Phelps v. McClellan

• Decision Date: 25 August 1994
• Docket Number: No. 93-3189,93-3189
• Parties: Angela M. PHELPS, Plaintiff-Appellant, v. John D. McCLELLAN, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 658

30 F.3d 658

29 Fed.R.Serv.3d 582

Angela M. PHELPS, Plaintiff-Appellant, v. John D. McCLELLAN, Defendant-Appellee.

No. 93-3189.

United States Court of Appeals Sixth Circuit.

Argued May 5, 1994.

Decided July 7, 1994.

Rehearing and Suggestion for Rehearing En Banc Denied Aug. 25, 1994.

Ned C. Gold, Jr. (argued and briefed), Hoppe, Frey, Hewitt & Milligan, Warren, OH, for plaintiff-appellant.

William Scott Fowler (argued and briefed), Comstock, Springer & Wilson, Youngstown, OH, for defendant-appellee.

Before JONES, RYAN, and BATCHELDER, Circuit Judges.

RYAN, Circuit Judge.

Plaintiff Angela M. Phelps raises interesting questions of jurisdiction, procedure, and choice of law in this appeal from the district court's order dismissing Phelps's diversity action for personal injuries sustained in a boating accident. The principal and dispositive issue is whether the district court correctly concluded that Phelps's suit was time barred under Ohio's two year statute of limitations. We agree with the district court that it was, and affirm.

I.

On August 13, 1989, Phelps, a Pennsylvania resident, was a passenger in a power boat cruising in DeWittville Bay on Lake Chautauqua in western New York. The boat was being operated by defendant, John D. McClellan, a citizen of Ohio, when it rammed another vessel. Phelps was injured in the collision.

On August 11, 1992, Phelps filed a complaint against McClellan in a federal court in Ohio alleging that McClellan was negligent and careless in the operation of his boat on that unfortunate summer afternoon nearly three years earlier. Phelps also alleged that the law suit was "governed by the laws of the State of New York inasmuch as the incident on which the complaint is based occurred therein." McClellan filed an answer denying negligence but admitting the plaintiff's allegation that New York law controlled. Subsequently, McClellan obtained leave to amend his answer under Fed.R.Civ.P. 15(a) and added a defense asserting that Phelps's claim was time barred because it was not filed within Ohio's two year limitations period for tort actions. Phelps then filed a motion under 28 U.S.C. Sec. 1404(a) to transfer venue to the federal court for the Western District of New York, and McClellan filed a motion for judgment on the pleadings under Fed.R.Civ.P. 12(c). The district court granted McClellan's motion after concluding that Ohio's statute of limitations barred the action. The district court denied Phelps's motion to transfer venue after concluding that such a transfer would be futile since the transferor court would nevertheless have to apply the transferee court's choice of law rules. Phelps now appeals.

II.

The district court's jurisdiction in this case was premised on diversity of citizenship under 28 U.S.C. Sec. 1332. A federal court sitting in diversity must apply the substantive law, including choice of law rules, of the state in which it sits. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021-22, 85 L.Ed. 1477 (1941); Macurdy v. Sikov & Love, P.A., 894 F.2d 818, 820 (6th Cir.1990). Statutes of limitations are classified as substantive for Erie purposes, ¹ Guaranty Trust Co. v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945), but interestingly, statutes of limitations are characterized as procedural for purposes of choice of law analysis in Ohio and most other states, see Eugene F. Scoles & Peter Hay, Conflict of Laws Sec. 3.9 (1984).

The substance/procedure dichotomy figures prominently in Ohio conflicts of law jurisprudence. Traditionally in tort actions, Ohio courts applied the substantive law of the place of the injury under the so-called lex loci delicti doctrine, Ellis v. Garwood, 168 Ohio St. 241, 152 N.E.2d 100 (1958), and the procedural law of the forum or the lex fori, Howard v. Allen, 30 Ohio St.2d 130, 283 N.E.2d 167, appeal dismissed, 409 U.S. 908, 93 S.Ct. 251, 34 L.Ed.2d 169 (1972). However, these rigid, formalistic rules have gradually fallen out of favor, in Ohio and elsewhere. See Fox v. Morrison Motor Freight, Inc., 25 Ohio St.2d 193, 267 N.E.2d 405, cert. denied, 403 U.S. 931, 91 S.Ct. 2254, 29 L.Ed.2d 710 (1971); Schiltz v. Meyer, 29 Ohio St.2d 169, 280 N.E.2d 925 (1972). In 1985, the Ohio Supreme Court formally adopted the Restatement (Second) of Conflicts of Law, recognizing that the Restatement's balancing test applying the law of the state with the "more significant relationship to the lawsuit" was "more reflective of [Ohio's] past decisions and also provide[d] sufficient guidelines for future litigation." Morgan v. Biro Mfg. Co., 15 Ohio St.3d 339, 474 N.E.2d 286, 288-89 (1984).

Section 146 of the Second Restatement creates a presumption in tort actions that the substantive law of the place of injury controls unless another jurisdiction has a more significant relationship to the law suit. See also id., 474 N.E.2d at 289. With regard to procedural rules, specifically statutes of limitations, the Restatement provides that in general: "The forum will apply its own statute of limitations barring the claim." Restatement (Second) of Conflicts of Law Sec. 142(1) (1988). But the Restatement's blanket rule that a forum court always applies its own statute of limitations differs from the Ohio common law under which Ohio courts applied Ohio's statute of limitations only if the relevant limitations period under the law of the state where the injury occurred was longer than Ohio's or nonexistent:

Actions upon causes of action accruing outside of this state, and not limited by the law of the place where they accrued, or limited thereby to longer periods than those specified in our statute, are governed as to limitations by the Ohio statute in like manner as causes of action accruing within the State.

Pinney v. Cummings, 26 Ohio St. 46, 46 (1875) (per curiam ); see also Howard, 283 N.E.2d at 168. There is then a slight tension between the approach of the Second Restatement and the Ohio common law on the issue of statutes of limitations in tort cases. Although in Morgan the Ohio Supreme Court expressly adopted the Second Restatement, Morgan dealt exclusively with a choice of conflicting substantive law. 474 N.E.2d at 288-89. There is then a question, at least in the plaintiff's mind, whether Morgan abrogated Ohio's common law approach to conflicting statutes of limitations. In this case, because under either the Second Restatement or the Pinney- Howard line of authority the same statute of limitations would apply, we think it best to leave this wrinkle to the Ohio courts to iron out.

Ohio requires that a personal injury action be brought within two years from the time it accrues. Ohio Rev.Code Ann. Sec. 2305.10 (Anderson 1991). New York allows a personal injury plaintiff three years to file an action. N.Y.Civ.Prac.L. & R. 214 (McKinney 1992). Under the Second Restatement, the forum court's statute of limitations always applies, so the Ohio statute would apply. Under the Ohio common law, the forum court must apply the statute of limitations with the shortest period, that is unless the foreign statute's limitations period is shorter than the forum's, in which case the forum court should apply its own law. In this case, Ohio's limitation period is shorter than New York's. Thus, the Ohio statute of limitations controls this law suit.

Phelps did not file her action within the two year period mandated by Ohio law. She alleges in her complaint that she was injured as a result of a boating accident in August 1989, but she did not file suit until August 1992. It is apparent on the face of Phelps's complaint that her suit is time barred, therefore it was entirely proper for the district court to grant judgment on the pleadings in favor of the defendant. See Craig v. Western & S. Indem. Co., 119 F.2d 591, 592 (6th Cir.1941); Miller v. St. Paul Fire & Marine Ins. Co., 480 F.Supp. 32, 33-34 (W.D. Okla.1979). ²

Phelps raises six objections to this analysis. We address each in turn. First, Phelps argues that McClellan's admission in his answer that New York law controlled the case amounts to an "agreement" or stipulation between the parties that the New York statute of limitations would govern this action. Generally, a defendant's failure to deny an allegation in the plaintiff's complaint takes the issue out of the case. Fleming James, Jr. & Geoffrey C. Hazard, Jr., Civil Procedure Sec. 4.4 (3d ed. 1985). However, the parties did not expressly state an intent to include the New York statute of limitations in their choice of law "agreement." While parties are generally free to contract choice of law, such "provisions in contracts are generally understood to incorporate only substantive law, not procedural law such as statutes of limitation[s]." Federal Deposit Ins. Corp. v. Petersen, 770 F.2d 141, 142 (10th Cir.1985). Absent an express statement of intent, a choice of law provision will not be interpreted to cover statutes of limitations. Des Brisay v. Goldfield Corp., 637 F.2d 680, 682 (9th Cir.1981); Alaska Airlines, Inc. v. Lockheed Aircraft Corp., 430 F.Supp. 134, 139 (D. Alaska 1977). Moreover, in his amended answer, McClellan added a statute of limitations defense implicitly premised on the two year Ohio statute, thus further evidencing his intent only to import New York substantive law.

Second, Phelps contends that the district court abused its discretion in allowing the defendant to amend his answer to add the statute of limitations defense. Rule 15(a) governs amendments to pleadings and provides that after a responsive pleading is filed, "a party may amend the party's pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires." Fed.R.Civ.P. 15(a). Leave to amend may be denied when it would result in undue delay, prejudice to the opposing party, or repeated failure to cure deficiencies in the complaint. Foman v. Davis, 371 U.S. 178, 182, 83...