United States District Court, Northern District of Illinois, E.D
July 27, 1984
MARSHA HOLLINS, ET AL., PLAINTIFFS,
YELLOW FREIGHT SYSTEM, INC., DEFENDANT.
The opinion of the court was delivered by: Grady, District Judge.
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).
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
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
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
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
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
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
B. Is Indiana's Statute of Limitations Shorter Than
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
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
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
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
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
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.
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
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.