Ellis v. Great Southwestern Corp.

Decision Date05 June 1981
Docket NumberNo. 80-1920,80-1920
Citation646 F.2d 1099
PartiesJeff ELLIS, Administrator of the Estate of Ida B. Ellis, Deceased, Plaintiff- Appellant, v. GREAT SOUTHWESTERN CORPORATION, Six Flags, Inc. and Six Flags Over Texas, Defendants-Appellees. Summary Calendar. . Unit A
CourtU.S. Court of Appeals — Fifth Circuit

Young, Patton & Folsom, Nicholas H. Patton, Texarkana, Ark., for plaintiff-appellant.

Fillmore & Camp, Patrick H. O'Neill, Fort Worth, Tex., for defendants-appellees.

Appeal from the United States District Court for the Northern District of Texas.

Before GEE, RUBIN and RANDALL, Circuit Judges.

RANDALL, Circuit Judge:

In this diversity tort suit, the court below held that the plaintiff's claim was barred by the applicable statute of limitations. Although the ultimate application of the appropriate statute of limitations is a comparatively simple business, the intermediate inquiry of which state's statute of limitations should be applied leads us on a merry chase through the murky area in which the Erie doctrine and the federal change of venue statutes intersect. For the reasons set forth below, we reverse and remand.


On July 29, 1976, Ida B. Ellis allegedly suffered a fall while alighting from a "log ride" at the Six Flags Over Texas amusement park in Arlington, Texas. As a consequence of the fall, Mrs. Ellis allegedly sustained a brain injury that subsequently caused her death. On July 28, 1978 exactly two years from the time of her fall, less one day Jeff Ellis, as administrator of her estate, filed this survival and wrongful death action in the United States District Court for the Western District of Arkansas, Hot Springs Division. Ellis claimed that Mrs. Ellis' death was proximately caused by the negligence of the amusement park, and sought damages in the amount of $404,300.

Three corporations were named as defendants in the original complaint. One, Great Southwestern Corporation, was never served with valid process. 1 The other two defendants named were Six Flags, Inc. ("SFI") and Six Flags Over Texas ("SFOT"). The complaint alleged that SFI was a California corporation with no place of business in Arkansas; SFOT was alleged to be a Texas corporation with its principal place of business in Arlington, Texas. Jeff Ellis, the named plaintiff, was alleged to be a citizen of Arkansas. Subject-matter jurisdiction was apparently premised upon diversity of citizenship under 28 U.S.C. § 1332 (1976), although the complaint contained no statement as to either subject-matter jurisdiction or venue.

At the time he filed his original complaint, Ellis had requested that the U.S. Marshal for the Western District of Arkansas serve SFI and SFOT by substituted service on the Arkansas Secretary of State pursuant to the Arkansas long-arm statute, Ark.Stat.Ann. §§ 27-339.1, 27-340 (1979). This request was delivered to the U.S. Marshal on July 31, 1978, and the Arkansas Secretary of State accepted service for these defendants on August 2, 1978.

On August 16, 1978, SFI and SFOT filed a joint motion to dismiss in which they alleged lack of personal jurisdiction, insufficiency of process, and failure to state a claim upon which relief could be granted. This motion was apparently predicated on Fed.R.Civ.P. 12(b)(2), (4), and (6), although that rule was not referred to in the motion. On September 21, 1978, SFI and SFOT filed a supporting affidavit from Gary W. Nielsen, the secretary and corporate counsel of the parent company of both SFI and SFOT. Nielsen averred that SFI and SFOT were both Delaware corporations and that neither had done, was doing, or was authorized to do business in Arkansas.

At the February 20, 1979, docket call, Ellis requested a continuance to develop information relating to jurisdiction, and was given ninety days to respond to the defendants' motion to dismiss. Although he did not conduct any formal discovery or file controverting pleadings or affidavits, Ellis filed a motion to transfer the case on June 11, 1979. The motion alleged only "(t)hat venue in the above-styled and numbered cause properly lies in the United States District Court, for the Northern District of Texas, Ft. Worth Division, and that said cause should be transferred to the aforementioned Court." The motion did not specify whether such transfer was to be under 28 U.S.C. § 1404(a) (1976) or 28 U.S.C. § 1406(a) (1976); neither did it allege that venue was not proper in Arkansas, or that the convenience of the parties or the interests of justice would be served by a transfer to Texas. Nonetheless, on June 14, 1979, the motion to transfer was granted. The transfer order does not indicate whether the transfer was pursuant to section 1404(a) or section 1406(a). The parties and the transferee court, however, have consistently characterized the transfer as having been pursuant to section 1406(a).

On August 6, 1979, SFI and SFOT filed a joint answer, subject to their pending motion to dismiss. The defendants generally denied Ellis' allegations of negligence, and pleaded as an affirmative defense that the suit was barred by the applicable statute of limitations.

Ellis claims to have requested on August 22, 1979, that the U.S. Marshal for the Northern District of Texas serve SFI and SFOT. For reasons not entirely clear from the record or the parties' briefs, however, summons was not issued at that time. The docket sheet in the record on appeal contains only this mysterious notation, dated December 17, 1979:

Re-issued SUMMONS/AMENDED COMPLAINT to C.T. Corporation, Republic National Bank Bldg, Dallas, Texas and Six Flass (sic), Inc., by Secy of State (Clerk's error this was not issued until this date also atty had not mailed $10.00 check).

The docket sheet then indicates that SFOT was personally served on December 21, 1979, with the Marshal's return thereupon filed on December 27, 1979; substituted service on SFI through the Texas Secretary of State was executed on January 11, 1980, and the return thereupon was filed on January 16, 1980. The parties agree that the initial substituted service upon SFI and SFOT through the Arkansas Secretary of State was invalid, and that it was not until the U.S. Marshal in Texas served SFI and SFOT that the court obtained personal jurisdiction over those two defendants.

On January 16, 1980, the defendants moved for summary judgment, arguing that Ellis' suit was barred under either the two-year statute of limitations contained in Tex.Rev.Civ.Stat.Ann. art. 5526 (Vernon Supp.1980), or the three-year statutes of limitations contained in Ark.Stat.Ann. § 27-907 (1979) (wrongful death) and § 37-206 (1962) (survival). 2 The court below granted summary judgment on June 30, 1980, in an unpublished memorandum opinion and accompanying order. The court addressed itself primarily to the Arkansas statutes of limitations, since they were longer than the Texas statute and since Ellis' arguments had focused more specifically on them. The court concluded that it was not until August 22, 1979, that Ellis had completed the actions necessary to toll the running of the Arkansas statutes of limitations: under Arkansas law, according to the court below, Ellis' action was not "commenced" for purposes of tolling the limitations period until summons was issued to the U.S. Marshal in the proper district. Since this date was more than three years after the accrual of the cause of action on July 28, 1976, the court held that Ellis' suit was barred.

A. The Choice of Law Rules to be Applied in Choosing the Proper Statute of Limitations

Our starting point in this case, as in all cases in which subject-matter jurisdiction is premised on diversity of citizenship, is Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), in which the Supreme Court held that there is no federal general common law and that a federal court must apply the laws of the state in which it sits except in those cases governed by the Constitution or laws of the United States. Two of Erie's progeny are particularly relevant. In Guaranty Trust Co. v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945), the Court confirmed that the Erie doctrine extends to state statutes of limitations. And in Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941), the Court confirmed that the Erie doctrine means also that as a general matter, a federal court is bound to apply the choice of law rules of the state in which it sits in determining whether that state's or some different state's substantive law should govern.

Together, these two cases mean that in diversity lawsuits, a federal court is ordinarily bound to look to the choice of law rules of the state in which it sits to determine whether the state courts of that state would apply their own state's statute of limitations or the statute of limitations of some other state. Baron Tube Co. v. Transport Insurance Co., 365 F.2d 858, 860 (5th Cir. 1966) (en banc). This principle may have significant practical effect in those cases in which the state courts of the state in which the federal court sits would apply the substantive law of another state, but would apply their own statute of limitations. 3

The differences between state and federal procedural rules have from time to time been the source of considerable confusion when federal courts have attempted to apply state statutes of limitations in diversity cases. For example, Fed.R.Civ.P. 4, rather than the analogous state procedural rule, governs the manner in which process is to be served on the defendants. Hanna v. Plumer, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965). By contrast, Fed.R.Civ.P. 3 provides that "(a) civil action is commenced by filing a complaint with the court"; yet this rule of federal procedure does not displace state rules which provide, for example,...

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