Pounders v. Enserch E & C, Inc.

• Decision Date: 17 April 2012
• Docket Number: No. 1 CA–CV 11–0282.,1 CA–CV 11–0282.
• Parties: Vicki L. POUNDERS, individually and as surviving wife of Dudley W. Pounders, Deceased, Plaintiff/Appellant, v. ENSERCH E & C, INC. nka EECI, Inc.; Riley Power, Inc. fna Riley Stoker Corporation; BW/IP, Inc., and its wholly-owned subsidiaries, Defendants/Appellees.
• Court: Arizona Court of Appeals

229 Ariz. 433

276 P.3d 502

632 Ariz. Adv. Rep. 26

Vicki L. POUNDERS, individually and as surviving wife of Dudley W. Pounders, Deceased, Plaintiff/Appellant,

v.ENSERCH E & C, INC. nka EECI, Inc.; Riley Power, Inc. fna Riley Stoker Corporation; BW/IP, Inc., and its wholly-owned subsidiaries, Defendants/Appellees.

No. 1 CA–CV 11–0282.

Court of Appeals of Arizona, Division 1, Department A.

April 17, 2012.

Stephen I. Leshner PC By Stephen I. Leshner, Phoenix and Waters & Kraus LLP By Charles S. Siegel, pro hac vice, Mark A. Linder, pro hac vice, Dallas, TX, Attorneys for Plaintiff/Appellant.

Stinson Morrison Hecker LLP By Larry J. Wulkan, and Hawkins Parnell Thackston & Young LLP, Phoenix, By Edward M. Slaughter, pro hac vice, Dallas, TX, Attorneys for Defendant/Appellee Enserch E & C, Inc., n/k/a EECI, Inc.

Jennings, Haug & Cunningham, LLP By Larry J. Crown, Hillary P. Gagnon, William F. Begley, Phoenix, and Kurowski Bailey & Shultz LLC By David J. Fisher, Swansea, IL, Attorneys for Defendant/Appellee BW/IP, Inc.

Jennings, Haug & Cunningham, LLP By Larry J. Crown, Travis A. Pacheco, Phoenix and Herrick & Associates, PC By David P. Herrick, pro hac vice, Dallas, TX, DeHay & Elliston, LLP By Bridgett N. Whitmore, pro hac vice, Dallas, TX, Attorneys for Defendant/Appellee Riley Power, Inc., f/k/a Riley Stoker Corporation.

OPINION

TIMMER, Judge.

[229 Ariz. 435]¶ 1 The appeal in this wrongful death case requires us to employ choice-of-law principles to determine whether the substantive law of Arizona or New Mexico applies. If we agree with the trial court that New Mexico law applies, we then must decide whether the court properly applied New Mexico's statute of repose to find that suit is barred against Appellees. For the reasons that follow, we affirm.

BACKGROUND

¶ 2 From 1969 to 1974 and again from 1977 to 1983, Arizona Public Service (“APS”) employed Dudley W. Pounders to work as a welder at the Four Corners Power Plant (the “Plant”) located in New Mexico. Mr. Pounders performed repair and maintenance work that required him to disturb and remove asbestos contained within equipment and insulation. As a result, he inadvertently inhaled asbestos fibers. Mr. Pounders lived in New Mexico while he worked at the Plant.

¶ 3 In May 2008, Mr. Pounders and his wife, Vicki, were living in Arizona when doctors diagnosed him with mesothelioma, a type of cancer purportedly caused by asbestos exposure. The Pounders initiated a personal injury lawsuit the following month in Arizona against several defendants, alleging defective design, construction, and use of asbestos in the Plant and a failure to warn of the dangers of asbestos. These defendants included appellees Enserch E & C, Inc. (“Enserch”), successor-in-interest to the architect and construction manager for three units at the Plant, BW/IP, Inc. (“BW”), parent company to the manufacturer, designer, and supplier of ten pumps used at the Plant, and Riley Power, Inc. (“Riley”), which designed and manufactured industrial boilers used at the Plant. After Mr. Pounders died in August, Mrs. Pounders amended the complaint to assert a claim for wrongful death.

¶ 4 During the course of litigation, the trial court granted Appellees' motion to apply New Mexico law to substantive issues concerning Mrs. Pounders' claims because Mr. Pounders' injuries occurred in that state. The court subsequently granted summary judgment for Appellees after applying New Mexico's statute of repose, New Mexico Statutes Annotated § 37–1–27 (West 2012),¹ which bars all claims arising from improvements made to real property and asserted more than ten years after substantial completion of the improvements. This timely appeal followed.

DISCUSSION

¶ 5 Mrs. Pounders argues the trial court erred by entering summary judgment because (1) Arizona substantive law, which does not include a statute of repose for tort claims,² applies to her lawsuit, and (2) even assuming New Mexico law applies, the court misapplied New Mexico's statute of repose.

¶ 6 The trial court properly granted summary judgment if “there is no genuine issue as to any material fact and [ ] the moving party is entitled to a judgment as a matter of law.” Ariz. R. Civ. P. 56(c)(1). In reviewing the court's ruling, we determine de novo whether any disputed issues of material fact exist and whether the court properly applied the law. Best Choice Fund, LLC v. Low & Childers, P.C., 228 Ariz. 502, 506, ¶ 10, 269 P.3d 678, 682 (App.2012) (as amended). We view the facts and inferences arising from them in the light most favorable to Mrs. Pounders as the party against whom judgment was entered. Id. Finally, we review a choice-of-law issue de novo as a question of law. Baroldy v. Ortho Pharm. Corp., 157 Ariz. 574, 578, 760 P.2d 574, 578 (App.1988).

I. Choice of law

¶ 7 Although the law of the forum state governs procedural matters, substantive issues are resolved by “the law of the jurisdiction to which the court is referred by the choice-of-law rules of the forum.” Cardon v. Cotton Lane Holdings, Inc., 173 Ariz. 203, 206, 841 P.2d 198, 201 (1992) (citations omitted). All parties acknowledge, and we agree, the statutes of repose in Arizona and New Mexico are matters of substantive law, and we must apply choice-of-law tenets to determine which state's laws apply. Albano v. Shea Homes Ltd. P'ship, 227 Ariz. 121, 127, ¶ 24, 254 P.3d 360, 366 (2011) (noting statutes of repose define substantive rights); see also Rice v. Dow Chem. Co., 124 Wash.2d 205, 875 P.2d 1213, 1217 (1994) (“The general authority is that statutes of repose are to be treated ... as part of the body of a state's substantive law in making choice-of-law determinations.”).

¶ 8 Arizona follows principles set forth in the Restatement (Second) of Conflict of Laws (“Restatement”) (1971) to resolve conflict-of-law issues. Bryant v. Silverman, 146 Ariz. 41, 42–43, 703 P.2d 1190, 1191–92 (1985). Section 175 provides that in wrongful death actions, “the local law of the state where the injury occurred determines the rights and liabilities of the parties” unless another state has “a more significant relationship under the principles stated in § 6 to the occurrence and the parties, in which event the local law of the other state will be applied.” Restatement § 175; see also Restatement § 146 (providing same principles for all personal injury actions). In other words, the laws of the state where the injury occurred presumptively apply unless another state has a more significant relationship. Phillips v. Gen. Motors Corp., 298 Mont. 438, 995 P.2d 1002, 1008 (2000) (characterizing Restatement § 175 as establishing a presumption). To resolve the parties' dispute, we initially decide where Mr. Pounders' “injury occurred”—New Mexico or Arizona—and then consider whether the other state has a more significant relationship to the event causing his injury and with the parties.

A. Place of injury

¶ 9 Mrs. Pounders argues her husband's injury occurred in Arizona because he was living there when the effects of inhaling asbestosmanifested in injury—mesothelioma. She contends Mr. Pounders did not sustain an injury in New Mexico because inhalation of asbestos absent the onset of disease is not harmful. Appellees counter that Mr. Pounders sustained injury when he inhaled asbestos while working in New Mexico because asbestos fibers immediately damaged his lung tissue. The issue presented by the parties is whether, for purposes of resolving a choice-of-law dispute, a plaintiff diagnosed with a slow-developing disease is injured at the time of exposure to conditions causing the disease or at the time the disease manifests. The appellate courts in this state have not yet addressed the issue.

¶ 10 We start with Restatement § 175. Comment b to that section provides:

b. Place of injury. The place where the injury occurs is the place where the force set in motion by the actor first takes effect on the person. This place is not necessarily that where the death occurs. Nor is it the place where the death results in pecuniary loss to the beneficiary named in the applicable death statute.

The parties do not dispute that “the force set in motion” by Appellees was exposing Mr. Pounders to asbestos and failing to warn him of its dangers. Their quarrel centers on where this exposure “first [took] effect” on Mr. Pounders.

¶ 11 Mrs. Pounders urges us to decide that asbestos exposure first takes effect on the person inhaling it when an asbestos-related illness develops. Until that time, she points out, the person does not possess a personal injury claim. She relies primarily on cases discussing compensability of claims based on exposure to harmful conditions. DeStories v. City of Phoenix, 154 Ariz. 604, 605, 744 P.2d 705, 706 (App.1987), for example, concerned a personal injury lawsuit filed by construction workers who sued their employer for exposing them to asbestos dust, which increased their risk of future asbestos-related illness and caused them to suffer emotional distress due to their fear of developing a future serious illness. This court held that an increased risk of injury and resulting mental anguish is not compensable absent proof of present physical harm or a medically identifiable effect from the asbestos exposure or associated emotional distress. Id. at 607–08, 610, 744 P.2d at 708–09, 711. Other cases cited by Mrs. Pounders reach similar conclusions. Transamerica Ins. Co. v. Doe, 173 Ariz. 112, 115, 840 P.2d 288, 291 (App.1992) (deciding plaintiffs exposed to HIV-infected blood did not sustain a “bodily injury” entitling them to recover under an insurance policy because they suffered no resulting physical injury); Burns v. Jaquays Mining Corp., 156 Ariz. 375, 376–78, 752 P.2d 28, 29–31 (App.1987) (concluding plaintiffs who inhaled asbestos fibers that changed lung tissue could not sue for increased risk of future asbestos-related disease or for distress caused by risk of future onset of disease before any disease...