Opinion
Case Number: 02-10171-BC
November 14, 2002.
OPINION AND ORDER DENYING DEFENDANTS' MOTION TO DISMISS
The plaintiff was injured while on a rafting trip conducted in West Virginia by the defendants. He has filed an action sounding in negligence. The defendants have filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), contending that the West Virginia two-year statute of limitations governs and the plaintiff's complaint was filed out of time. The plaintiff argues that Michigan's three-year statute of limitation applies to this claim and therefore the claim is timely. The Court entertained oral argument on the motion on November 13, 2002. Because the parties have referred to materials outside the pleadings, the Court has treated the motion as having been brought under Rule 56. The Court finds that there is no material fact question concerning this issue, and that the Michigan statute governs. The Court, therefore, will deny the motion.
I.
The complaint filed by the plaintiff in this case on June 14, 2002 alleges negligence by defendant Jennifer Sutler, a tour guide for defendants Rivers White Water Rafting Resort, Rivers II, Inc., and Rivers — 2, Inc ("Rivers"). Jurisdiction is based on diversity of citizenship.
The plaintiff allegedly became aware of Rivers at an "outdoor-rama" put on and attended by Rivers and other businesses in the metropolitan Detroit, Michigan area. Compl. ¶ 8. After the show, the plaintiff purchased a resort white water rafting trip from Rivers on the Lower New River in West Virginia to occur on or about June 15, 1999. Compl. ¶¶ 11, 13. Rivers allegedly used the occasion to permit defendant Sutler, an inexperienced guide, to take her first solo trip with passengers. Id. ¶ 14. Sutler negligently failed to wear properly protective headgear when she started the tour, even though passengers were required to wear helmets. Id. ¶¶ 15-16. Sutler did not realize her mistake until the plaintiff's raft, in which Sutler was apparently traveling, entered a class 4 rapids. Id. ¶ 17. Sutler released the rudder of the raft to put on her helmet, allowing the raft to leave its intended route, strike a rock, and begin turning over. Id. ¶¶ 18-21. Sutler directed the passengers, including the plaintiff, to maneuver in some manner to prevent capsizing, during which the plaintiff was injured. Id. ¶¶ 22-24. The plaintiff avers that his injury (a ruptured right biceps tendon) was caused by the defendants' negligence, not the inherent risks of white-water rafting. Id. ¶ 25. The injury occurred on June 15, 1999. ¶ 24.
The complaint alleges that Sutler's failure to use proper equipment and control the raft violated the state laws and regulations of West Virginia, that Sutler was improperly trained, and that the defendants violated both the applicable West Virginia Department of National Resources Regulations and the Whitewater Responsibility Act of West Virginia, W. Va. Code §§ 20-3B-1 through 3B-5. Id. ¶¶ 24, 26-30.
The defendants have furnished exhibits in support of their motion which include a "waiver and release of liability." That document states that the waiver "is a legal and binding document which I agree is to be construed pursuant to and consistent with West Virginia law." Waiver and Release of Liability ¶ 4, Def.'s Motion Ex. A. The plaintiff does not contest that he signed the document, nor does he quarrel with its contents. However, the defendants argue that the legal effect of this agreement is to impose West Virginia's two-year statute of limitations on the plaintiff, rendering his June 14, 2002 filing (two days before the expiration of Michigan's three-year statute) untimely.
II.
Dismissal of a claim under Rule 12 for failure to conform with the applicable statute of limitations is proper when there is no set of facts that could demonstrate a timely claim upon which relief can be granted. Gibson v. Amer. Bankers Ins. Co., 289 F.3d 943, 946 (6th Cir. 2002) (emphasis omitted). The court must liberally construe the complaint in determining whether the action is time-barred. Only when the allegations of the complaint itself demonstrate that the cause is time-barred can the court grant a motion to dismiss on the basis of the statute of limitations. Rauch v. Day Night Mfg., 576 F.2d 697, 702 (6th Cir. 1978). However, "[e]ven where the defect does not appear on the face of the complaint, the defendant can still raise it by a motion to dismiss, accompanied by affidavits, which Rule 12(b) permits the court to treat as a motion for summary judgment [under Rule 56]." Id. (citing 2A Moore's Federal Practice, ¶ 12.10 at 2315-16 (2d ed. 1975)).
At oral argument, counsel for the plaintiff acknowledged that his client signed the release form and that there was no fraud in the inducement. He conceded that, at least for the purpose of the statute of limitations issue, there was no genuine issue of material fact and that the statute of limitations claim can be decided as a matter of law.
In diversity cases, a federal court must apply the substantive law of the forum state in which it sits. Erie R.R. v. Tompkins, 304 U.S. 64, 78 (1938). This prescription includes the forum state's choice-of-law rules. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941) ("The conflict of laws rules to be applied by the federal court in Delaware must conform to those prevailing in Delaware's state courts. . . . It is not for the federal courts to thwart such local policies by enforcing an independent 'general law' of conflict of laws."); Mill's Pride, Inc. v. Cont'l Ins. Co., 300 F.3d 701, 704 (6th Cir. 2002). Michigan's choice of law rules, therefore, must be used to resolve this dispute.
For Erie purposes, statutes of limitations are classified as "substantive." Guaranty Trust Co. of N.Y. v. York, 326 U.S. 99, 110-12 (1945). But they are treated as "procedural" under Michigan law for most other purposes including, presumably, conflict of laws analysis. See Lothian v. City of Detroit, 414 Mich. 160, 166, 324 N.W.2d 9, 13 (1982) ("In general, statutes of limitations are regarded as procedural, not substantive, in nature."); cf. Phelps v. McClellan, 30 F.3d 658, 661 (6th Cir. 1994).
West Virginia Code 55-2-12(b) states: "Every personal action for which no limitation is otherwise prescribed shall be brought: . . . (b) within two years next after the right to bring the same shall have accrued if it be for damages for personal injuries . . . ." Under Mich. Comp. Laws § 600.5805(9), "[t]he period of limitations is 3 years after the time of the death or injury." Michigan has adopted a borrowing statute to determine which limitations period applies when the cause of action being brought in a Michigan court arose in another state. See Mich. Comp. Laws § 600.5861. It provides:
An action based upon a cause of action accruing without this state shall not be commenced after the expiration of the statute of limitations of either this state or the place without this state where the cause of action accrued, except that where the cause of action accrued in favor of a resident of this state the statute of limitations of this state shall apply. This amendatory act shall be effective as to all actions hereinafter commenced and all actions heretofor[e] commenced now pending in the trial or appellate courts.Id. Thus, while a nonresident is subjected to whichever statute of limitations bars the claim, a Michigan resident is always subjected to the applicable Michigan statutory limitations period. Bechtol v. Mayes, 198 Mich. App. 691, 694, 499 N.W.2d 439, 440 (1993) (finding Hawaiian resident's cause of action, arising in Ontario but brought in Michigan, was barred by Ontario's shorter two-year statute of limitations).
Applying Michigan's choice of law rule, then, it would appear that the plaintiff had three years to file his lawsuit. However, the defendants point to the Waiver and Release of Liability which the plaintiff signed and argue that the plaintiff agreed that his claim would be governed by West Virginia law. That agreement, contends the defendants, includes within its sweep the West Virginia statute of limitations.
The general rule for choice-of-law provisions in contracts is furnished by the Restatement (Second) of Conflict of Laws:
(1) The law of the state chosen by the parties to govern their contractual rights and duties will be applied if the particular issue is one which the parties could have resolved by an explicit provision in their agreement directed to that issue.
(2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either
(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or
(b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties.
(3) In the absence of a contrary indication of intention, the reference is to the local law of the state of the chosen law.
Restatement (Second) of Conflict of Laws § 187 (1971), cited with approval by Chrysler Corp. v. Skyline Indus. Servs., Inc., 448 Mich. 113, 528 N.W.2d 698 passim (1995) (declining to overrule the parties' explicit choice of Michigan law to govern their indemnification agreement where the other interested state did not have a materially greater interest than Michigan in the contract). Subsection (3) makes clear that only the "local" or substantive law of West Virginia applies — the Court does not borrow West Virginia's "whole law," meaning substantive law plus its choice-of-law principles. Restatemant § 187 cmt. h ("The reference, in the absence of a contrary indication of intention, is to the 'local law' of the chosen state and not to that state's "law," which means the totality of its law including its choice-of-law rules.").
There is no question that parties may agree to a contractual provision reasonably limiting the time within which claims may be brought, and thus subsection (1) would apply here. See Tom Thomas Org., Inc. v. Reliance Ins. Co., 396 Mich. 588, 592, 596-97, 242 N.W.2d 396, 397, 399-400 (1976) (validating one-year statute of limitations stated in insurance contract, but finding that cause of action against the insurer for coverage would not accrue until the claim was formally denied by the insurer). The question in this case is whether the document relied upon by the defendants constitutes such an agreement.
Under both Michigan and West Virginia law, the paramount goal when interpreting a contract is to give effect to the intent of the contracting parties. Coleman v. Sopher, 499 S.E.2d 592, 601 (W.Va. 1997); Old Kent Bank v. Sobczak, 243 Mich. App. 57, 63-64, 620 N.W.2d 663, 666-67 (2000) ("The primary goal in interpreting contracts is to determine and enforce the parties' intent. To do so, this Court reads the agreement as a whole and attempts to apply the plain language of the contract itself."). If that intent is clear from the language of the contract itself, there is no place for further construction or interpretation of the agreement. Bass v. Coltelli-Rose, 536 S.E.2d 494, 497 (W.Va. 2000); Farm Bureau Mut. Ins. Co. v. Nikkel, 460 Mich. 558, 566, 596 N.W.2d 915, 919 (1999). The contract may be considered ambiguous, however, when terms are factually inconsistent or the phraseology can suggest different meanings or obligations undertaken. Supervalu Operations, Inc. v. Ctr. Design, Inc., 524 S.E.2d 666, 670 (W.Va. 1999); Port Huron Educ. Ass'n, MEA/NEA v. Port Huron Area Sch. Dist., 452 Mich. 309, 323, 550 N.W.2d 228, 237 (1996).
Once a contract has been determined to be ambiguous, it is subject to construction. Coleman, 499 S.E.2d at 602. In addition to the language used, the Court may consider the circumstances under which the contract was drafted and signed and the purpose sought to be accomplished. Ambiguity in a contract is resolved against the party who prepared it. Nisbet v. Watson, 251 S.E.2d 774, 780 (W.Va. 1979); Lichnovsky v. Ziebart Int'l Corp., 414 Mich. 228, 239, 324 N.W.2d 732, 738 (1982).
The choice-of-law provision in the Waiver and Release of Liability is stated in very general terms, and does not explicitly make reference to West Virginia's statute of limitations. This is significant because, "[w]hile parties are generally free to contract choice of law, such provisions in contracts are generally understood to incorporate only substantive law, not procedural law such as statutes of limitation[s]. Absent an express statement of intent, a choice of law provision will not be interpreted to cover statutes of limitations." Phelps, 30 F.3d at 662 (internal quotes and citations omitted). As observed previously, Michigan views its statutes of limitations as procedural matters.
Because there is no explicit provision in the Waiver and Release of Liability signed by the plaintiff relating to a time limit within which claims may be brought or which state's statute of limitations applies, the Court concludes that the parties chose not to make an agreement covering this issue. The document relied upon by the defendants does not require the application of the West Virginia statute of limitations to this case.
III.
The contract choosing West Virginia law as the rules of decision of the dispute in this case is not broad enough to incorporate that state's statute of limitations. Applying the choice of law rules of the forum state — Michigan — to resolve the question, the Court concludes that Michigan's three-year statute governs, and the plaintiff's complaint was filed timely.
Accordingly, it is ORDERED that the defendants' motion to dismiss [dkt #9], construed as a motion for summary judgment, is DENIED.