Schum v. Bailey
| Decision Date | 26 May 1978 |
| Docket Number | No. 77-1380,77-1380 |
| Citation | 578 F.2d 493 |
| Parties | Diana M. SCHUM, Plaintiff-Appellant, v. Charles P. BAILEY, M.D., Teruo Hirose, M.D., St. Barnabas Hospital for Chronic Diseases and Does I to XXXV, including each and every number between I and XXXV inclusive, Plaintiffs-Appellees. |
| Court | U.S. Court of Appeals — Third Circuit |
Lawrence Weintraub, Hackensack, N. J., for plaintiff-appellant; Donald R. Venezia, Hackensack, N. J., on brief.
Conway, Reiseman, Michals, Wahl, Bumgardner & Hurley, Gerald W. Conway, Newark, N. J., for plaintiffs-appellees; George R. Hardin, Newark, N. J., on brief.
Before ADAMS, GIBBONS and GARTH, Circuit Judges.
This is an appeal from an order granting the defendant's motion for summary judgment in a diversity action brought in United States District Court for the District of New Jersey. The district court concluded that plaintiff's claim was time-barred under the New York statute of limitations for medical malpractice claims. The plaintiff, Diana M. Schum, is a New Jersey resident. In her complaint she alleges that the defendant, Charles P Bailey, M. D., a resident of New York, subjected her to unnecessary surgery in St. Barnabas Hospital in the
Bronx, New York, on October 25, 1967, and to resulting treatment in New York until October 21, 1970. We conclude that the district court should have applied the New Jersey statute of limitations. Since under that statute plaintiff's complaint may not be time-barred, we reverse the judgment below.
In March of 1974, Schum filed her diversity complaint in the District of New Jersey. 1 On September 23, 1974, defendant Bailey responded with a motion to dismiss the complaint for lack of personal jurisdiction, asserting by affidavit that although licensed in New Jersey as well as in New York, he had not practiced in New Jersey since 1938 and had no affiliation with any New Jersey hospital during the relevant times to which Schum's complaint referred.
While that motion was under consideration, Schum filed a second complaint in the United States District Court for the Southern District of New York. That complaint was identical to the complaint filed in the New Jersey action. On November 7, 1974, the New Jersey district court dismissed the complaint as to Bailey, holding that Dr. Bailey's contacts with New Jersey provided an insufficient basis for personal jurisdiction over him. Schum did not appeal from that judgment.
In the then pending New York action Bailey moved for summary judgment alleging that Schum's cause of action was time-barred by New York's three-year statute of limitations. The district court in New York agreed with Bailey and on June 23, 1975, dismissed Schum's complaint as barred by the statute of limitations. The district court's opinion discussed only the New York statute of limitations as it applied to Schum's action. That opinion makes no reference to any possible conflict between New York law and New Jersey law. Schum v. Bailey, 398 F.Supp. 164 (S.D.N.Y.1975). Schum appealed to the United States Court of Appeals for the Second Circuit, which affirmed without opinion the district court's order. 538 F.2d 313 (2d Cir. 1976).
Subsequent to the Southern District's disposition, Schum's attorney acquired information that Bailey, at the times in question, was in fact a staff member of, and performed professional services at, at least two New Jersey medical facilities. Accordingly, in October 1975, Schum filed a motion in the district court for the District of New Jersey seeking to set aside "the order of dismissal of the complaint as to Charles P Bailey, M.D., entered in this Court on November 7, 1974, based on new evidence under Rule 60(b)." The motion was accompanied by affidavits which contradicted the earlier Bailey affidavit upon which the district court had relied when it dismissed the complaint against Bailey in November, 1974. On June 22, 1976, Schum's motion was granted and the court restored Schum's complaint to the trial calendar.
Once again Bailey moved for summary judgment claiming that "under New Jersey choice of law principles the New York statute of limitations applies and all causes of action . . . are barred by the New York limitations." (A-19). 2 The New Jersey district court granted Bailey's motion for summary judgment on January 6, 1977. Had it accepted Schum's argument that the New Jersey statute of limitations applied, the court would have been faced with the applicability of the rule of Lopez v. Swyer, 62 N.J. 267, 300 A.2d 563 (1973). In Lopez, the New Jersey Supreme Court held that the New Jersey two-year statute of limitations does not begin to run until the injured party knows, or reasonably should know,
not only of the injury but also of the basis for the actionable claim. Schum contends that she did not learn until 1973 that her 1967 surgery had been unnecessary. Thus, if the New Jersey statute of limitations applies, there would be a material fact issue as to when the statute began to run, and summary judgment would be precluded. See Goodman v. Mead Johnson & Co., 534 F.2d 566 (3d Cir. 1976). This appeal followed from the district court's order of January 6, 1977.
Under Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1940), a federal court sitting in diversity applies the choice of law principles of the forum state. Thus, the conflict at issue here between the New York and New Jersey statutes of limitations is properly resolved by the application of the choice of law principles of New Jersey.
Prior to 1973, the New Jersey courts generally viewed statutes of limitations as purely matters of procedure, and had followed the common law lex fori rule that the forum state would always apply its own statute of limitations regardless of which state's law governed the substantive issues in the case. In 1973, the New Jersey Supreme Court in Heavner v. Uniroyal, Inc., 63 N.J. 130, 305 A.2d 412 (1973), abandoned this rule. The court recognized that the rule of lex fori did not comport with an interest-based approach to resolving choice of law problems an approach which had been adopted by New Jersey in a series of cases beginning with Mellk v. Sarahson, 49 N.J. 226, 229 A.2d 625 (1967).
In Heavner, a husband and wife, residents of North Carolina, sued on claims arising out of the purchase in North Carolina of an allegedly defective tire manufactured by Uniroyal, a New Jersey corporation. The accident occurred in North Carolina and the motor vehicle involved in the accident was registered there. Since Uniroyal was a New Jersey corporation it was amenable to suit in the New Jersey court. This contact alone, however, was deemed insufficient to give New Jersey an interest in applying its more favorable products liability law to the case.
Noting the unsoundness of the lex fori rule, and recognizing the existence in other jurisdictions of "borrowing" statutes which provide for the application of a foreign statute of limitations under certain circumstances, the New Jersey Supreme Court in Heavner fashioned a judicial "borrowing" rule of its own. The court stated:
We need go no further now than to say that when the cause of action arises in another state, the parties are all present in and amenable to the jurisdiction of that state, New Jersey has no substantial interest in the matter, the substantive law of the foreign state is to be applied, and its limitation period has expired at the time suit is commenced here, New Jersey will hold the suit barred. In essence, we will "borrow" the limitations law of the foreign state.
63 N.J. at 140-41, 305 A.2d at 418. This result was predicated on the conclusion that under a governmental interest analysis New Jersey would apply North Carolina's substantive law to the cause of action, 63 N.J. at 135 n.4, 305 A.2d at 414 n.4. Since the claim would be time-barred in North Carolina, the court held it would also be time-barred in New Jersey.
We glean from Heavner that the critical determination underlying the "borrowing" of a foreign statute of limitations is a determination as to whether a foreign substantive law is to be applied. The threshold question here, therefore, is whether New York's or New Jersey's substantive law governs Schum's action against Bailey. If, as in Heavner, New Jersey has no substantial interest in Schum's action, then New York's substantive law would govern. In such a case the district court, applying the principle of Heavner, might not have erred in borrowing New York's statute of limitations
and granting summary judgment for Bailey. If, on the other hand, it is determined that New Jersey, the forum state, does have a substantial interest such as to invoke the application of its own substantive law, then the district court, following Heavner, would be constrained to apply the relevant limitations law of New Jersey, and on this record could not have granted Bailey's motion for summary judgment.
This court's initial consideration of Heavner is to be found in Henry v. Richardson-Merrell, Inc., 508 F.2d 28 (3d Cir. 1975). The plaintiffs in Henry were all mothers, domiciliaries of Quebec, for whom thalidomide had been prescribed during pregnancy. The complaint alleged certain defects respecting the drug. Baker, a subsidiary of the defendant Richardson-Merrell (a Delaware corporation) had manufactured an active ingredient of the drug in its New Jersey plant. The central issue presented to this court by Henry was whether the Quebec or the longer New Jersey statute of limitations should be applied. The district court in Henry had found that New Jersey was "sufficiently interested" and thus applied New Jersey law. On appeal this court reversed, holding that the plaintiffs' suit was time-barred under the applicable Quebec statute of limitations. In so holding, Henry characterized New Jersey's governmental-interest...
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