Clay v. Johns-Manville Sales Corp., JOHNS-MANVILLE

CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)
Writing for the CourtBefore EDWARDS, Circuit Judge, PECK; GEORGE CLIFTON EDWARDS, Jr.
PartiesBankr. L. Rep. P 69,507, 14 Fed. R. Evid. Serv. 1205 John Ed CLAY and wife, Marie Clay, Plaintiffs-Appellants, v.SALES CORP., Raybestos-Manhattan, Inc., Defendants-Appellees. Curtis T. BAILEY and wife, Effie Bailey, Plaintiffs-Appellants, v.SALES CORP., Raybestos-Manhattan, Inc., Defendants-Appellees.
Docket NumberNos. 80-5416,80-5417,JOHNS-MANVILLE
Decision Date26 January 1984

Page 1289

722 F.2d 1289
Bankr. L. Rep. P 69,507, 14 Fed. R. Evid. Serv. 1205
John Ed CLAY and wife, Marie Clay, Plaintiffs-Appellants,
v.
JOHNS-MANVILLE SALES CORP., Raybestos-Manhattan, Inc.,
Defendants-Appellees.
Curtis T. BAILEY and wife, Effie Bailey, Plaintiffs-Appellants,
v.
JOHNS-MANVILLE SALES CORP., Raybestos-Manhattan, Inc.,
Defendants-Appellees.
Nos. 80-5416, 80-5417.
United States Court of Appeals,
Sixth Circuit.
Argued March 3, 1982.
Decided Dec. 7, 1983.
As Amended Dec. 22, 1983.
Rehearing and Rehearing En Banc Denied Jan. 26, 1984.

Page 1290

Michael Y. Rowland (argued), Gilreath, Pryor & Rowland, Knoxville, Tenn., for plaintiffs-appellants.

Fred H. Cagle, Jr. (argued), Frantz, McConnell & Seymour, W. Kyle Carpenter, Knoxville, Tenn., for Johns-Manville.

Donald F. Paine Egerton, McAfee, Armistead & Davis, Harry P. Ogden, Dwight E. Tarwater (argued), Knoxville, Tenn., for Raybestos.

Before EDWARDS, Circuit Judge, PECK, Senior Circuit Judge, and CHURCHILL, * District Judge.

GEORGE CLIFTON EDWARDS, Jr., Circuit Judge.

In these two cases plaintiffs John Ed Clay and Curtis Bailey, each joined by his wife, brought actions for damages against defendants Johns-Manville Sales Corporation and Raybestos-Manhattan, Inc., on the basis of products liability claims resulting from plaintiffs' exposure to asbestos containing products manufactured by the defendants. The cases were tried in the United States District Court for the Eastern District of Tennessee and ended in jury verdicts for the defendants.

Appellants urge that the District Judge committed reversible error in a variety of ways. In our judgment, three of these require our discussion.

Before turning to these issues, however, we must point out that Johns-Manville as previously recognized in a number of cases which we cite in the footnote below, 1 has filed for reorganization under Chapter 11 of the Bankruptcy Act of 1979, 11 U.S.C. Sec. 1101, et seq. Supp. III 1979, in the Bankruptcy Court for the Southern District of New York. This action brought into play the automatic stay provision set out in Sec. 362(a)(1) of the Act, which reads:

Sec. 362. Automatic stay

(a) Except as provided in subsection (b) of this section, a petition filed under section 301, 302, or 303 of this title operates as a stay, applicable to all entities, of--

(1) the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title; ....

The language of Sec. 362(a)(1) quoted above states flatly that filing of a bankruptcy

Page 1291

petition "operates as a stay." Although no motion to stay has been filed by Johns-Manville in this court, we hereby order the appeal as to Johns-Manville to be stayed, pending further action by the parties or the Bankruptcy Court in the Southern District of New York, and we further instruct the clerk to place the file as it pertains to Johns-Manville in inactive status, pending the actions just referred to.

I.

Turning now to the other issues remaining in relation to defendant Raybestos-Manhattan, the first issue pertains to the judge's instruction to the jury on the possible effect of a general 10-year statute of limitations, T.C.A. Sec. 29-28-103, which became effective in the State of Tennessee on July 1, 1978. This statute was amended approximately one year later by the Tennessee legislature by the adoption of T.C.A. Sec. 29-28-103(b) which provided that the 10-year statute of limitations was inapplicable "to any action resulting from exposure to asbestos." The District Judge in these cases instructed the jury in effect that if the jury found that plaintiffs during the year the 10-year statute of limitations was in effect for all cases discovered or should have discovered that they were suffering from asbestosis, then the jury should find for the defendants.

Although it seems obvious to us that the legislature of Tennessee, in adopting the 10-year statute of limitations without any exemption of asbestos disease in the first instance, simply made a serious error which it has now sought to correct, appellees argue that the Tennessee Constitution and the Tennessee Supreme Court have mandated the interpretation which the District Judge gave to this jury. See Article I, Section 20 of the Tennessee Constitution, which provides: "That no retrospective law, or law impairing the obligation of contracts, shall be made." See Ford Motors v. Moulton, 511 S.W.2d 690 (Tenn.1974), cert. denied, 419 U.S. 870, 95 S.Ct. 129, 42 L.Ed.2d 109 (1974), reaffirmed, 533 S.W.2d 295 (Tenn.1976).

This would obviously produce a harsh result from what appears clearly to have been a legislative mistake. Even so, the federal courts in the exercise of their diversity jurisdiction would be obligated to follow state law as that law has been construed by the state's highest court, absent reason to believe from subsequent state court developments that such would no longer be the ruling of the Supreme Court of Tennessee.

Such reason has now been found in a recent case in this court which raised this identical issue from a similar ruling by the same District Judge. In Murphree v. Raybestos-Manhattan, Inc., 696 F.2d 459 (6th Cir.1982), with one of this court's Tennessee judges writing for a unanimous panel, the court held on the principal legal issue presented in our instant case:

"The main question of law on appeal in this diversity case is whether Tennessee's ten year statute of limitations based on sale, adopted July 1, 1978, as T.C.A. Sec. 29-28-103 (action 'must be brought within ten years from the date ... product ... first purchased for use') created for defendant a vested right barring plaintiff's claim despite a July 1, 1979, statutory amendment excluding asbestos-related disease actions from this ten year ceiling. 1 The Tennessee appellate courts have not spoken directly on this issue. We hold that Tennessee's vested rights doctrine based on Tennessee Constitution Article I Section 20 does not bar the claim and that the 1979 amendment is applicable as a matter of law.

"Interpretation of Tennessee's various statutes of limitations governing products liability actions has created troublesome problems for Tennessee courts in the past two decades. In 1969 the Tennessee Supreme Court in Jackson v. General Motors, 223 Tenn. 12, 441 S.W.2d 482 (1969), adopted a rule widely criticized by the bench and bar of the state. It held that Tennessee's limitations statute in products cases begins to run on the date of purchase of the product and not on the date of injury or discovery. Thus, in some cases of latent disease and injury the limitation period expired before discovery by the victim. The legislature acted promptly to overrule the holding in Jackson by amending the statute.

Page 1292

In 1974 the Tennessee Supreme Court, with Justice William Fones dissenting, prevented the amendment from becoming effective. The Court held in Ford Motor Company v. Moulton, 511 S.W.2d 690 (Tenn.1974) that under Tennessee vested rights doctrine, based on Article I, Section 20 of the Tennessee Constitution, the statutory amendment running the limitation period from discovery could not be applied retroactively. Thus, the seller who sold his product outside the statutory period was held to have a vested right to defeat an action for injuries discovered and sued upon during the statutory period.

"In 1975, shortly after the decision in Moulton, a new Tennessee Supreme Court was elected. Of the members of the old Court, only Justice William Fones remained. He became the first Chief Justice of the new Court. The new Court, in an opinion by Justice Joe Henry (a beloved member of that Court until his recent untimely death), promptly overruled Jackson v. General Motors, supra, and held that the limitations statute runs from discovery, not sale. In McCroskey v. Bryant Air Conditioning Co., 524 S.W.2d 487 (Tenn.1975), Justice Henry held that 'reason, logic and fundamental fairness' demanded that the running of the statute begin upon discovery, for it is ludicrous to have a 'law which charges a litigant with sleeping upon any right which he does not have' just as one cannot 'harvest a crop never planted, or burn down a house never built.' 524 S.W.2d at...

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51 practice notes
  • Owens-Illinois, Inc. v. Zenobia, OWENS-ILLINOI
    • United States
    • Court of Appeals of Maryland
    • September 1, 1991
    ...873, 107 S.Ct. 38, 93 L.Ed.2d 174 (1986). The United States Court of Appeals for the Sixth Circuit in Clay v. Johns-Manville Sales Corp., 722 F.2d 1289, 1295 (6th Cir.1983), cert. denied, 467 U.S. 1253, 104 S.Ct. 3537, 82 L.Ed.2d 842 (1984), quoting Weinstein & Berger, Evidence § 804(b)(1),......
  • Maritime Elec. Co., Inc. v. United Jersey Bank, No. 90-6057
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • December 2, 1991
    ...F.2d 124, 126-27 (4th Cir.1983); Wedgeworth v. Fibreboard Corp., 706 F.2d 541, 544 (5th Cir.1983); Clay v. Johns-Manville Sales Corp., 722 F.2d 1289, 1290-91 (6th Cir.1983), cert. denied, 467 U.S. 1253, 104 S.Ct. 3537, 82 L.Ed.2d 842 (1984); Pitts v. Unarco Industries, Inc., 698 F.2d 313, 3......
  • Sec. Investor Prot. Corp. v. Bernard L. Madoff Inv. Sec. LLC, Adv. Pro. No. 08-01789 (SMB) (Substantively Consolidated)
    • United States
    • United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Southern District of New York
    • November 21, 2019
    ...v. Cybermation, Inc. , No. 91 Civil 7474, 1996 WL 376601, at *1 (S.D.N.Y. Apr. 30, 1996) (quoting Clay v. Johns-Manville Sales Corp. , 722 F.2d 1289, 1295 (6th Cir. 1983) ); accord Fed. Hous. Fin. Agency v. Merrill Lynch & Co., Inc. , No. 11 Civ. 6202(DLC), 2014 WL 798385, at *1 (S.D.N.Y. F......
  • U.S. Gypsum Co. v. Mayor and City Council of Baltimore, No. 127
    • United States
    • Court of Appeals of Maryland
    • September 1, 1992
    ...a "motive to develop the testimony" test, saying (325 Md. at 440-442, 601 A.2d at 642-643, quoting Clay v. Johns-Manville Sales Corp., 722 F.2d 1289, 1295 (6th Cir.1983), cert. denied, 467 U.S. 1253, 104 S.Ct. 3537, 82 L.Ed.2d 842 " ' "if it appears that in the former suit a party having a ......
  • Request a trial to view additional results
51 cases
  • Owens-Illinois, Inc. v. Zenobia, OWENS-ILLINOI
    • United States
    • Court of Appeals of Maryland
    • September 1, 1991
    ...873, 107 S.Ct. 38, 93 L.Ed.2d 174 (1986). The United States Court of Appeals for the Sixth Circuit in Clay v. Johns-Manville Sales Corp., 722 F.2d 1289, 1295 (6th Cir.1983), cert. denied, 467 U.S. 1253, 104 S.Ct. 3537, 82 L.Ed.2d 842 (1984), quoting Weinstein & Berger, Evidence § 804(b)......
  • Maritime Elec. Co., Inc. v. United Jersey Bank, No. 90-6057
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • December 2, 1991
    ...F.2d 124, 126-27 (4th Cir.1983); Wedgeworth v. Fibreboard Corp., 706 F.2d 541, 544 (5th Cir.1983); Clay v. Johns-Manville Sales Corp., 722 F.2d 1289, 1290-91 (6th Cir.1983), cert. denied, 467 U.S. 1253, 104 S.Ct. 3537, 82 L.Ed.2d 842 (1984); Pitts v. Unarco Industries, Inc., 698 F.2d 313, 3......
  • Sec. Investor Prot. Corp. v. Bernard L. Madoff Inv. Sec. LLC, Adv. Pro. No. 08-01789 (SMB) (Substantively Consolidated)
    • United States
    • United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Southern District of New York
    • November 21, 2019
    ...v. Cybermation, Inc. , No. 91 Civil 7474, 1996 WL 376601, at *1 (S.D.N.Y. Apr. 30, 1996) (quoting Clay v. Johns-Manville Sales Corp. , 722 F.2d 1289, 1295 (6th Cir. 1983) ); accord Fed. Hous. Fin. Agency v. Merrill Lynch & Co., Inc. , No. 11 Civ. 6202(DLC), 2014 WL 798385, at *1 (S.D.N.......
  • U.S. Gypsum Co. v. Mayor and City Council of Baltimore, No. 127
    • United States
    • Court of Appeals of Maryland
    • September 1, 1992
    ...to develop the testimony" test, saying (325 Md. at 440-442, 601 A.2d at 642-643, quoting Clay v. Johns-Manville Sales Corp., 722 F.2d 1289, 1295 (6th Cir.1983), cert. denied, 467 U.S. 1253, 104 S.Ct. 3537, 82 L.Ed.2d 842 " ' "if it appears that in the former suit a party havi......
  • Request a trial to view additional results

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