Stokes v. Southeast Hotel Properties

• Decision Date: 21 December 1994
• Docket Number: No. 3:94CV23P.,3:94CV23P.
• Citation: 877 F. Supp. 986
• Parties: Clayton STOKES, and Loretta Stokes, husband and wife, Plaintiffs, v. SOUTHEAST HOTEL PROPERTIES, LTD. and Commercial Management Corp., Defendants.
• Court: U.S. District Court — Western District of North Carolina

877 F. Supp. 986

Clayton STOKES, and Loretta Stokes, husband and wife, Plaintiffs, v. SOUTHEAST HOTEL PROPERTIES, LTD. and Commercial Management Corp., Defendants.

No. 3:94CV23P.

United States District Court, W.D. North Carolina, Charlotte Division.

December 21, 1994.

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Edmund W. Holt, Thomas G. Reed, III, Pensacola, FL, for plaintiffs.

R. Keith Johnson, Matthew R. Joyner, Rayburn, Moon & Smith, P.A., Charlotte, NC, for defendants.

MEMORANDUM OF DECISION AND ORDER

ROBERT D. POTTER, Senior District Judge.

THIS MATTER is before the Court on Defendant Commercial Management Corp.'s ("CMC") motion, filed July 21, 1994, for summary judgment as to Plaintiff Clayton Stokes on the grounds that his claims are barred by the statute of limitations. Also before the Court is Plaintiffs' motion, filed September 21, 1994, to transfer this action to the Northern District of Florida pursuant to 28 U.S.C. § 157(b)(5) and 28 U.S.C. § 1404 and Plaintiffs' response to Defendant's summary judgment motion. On October 13, 1994, Defendant CMC filed a reply to Plaintiffs' response and a request for an oral argument upon their summary judgment motion and the Plaintiffs' transfer motion. In the alternative, Defendant requests that this Court rule on the summary judgment motion prior to the venue transfer motion. Also before the Court is Plaintiffs' motion, filed July 1, 1994, pursuant to Fed.R.Civ.P. 12(f), to strike the Defendant's third affirmative defense.

The Court has reviewed the motions for summary judgment and for transfer of venue, the parties responses and objections to those motions, and the relevant legal authorities. Based upon its review of this case, the Court makes the following findings of facts and conclusions of law.

FACTS

According to the Complaint, on July 21, 1990, Plaintiff Clayton Stokes was the victim of an armed robbery and aggravated battery which occurred at the Days Inn motel located in Pensacola, Florida. At the time of the incident Defendant Southeast Hotel Properties Limited Partnership (SHPLP) owned and defendant Commercial Management Corporation operated the Days Inn in Pensacola.

The Plaintiffs are citizens and residents of the State of Mississippi. Defendant CMC is a corporation with its office and principal place of business in Charlotte, North Carolina.¹ Both Defendants are the subject of separate bankruptcy proceedings in the United States Bankruptcy Court for the Western District of North Carolina.² On September 30, 1992, plaintiff Clayton Stokes filed a motion in the Bankruptcy Court for relief from the automatic stay to prosecute his personal injury claim against CMC. On November 19, 1992, the Bankruptcy Court granted relief from the stay in the case of CMC and SHPLP. On January 31, 1994, plaintiffs initiated this personal injury action by filing their Complaint in this District Court. Subsequently, on September 9 and 14, 1994, Plaintiff Loretta Stokes received relief from the automatic stay nunc pro tunc to January 31, 1994, in order to allow her to proceed with her derivative civil action for loss of consortium against CMC and SHPLP.

DISCUSSION

As framed by the parties there are essentially two issues presently before the Court. The first argument is the subject of Defendant CMC's motion for summary judgment and Plaintiffs' motion to strike Defendant CMC's third affirmative defense, and centers upon whether or not Plaintiff Clayton Stokes' claims are barred by the statute of limitations. Resolution of that issue requires the Court to determine whether an action will be maintained if it is barred by the statute of limitations of the forum North Carolina. The second issue concerns the Court's determination pursuant to 28 U.S.C. § 157(b)(5) and whether this litigation is proper for transfer pursuant to 28 U.S.C. § 1404(a).

A. Choice of Law and the Statute of Limitations

As to the first dispute, Stokes argues that the statute of limitations of the state where the action arose, Florida, rather than the statute of limitations of the forum state, North Carolina, apply to his personal injury claims. Here, both parties recognize that in a diversity case, the federal court must apply the conflict of law rules that the forum state would apply. Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 496-97, 61 S.Ct. 1020, 1021-1022, 85 L.Ed. 1477 (1941).

In fact, Plaintiffs state in their brief that "this Court is compelled to apply the North Carolina choice of law rules in this action. Under the North Carolina choice of law rules, Courts sitting in North Carolina apply the substantive law of the state where the cause of action accrued. In this case, courts sitting in North Carolina would apply Florida's substantive law." (Plaintiff's Memorandum of Law in Opposition to Defendant's Motion for Summary Judgment, September 21, 1994, at 3). Beyond this partially correct assertion, both parties drift astray from the proper legal analysis of this choice of law problem.

Plaintiff goes on, arguing that Florida law adopted the "most significant contents" rule, as set forth in Restatement (Second) of Conflict of Laws § 145 (1971), as a means of resolving choice of law problems in tort cases. Bates v. Cook, Inc., 509 So.2d 1112 (Fla.1987); Bishop v. Specialty Paint Co., 389 So.2d 999 (Fla.1980) (in tort actions involving more than one state, all substantive issues should be determined in accordance with the law of the state having the most significant relationship to the occurrence and the parties). Plaintiff then concludes, in apparent accord with Bates, that the significant relationship test should be used to decide conflicts of law involving statutes of limitation and that such application to the facts of this matter requires the conclusion that Florida is the place with the most significant relationship. Thus, according to the plaintiff, Florida's statute of limitations should be applied. In a nutshell, plaintiff contends that Florida treats statutes of limitation as substantive rather than procedural and therefore, in accordance with North Carolina's choice of law rule, Florida substantive law, including the statute of limitations, applies in this case.

Unfortunately, however, Plaintiff's entire characterization reveals only half of this state's choice of law rule. The omitted portion of the rule mandates that the federal court must also apply the procedural rules of North Carolina. Clearly, if both states characterize statute of limitations as procedural then there is little confusion on this issue and lawyers as well as courts seem to agree that the forum state's statute of limitations would apply. In fact, this is exactly the argument made by the Defendant based, in part, upon a North Carolina Appeals Court ruling in John C. Stokes, Jr. v. Wilson & Redding Law Firm, 72 N.C.App. 107, 323 S.E.2d 470 (1984).³

In an attempt to bolster this argument, Defendant's briefs go to great lengths to convince this Court that Florida law recognizes statute of limitations as procedural, citing to Colhoun v. Greyhound Lines, Inc., 265 So.2d 18, 20 (Fla.1972), and more recently, Aerovias Nacionales De Columbia v. Tellez, 596 So.2d 1193, 1195 (Fla.App. 3 Dist.1992), and most pointedly to Pledger v. Burnup & Sims, Inc., 432 So.2d 1323, 1329 (Fla.App. 4 Dist.1983).

The Defendant correctly notes that neither Bishop, Pledger nor Bates expressly overruled the Florida Supreme Court's decision in Colhoun, and moreover, those cases are limited because they deal exclusively with application of Florida's borrowing statute with specific reference to the "significant relationships" test as a better rule for determining where the cause of action arose.

In fact, the Florida Supreme Court expressly held that "our ruling does not do violence to Florida's borrowing statute. We simply hold that the significant relationships test should be employed to decide in which state the cause of action `arose.' The borrowing statute will only come into play if it is determined that the cause of action arose in another state." Bates, 509 So.2d at 1115. In a nutshell, the Florida Courts carved an exception to the traditional lex loci delicti rule under which a cause of action sounding in tort arises in the jurisdiction where the last act necessary to establish liability occurred and replaced it with the significant relationships test.

That this is the extent of the Florida Supreme Court's holding in Bates is made clear by the Court's reference to the Restatement (Second) of Conflicts of Laws §§ 142 and revision (1971, revised 1986), which states:

An action will be maintained if it is not barred by the statute of limitations of the forum unless the action would be barred in some other state which, with respect to the issue of limitations, has a more significant relationship to the parties and occurrence.

Bates, 509 So.2d, at 1114, citing, 54 U.S.L.W. 2597 (May 27, 1986) (emphasis added).

Properly viewed the Bates decision merely provides that, Florida Courts, in deciding whether or not to apply the borrowing statute, first must decide where the cause of action arose and in making that determination the Court would apply the significant relationships (Bishop) test rather than the looking to where the last act necessary to establish liability occurred (Colhoun). If the significant relationship analysis reveals that the cause of action arose in the foreign state then the borrowing statute would apply. If, however, the significant relationship analysis revealed that the cause of action arose in Florida then the Florida statute of limitations would apply. In other words, unless there is a dispute concerning the applicability of Florida's borrowing statute which emanates from the question of determining where a cause of action arose, this Court finds that under Florida law statutes of limitations generally remain procedural matters to which the law of...