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HOLLINS v. YELLOW FREIGHT SYSTEM

United States District Court, Northern District of Illinois, E.D


July 27, 1984

MARSHA HOLLINS, ET AL., PLAINTIFFS,
v.
YELLOW FREIGHT SYSTEM, INC., DEFENDANT.

The opinion of the court was delivered by: Grady, District Judge.

MEMORANDUM OPINION

This is a personal injury action. Defendant Yellow Freight System, Inc.*fn1 has moved for judgment on the pleadings pursuant to Fed.R.Civ.P. 12(c), on the ground that plaintiffs' action is time-barred. Because the parties have attached to their pleadings affidavits, and because we have considered these affidavits, we construe defendant's motion as one for summary judgment. See Fed.R.Civ.P. 12(c).

BACKGROUND

On March 10, 1981, plaintiffs Marsha and Frank Hollins were allegedly injured when a car they were riding in collided with a truck operated by defendant's agent in Hammond, Indiana. On May 28, 1982, 14 1/2 months after the collision, plaintiffs filed suit in the Circuit Court of Cook County. On January 11, 1983, the Hollins' lawsuit was dismissed voluntarily. On January 10, 1984, within one year of the voluntary dismissal but nearly three years after the accident, plaintiffs refiled the complaint in the Circuit Court of Cook County. Defendant removed the action to this court under 28 U.S.C. § 1441 and 1446.

Defendant now contends that pursuant to the Illinois "borrowing act," Ill.Rev.Stat. ch. 110, ¶ 13-210 ("§ 13-210"), we should apply Indiana's personal injury statute of limitations to determine whether plaintiffs' action was timely filed. Defendant concludes that the action was not timely filed under Indiana law and urges that we dismiss the lawsuit.

Plaintiffs argue in response that the Illinois borrowing act is inapplicable because defendant is an Illinois resident. According to plaintiffs, the Illinois rather than the Indiana statute of limitations therefore controls, and the action was timely filed under the Illinois limitations provisions. In the alternative, plaintiffs argue that even if the Indiana statute controls and bars this action, defendant is estopped from relying on the limitations defense.

Thus, we must determine (1) which state's limitations provisions control this case; (2) whether the action was timely filed under the relevant provisions; and (3) whether in any event the defendant is equitably estopped from asserting the statute of limitations.

I. WHICH STATE'S STATUTE OF LIMITATIONS GOVERNS?

Since our jurisdiction in this case rests on diversity of citizenship, we must decide the issues presented as though we were an Illinois state court. Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1941).

The Illinois borrowing act provides:

    § 13-210. Foreign limitation. When a cause of
  action has arisen in a state or territory out of
  this State, or in a foreign country, and, by the
  laws thereof, an action thereon cannot be
  maintained by reason of the lapse of time, an
  action thereon shall not be maintained in this
  State.

Illinois courts apply § 13-210 and borrow another state's statute of limitations only where: (a) none of the parties are Illinois residents, see Miller v. Lockett,
98 Ill.2d 478, 75 Ill.Dec. 224, 457 N.E.2d 14 (1983); Coan v. Cessna Aircraft, 53 Ill.2d 526, 293 N.E.2d 588 (1973); Panchinsin v. Enterprise Companies, 117 Ill. App.3d 441, 72 Ill.Dec. 922, 453 N.E.2d 797 (1st Dist. 1983);*fn2 and (b) the foreign statute of limitations is shorter than that of Illinois, see Williams v. Fulton County Jail, 575 F. Supp. 306, 308 n. 3 (N.D.Ill. 1983); Norman v. Kal, 550 F. Supp. 736, 738 (N.D.Ill. 1982); Comment, Foreign Statute Of Limitations: Borrowed Only To Shorten The Period Of Limitations Of The Forum, 1962 U.Ill.L.F. 452. Thus, if either party to this lawsuit is an Illinois resident, or if the Indiana statute of limitations is not shorter than the parallel Illinois provision, we may not borrow Indiana's statute and we will apply that of Illinois.

A. Is Either Party A Resident of Illinois?

Plaintiffs, who are not residents of Illinois, argue that defendant is a "resident" as that term is used in interpreting and applying the borrowing act. Plaintiffs' argument is premised on the facts that defendant, a foreign corporation, is licensed to do business in Illinois and is subject to the jurisdiction of courts sitting here.

Although the borrowing act does not define resident,*fn3 plaintiffs suggest that we adopt the definition of resident utilized in the Illinois Tolling Act, Ill.Rev.Stat. ch. 110, ¶ 13-208. The tolling act provides that "no person shall be considered to . . . reside outside of the State during any period when he or she is subject to the jurisdiction of the courts of this State with respect to that cause of action. . . ."

We reject plaintiffs' suggestion. The tolling act is entirely inapplicable to this case, as it is directed at situations in which a defendant has fled the jurisdiction in an effort to run the statute of limitations. Further, the tolling act expressly states that its residency definition is "for purposes of" the act only. In short, we do not believe that the Illinois legislature intended to provide a general definition of corporate residency in enacting the tolling act. Cf. Thornton v. Nome and Sinook Co., 260 Ill. App. 76, 82-83 (1st Dist. 1931).*fn4

We believe that absent a specific statutory provision or state court decision defining corporate residency for borrowing act purposes, we must apply — as would the state courts — the general common law approach to corporate residency.

Under the common law, a corporation is considered a resident only of the state(s) in which it is incorporated, and not of all states in which it is licensed to do business or subject to the jurisdiction of the local courts. 8 W. Fletcher, Cyclopedia Of The Law Of Corporations § 4025 (rev. perm ed. 1982); People Ex rel. Compagnie Nationale v. Giliberto, ll.2d 90, 102, 23 Ill.Dec. 106, 110, 383 N.E.2d 977, 981 (1978), cert. denied, 441 U.S. 932, 99 S.Ct. 2052, 60 L.Ed.2d 660 (1979) ("The domicile of a corporation is customarily regarded as the place where it was incorporated. . . . ").*fn5 It is undisputed that defendant is not incorporated in Illinois. Accordingly, and despite the fact that defendant is amenable to jurisdiction in this state, defendant is not a "resident" of Illinois for purposes of the borrowing act.*fn6 Because neither party is an Illinois resident, we must apply the Indiana statute of limitations if it is shorter than that of Illinois.

  B. Is Indiana's Statute of Limitations Shorter Than
      Illinois'?

Indiana's statute of limitations, Ind.Code § 34-1-2-2, provides a two year filing period for personal injury actions. The Illinois statute of limitations also allows personal injury plaintiffs two years to file suit. Ill.Rev.Stat. ch. 110 ¶ 13-202. At first glance then, it would appear that Indiana's statute is no shorter than Illinois', and that it would make no difference in this case which state's statute applies. It is by now clear, however, that when statutes of limitation are borrowed, accompanying tolling and/or savings provisions are also borrowed. See, e.g., Speight v. Miller, 437 F.2d 781, 783 n. 4 (7th Cir.), cert. denied, 404 U.S. 827, 92 S.Ct. 60, 30 L.Ed.2d 55 (1971) (when a foreign limitations provision is borrowed, also borrow "all its accouterments," quoting American Surety Company Of New York v. Gainfort, 219 F.2d 111, 112 (2nd Cir. 1955)). See also Norman v. Kal, supra, 550 F. Supp. at 740-41; Comment, Foreign Statute Of Limitations, supra, 1962 U.Ill.L.F. at 454.

This "tandem borrowing" doctrine is particularly relevant in this case. Although both Illinois and Indiana have two year filing periods for personal injury actions, the Illinois Code of Civil Procedure also contains a "savings" provision allowing plaintiffs who have voluntarily dismissed actions that were timely filed to refile the action within one year of the voluntary dismissal "whether or not the time limitation for bringing such action expires during the pendency of such action." Ill.Rev.Stat. ch. 110, ¶ 13-217 ("§ 13-217").*fn7 Under § 13-217, plaintiffs' action would not be barred by the Illinois statute of limitations because the initial filing — even though it was later voluntarily dismissed — was made within two years of the collision, and the refiling was effected within one year of the initial filing. The effect of § 13-217, then, is to give plaintiffs in this case what amounts to a filing period which is longer than two years.

Indiana also has a "savings" clause, Ind.Code § 34-1-2-8. That clause provides:

    If, after the commencement of an action, the
  plaintiff fails therein, from any cause except
  negligence in the prosecution, or the action
  abate, or be defeated by the death of a party, or
  judgment be arrested or reversed on appeal, a new
  action may be brought within five (5) years after
  such determination, and be deemed a continuation
  of the first, for the purposes herein
  contemplated.

As interpreted by the Indiana courts, however, this section does not save actions that are voluntarily dismissed. Ferdinand Furniture Co., Inc. v. Anderson, 399 N.E.2d 799, 803 (Ind. App. 2d Dist. 1980). Indiana courts consider that a judgment of voluntary dismissal leaves the parties as if suit had never been brought, so the statute of limitations is not tolled by the pendency of such a suit. Board of Comm'rs of Cass County v. Nevitt, 448 N.E.2d 333, 339 n. 5 (Ind. App. 4th Dist. 1983). Under the Indiana provisions, plaintiffs' present action would not be deemed timely filed.

Thus, when considered in conjunction with its savings clause, the Indiana statute of limitations effectively provides plaintiffs with a shorter time in which to bring this personal injury action than does the Illinois limitations provision.

Accordingly, all of the requirements for application of the Illinois borrowing statute are met. The cause of action arose in Indiana, neither of the parties are Illinois residents for purposes of borrowing act analysis, and the Indiana statute of limitations, when considered with the accompanying savings clause, is shorter than that of Illinois. We therefore must give effect to the borrowing act, and determine the timeliness of this action under Indiana, and not Illinois, law.

II. WAS PLAINTIFFS' ACTION TIMELY FILED UNDER THE INDIANA
    STATUTE?

As discussed above, the Indiana personal injury statute of limitations is two years. Because plaintiffs' present action, filed on January 10, 1984, was filed more than two years after the collision, and as no savings clause works to limit the effect of the statute of limitations, this action is time-barred.*fn8

III.  IS THE DEFENDANT EQUITABLY ESTOPPED FROM ASSERTING THE
      STATUTE OF LIMITATIONS?

Plaintiffs contend that even if their action is time-barred, they should nevertheless be allowed to proceed because defendant has no right to assert the statute of limitations defense. Plaintiffs argue that defendant "engaged in a course of conduct that led the Plaintiffs into a reasonable belief that this case would be settled without the refiling of the suit." Response To Defendant's Motion For Judgment On The Pleadings, at 5. Specifically, plaintiffs assert that defendant's attorneys told plaintiffs' attorneys that defendant was willing to settle the case for $6,000.00 to $7,000.00, and that defendant's attorneys would get back to plaintiffs with the precise amount agreed to. Affidavit of Patterson Carl Meuth, at ¶ 3. Plaintiffs claim that they refrained from filing suit based on these representations. Id. at ¶ 4.

Defendant, on the other hand, contends that its attorneys had only engaged in settlement negotiations with plaintiffs, that no settlement was ever agreed to as plaintiffs' attorneys never indicated that $6,000.00 to $7,000.00 would be an acceptable settlement, that plaintiffs in fact never demanded less than $12,000.00 in settlement, and that defendant's attorneys never suggested to plaintiffs' attorneys that the latter not file suit and never agreed to waive a statute of limitations defense. See Defendant's Reply In Support Of Its Motion For Judgment On The Pleadings, at 4; Affidavit of John M. Duczynski.

Indiana substantive law, which applies to this case under the Illinois choice of law rules, see Ingersoll v. Klein, 46 Ill.2d 42, 262 N.E.2d 593 (1970), McIntosh v. Magna Systems, Inc., 539 F. Supp. 1185 (N.D.Ill. 1982), recognizes that parties may in certain circumstances be estopped from raising a statute of limitations defense. See, e.g., Martin v. Levinson, 409 N.E.2d 1239, 1242-43 (Ind. App. 3d Dist. 1980). Equitable estoppel will only be invoked, however, where a defendant made statements during the course of settlement negotiations which were calculated to lull the plaintiff into inaction and to induce a reasonable belief that the claim would be settled without suit. Id. The mere willingness of a defendant to discuss settlement before the expiration of the statute of limitations is insufficient to warrant estoppel. Collins v. Dunifon, 163 Ind. App. 201, 323 N.E.2d 264 (3d Dist. 1975).*fn9

Having reviewed the affidavits filed by the parties, we cannot say that plaintiffs have managed to raise a genuine issue of material fact regarding whether defendant should be estopped from asserting the statute of limitations. The most that can be gleaned from the affidavit of plaintiffs' former attorney, Patterson Carl Meuth,*fn10 is that on one occasion within two months of the running of the statute of limitations, defendant's attorney informed Meuth that a concrete settlement offer would be forthcoming. As defendant points out, however, there is no indication in Meuth's affidavit that he or plaintiffs ever agreed to accept any specific amount in settlement, or even that they looked favorably upon defendant's attorney's suggestion that "he could get $6,000 to $7,000 to settle the case. . . ." Meuth Affidavit, ¶ 3. There is no attempt to explain why, as time was running out and no offer was forthcoming, suit was not filed. Plaintiffs' attorneys made no further inquiry before the statute ran, and apparently there was no communication at all between counsel after the conversation referred to above. On its face, then, Meuth's affidavit does not set forth facts that would support a ruling that defendant may be equitably estopped from asserting its statute of limitations defense.*fn11

It appears to the court that plaintiffs' failure to file this action in a timely manner resulted not from any justifiable reliance on the statements or actions of defendant or its attorneys, but instead, regrettably, from the neglect of plaintiffs' own attorneys. If plaintiffs have a remedy in this case, that remedy would seem to be a malpractice suit against their attorneys. Stewart v. United States, 655 F.2d 741, 742 (7th Cir. 1981).

Accordingly, defendant's motion for summary judgment is granted, and we order that this action be dismissed.


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