Hartford v. Gibbons & Reed Co.

• Citation: 617 F.2d 567
• Decision Date: 19 March 1980
• Docket Number: Nos. 78-1857,78-1884,s. 78-1857
• Parties: The HARTFORD, a Connecticut Corporation and U. V. Industries, Inc., a Maine Corporation, Plaintiffs, v. GIBBONS & REED CO., a Utah Corporation, Defendant-Counterclaimant. Don LEE, Defendant-Counterclaimant Appellant-Cross-Appellee, v. The HARTFORD, a Connecticut Corporation, and U. V. Industries, Inc., a Maine Corporation, Counter-Defendants Appellees-Cross-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

Page 567

617 F.2d 567

The HARTFORD, a Connecticut Corporation and U. V.

Industries, Inc., a Maine Corporation, Plaintiffs, v. GIBBONS & REED CO., a Utah Corporation, Defendant-Counterclaimant.

Don LEE, Defendant-Counterclaimant Appellant-Cross-Appellee, v. The HARTFORD, a Connecticut Corporation, and U. V.

Industries, Inc., a Maine Corporation,

Counter-Defendants Appellees-Cross-Appellants.

Nos. 78-1857, 78-1884.

United States Court of Appeals, Tenth Circuit.

Argued Jan. 23, 1980.

Decided March 19, 1980.

Kathleen Davison Lebeck (Richard C. Civerolo, Albuquerque, N. M., with her on brief), of Civerolo, Hansen & Wolf, Albuquerque, N. M., for The Hartford and U.V. Industries, Inc.

Leland S. Sedberry (Douglas A. Baker, Albuquerque, N. M., with him on brief), of Modrall, Sperling, Roehl, Harris & Sisk, Albuquerque, N. M., for Don Lee.

Before BARRETT, DOYLE and LOGAN, Circuit Judges.

BARRETT, Circuit Judge.

This appeal and cross-appeal arise out of an off-road vehicular accident, which occurred on October 17, 1973, between two large earth moving vehicles. The circumstances surrounding the accident are not material in view of our disposition.

On April 28, 1977, U.V. Industries, Inc. and its insurance carrier, The Hartford, filed an action in state court seeking compensation from Gibbons and Reed Company for damages sustained to a vehicle owned by U.V. Industries which was involved in the accident. Following service of summons, Gibbons and Reed petitioned for removal to the United States District Court for the District of New Mexico. The petition for removal was granted.

On November 3, 1977, a first amended complaint was filed by U.V. Industries and The Hartford adding, as a party defendant, Don Lee, the driver of the Gibbons and Reed vehicle. Gibbons and Reed, and Lee answered the plaintiffs' complaint, generally denying the allegations contained therein and asserting various affirmative defenses. A counterclaim was also filed by both Gibbons and Reed, and Lee against U.V. Industries, Inc., and The Hartford, for permanently disabling injuries sustained by Lee as a result of the accident. ¹

After a limited amount of pretrial discovery, Hartford and U.V. Industries filed a motion to dismiss the counterclaim based on the bar of the three-year statute of limitations contained in N.M.Stat.Ann. § 23-1-8 (1953 Comp.), (currently N.M.Stat.Ann. § 37-1-8 (1978 Comp.)). The District Court issued a memorandum opinion, ruling that the counterclaim for personal injuries was barred by the statute of limitations, except to the extent that it could be used as a set-off to any recovery received by the plaintiffs on their complaint. (R., Vol. I, pp. 175-178). Accordingly, the issues underlying both the complaint and counterclaim were submitted to the jury, with a stipulation between the parties that the District Court adjust the damages awarded in accordance with its prior ruling.

Following a four-day trial to a jury of six, verdicts were entered against the plaintiffs on their complaint and in favor of Gibbons and Reed, and Lee on their counterclaims in the sum of $225,000.00. Following submission of these verdicts to the Court, pursuant to the parties' previous stipulation, the District Court ruled:

This Court had previously held that the claim for personal injuries was barred by the New Mexico statute of limitations, except that it could be used to offset any recovery of the plaintiffs on their original complaint. The Jury has found that the original plaintiffs were to receive nothing on their original complaint, but that the defendants were to receive $225,000.00. Under the circumstances the award for $225,000.00 was really barred by the statute of limitations. By stipulation of the parties it was agreed that the case would be submitted with the verdicts which were submitted and that the Court would adjust the matters between the parties.

Consequently, it appears to the Court that neither party is to receive anything by virtue of the Jury's verdict.

IT IS, THEREFORE, ORDERED AND ADJUDGED that neither the plaintiffs nor the counterclaimants receive anything by virtue of the verdict and that neither party is entitled to any relief . . .

(R., Vol. I, pp. 298-299).

Various issues are presented on appeal. However, our holding that Don Lee's counterclaim for personal injuries is barred by the statute of limitations is dispositive. ²

I.

We have not found any controlling New Mexico law on the question of whether a plaintiff, by instituting an action, waives the defense of the statute of limitations to a compulsory counterclaim asserted after expiration of the applicable period of time. Thus, we must construe the law of the State of New Mexico in a manner in which the Supreme Court of New Mexico would so construe if faced with similar facts and issues. City of Aurora, Colorado v. Bechtel Corp., 599 F.2d 382 (10th Cir. 1979). In so doing, we may consider all resources, including decisions of New Mexico, other states, federal decisions, and the general weight and trend of authority. Burgert v. Tietjens, 499 F.2d 1 (10th Cir. 1974). Of course, the views of the District Court interpretive of New Mexico laws carry extraordinary force on appeal where there are no controlling state decisions providing clear precedent. Rasmussen Drilling, Inc. v. Kerr-McGee Nuclear Corp., 571 F.2d 1144 (10th Cir. 1978), cert. denied, 439 U.S. 862, 99 S.Ct. 183, 58 L.Ed.2d 171 (1978).

Statutes of repose serve several well defined purposes. First, by requiring litigation to be commenced within a prescribed period of time the reliability and availability of evidence is assured. Second, both defendants and the courts, are protected from the burdens necessarily entailed in protracted controversies of unknown potential liability. Thus, statutes of limitation give a measure of finality to the judicial system. They bar litigation of stale claims where plaintiffs have slept on their rights and evidence may have been lost or witnesses' memories faded.

These prescriptive statutes of limitation are, by their very nature, arbitrary. They operate against even the most meritorious claims without regard to the nature of the injury involved, the social considerations or the emotional appeal of the claim.

The harshness in their application, however, has been dulled somewhat by the judicial maxim that "the law favors the right of action rather than the right of limitation." Slade v. Slade, 81 N.M. 462, 468 P.2d 627, 628 (1970). Nevertheless, it is often stated that "exceptions to statutes of limitations must be construed strictly". Slade v. Slade, supra, 468 P.2d at 628.

In determining which statute of limitation to apply to a particular claim, New Mexico has taken the view that it is "the nature of the right sued upon, not the form of the action or relief demanded, (which) determines the applicability of the statute of limitations." Taylor v. Lovelace Clinic, 78 N.M. 460, 432 P.2d 816, 818 (1967). In this case, two particular claims are asserted one, for property damage, and the other for personal injuries. All parties agree that N.M.Stat.Ann. § 23-1-4 (1953 Comp.) (currently, N.M.Stat.Ann. § 37-1-4 (1978 Comp.)) controls U.V. Industries, Inc.'s and The Hartford's claim for property damage. This statute prescribes a four year period of limitations. Lee contends that the same section also covers his action for personal injuries. We disagree.

Section 23-1-8 N.M.Stat.Ann. (1953 Comp.) (currently, N.M.Stat.Ann. § 37-1-8 (1978 Comp.)) has consistently been held by New Mexico courts to be the applicable statute of limitations for claims for personal injuries. See: New Mexico Electric Service Co. v. Montanez, 89 N.M. 278, 551 P.2d 634 (1976); Roybal v. White, 72 N.M. 285, 383 P.2d...