Roskam Baking Co. v. Lanham Machinery Co., Inc.
| Citation | 288 F.3d 895 |
| Decision Date | 03 May 2002 |
| Docket Number | No. 00-1578/2385.,No. 00-1570.,00-1570.,00-1578/2385. |
| Parties | ROSKAM BAKING COMPANY, INC., Plaintiff-Appellant (00-1570)/Cross-Appellee, v. LANHAM MACHINERY COMPANY, INC.; APV Consolidated, Inc.; APV Baker Company, Inc., Defendants-Appellees/Cross-Appellants (00-1578). Maximo Dominguez, Personal Representative of the Estate of Jacqueline Del Carmen Medina, deceased, Plaintiff-Appellant, v. Lanham Machinery Company, Inc.; APV Consolidated, Inc.; APV Baker Company, Inc., Defendants-Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (6th Circuit) |
Michael J. Izzo, Jr. (argued and briefed), Robert M. Caplan (briefed), Cozen & O'Connor, Philadelphia, PA, for Roskam Baking Co.
Steven L. Skahn (argued and briefed), Grand Rapids, MI, for Maximo Dominguez.
Mark H. Verwys (argued and briefed), Plunkett & Cooney, Grand Rapids, MI, William O. Martin, Jr. (argued and briefed), Haight, Brown & Bonesteel, Los Angeles, CA, for Lanham Machinery Co., Inc., APV Consolidated, Inc. and APV Baker Co., Inc.
Before: KENNEDY and BOGGS, Circuit Judges; and COFFMAN, District Judge.*
Roskam Baking Company ("Roskam") and Maximo Dominguez appeal the district court's grant of motions to dismiss Roskam's and Dominguez's diversity suits against Lanham Machinery Company, Inc., APV Consolidated, Inc., and APV Baker Company, Inc. ("APV") seeking damages resulting from a fire allegedly caused by APV's negligent installation of a baking oven. More than two years after Roskam and Dominguez separately filed suit, and after extensive motion practice and discovery, APV filed a motion in each case seeking dismissal on the basis that the action was barred by M.C.L. § § 600.5839(1), the Michigan statute of repose applicable to architects, engineers, and contractors who undertake improvements to real property (the "SOR").1 The district judge initially denied APV's motion in both cases, holding that the statute was an affirmative defense that was waived when it was not raised in APV's first responsive pleading. However, on reconsideration, the judge reversed himself in both cases and held that the defense offered by the statute was not waived because the statute serves to extinguish a cause of action before it accrues. Therefore, the court held that if the statute applied to their cases, Roskam and Dominguez had failed to state a claim upon which relief can be granted, and failure to state a claim is a defense that is not waived by failure to assert it in the party's responsive pleading. With respect to Roskam, the court held that the issue of whether the statute applied to the circumstances at bar was decided on the merits in the affirmative in a parallel state court action involving the same parties and occurrence and that the state court's conclusion was binding on the court by issue preclusion. Accordingly, the district court granted APV's motion to dismiss.
Dominguez, however, had not been a party to the state court suit, so the district court held that issue preclusion did not apply to him. Therefore, the court ordered the parties to submit briefs on the issue of applicability of the SOR and a joint stipulation of facts from which the court could decide whether the SOR applied. The court also conducted a site visit to Roskam's newly rebuilt facility. On the basis of these items, the court held that the SOR did apply to the cause of action filed by Dominguez and accordingly dismissed that suit as well.
Roskam and Dominguez appeal to this court from the dismissal of their respective suits. Dominguez also, in the alternative, appeals the district court's denial of his motion to amend the court's judgment to allow him to amend his complaint in order to state a claim not affected by the SOR. APV cross-appeals the district court's denial of several of its earlier motions in the Roskam case, which become relevant in the event that this court reverses the district court on the SOR issue. For the reasons that follow, we affirm the district court's dismissal of both cases.
Roskam owns and operates several commercial bakeries in Grand Rapids, Michigan and counts among its customers the Kellogg Company. On March 1, 1996, a fire destroyed Roskam's Butterworth Avenue bakery ("the bakery"). According to Roskam, investigators concluded that the fire was caused by spontaneous combustion of wooden planks in the bakery's ceiling, which combustion was caused by long-term heat exposure of the planks due to inadequate clearance between the ceiling and the intake opening of a commercial oven manufactured, sold, and positioned in the bakery by APV. Unbaked bread was fed into the oven by conveyor belt into the permanent intake opening at the top of the oven, and the baked bread left the oven through a similar opening at the bottom; Roskam alleges that heat escaping through the top opening led to the spontaneous combustion because the top of the oven was positioned less than one foot from combustible ceiling rafters. The oven had been installed in 1987-88 pursuant to a contract between Roskam and APV, under which APV sold the oven to Roskam and agreed to supervise Roskam employees in installing it. According to the contract, the price of the oven was $243,019 and Roskam paid a separate fee of $36,204 to APV for installation supervision.
On March 27, 1996, Trafford Park Insurance, Ltd. ("Trafford Park"), an insurer for Kellogg, filed a subrogation suit in Michigan state court against Roskam and APV, seeking damages for breach of contract and lost profits from cereal product not received due to the fire. Roskam and APV filed cross claims against one another for indemnity; Roskam sued APV for negligence and breach of contract, and APV sued Roskam for breach of contract. The state court disposed of the contract claims in favor of APV. However, the state court allowed Roskam's negligence claim to proceed, despite a motion for summary judgment by APV.
In January 1997, Roskam's insurer filed a subrogation suit against APV in state court, making similar allegations. In March 1997, Maximo Dominguez, the personal representative of Jacqueline Medina, filed suit in state court seeking damages from APV for the alleged wrongful death of Medina in the bakery fire. APV removed both cases to federal court based on diversity of citizenship and the cases were assigned to the same judge. In the Roskam case, APV moved for summary judgment on grounds similar to those it had asserted in the state court. The district court agreed with the prior holding of the state court judge that Roskam's contract claim merited dismissal but that its negligence claim should survive.
Meanwhile, in November 1999, APV filed additional motions to dismiss in the still-pending state court case, including one claiming that operation of the SOR had extinguished Roskam's claims against APV before the fire. The state court heard these motions on December 3, 1999, just days before the scheduled start of trial in the case. The state court found that the necessary factual elements existed, in that Roskam alleged damages for injury to property arising out of an improvement to real property, and Roskam was suing the contractor responsible for the improvement. However, the court at first declined to apply the statute, apparently believing that Roskam alleged its damages to have arisen not from the unsafe condition of the improvement, but from a failure to warn of a possible danger. However, on reconsideration, the state court held that the statute was applicable, and accordingly entered judgment dismissing Roskam's complaint against APV on December 7, 1999.
On the same day that APV filed its motion asserting the applicability of the SOR in the state court action, it did the same in both federal court actions. After the state court held that the SOR was applicable and dismissed Roskam's complaint on that basis, APV brought that decision to the district judge's attention in a reply brief in support of its motion. On January 25, 2000, the district judge denied APV's motion in both cases on the basis that the SOR was an affirmative defense that was waived if not brought up in the defendant's answer. However, upon APV's motion for reconsideration, the judge reversed himself. The judge held that under Michigan law the SOR serves to extinguish a cause of action before it accrues, and that a defense based on the SOR is therefore an argument that the plaintiff has failed to state a cause of action upon which relief can be granted, which can be raised at any time.
In Roskam's case, the district judge went on to hold that the applicability of the SOR had been decided on the merits in the state court action and that the issue was therefore precluded from further consideration. Accordingly, the district court granted APV's motion to dismiss for failure to state a claim, treating it is a motion for summary judgment because matters outside the pleadings were presented to the court. Roskam appeals the dismissal of its action to this court. For its part, APV cross-appeals the district court's denial of several of its earlier motions, in the event that this court overturns the district court on the SOR issue.
In Dominguez's case, the court undertook the consideration described above and issued an order granting APV's motion to dismiss on August 23, 2000. The court issued a judgment dismissing the case on August 28, 2000. Dominguez then filed a motion to amend the court's judgment in order to allow him to amend his complaint to allege gross negligence, a claim that would not be barred by the SOR. See M.C.L. § § 600.5839(1). The district court denied that motion, and Dominguez appeals to this court both the court's dismissal of his action and its denial of his motion to amend his complaint.
The Nature of M.C.L. § § 600.5839(1)
The district court in these cases initially held that the SOR was an affirmative defense, like a statute of...
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