Lafferty v. St. Riel

• Decision Date: 13 July 2007
• Docket Number: No. 05-5357.,05-5357.
• Citation: 495 F.3d 72
• Parties: Debra A. LAFFERTY; Randolph C. Lafferty, her Husband, Appellants v. Gito ST. RIEL; Achenbach's Pastries, Inc.; John Doe; Mary Doe; ABC Partnerships; DEF Corporations; XYZ Corporations, Jointly, Severally and/or in the Alternative.
• Court: U.S. Court of Appeals — Third Circuit

495 F.3d 72

Debra A. LAFFERTY; Randolph C. Lafferty, her Husband, Appellants v. Gito ST. RIEL; Achenbach's Pastries, Inc.; John Doe; Mary Doe; ABC Partnerships; DEF Corporations; XYZ Corporations, Jointly, Severally and/or in the Alternative.

No. 05-5357.

United States Court of Appeals, Third Circuit.

Submitted Under Third Circuit LAR 34.1(a) January 9, 2007.

Opinion filed: July 13, 2007.

As Amended July 19, 2007.

Daniel J. Cahill, Esquire, Youngblood, Corcoran, Lafferty & Hyberg, Linwood, NJ, for Appellants.

Lloyd G. Parry, Esquire, Davis, Parry & Tyler, Philadelphia, PA, for Appellees.

Before: McKEE, AMBRO and FISHER, Circuit Judges.

OPINION OF THE COURT

AMBRO, Circuit Judge.

We deal with a deceptively simple issue: which filing date applies for statute of limitations purposes when a federal district court transfers venue to another district under 28 U.S.C. § 1406(a)? Here, a federal district court in New Jersey with diversity jurisdiction transferred a personal injury claim filed within the limitations statutes of both New Jersey and Pennsylvania to another federal district court in Pennsylvania because the New Jersey district was an improper venue. The United States District Court for the Eastern District of Pennsylvania held that recovery was barred because the transfer occurred after the running of Pennsylvania's statute of limitations. Lafferty v. St. Riel, 397 F.Supp.2d 602, 603-04 (E.D.Pa.2005).

That response in this uncertain area is well-reasoned, but we disagree. Even though the suit was filed in an improper, transferor forum in New Jersey, it was timely here because it was filed within the limitations statute for the transferee forum in Pennsylvania, as the filing date for a case transferred under § 1406(a) is that of the initial filing in the improper forum.

I. Factual Background

On July 17, 2003, Gito St. Riel, who was driving a delivery truck for Achenbach Pastries (together, "defendants"), was in an automobile accident in Pennsylvania with Debra Lafferty. Almost two years later (July 11, 2005), Lafferty filed a personal injury claim (and her husband filed a loss of consortium claim as well) in the United States District Court for the District of New Jersey. As St. Riel and Achenbach Pastries were citizens of Pennsylvania, and the Laffertys citizens of New Jersey, federal diversity jurisdiction existed under 28 U.S.C. § 1332.¹ They asserted venue under 28 U.S.C. § 1391(a).² Sixteen days later (July 27, 2005), the New Jersey District Court transferred the action sua sponte, pursuant to 28 U.S.C. § 1406(a),³ to the Eastern District of Pennsylvania, and the case was docketed there a few days later. Two months later, defendants filed a motion for judgment on the pleadings, asserting that the Laffertys' action was time-barred by Pennsylvania's two-year statute of limitations for personal injury claims.

The Eastern District of Pennsylvania Court determined that the doctrine of Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), requires courts to "apply the substantive law, including conflicts of laws rules" and "statute[s] of limitations," "of the state where the District Court sits . . ., in this case, the law of Pennsylvania" whenever venue was improper. Lafferty, 397 F.Supp.2d at 603-04 (citations omitted). The Court noted that Pennsylvania's statute of limitations for personal injury actions is two years. 42 Pa. Cons.Stat. Ann. § 5524(2).⁴ It further noted that this case was barred because it did not fall under exceptions to the state limitations period, 42 Pa. Cons.Stat. Ann. §§ 5103(a), (b)(1). It therefore concluded that the Laffertys' action was untimely because the case was transferred ten days after the Pennsylvania statute of limitations had run—counting the date of the transfer to the Eastern District of Pennsylvania (July 27, 2005) rather than the date of the initial filing in the District of New Jersey (July 11, 2005) as the filing date. Finally, the Court observed that the Laffertys could have filed a protective action in a Pennsylvania commonwealth court or one of the federal district courts sitting in Pennsylvania "to avoid the possibility that the statute of limitations [would] bar an action in situations not exempted by [Pennsylvania's limitations law] . . . ." Lafferty, 397 F.Supp.2d at 605. Concluding that the Laffertys had not availed themselves of the means for bringing a timely claim or otherwise preserving it, the Court granted defendants' motion for judgment on the pleadings.

The Laffertys appeal to us, arguing that they complied with both New Jersey and Pennsylvania statutes of limitations by filing a complaint within two years of the accident. They also point out that the New Jersey District Court simply transferred the matter rather than dismissing it. Thus, they argue, the statute of limitations—for purposes of determining timeliness under Pennsylvania law—must run from the time the case was first filed.⁵

II. Discussion

As the District Court noted, a federal court must apply the substantive laws of its forum state in diversity actions. Erie, 304 U.S. at 78, 58 S.Ct. 817, and these include state statutes of limitations, Guaranty Trust Co. v. York, 326 U.S. 99, 110, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945); see also Dixon Ticonderoga Co. v. Estate of O'Connor, 248 F.3d 151, 160-61 (3d Cir.2001). Also correct is the observation that "Erie and its progeny are grounded on the notion that actions in a state court and a federal court involving the same transaction or accident `should not lead to a substantially different result.'" Lafferty, 397 F.Supp.2d at 603 (citing Ferens v. John Deere Co., 494 U.S. 516, 524, 110 S.Ct. 1274, 108 L.Ed.2d 443 (1990)); see also Guaranty Trust, 326 U.S. at 109, 65 S.Ct. 1464 (same). For this case the issue is not so much whose statute of limitations applies; both are the same (two years). It is whether the first-filed complaint, which was timely but in an improper forum, may be heard when the case is transferred— rather than dismissed—to a proper venue where the action would have been timely if filed there initially.⁶

A. Venue Transfers under 28 U.S.C. §§ 1404(a) & 1406(a)

The two provisions governing venue transfers at issue here read, in relevant part, as follows:

1. 28 U.S.C. § 1404(a):

Venue: Change of venue

(a) For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.

2. 28 U.S.C. § 1406(a):

Venue: Cure or waiver of defects

(a) The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.

Distinctions between § § 1404(a) and 1406(a) have to do with discretion, jurisdiction, and choice of law. Section 1404(a) transfers are discretionary determinations made for the convenience of the parties and presuppose that the court has jurisdiction and that the case has been brought in the correct forum. Jumara v. State Farm Ins. Co., 55 F.3d 873, 878 (3d Cir.1995); 17A Moore's Federal Practice, § 111.02 (Matthew Bender 3d ed.2006). Faced with a choice-of-law question, federal courts in the district to which the case has been transferred under § 1404(a) must apply the law of the transferor state. See Van Dusen v. Barrack, 376 U.S. 612, 639, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964) (for defendant-initiated § 1404(a) transfers); Ferens, 494 U.S. at 527-28, 110 S.Ct. 1274 (extending the Van Dusen rule to all § 1404(a) transfers, whether initiated by plaintiff or defendant).

Section 1406(a) comes into play where plaintiffs file suit in an improper forum. Jumara, 55 F.3d at 878; Moore's Federal Practice, supra, § 111.02. In those instances, district courts are required either to dismiss or transfer to a proper forum. Goldlawr, Inc. v. Heiman, 369 U.S. 463, 465-66, 82 S.Ct. 913, 8 L.Ed.2d 39 (1962) (emphasizing that federal district courts may transfer—rather than dismiss—cases that plaintiffs initially brought in an improper forum, regardless whether they otherwise have personal jurisdiction). When cases have been dismissed for improper venue, plaintiffs in those cases must file anew in a proper forum. See Moore's Fed. Practice, supra, § 111.03. No doubt the filing date in the new forum governs for limitations purposes. When cases have been transferred for improper venue, transferee courts generally apply the substantive law they would have applied had the action been brought there initially. See Moore's Fed. Practice, supra, §§ 111.02[2][c], 111.38 (citing cases); 15 Charles A. Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice & Procedure: Jurisdiction 3d § 3827 at 581 n. 22 (West 2007) (same). However, there is a question whether a transferee court should count the date of transfer as the date of initial filing under its forum's statute of limitations to bar a claim merely because that statute has run by the time of the transfer.

B. The District Court's Analysis

The District Court's rejection of the Laffertys' claims turns on its analysis of 28 U.S.C. §§ 1404(a) and 1406(a):

We acknowledge that one of the salutary purposes of § 1406(a) is to permit a transfer to overcome the bar of the statute of limitations that might otherwise result if an action is dismissed by a federal court for improper venue or lack of personal jurisdiction. Goldlawr, 369 U.S.[463] at 463[82 S.Ct. 913, 8 L.Ed.2d 39 (1962)]. It clearly serves this intended purpose where federal questions are involved. It also does so in diversity cases when the statute of limitations of the state in which the transferee court sits has not expired or the transferee state has an appropriate savings provision in its law. Nonetheless, unlike a transfer under § 1404(a), a transfer under § 1406(a) is not merely a change in courtrooms...