Paracelsus Healthcare v. Philips Medical

• Citation: 384 F.3d 492
• Decision Date: 03 August 2004
• Docket Number: No. 03-2939.,03-2939.
• Parties: PARACELSUS HEALTHCARE CORP., Plaintiff — Appellant, v. PHILIPS MEDICAL SYSTEMS, NEDERLAND, B.V., Defendant — Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

384 F.3d 492

PARACELSUS HEALTHCARE CORP., Plaintiff — Appellant, v. PHILIPS MEDICAL SYSTEMS, NEDERLAND, B.V., Defendant — Appellee.

No. 03-2939.

United States Court of Appeals, Eighth Circuit.

Submitted: May 10, 2004.

Filed: August 3, 2004.

Appeal from the United States District Court for the District of North Dakota, Rodney S. Webb, J Chad Michael Neuens, argued, Denver, CO (Steven L. Marquart, Moorhead, MN on the brief), for appellant.

Larry L. Boschee, argued, Bismarck, ND, for appellee.

Before WOLLMAN, HANSEN and BYE, Circuit Judges.

BYE, Circuit Judge.

Paracelsus Medical Corp. appeals the district court's¹ grant of summary judgment finding Paracelsus's breach of warranty claim barred by expiration of the statute of limitations. We affirm.

I

This is a breach of warranty claim involving a Philips Integris H5000-C Cardiac Imaging Device. Philips Medical manufactured the device which was marketed and sold to Diagnostic Medical Systems, Inc. (DMS), by Philips Electronics. DMS, in turn, sold the device to Dakota Heartland Health System (DHHS), a wholly-owned subsidiary of Paracelsus. Philips Medical and Philips Electronics are separate but related Dutch corporations.

The device was delivered and installed at DHHS on January 12, 1998. On August 2, 1999, the device overheated causing significant damage to various component parts. Paracelsus brought suit against Philips Electronics and DMS alleging the device overheated because it was defectively manufactured and Paracelsus sustained damages in the form of repairs and lost profits as a result of the defect.

Initially, Philips Electronics admitted manufacturing the device. Later, Philips Electronics realized it was mistaken and Paracelsus agreed to allow Philips Electronics to amend its answer. Philips Electronics's amended answer denying it manufactured the device was served September 6, 2001. Thereafter, Paracelsus moved to amend the complaint to add Philips Medical as a defendant. The motion was granted on October 9, 2001, and on October 30, 2001, Philips Electronics's motion for reconsideration was denied. On November 6, 2001, Paracelsus forwarded a copy of its amended complaint to Legal Language Services (LLS), a company specializing in service of process on foreign defendants in accordance with the Hague Convention. Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, 20 U.S.T. 361, T.I.A.S. No. 6638. LLS translated the amended complaint into Dutch and prepared the additional documents needed to effect service under the Hague Convention. On November 30, 2001, LLS forwarded the completed documents to Paracelsus's attorney for his signature. Counsel returned the documents to LLS, which in turn forwarded them to the Central Authority.² The amended complaint and related documents were received by the Central Authority December 12, 2001 — one month prior to expiration of the statute of limitations. The amended complaint was not, however, served on Philips Medical until February 5, 2002.

Philips Medical moved for summary judgment arguing it was not served before the statute of limitations expired. The district court agreed and granted the motion. On appeal, Paracelsus argues the district court erred because 1) once the amended complaint was delivered to the Central Authority, service was complete under N.D. Cent.Code § 28-01-38; 2) once the amended complaint was delivered to the Central Authority, the statute of limitations was tolled under N.D. Cent.Code § 28-01-29, because the Hague Convention is a positive rule of law which could prevent timely commencement of a suit; and 3) the doctrine of equitable tolling applies to toll the statute of limitations during Paracelsus's attempts to serve Philips Medical. We disagree.

II

This court reviews a grant of summary judgment de novo, applying the same standard as the district court. Jaurequi v. Carter Mfg. Co., Inc., 173 F.3d 1076, 1085 (8th Cir.1999). Summary judgment is proper if there exists no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c).

This is a diversity action and is governed by state substantive law. Erie R.R. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Statutes of limitations are substantive laws and thus in diversity actions are controlled by state law. See Hillary v. Trans World Airlines, Inc., 123 F.3d 1041, 1043 (8th Cir.1997). The district court held, and the parties agree, the case is controlled by North Dakota law.

A. N.D. Cent.Code § 28-01-38

Paracelsus first argues service was complete under § 28-01-38 once the suit papers were delivered to the Central Authority for service on Philips Medical. We disagree.

Section 28-01-38 provides

An action is commenced as to each defendant when the summons is served on him, or on a codefendant who is a joint contractor or otherwise united in interest with him. An attempt to commence an action is equivalent to the commencement thereof within the meaning of this chapter when the summons, with the intent that it shall be actually served, is delivered:

1. To the sheriff or other officer of the county in which the defendants or one of them usually or last resided; or

2. To the sheriff or other officer, if a corporation is defendant, of the county in which was situated the principal place of business of such corporation, or in which its general business was transacted, or in which it kept an office for the transaction of business.

Such an attempt must be followed within sixty days by the first publication of the summons or the service thereof.

(Emphasis supplied).

Paracelsus argues, by analogy, the Central Authority is the equivalent of a sheriff or other officer, and under § 28-01-38 the suit against Philips Medical was commenced once the summons was delivered to the Central Authority. The district court disagreed, holding the plain language of the statute makes it applicable only when a summons is delivered to the sheriff or other officer located in the county in which the corporate defendant's principal place of business is situated.

Interpretation of a statute is a question of law. Feist v. N.D. Workers Comp. Bureau, 569 N.W.2d 1, 4 (N.D.1997). "The primary goal when interpreting a statute is to ascertain the legislative intent." State v. Hafner, 587 N.W.2d 177, 179 (N.D.1998). When interpreting a statute, courts first look to the language of the statute itself and determine whether it is unambiguous. Id. If the statutory language is unambiguous, the court applies the plain language of the statute. Id.

Paracelsus does not contend the statute is ambiguous. Thus, the plain language controls and the plain language of § 28-01-38 indicates an action is commenced only if the summons is delivered to the sheriff or other county officer — not the Central Authority. Further, Paracelsus does not cite nor are we able to locate any North Dakota cases applying the statute in a broader context. Therefore, we must reject Paracelsus's arguments advocating a broader application.

B. N.D. Cent.Code § 28-01-29

Paracelsus next argues once the amended complaint was delivered to the Central Authority the statute of limitations was tolled under § 28-01-29.

Section 28-01-29 provides, "[w]hen the commencement of an action is stayed by injunction or other order of a court, or by a statutory prohibition, the time of the continuance of the stay is not a part of the time limited for the commencement of the action." (Emphasis supplied.)

Paracelsus argues the Hague Convention is a "positive rule of law" creating a statutory prohibition which prevented it from bringing its action against Philips Medical in a timely manner, because once the suit papers were delivered to the Central Authority, Paracelsus no longer had control over when service would occur. In support of its argument, Paracelsus cites Broad v. Mannesmann Anlagenbau, A.G., 141 Wash.2d 670, 10 P.3d 371 (2000).

In Broad, the plaintiffs brought a federal diversity action against a German manufacturer alleging its product was defective. Id. at 373. The plaintiffs first attempted service through the Bavarian State Ministry one day before the statute of limitations expired. The attempt was unsuccessful, but under Washington law, once the complaint was filed with the court, the plaintiffs were afforded an additional 90-day period within which to perfect service. Id. at 373-74. The plaintiffs next submitted the suit papers to the German Central Authority for service of process but service was not effected until after the additional 90-day period had expired. The defendant moved for summary judgment, with the plaintiffs arguing the 90-day extension should be tolled because they were prevented by the Hague Convention from serving the defendant in a timely manner. The Ninth Circuit Court of Appeals certified the question to the Washington Supreme Court and the court agreed. Id. at 377-79. In reaching its holding in Broad, the Washington Supreme Court looked to the provisions of a Washington statute nearly identical to § 28-01-29 and concluded the Hague Convention operated as a "positive rule of law" which prevented the plaintiffs from bringing suit, because once the suit papers were turned over to the...