Smith v. Morbark Industries, Inc.

• Decision Date: 04 April 1990
• Docket Number: Civ. No. 88-466-D.
• Citation: 733 F. Supp. 484
• Parties: Stephen SMITH v. MORBARK INDUSTRIES, INC.
• Court: U.S. District Court — District of New Hampshire

733 F. Supp. 484

Stephen SMITH v. MORBARK INDUSTRIES, INC.

Civ. No. 88-466-D.

United States District Court, D. New Hampshire.

April 4, 1990.

R. Peter Decato, Lebanon, N.H., for plaintiff.

Gregory S. Clayton, St. Johnsbury, Vt., for defendant.

ORDER

DEVINE, Chief Judge.

Defendant seeks reconsideration of the Court's October 3, 1989, Order which denied defendant's motion to dismiss and for summary judgment. As the basis for reconsideration, defendant argues that the Court erred by applying New Hampshire law to determine (1) the effect of a previous release signed by plaintiff, and (2) the applicable statute of limitations. Defendant takes the position that Vermont law applies to both issues and that such application requires dismissal of the present action. Briefly stated, the factual basis of plaintiff's claim follows.

Stephen Smith suffered severe injuries on November 27, 1983, when his legs were caught in a lumber conveyor he was operating in the course of his employment with Land East Corporation. The accident occurred at a sawmill (known as "Tri-State Timberland") operated by Land East in Hartland, Vermont.

In November 1986, Smith brought suit in Vermont state court against Tri-State Timberland and Morbark Maine, Inc. Smith alleged that Morbark Maine had negligently designed and manufactured the conveyor that caused his injury. It later became clear that Smith sued the wrong Morbark. Morbark Industries, Inc., a Michigan corporation, not Morbark Maine, manufactured the "48 foot trough type conveyor" operated at Tri-State's sawmill. Morbark Maine was dismissed from the action, but by the time Smith learned of his mistake, it was too late to bring suit against the proper Morbark—Vermont's three-year statute of limitations had run.

On August 3, 1988, Smith dismissed his state claim pursuant to a general release in which he accepted $25,000 in exchange for his agreement to forego "any and all manner of action and actions, cause and causes of action, suits, damages, judgments, executions, claims for personal injuries, property damage and demands whatsoever, in law or in equity" against Land East, Tri-State Timberland and the Aetna Insurance Company. October 26, 1988, General Release (exhibit # 2 attached to defendant's motion to dismiss and for summary judgment).

Approximately three weeks later, Smith initiated the instant claim against Morbark Industries in this court.

1. Statute of Limitations

In the October 3, 1989, Order, the Court concluded that New Hampshire's six-year statute of limitations (not Vermont's three-year statute) applies to this action. That conclusion was based on the finding that the issue was procedural, not substantive.

New Hampshire has "long followed the rule that a statute of limitations is a matter of procedure and as such the law of the forum applies." Gordon v. Gordon, 118 N.H. 356, 360, 387 A.2d 339, 342 (1978). The rule was recently reaffirmed by the Keeton court which stated that "the varied purposes that statutes of limitations are meant to serve justify the application of forum law, and thus the essential treatment of such statutes as procedural rules, in most instances, whether or not our choice of law principles advise application of New Hampshire substantive law." Keeton v. Hustler Magazine, Inc., 131 N.H. 6, 14, 549 A.2d 1187, 1192 (1988).

Order at 21.

Keeton was a libel suit brought in New Hampshire by a New York domiciliary against Hustler Magazine and Larry Flynt, Hustler's publisher, both non-resident defendants. The case was related to New Hampshire in only one way: less than one percent of Hustler's magazines were distributed in the state. Nevertheless, the New Hampshire Supreme Court ruled that New Hampshire's six-year statute of limitations applied, not the shorter periods adopted in the other interested states. "The varied purposes that statutes of limitations are meant to serve justify the application of forum laws, and the essential treatment of such statutes as procedural rules, in most instances, whether or not our choice of law principles advise application of New Hampshire substantive law." Keeton, supra, 131 N.H. at 14, 549 A.2d at 1192.

It is true that the New Hampshire Supreme Court left open the possibility that the statute of limitations question could be analyzed with reference to the "Leflar" choice-of-law analysis in the appropriate case. But New Hampshire's highest court has not yet identified that case, and this Court is not persuaded that the present case requires different treatment than Keeton. Morbark's relationship with this state is minimal, but it is not that different from the activities Hustler conducted here, and those activities were enough to support application of the New Hampshire statute of limitations.

In essence, defendants here take the position championed by Justices Souter and Thayer in the Keeton dissent. Justice Souter's opinion brilliantly stated the case for applying modern choice-of-law principles to determine which state's limitation period to apply. That opinion, however, did not win a majority in the Keeton case and therefore it cannot win here.

The New Hampshire Supreme Court has consistently chosen to apply New Hampshire's statutes of limitation in similar situations. See, e.g., Gordon v. Gordon, 118 N.H. 356, 387 A.2d 339 (1978); Barrett v. Boston & M.R.R. 104 N.H. 70, 178 A.2d 291 (1962); Potter v. Lefebvre, 95 N.H. 482, 66 A.2d 643 (1949); Smith v. Turner, 91 N.H. 198, 17 A.2d 87 (1941); Connecticut Valley Lumber Co. v. Maine Cent. R.R., 78 N.H. 553, 103 A. 263 (1918). As noted in the Court's prior Order, there are only two exceptions to this general rule: foreign statutes of limitations are applied "only when such statutes either `extinguish a right, or ... are an inherent part of a statutory scheme creating a right.'" Keeton, supra, 131 N.H. at 14, 549 A.2d at 1192. See also, Dupuis v. Woodward, 97 N.H. 351, 88 A.2d 177 (1952) (action time-barred where Quebec statute upon which claim was based "absolutely extinguished" the right to maintain such action after one year). Neither exception applies in this case.

Accordingly, after carefully considering defendant's arguments, the Court concludes that New Hampshire's six-year statute of limitations applies, and plaintiff's claim was therefore timely filed.

2. Choice-of-Law: The Vermont Release

Defendant also argues that the Court erred in applying New Hampshire law to determine the effect of the release. As explained in the earlier Order, plaintiff executed the release and thereby expressly gave up his right to pursue a claim against Land East Corporation, Tri-State Timberland, and Aetna Insurance Company. Vermont adheres to the common law doctrine that would extend the release to Morbark, a joint tortfeasor.¹ The animating principles behind that doctrine have been described as follows:

At common law, the release of a claim against one joint tortfeasor by an injured party released all. In the eyes of the law, the plaintiff's harm was the product of concerted action and all defendants were jointly and severally liable for the entire injury. There was, therefore, but one cause of action and a plaintiff was not permitted to segment the litigation by piecemeal resolution. It was assumed that to allow otherwise would open the door for multiple recoveries for the same injury.

Confusion ensued in the nineteenth century when courts began the practice of consolidating all related claims into one case. As a consequence of liberalized joinder rules, the term joint tortfeasor was soon expanded beyond its previous definition to include individuals whose combined actions had produced injury but who had not acted in conscious concert. Although these "concurrent tortfeasors" could not at common law have been joined in a single action and thus, would not have been subject to the rule of "release one, release all," the linguistic evolution extended the benefits of the rule to such defendants. In many jurisdictions, it was routinely held that a release of one tortfeasor whether joint or concurrent automatically released all despite express reservations to the contrary in the language of the document.

Welsh v. Gerber Products, Inc., 839 F.2d 1035, 1037 (4th Cir.1988).

Simply put, if the Vermont joint tortfeasor doctrine controls, Smith has no claim against Morbark; if the law of New Hampshire applies, Smith's claim survives. The relevant New Hampshire statute reads as follows:

Effect of Release or Covenant Not to Sue. A release or covenant not to sue given in good faith to one of 2 or more persons liable in tort for the same injury discharges that person in accordance with its terms and from all liability for contribution, but it does not discharge any other person liable upon the same claim unless its terms expressly so provide. However, it reduces the claim of the releasing person against other persons by the amount of the consideration paid for the release.

New Hampshire Revised Statutes Annotated ("RSA") 507:7-h (1986).²

After careful consideration of this close question, the Court adheres to its earlier decision—New Hampshire law applies, and the case is not barred. For purposes of providing a more complete explanation of the reasons for its position, the Court adds the following.

It is undisputed that this Court must apply New Hampshire's choice-of-law rules. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1941); Roy v. Star Chopper Co., 584 F.2d 1124, 1128 (1st Cir.1978), cert. denied, 440 U.S. 916, 99 S.Ct. 1234, 59 L.Ed.2d 466 (1979). Defendant asserts that the rules applicable here are those that apply to the making of contracts, not torts, as the Court previously held. But in either case, New Hampshire has adopted modern choice-of-law principles; that is, multifactor analyses that reject mechanistic "lex loci" rules. Thus, whether the Court applies the five choice-influencing factors of the "Leflar"...