Van Den Hul v. Baltic Farmers Elevator Co.

• Citation: 716 F.2d 504
• Decision Date: 06 October 1983
• Docket Number: 82-2456,Nos. 82-2455,s. 82-2455
• Parties: Barbara VAN DEN HUL, Special Administratrix of the Estate of Ralph Van Den Hul, Deceased, Appellant, v. BALTIC FARMERS ELEVATOR COMPANY, a South Dakota cooperative association; The Baltic Cooperative Building Supply Association, a South Dakota cooperative association; Koopman & Sons Gas Company, Inc., a South Dakota corporation; and Crane Company, an Illinois corporation, Appellees. Mick ANDERSON, Appellant, v. BALTIC FARMERS ELEVATOR COMPANY, a South Dakota cooperative association; The Baltic Cooperative Building Supply Association, a South Dakota cooperative association; Koopman & Sons Gas Company, Inc., a South Dakota corporation; and Crane Company, an Illinois corporation, Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 504

716 F.2d 504

Barbara VAN DEN HUL, Special Administratrix of the Estate of Ralph Van Den Hul, Deceased, Appellant, v. BALTIC FARMERS ELEVATOR COMPANY, a South Dakota cooperative

association; The Baltic Cooperative Building Supply

Association, a South Dakota cooperative association;

Koopman & Sons Gas Company, Inc., a South Dakota

corporation; and Crane Company, an Illinois corporation, Appellees.

Mick ANDERSON, Appellant, v. BALTIC FARMERS ELEVATOR COMPANY, a South Dakota cooperative

association; The Baltic Cooperative Building Supply

Association, a South Dakota cooperative association;

Koopman & Sons Gas Company, Inc., a South Dakota

corporation; and Crane Company, an Illinois corporation, Appellees.

Nos. 82-2455, 82-2456.

United States Court of Appeals,

Eighth Circuit.

Submitted June 14, 1983.

Decided August 30, 1983.

Rehearing Denied Oct. 6, 1983.

Edward J. Leahy, May, Johnson, Doyle & Becker, P.C., Sioux Falls, S.D., for Baltic Co-op. Bldg. Supply Ass'n.

John E. Simko, Woods, Fuller, Shultz & Smith, Sioux Falls, S.D., for Koopman & Sons Gas Co., Inc.

Stanley E. Siegel, Siegel, Barnett, Schutz, O'Keefe, Jewett & King, Aberdeen, S.D. and Joel Hagen and Karen Schreier, Burns, Hagen & Wilka, Sioux Falls, S.D., for appellant Barbara Van Den Hul.

Thomas Frankman, Willy, Pruitt, Matthews, Farrell, Frankman & Johnson, Sioux Falls, S.D., for appellant Mick Anderson.

Terry Prendergast, Boyce, Murphy, McDowell & Greenfield, Sioux Falls, S.D., of counsel to appellants on brief only.

Before HEANEY, Circuit Judge, and FLOYD R. GIBSON and HENLEY, Senior Circuit Judges.

HEANEY, Circuit Judge.

On May 28, 1980, Ralph Van Den Hul and Mick Anderson were painting at the Baltic Farmers Cooperative Elevator (Baltic Elevator)

in Baltic, South Dakota, when an explosion ripped through the elevator. Van Den Hul was killed, and Anderson was severely burned. Barbara Van Den Hul, special administratrix of the estate of Ralph Van Den Hul, and Anderson brought wrongful death and personal injury actions respectively, naming multiple defendants. The district court dismissed three of the defendants and entered final judgment as to them pursuant to Fed.R.Civ.P. 54(d). Van Den Hul and Anderson appeal. We affirm in part and reverse in part.

I. FACTS

The complaints alleged that the explosion was caused by the ignition of accumulated propane gas which occurred as a result of premature corrosion of a one-inch underground pipe laid under a street near the elevator basement in October, 1970. The pipe carried liquified petroleum (LP) gas from a tank installed on one side of the street to a grain dryer on the other side of the street. The pipe was allegedly laid in actively corrosive soil but unprotected from corrosion by an acceptable technique. The defendants included, in addition to Baltic Elevator and others, the Baltic Cooperative Building Supply Association (the Co-op), the Crane Company (Crane), and Koopman & Sons Gas Company (Koopman). Crane supplied the pipe, the Co-op installed it, and Koopman connected an LP gas tank to the line and supplied the LP gas to Baltic Elevator.

The district court granted summary judgment on the ground that SDCL 15-2-9 barred the action against the Co-op and partially against Koopman, that SDCL 15-2-12.1 barred the action against Crane, and that the facts showed no right to relief against Koopman.

II. STATUTES OF LIMITATIONS

SDCL 15-2-9 and 15-2-12.1 were enacted to protect architects, builders, and suppliers of products from long-term liability upon claims arising out of improvements to real property. McMacken v. State, 320 N.W.2d 131, 133 (S.D.), aff'd on rehearing, 325 N.W.2d 60 (S.D.1982). SDCL 15-2-9 provides in pertinent part that

[n]o action to recover damages * * * for personal injury or death arising out of any deficiency in the design, * * * or construction, of an improvement to real property, * * * may be brought against any person performing or furnishing the design, * * * or construction, of such an improvement more than six years after substantial completion of such construction. Date of substantial completion shall be determined by the date when construction is sufficiently completed so that the owner or his representative can occupy or use the improvement for the use it was intended.

Prior to its amendment in 1978, the statute imposed a ten-year limitation.

SDCL 15-2-12.1 provides:

Product liability actions barred after six years from delivery of product. In the application of any statute of limitations to a cause of action against a manufacturer, lessor or seller of a product, regardless of the substantive legal theory or theories upon which the action is brought, for or on account of personal injury, death, or property damage caused by or resulting from the manufacture, construction, design, formula, installation, inspection, preparation, assembly, testing, packaging, labeling, or sale of any product or failure to warn or protect against a danger or hazard in the use, misuse or unintended use of any product, or the failure to provide proper instructions for the use of any product, the cause of action shall be barred if it accrues more than six years after the date of the delivery of the completed product to its first purchaser or lessee who was not engaged in the business of selling such product, regardless of the date the defect in the product was or should have been discovered. This section shall not apply to causes of action which have arisen prior to July 1, 1978.

The appellants assert that these statutes are unconstitutional, that they were improperly applied retroactively, that factual issues exist as to the validity of application of SDCL 15-2-9, and that the injuries occurred as a result of defendants' violation of South Dakota safety statutes which must be considered outside the class of actions to which the statutes of limitations are applicable.

A. Fact issues.

We discuss first appellants' contention that whether the installation of the underground pipe in 1970 constituted an improvement within the meaning of SDCL 15-2-9 was a genuine issue of material fact, precluding the grant of summary judgment.

SDCL 15-2-9's six-year period of limitations begins to run upon substantial completion of construction of an improvement. The date of substantial completion is defined as the date "when construction is sufficiently completed so that the owner or his representative can occupy or use the improvement for the use it was intended." The appellants contend that a jury could find that the underground pipe was not, by itself, an improvement, and did not become one until it was hooked up to a grain dryer in 1975. The appellees contend that the undisputed facts show that the pipeline was installed for the purpose of providing an alternative source of fuel for the grain dryer owned by Baltic Elevator, that the installation of the pipeline involved the expenditure of labor and money, and that the pipeline enhanced the use and value of the elevator. They contend that, upon these facts, the pipeline as a matter of law constituted a substantially completed improvement.

The Supreme Court of South Dakota has not construed the term "improvement" as used in SDCL 15-2-9. In the absence of a controlling state decision, it is our duty to apply the rule we believe the state's courts would follow. Luster v. Retail Credit Co., 575 F.2d 609, 613 (8th Cir.1978); 19 Wright, Miller & Cooper, Federal Practice and Procedure, Jurisdiction Sec. 4507, at 100-102 (1982).

Generally, in determining whether a modification of or addition to real property is an improvement, courts have adopted a commonsense interpretation of the word "improvement." Pacific Indemnity Co. v. Thompson-Yaeger, Inc., 260 N.W.2d 548, 554 (Minn.1977). See generally Note, Actions Arising Out of Improvements to Real Property: Special Statutes of Limitations, 57 N.D.L.Rev. 43, 45-47 (1981). Among the factors considered are whether the modification or addition enhances the use of the property, involves the expenditure of labor or money, is more than mere repair or replacement, adds to the value of the property, and is permanent in nature. Southland Corp. v. United States, 222 Ct.Cl. 22, 611 F.2d 348, 353 (Ct.Cl.1979); Allentown Plaza Assoc. v. Suburban Propane Gas Corp., 43 Md.App. 337, 405 A.2d 326, 332 (1979); Washington Natural Gas Co. v. Tyee Constr. Co., 26 Wash.App. 235, 611 P.2d 1378, 1381 (1980); Mora-San Miguel Electric Cooperative, Inc. v. Hicks & Ragland, etc., 93 N.M. 175, 598 P.2d 218, 220 (1979); Kallas Millwork Corp. v. Square D Co., 66 Wis.2d 382, 225 N.W.2d 454, 456-457 (1975).

The installation of the underground pipe enhanced the use and value of the property, was permanent, and involved the expenditure of labor and money. Thus, we believe that the South Dakota courts would adopt the commonsense definition described above and would determine on the basis of the undisputed facts that, as a matter of law, the pipeline was an improvement within the meaning of SDCL 15-2-9. We are also convinced that they would determine that the pipeline was substantially completed within the meaning of the statute in 1970. ¹ The pipeline could have been hooked up in 1970. SDCL 15-2-9 only requires that construction be sufficiently completed so that the owner can use the improvement, not that the owner actually use it.

B. Retroactivity.

SDCL 15-2-9 imposed a ten-year period of limitations until 1978, when the period was reduced to six years. SDCL 15-2-12.1, which protects the seller of the piping used in the 1970 improvement and which also imposes a six-year period of limitations, was enacted in 1978. The appellants contend that application of these statutes to installation of an improvement and to delivery of materials used in that improvement prior to the statutes' effective date in 1978 constitutes an impermissible retroactive application. ²

In Kotval v. Gridley, 698 F.2d 344, 347 (8th Cir.1983), we considered the...