Yarber v. Allstate Ins. Co.

• Decision Date: 19 March 1982
• Docket Number: No. 81-1386,81-1386
• Citation: 674 F.2d 232
• Parties: Regina YARBER, Phyllis Oram, Joyce E. Williams, Frances Seamon, Appellees, v. ALLSTATE INSURANCE COMPANY, Physical Measurements, Inc., Appellants. and Robert Borden Miller, Jr., Defendant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 232

674 F.2d 232

Regina YARBER, Phyllis Oram, Joyce E. Williams, Frances Seamon, Appellees, v. ALLSTATE INSURANCE COMPANY, Physical Measurements, Inc., Appellants and Robert Borden Miller, Jr., Defendant.

No. 81-1386.

United States Court of Appeals Fourth Circuit.

Argued July 15, 1981.

Decided March 19, 1982.

Fred C. Alexander, Jr., Alexandria, Va. (Boothe, Prichard & Dudley, Alexandria, Va., Francis M. Gregory, Jr., Sutherland, Asbill & Brennan, Paul Martin Wolff, Williams & Connolly, Washington, D. C., on brief), for appellants.

Michael Mays, Fairfax, Va. (Kenneth R. Weiner, Weiner, Weiner & Weiner, P. C., Fairfax, Va., on brief), for appellees.

Before PHILLIPS, MURNAGHAN and ERVIN, Circuit Judges.

JAMES DICKSON PHILLIPS, Circuit Judge:

Virginia law permits a plaintiff to take one voluntary nonsuit without prejudice to recommencement of the same action and, in a saving provision, gives a six-months grace period following the nonsuit within which the action may be recommenced free of the bar of any limitation period that would otherwise have run, subject only to the condition that the action be recommenced in the same state court in which the nonsuit was taken. The issue on this appeal is whether a federal court sitting in diversity must honor Virginia's restriction of the court within which a nonsuited plaintiff may recommence in order to invoke the saving provision. Because we construe the restriction to be an integral part of the several policies served by Virginia's statutes of limitations, we hold that it must be applied in these consolidated federal diversity actions. Accordingly, we find error in the district court's contrary conclusion, and on that basis reverse and remand for entry of a judgment dismissing the plaintiffs' actions as time-barred by the duly pleaded statute of limitations.

I

As a critical feature of that state's voluntary nonsuit procedure, ¹ Va.Code § 8.01-229(E)(3) (Cum.Supp.1981) provides:

If a plaintiff suffers a voluntary nonsuit as prescribed in § 8.01-380 the statute of limitation with respect to such action shall be tolled by the commencement of the nonsuited action, and the plaintiff may recommence his action within six months from the date he suffers such nonsuit, or within the original period of limitation, whichever is longer.

The operation of this basic tolling and saving provision is, however, expressly conditioned upon a special venue restriction found in the cross-referenced section, Va.Code § 8.01-380 A, which provides in pertinent part:

After a nonsuit no new proceeding on the same cause of action or against the same party shall be had in any court other than that in which the nonsuit was taken, unless that court is without jurisdiction, or not a proper venue, or other good cause be shown for proceeding in another court.

On December 6, 1979, each of the four plaintiffs in the instant actions commenced an action in the Circuit Court of Fairfax County, Virginia, against defendants Allstate Insurance Company (Allstate), Physical Measurements, Inc. (PMI), and Robert Miller, Jr. The actions arose out of physical examinations conducted by Miller on or before October 24, 1978, which were part of each plaintiff's application for employment with Allstate. Plaintiffs later learned that Miller was not a licensed physician and they sued defendants for assault, battery, and gross negligence resulting in personal injury.

On January 30, 1981, over defendants' objections, plaintiffs took voluntary nonsuits in the state actions. On February 11, 1981, they filed complaints, invoking diversity jurisdiction, in the U. S. District Court for the Eastern District of Virginia asserting the same causes of action alleged in the state court suits. Defendants Allstate and PMI ² moved to dismiss the federal court actions for lack of subject matter jurisdiction ³ and as time-barred by the concededly relevant two-year statute of limitations, Va.Code § 8.01-243(A) (1977). Unless first tolled by commencement of the nonsuited actions and further saved by the grace period provided by Virginia law, the two-year statute had run between the time the state court actions were commenced and the time the present federal actions were commenced. ⁴

After consolidating the actions for pretrial proceedings, the district court ruled that it had subject matter jurisdiction ⁵ and that the suits were not time-barred because the six-months grace period following voluntary nonsuits that is provided by Va.Code § 8.01-229(E)(3) (Cum.Supp.1981), had not expired when these federal actions were commenced. ⁶ In the district court's view, the special venue restriction of state law-obviously not met in the federal actions-did not govern decision in the diversity cases. On this basis, because without the restriction the federal actions were commenced within the six-months grace period, the district court denied defendants' motion to dismiss the actions as time-barred.

From this interlocutory order rejecting their statute of limitations defense, defendants were permitted to appeal under 28 U.S.C. § 1292(b).

II

We have here yet another twist on the recurring and peculiarly difficult choice-of-law problem historically posed for federal courts required for any reason to apply state statutes of limitation. See Walker v. Armco Steel Corp., 446 U.S. 740, 744, 100 S.Ct. 1978, 1981, 64 L.Ed.2d 659 (1980). Whether encountered, as here, in a diversity case in which, under Erie's command, the state statute is being applied qua state law, or in a federal claim case where it is being "borrowed" in the absence of a federal statute, see, e.g., Johnson v. Railway Express Agency, Inc., 421 U.S. 454, 95 S.Ct. 1716, 44 L.Ed.2d 295 (1975), the difficult question has always been how much of state law governing limitation of actions is to be applied. Obviously, if any part is to be applied, the aspect of chronological length of the limitation period must be, and at least since Guaranty Trust Co. v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945), this much has been settled in diversity cases. The rub has come generally, as it does here, in deciding whether other, related aspects of the whole body of state limitation doctrine-tolling, saving, estoppel, etc.-shall also be applied.

That of course is the specific question here. No one doubts, indeed there is no dispute, that the two-year period of Va.Code § 8.01-243(A) controls. The question is whether the venue restriction, which in the Virginia statutory scheme operates as a condition to invocation of the six-months saving provision for timely commenced nonsuited actions, is also to apply. If it does, the actions here are time-barred, because the special condition for invocation has obviously not been met. If it does not, the actions are not time-barred because the federal actions were commenced, though not in the restricted venue, within the grace period of the saving provision.

Though the general problem, as indicated, has long been a troublesome one, we think that recent Supreme Court decisions now give a plain guide to decision here and specifically to decision that the venue restriction must be applied as a critical element of Virginia's policies respecting the time-barring of actions voluntarily nonsuited in its courts.

A

The critical principle now established in the diversity context is that, except as a valid federal procedural rule might be in direct conflict, see Hanna v. Plumer, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965), or possibly as there might be a sufficiently powerful countervailing federal interest not embodied in a specific procedural rule, see Byrd v. Blue Ridge Rural Electric Cooperative, 356 U.S. 525, 78 S.Ct. 893, 2 L.Ed.2d 953 (1958), every aspect of state law that can properly be considered "an integral part of the several policies served by (a) state statute of limitations," Walker v. Armco Steel Corp., 446 U.S. at 751, 100 S.Ct. at 1985, is to be applied by a federal court in the course of applying the state limitation period. Cf. Board of Regents v. Tomanio, 446 U.S. 478, 100 S.Ct. 1790, 64 L.Ed.2d 440 (1980) (federal claim; state statute borrowed). The proper inquiry therefore in this and related cases is a two-step one: first, whether application of the state rule is precluded in any event by the existence of a directly conflicting federal rule of procedure or a sufficiently powerful countervailing federal interest otherwise grounded; and second, if not, whether the state rule is "an integral part of the several policies served by the state statute of limitations."

There is no federal rule of civil procedure in direct conflict either with the Virginia venue restriction itself or with the tolling and savings provisions whose operation it conditions. Only Fed.R.Civ.P. 3-in specifying the manner and time for commencing a federal action-might be thought to constitute even in diversity cases a generally preemptive federal tolling rule. As to this possibility the Supreme Court has recently held in this very context, reaffirming Ragan v. Merchants Transfer & Warehouse Co., 337 U.S. 530, 69 S.Ct. 1233, 93 L.Ed. 1520 (1949), that Rule 3 was not intended "to displace state tolling rules for purposes of state statutes of limitations." Walker v. Armco Steel Corp., 446 U.S. at 750-51, 100 S.Ct. at 1985. In consequence the Hanna v. Plumer displacement principle has no application here.

Neither are there discernible to us any countervailing federal interests deriving from other sources than the federal rules of civil procedure which, under Erie and its progeny, might require displacement of the state rule in question. To the extent federal/state forum shopping concerns are at all a factor, they militate against rather than for displacement of the state rule.. ⁷ Neither do we see how any other federal interest would be affected by strictly applying the state rule in accordance with Erie 's basic command. ⁸

B

This leaves only the question...