Trust Company Bank v. United States Gypsum Company
1992 WL 292, 950 F.2d 1144 (1992)
Rule of Law:
A state's statute of repose that broadly protects any person furnishing design, planning, supervision, or construction of an improvement to real property can apply to manufacturers of component building materials, thereby barring products liability claims filed beyond the statutory period, even if the cause of action arose in another state.
Facts:
- Trust Company Bank ("Trust") contracted for the erection of a building in downtown Atlanta, Georgia, many years ago.
- In 1969, the contractor finished construction of the Trust building, utilizing fireproofing materials containing asbestos that were designed and manufactured by United States Gypsum Company ("USG").
- Asbestos is a carcinogen that can release toxic fibers, potentially causing lung and other organ damage after a long latency period.
- The presence of asbestos in its building necessitated an expensive abatement program for Trust.
- On June 30, 1989, Trust filed a lawsuit in Mississippi state court against USG, alleging the manufacture of defective and unreasonably dangerous asbestos-containing products.
Procedural Posture:
- Trust Company Bank ("Trust") filed a lawsuit in Mississippi state court against United States Gypsum Company ("USG").
- USG removed the action to the United States District Court for the Southern District of Mississippi.
- USG filed a motion for dismissal, arguing lack of subject matter jurisdiction based on the "local action" doctrine, which the district court initially denied.
- USG then filed a motion for summary judgment, contending the Mississippi statute of repose barred Trust's action.
- On September 27, 1990, the district court sua sponte reconsidered and reversed its earlier decision, dismissing Trust's action under Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction.
- In the alternative, the district court granted USG’s motion for summary judgment, concluding the Mississippi statute of repose barred the action.
- On October 9, 1990, Trust filed a "Motion to Reconsider" the district court’s judgment.
- On February 1, 1991, the district court denied Trust's "Motion to Reconsider."
- Within thirty days, Trust filed its notice of appeal to the United States Court of Appeals for the Fifth Circuit.
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Issue:
Does the Mississippi statute of repose, Miss.Code Ann. § 15-1-41, bar a products liability action brought by a building owner against a manufacturer of asbestos-containing fireproofing materials used in a building in another state, and did the federal district court in Mississippi correctly determine it lacked subject matter jurisdiction under the local action doctrine?
Opinions:
Majority - Johnson, Circuit Judge
No, the federal district court in Mississippi did not lack subject matter jurisdiction over this case, but yes, the Mississippi statute of repose, Miss.Code Ann. § 15-1-41, does bar Trust Company Bank's products liability action against United States Gypsum Company. The court first established its appellate jurisdiction, finding Trust's appeal both timely and effective despite a technical error in the notice of appeal, by liberally interpreting Federal Rule of Appellate Procedure 3(c) given the clear intent to appeal the entire case. Regarding subject matter jurisdiction, the court concluded that the district court erred in dismissing the case based on the local action doctrine. While federal law typically governs federal jurisdiction and venue, the Fifth Circuit's established precedent in Chateau Lafayette Apartments, Inc. and Hayes v. Gulf Oil Corp. mandates that the law of the forum state determines the applicability of the local action doctrine. Mississippi has rejected the common law local action doctrine, with Miss.Code Ann. § 11-11-3 limiting 'local' actions to specific categories (trespass on land, ejectment proceedings, and actions for statutory penalties related to timber/woods). Trust's products liability claim is not one of these and is thus a transitory action under Mississippi law, meaning a Mississippi court, including the federal district court, could properly exercise jurisdiction. The court acknowledged its misgivings about applying state law to a federal jurisdictional matter but was bound by stare decisis. Turning to the Mississippi statute of repose, Miss.Code Ann. § 15-1-41, the court affirmed the summary judgment for USG. First, the court held that section 15-1-41 protects manufacturers like USG. The statute broadly covers 'any person... furnishing the design, planning, supervision of construction or construction of [an] improvement to real property,' a category the court found inclusive of manufacturers who design materials for such improvements, consistent with Smith v. Fluor Corp. Second, the court determined that asbestos-containing fireproofing materials constitute 'improvements to real property' as defined by the statute. Drawing on Collins v. Trinity Indus., Inc., an 'improvement' is a permanent addition that increases property value and usefulness, which the fireproofing clearly did. Third, Trust's argument that the statute was unconstitutional on equal protection grounds was waived because it was not raised in the district court prior to final judgment, only in a post-judgment 'Motion to Reconsider' (a Rule 59(e) motion). Since Trust filed its suit more than six years after occupying the building, the statute of repose barred the claims. Therefore, despite the district court's error on subject matter jurisdiction, its alternative ground for summary judgment based on the statute of repose was correct, necessitating affirmance.
Analysis:
This case offers critical clarification on the application of the local action doctrine in federal courts, particularly when forum state law deviates from federal common law, underscoring the formidable power of stare decisis. More significantly, it provides an expansive interpretation of Mississippi's statute of repose, extending its protections to manufacturers of component building materials in products liability actions. This broad application offers substantial immunity to a wide range of construction-related entities from long-term liability for property damage, effectively placing a stringent temporal limit on litigation for defects regardless of discovery. Future cases in Mississippi, and potentially other states with similarly worded statutes, will rely on this precedent for defining who is a 'protected person' and what constitutes an 'improvement to real property' under statutes of repose, especially within the context of latent defect claims like asbestos exposure.
