES knew it had been damaged by the new crane's failure on September 30, 1999, the day the crane's boom malfunctioned in St. Joseph, Missouri. On that day, BES knew the crane no longer worked, even if BES did not fully appreciate the cause or extent of the crane's problem, and knew the crane had damaged the roof of a home and caused personal injuries to two painters. Thus, BES's damages were sustained and "capable of ascertainment" as that phrase has been construed under Missouri law. See Nettles, 55 F.3d at 1362-63 ("Under the capable-of-ascertainment test ... a cause of action accrues when the injury to plaintiff was complete as a legal injury.... The most that is required is that some damages have been sustained, so that the claimants know that they have a claim for some amount.") (internal citations and quotations omitted); Day v. Devries & Assocs., P.C., 98 S.W.3d 92, 96 (Mo.Ct.App.2003) ("Damage is sustained and capable of ascertainment when the damage can be discovered or made known, even if the extent of the damage remains unknown. The extent of potential damages need not even be knowable. All that is required for accrual is that some damage be sustained and capable of ascertainment.") (internal citations omitted).

BES's causes of action did not originate upon its receipt of the expert's report on January 8, 1996; that was merely the day BES knew the potential cause of its damages. If we were to hold BES's causes of action accrued upon receipt of the metallurgical report, we would be adopting the implicit premise that an injured party does not know it has been damaged until it receives an expert's report addressing the potential cause of damage. We refuse to do so because we see no logical connection between the receipt of a report addressing a liability issue and the accrual of the cause of action itself. See King v. Nashua Corp., 763 F.2d 332, 333 (8th Cir.1985) (indicating the relevant inquiry "focuses on the damage and not the discovery of its cause").

Next, we address where the tort claims accrued. As JLG and Powerscreen's reasoning goes, the claims accrued in Kansas even though the cranes failed in Missouri because a corporation can only be injured through its pocketbook, and BES's principal place of business (and pocketbook) is in Kansas. We disagree. The crane failures caused damage to BES's physical property while the property was located in Missouri. "[W]hen a commercial entity sues for tortious injury to its physical property, the `injury' takes place for jurisdictional purposes where the property has been damaged." Pennzoil Prods. Co. v. Colelli & Assocs., Inc., 149 F.3d 197, 202 (3d Cir.1998) (quoting Carty v. Beech Aircraft Corp., 679 F.2d 1051, 1065 (3d Cir.1982)). We believe this rule applies for accrual purposes as well; when a commercial entity sues for injury to its physical property, the claim accrues where the property was damaged.

JLG and Powerscreen contend our decision in Rajala controls and requires us to decide BES's injuries accrued in Kansas. Rajala dealt with a Kansas plastics manufacturing business, U.S.C. Industries, Inc. (U.S.C.I.),...