Roundhouse v. Owens-Illinois, Inc.

• Decision Date: 16 August 1979
• Docket Number: Nos. 77-1228,INC,77-1229,OWENS-ILLINOI,s. 77-1228
• Citation: 604 F.2d 990
• Parties: 27 UCC Rep.Serv. 1010 Jacob ROUNDHOUSE and Jay Roundhouse, d/b/a Roundhouse Trout Ranch and Robinett Trout Pond, Plaintiffs-Appellees-Cross Appellants, v., Defendant-Appellant-Cross Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 990

604 F.2d 990

27 UCC Rep.Serv. 1010

Jacob ROUNDHOUSE and Jay Roundhouse, d/b/a Roundhouse Trout

Ranch and Robinett Trout Pond, Plaintiffs-Appellees-Cross Appellants, v. OWENS-ILLINOIS, INC., Defendant-Appellant-Cross Appellee.

Nos. 77-1228, 77-1229.

United States Court of Appeals, Sixth Circuit.

Argued April 6, 1979.

Decided Aug. 16, 1979.

Eugene F. Townsend, Jr., Fraser, Trebilcock, Davis & Foster, John J. Loose, Lansing Mich., for defendant-appellant-cross-appellee.

Joseph J. Jerkins, Jerkins, Plaszczak & Hurley, James F. Bauhof, Kalamazoo, Mich., for plaintiffs-appellees-cross-appellants.

Before EDWARDS, Chief Judge, KEITH, Circuit Judge, and BROWN, District Judge. ^*

KEITH, Circuit Judge.

This case involves a dispute between the former operators of a "ma and pa fish-ranch" and a corporation which allegedly sold them diseased fish. The plaintiffs and the defendant both raised trout for resale. In June of 1967, the parties agreed to a "fish exchange" whereby the plaintiff bought fish from the defendant and vice-versa. The plaintiff received fish from the defendant on June 26, 1967, July 6, 1967, August 11, 1967, and October 5, 1967.

During 1968 both sides noticed that the fish in their respective facilities were acting abnormally. After testing took place, it was determined that the fish in both facilities were infected with Myxosoma Cerabralis, also known as "whirling disease." Both parties lost out as a result. The state of Michigan forced the plaintiffs to destroy all of their fish; the defendant suffered similar, though lesser losses. The result of what the district court correctly characterized as "these tragic misfortunes" was the instant litigation where each side blamed the other for the outbreak of the "whirling disease." The jury settled the hotly disputed issue of liability by finding that the defendant was responsible for the tragedy. The validity of this finding is not questioned here, but both sides have appealed on separate grounds. The defendant complains that the plaintiffs' cause of action was barred by the statute of limitations. The plaintiffs complain that they were entitled to more money and that the district judge erred in refusing to let the jury consider questions of loss of business reputation and goodwill. We think that Judge Miles correctly handled these unsettled questions of state law and affirm the judgment in all respects save one regarding damages and the collateral source rule.

I The Statute of Limitations Question

The basis for defendant's claim that the statute of limitations bars plaintiffs' cause of action is that the Uniform Commercial Code prescribes a 4-year statute of limitations which begins to run at delivery. ¹ The fish in this case were delivered in June, July, August, and October of 1967; the complaint was filed on September 30, 1971. Application of the U.C.C.'s four year statute of limitation bars claims based on three out of the four fish deliveries. Defendants conclude their argument by saying that it would be speculative for the jury to find that the fish were infected on the one non-barred delivery as opposed to the three time-barred deliveries.

Plaintiffs make a number of arguments in reply. Their strongest argument is that Another Michigan statute should be applied to modify the Uniform Commercial Code here. U.C.C. § 2-725 provides that ordinarily a limitations period for a breach of warranty action starts running at the time of delivery of the goods. ² However an old and unrepealed Michigan statute provides that the limitations period for a breach of warranty action starts running at the time breach is discovered or should have been discovered. ³ Reconciling these conflicting state statutes is a task to which we are ill-suited. ⁴ The Michigan State courts have provided no definitive guidance, although Dicta in one opinion ⁵ favors the defendant.

Fortunately, we do not have to grapple with this issue. We conclude that the jury's verdict must be sustained even if operation of the statute of limitations barred any claim based on the first three deliveries. The expert testimony at trial was to the effect that there was no way to determine which delivery of fish caused the "whirling disease." It could have been any one of the three deliveries or a combination thereof. The defendant argues that since it is equally plausible that the whirling disease resulted from a time-barred delivery as from a non-time-barred delivery, that the jury must not be allowed to speculate as to which caused the "whirling disease." Primary reliance is placed upon Kaminski v. Grand Trunk R. Co., 347 Mich. 417, 421, 79 N.W.2d 899, 901 (1956), where the court indicated that when a trial judge addresses a motion for directed verdict, he must examine whether there exists a "conjectural choice between equally plausible inferences." If, viewing the inferences in favor of the plaintiff, the cause of the injury urged by him is "equiponderant," then a directed verdict is in order. See also Parsonson v. Construction Equipment Co., 386 Mich. 61, 191 N.W.2d 465 (1971) (plaintiff's theory that gasoline explosion was caused by a defective heater-blower was only "conjecture"); Daigneau v. Young, 349 Mich. 632 634-36, 85 N.W.2d 88, 90 (1957) (proof of negligence could not be "supplied by a guess of the jury"); Barry v. Elkin, 332 Mich. 427, 431, 52 N.W.2d 171, 173 (1952); ("Where a death or injury may be due to one of several causes and the proofs do not establish the active cause, damages will not lie.") Frye v. City of Detroit, 256 Mich. 466, 469-70; 239 N.W. 886, 887 (1932); ("The proof must establish causal connection beyond the point of conjecture") ⁶

We think that the above-cited authorities are distinguishable. They stand for the proposition that a plaintiff must prove via direct evidence or reasonable inference that a liability conferring cause resulted in injury to him. A jury cannot speculate as to liability, the evidence must be such that a liability creating cause is more likely than non-liability creating ones. In this case, however, the only cause which would subject the defendant to liability was the sale of diseased fish. It is true that this cause could have resulted on any one of four separate occasions, but that cannot obscure the fact that there was only One cause for the outbreak of the "whirling disease" and that was the sale of diseased fish.

We think that the district court was correct in ruling that under these circumstances, the defendant had the burden of proving that the bar of the limitations period would preclude liability. See Alston v. Bitely, 252 Ark. 79, 477 S.W.2d 446, 458 (1972); Furrer v. Talent Irrigation District, 258 Or. 494, 466 P.2d 605 (1970); Sanders v. Merchant State Bank, 349 Ill. 547, 182 N.E. 897 (1932); Hood v. Commonwealth Trust & Savings Bank, 376 Ill. 412, 34 N.E.2d 414, 419 (1941); Golden v. Lerch Bros., 203 Minn. 211, 281 N.W. 249, 253-54 (Minn.1938); Buck v. Newbury, 55 W.Va. 681, 47 S.E. 889, 890 (1904); 51 Am.Jur.2d Limitations of Actions § 484; 54 C.J.S. Limitations of Actions § 386.

This view is in accord with Michigan law that the statute of limitations is an affirmative defense which must be pleaded and proved by the defendant. Locke v. Detroit, 335 Mich. 29, 55 N.W.2d 161 (1952); Tumey v. Detroit, 316 Mich. 400, 25 N.W.2d 571 (1947); Szlinis v. Moulded Fiberglass Co., 51 Mich.App. 620, 215 N.W.2d 777 (1974); Bratton v. Trojan Boat Co., 19 Mich.App. 236, 172 N.W.2d 457 (1969), Aff'd 385 Mich. 585, 189 N.W.2d 206 (1971). ⁷

This is also in accord with Michigan's view that statutes of limitation are based on a fairness rationale of protecting defendants against stale claims. See Bigelow v. Walraven, 392 Mich. 566, 221 N.W.2d 328 (1974); Buscaino v. Rhodes, 385 Mich. 474, 189 N.W.2d 202 (1971); Pesola v. Inland Tool & Mfg. Inc., 423 F.Supp. 30 (E.D.Mich.1976). ⁸ No claim of unfairness to defendant can be made here. On the contrary, to accept defendant's argument is to formalistically deny plaintiff recovery on a valid jury verdict.

We think that the situation here is analogous to that of a case of joint and several liability. Where it is impossible to determine which one of several tortfeasors was responsible for an injury, a plaintiff can join them all in one action and let them fight out liability among themselves. See Watts v. Smith, 375 Mich. 120, 134 N.W.2d 194 (1966); Maddux v. Donaldson, 362 Mich. 425, 108 N.W.2d 33 (1961); Schindler v. Standard Oil Co., 166 Ohio St. 391, 143 N.E.2d 133 (1957); Maryland Cas. Co. v. Frederick Co., 142 Ohio St. 605, 53 N.E.2d 795 (1944); Cuddy v. Horn, 46 Mich. 596, 109 N.W. 32 (1881). The theoretical basis for joint and several liability is the same as that for vicarious liability generally it is fair under some circumstances to enhance the recovery possibilities of an injured victim even at the risk of making a possibly innocent party pay the cost. See generally Hall v. DuPont, 345 F.Supp. 353, 370-380 (E.D.N.Y.1972). Here, the policy considerations are at least as strong since there is only one wrongdoer.

In this case, we have a single wrongdoer which caused injury on at least one of four occasions (deliveries). It should be incumbent on the wrongdoer to prove that the injury it caused did not result from the one non-time-barred delivery. The defendant would have us place the burden of proof on the innocent plaintiff. This we decline to do. Since the defendant did not meet its burden or even begin to do so, the jury's verdict must stand. ⁹

II The Damages Issues

A. The Collateral Source Problem

Upon discovery of the whirling disease, the state of Michigan ordered that the plaintiffs destroy all of their trout. The plaintiffs opposed this drastic measure in state court, but to no avail. Subsequently, they applied to the state for compensation for the destruction of the fish. The state of Michigan was eventually successful in securing funds from the federal government...