Dade County v. Rohr Industries, Inc.

• Decision Date: 08 September 1987
• Docket Number: Nos. 85-6004,86-5446,s. 85-6004
• Citation: 826 F.2d 983
• Court: U.S. Court of Appeals — Eleventh Circuit
• Parties: 4 UCC Rep.Serv.2d 770 DADE COUNTY, a political subdivision of the State of Florida, Plaintiff- Appellee, v. ROHR INDUSTRIES, INC., etc., the Flxible Company, etc., Defendants, Grumman Allied Industries, and Grumman Flxible Corporation, Defendants- Appellants. DADE COUNTY, a political subdivision of the State of Florida, Plaintiff- Counterclaim Defendant-Appellee, v. ROHR INDUSTRIES, etc., et al., Defendants, Grumman Allied Industries, Inc., a corporation, and Grumman Flxible Corp., a foreign corporation, Defendants-Counterclaim Plaintiffs-Appellants.

Page 983

826 F.2d 983

4 UCC Rep.Serv.2d 770

DADE COUNTY, a political subdivision of the State of

Florida, Plaintiff- Appellee, v. ROHR INDUSTRIES, INC., etc., the Flxible Company, etc., Defendants,

Grumman Allied Industries, and Grumman Flxible Corporation,

Defendants- Appellants.

DADE COUNTY, a political subdivision of the State of

Florida, Plaintiff- Counterclaim Defendant-Appellee, v. ROHR INDUSTRIES, etc., et al., Defendants,

Grumman Allied Industries, Inc., a corporation, and Grumman

Flxible Corp., a foreign corporation,

Defendants-Counterclaim Plaintiffs-Appellants.

Nos. 85-6004, 86-5446.

United States Court of Appeals, Eleventh Circuit.

Sept. 8, 1987.

Frank A. Shepherd, Roy D. Wasson, Kimbrell & Hamann, P.A., Miami, Fla., for defendants-appellants.

John F. Finney, Dade County Attorney's Office, Miami, Fla., for Dade County.

Appeals from the United States District Court for the Southern District of Florida.

Before JOHNSON and CLARK, Circuit Judges, and MORGAN, Senior Circuit Judge.

MORGAN, Senior Circuit Judge:

I. BACKGROUND

Dade County, a political subdivision of Florida, sued four out-of-state corporations: The Flxible Company (Flxible), Rohr Industries, Inc. (Rohr), Grumman Allied Industries, Inc. (Grumman Allied), and Grumman Flxible Corp. (Grumman Flxible) for breach of contract and breach of express warranty arising out of the sale of certain transit buses to Dade County during 1973. In a non-jury trial, the district court ruled in favor of Dade County and ordered Grumman Allied and Grumman Flxible to pay $650,000 in damages. ¹ Grumman Allied and Grumman Flxible appeal, alleging (1) the statute of limitations bars Dade County's claims; (2) Grumman Flxible should not be held liable because it is not a successor corporation that assumed the liabilities of Flxible; (3) the district court's judgment is unsupported by the evidence and (4) the district court erred in awarding prejudgment interest. We find that the statute of limitations precludes this action, so we reverse solely on that ground.

In 1973, after two rounds of competitive bidding, Dade County awarded Flxible purchase orders for two different series of buses. In a purchase order dated February 1, 1973, Dade County bought seventy-four transit buses, referred to as the "500 series," at a price of $45,800.05 per bus. Flxible delivered all of the 500 series by August 7, 1973. On September 11, 1973, Dade County purchased thirty transit buses, referred to as the "Orange Streakers," at a price of $51,509.00 per bus. Flxible completed delivery of the Orange Streakers by April 24, 1974. Flxible's standard express warranty covered both series of buses. ² On November 15, 1973, Hobart McKay, Dade County's chief operating officer from 1971 to June 1976, was informed of a serious problem of body rust on the new 500 series. McKay examined the buses and found extensive rusting of the body panels at the beltline of the buses as well as rusting around the side and rear window frames. About sixty to ninety days after delivery, the Orange Streakers also developed these same rusting problems. Within the applicable warranty periods of both series of buses, Dade County notified Flxible of the rusting problems. ³

Flxible then attempted to correct the problems by testing several methods of repair. Flxible had some of the buses sanded, reprimed and repainted where they were rusting along the beltline. More extensive repairs were made on three of the 500 series buses, one each done by Fruehauf, Star Body, and Dade County's own inhouse body shop. Shortly after the repair work, all the buses began to rust through again. Although Flxible and Dade County continued to discuss the problem, Flxible did not undertake any further repair work.

Dade County on August 15, 1978, filed suit against Flxible, Rohr, Grumman Allied and Grumman Flxible. The complaint sought to impose liability upon Flxible as the manufacturer and seller of the buses. Dade County alleged that Rohr was liable because Flxible was a mere agency or instrumentality of Rohr. Dade County included Grumman Allied and Grumman Flxible on the theory that since they had obtained the total assets of Flxible from Rohr by merger, sale or transfer they had thereby expressly or impliedly assumed the contract obligations and warranties of Flxible and/or Rohr. The four corporations answered Dade County's complaint and asserted the statute of limitations defense.

On May 8, 1979, the district court entered an order for a pretrial conference, setting the conference for July 20, 1979, and requiring that seven days prior to the conference a pre-trial stipulation be filed. The section of the order requiring the filing of a pretrial stipulation stated the following:

The filing of a motion for continuance or a stipulation of extension by counsel will not extend any deadline in this time schedule. Counsel can expect dismissal or striking of defenses, as appropriate, for failure to file the pre-trial stipulation on time.

Thereafter, Dade County and the defendants jointly moved to continue the pre-trial conference. The district court granted the motion and reset the conference for August 15, 1979.

Then, on August 13, 1979, the district court dismissed Dade County's suit without prejudice because the court had not received the required pre-trial stipulation nor heard from counsel for the plaintiff. The defendants on August 20, 1979, filed a motion to vacate the court's order of dismissal. Dade County took no action. Almost seven months later, on March 11, 1980, the defendants filed their notice of withdrawal of defendants' motion to vacate the order of dismissal. Ten days after defendants withdrew their motion, Dade County filed its motion to vacate the order of dismissal. The clerk of the court, however, refused to accept the motion and returned it to Dade County's counsel for failure to meet the court's filing requirements.

Finally, on March 27, 1980, Dade County filed another motion seeking to set aside the court's order of dismissal. As grounds for its motion, Dade County asserted that it "believed that the filing of the joint motions for a continuance would negate the requirement [in the Pretrial Order] for the filing of pre-trial stipulations ..." According On June 25, 1980, Dade County filed a second complaint which restated the same material allegations against the same four defendants as found in the first complaint. Once again, the defendants answered, alleging, among other things, the statute of limitations defense.

to Dade County, that belief showed "mistake or inadvertence," a basis for relief under Fed.R.Civ.P. 60(b)(1). Defendants opposed Dade County's motion to vacate the order of dismissal, alleging that the negligence in ignoring the language of the pre-trial order was not excusable. On June 18, 1980, the district court denied Dade County's motion. Dade County did not appeal the order of dismissal or the order denying its motion to vacate the order of dismissal.

Thereafter, the defendants moved for summary judgment on the statute of limitations defense. In denying the motion, the court allowed the refiled complaint to relate back to the date of the original complaint for purposes of the statute of limitations. ⁴

Upon the parties' withdrawal of the demand for a jury trial, the court ordered a non-jury trial and heard the parties' evidence in eight days in July 1984. On April 16, 1985, the district court rendered its verdict in favor of Dade County, finding that Grumman Allied and Grumman Flxible, which had acquired Flxible's assets as well as its liabilities, had breached the contracts for sale and warranty on the buses. The court ordered Grumman Allied and Grumman Flxible to pay Dade County $560,000 plus interest and costs. Since the court's opinion did not mention the statute of limitations defense, the defendants moved the district court for relief pursuant to Fed.R.Civ.P. 59 on the ground that the defense was overlooked. The court denied the motion, once again relying on the relation back principle. Eventually, the court awarded $650,000 in compensatory damages and $520,783.57 in prejudgment interest for a total of $1,170,783.57 plus interest. Grumman Allied and Grumman Flxible appealed the judgment to this court.

II. DISCUSSION

To determine the applicable statute of limitations for a diversity case in federal court, we must look to state law. Erie Railroad v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 822, 82 L.Ed. 1188 (1938). The defendants contend that Fla.Stat. Sec. 672.2-725 or alternatively Fla.Stat. Sec. 95.11(2)(b) should apply to this case. ⁵ Section 672.2725(1), eventually renumbered as Sec. 672.725, provides the following An action for breach of any contract for sale must be within four years after the cause of action has accrued. By the original agreement the parties may reduce the period of limitation to not less than one year but may not extend it.

According to the defendants, the buses were movable goods, ⁶ and accordingly governed by Florida's Uniform Commercial Code and Sec. 672.725. The Uniform Commercial Code (UCC) limitation period generally prevails over that contained in a general statute of limitations. Lake Wales Publishing Co., Inc. v. Fla. Visitor, Inc., 335 So.2d 335, 336 (Fla. 2d D.C.A.1976). See Official Comment to UCC Sec. 2-725. Thus, Sec. 672.725's four year limitation period would be applied instead of the five year period for written contracts found in Sec. 95.11(2)(b). Section 672.725, however, was repealed as superfluous by 1974 Fla.Laws c. 74-382, Sec. 26, effective January 1, 1975, when Fla.Stat. Sec. 95.11(3)(k) (1975) made a four year limitation period applicable to all contracts. ⁷ Lake Wales Publishing Co., Inc. v. Fla. Visitor, Inc., 335 So.2d 335 (Fla. 2d D.C.A.1976).

In Dade County v. Ferro, 384 So.2d 1283 (Fla.1980), the Florida Supreme Court ruled that when a cause of action arises from an occurrence which pre-dates the effective date of ...