Dade County, a Political Subdivision of the State Offlorida, Plaintiff- Appellee, v. Rohr Industries, Inc., Etc., the Flxible Company, Etc., Defendants,grumman Allied Industries, and Grumman Flxible Corporation,defendants- Appellants.dade County, a Political Subdivision of the State Offlorida, Plaintiff- Counterclaim Defendant-appellee, v. Rohr Industries, Etc., et al., Defendants,grumman Allied Industries, Inc., a Corporation, and Grummanflxible Corp., a Foreign Corporation,defendants-counterclaim Plaintiffs-appellants, 826 F.2d 983 (11th Cir. 1987)

Dade County, a political subdivision of Florida, sued four out-of-state corporations: The Flxible Company (Flxible), Rohr Industries, Inc. (Rohr), Grumman Allied Industries, Inc. (Grumman Allied), and Grumman Flxible Corp. (Grumman Flxible) for breach of contract and breach of express warranty arising out of the sale of certain transit buses to Dade County during 1973. In a non-jury trial, the district court ruled in favor of Dade County and ordered Grumman Allied and Grumman Flxible to pay $650,000 in damages.¹  Grumman Allied and Grumman Flxible appeal, alleging (1) the statute of limitations bars Dade County's claims; (2) Grumman Flxible should not be held liable because it is not a successor corporation that assumed the liabilities of Flxible; (3) the district court's judgment is unsupported by the evidence and (4) the district court erred in awarding prejudgment interest. We find that the statute of limitations precludes this action, so we reverse solely on that ground.

In 1973, after two rounds of competitive bidding, Dade County awarded Flxible purchase orders for two different series of buses. In a purchase order dated February 1, 1973, Dade County bought seventy-four transit buses, referred to as the "500 series," at a price of $45,800.05 per bus. Flxible delivered all of the 500 series by August 7, 1973. On September 11, 1973, Dade County purchased thirty transit buses, referred to as the "Orange Streakers," at a price of $51,509.00 per bus. Flxible completed delivery of the Orange Streakers by April 24, 1974. Flxible's standard express warranty covered both series of buses.² 

On November 15, 1973, Hobart McKay, Dade County's chief operating officer from 1971 to June 1976, was informed of a serious problem of body rust on the new 500 series. McKay examined the buses and found extensive rusting of the body panels at the beltline of the buses as well as rusting around the side and rear window frames. About sixty to ninety days after delivery, the Orange Streakers also developed these same rusting problems. Within the applicable warranty periods of both series of buses, Dade County notified Flxible of the rusting problems.³ 

Flxible then attempted to correct the problems by testing several methods of repair. Flxible had some of the buses sanded, reprimed and repainted where they were rusting along the beltline. More extensive repairs were made on three of the 500 series buses, one each done by Fruehauf, Star Body, and Dade County's own inhouse body shop. Shortly after the repair work, all the buses began to rust through again. Although Flxible and Dade County continued to discuss the problem, Flxible did not undertake any further repair work.

Dade County on August 15, 1978, filed suit against Flxible, Rohr, Grumman Allied and Grumman Flxible. The complaint sought to impose liability upon Flxible as the manufacturer and seller of the buses. Dade County alleged that Rohr was liable because Flxible was a mere agency or instrumentality of Rohr. Dade County included Grumman Allied and Grumman Flxible on the theory that since they had obtained the total assets of Flxible from Rohr by merger, sale or transfer they had thereby expressly or impliedly assumed the contract obligations and warranties of Flxible and/or Rohr. The four corporations answered Dade County's complaint and asserted the statute of limitations defense.

On May 8, 1979, the district court entered an order for a pretrial conference, setting the conference for July 20, 1979, and requiring that seven days prior to the conference a pre-trial stipulation be filed. The section of the order requiring the filing of a pretrial stipulation stated the following:

The filing of a motion for continuance or a stipulation of extension by counsel will not extend any deadline in this time schedule. Counsel can expect dismissal or striking of defenses, as appropriate, for failure to file the pre-trial stipulation on time.

Thereafter, Dade County and the defendants jointly moved to continue the pre-trial conference. The district court granted the motion and reset the conference for August 15, 1979.

Then, on August 13, 1979, the district court dismissed Dade County's suit without prejudice because the court had not received the required pre-trial stipulation nor heard from counsel for the plaintiff. The defendants on August 20, 1979, filed a motion to vacate the court's order of dismissal. Dade County took no action. Almost seven months later, on March 11, 1980, the defendants filed their notice of withdrawal of defendants' motion to vacate the order of dismissal. Ten days after defendants withdrew their motion, Dade County filed its motion to vacate the order of dismissal. The clerk of the court, however, refused to accept the motion and returned it to Dade County's counsel for failure to meet the court's filing requirements.

Finally, on March 27, 1980, Dade County filed another motion seeking to set aside the court's order of dismissal. As grounds for its motion, Dade County asserted that it "believed that the filing of the joint motions for a continuance would negate the requirement [in the Pretrial Order] for the filing of pre-trial stipulations ..." According to Dade County, that belief showed "mistake or inadvertence," a basis for relief under Fed. R. Civ. P. 60(b) (1). Defendants opposed Dade County's motion to vacate the order of dismissal, alleging that the negligence in ignoring the language of the pre-trial order was not excusable. On June 18, 1980, the district court denied Dade County's motion. Dade County did not appeal the order of dismissal or the order denying its motion to vacate the order of dismissal.

On June 25, 1980, Dade County filed a second complaint which restated the same material allegations against the same four defendants as found in the first complaint. Once again, the defendants answered, alleging, among other things, the statute of limitations defense.

Thereafter, the defendants moved for summary judgment on the statute of limitations defense. In denying the motion, the court allowed the refiled complaint to relate back to the date of the original complaint for purposes of the statute of limitations.⁴ 

Upon the parties' withdrawal of the demand for a jury trial, the court ordered a non-jury trial and heard the parties' evidence in eight days in July 1984. On April 16, 1985, the district court rendered its verdict in favor of Dade County, finding that Grumman Allied and Grumman Flxible, which had acquired Flxible's assets as well as its liabilities, had breached the contracts for sale and warranty on the buses. The court ordered Grumman Allied and Grumman Flxible to pay Dade County $560,000 plus interest and costs. Since the court's opinion did not mention the statute of limitations defense, the defendants moved the district court for relief pursuant to Fed. R. Civ. P. 59 on the ground that the defense was overlooked. The court denied the motion, once again relying on the relation back principle. Eventually, the court awarded $650,000 in compensatory damages and $520,783.57 in prejudgment interest for a total of $1,170,783.57 plus interest. Grumman Allied and Grumman Flxible appealed the judgment to this court.

To determine the applicable statute of limitations for a diversity case in federal court, we must look to state law. Erie Railroad v. Tompkins, 304 U.S. 64, 78, 58 S. Ct. 817, 822, 82 L. Ed. 1188 (1938). The defendants contend that Fla.Stat. Sec. 672.2-725 or alternatively Fla.Stat. Sec. 95.11(2) (b) should apply to this case.⁵  Section 672.2725(1), eventually renumbered as Sec. 672.725, provides the following:An action for breach of any contract for sale must be within four years after the cause of action has accrued. By the original agreement the parties may reduce the period of limitation to not less than one year but may not extend it.

According to the defendants, the buses were movable goods,⁶  and accordingly governed by Florida's Uniform Commercial Code and Sec. 672.725. The Uniform Commercial Code (UCC) limitation period generally prevails over that contained in a general statute of limitations. Lake Wales Publishing Co., Inc. v. Fla. Visitor, Inc., 335 So. 2d 335, 336 (Fla. 2d D.C.A.1976). See Official Comment to UCC Sec. 2-725. Thus, Sec. 672.725's four year limitation period would be applied instead of the five year period for written contracts found in Sec. 95.11(2) (b). Section 672.725, however, was repealed as superfluous by 1974 Fla.Laws c. 74-382, Sec. 26, effective January 1, 1975, when Fla.Stat. Sec. 95.11(3) (k) (1975) made a four year limitation period applicable to all contracts.⁷  Lake Wales Publishing Co., Inc. v. Fla. Visitor, Inc., 335 So. 2d 335 (Fla. 2d D.C.A.1976).

In Dade County v. Ferro, 384 So. 2d 1283 (Fla.1980), the Florida Supreme Court ruled that when a cause of action arises from an occurrence which pre-dates the effective date of the statute of limitations, that statute does not apply. Accordingly, we must determine when Dade County's cause of action arose in order to place it within the parameters of the applicable statute of limitations.

Dade County admits that it first noticed the serious rust problem for the 500 series on November 15, 1973, and for the Orange Streakers by at least August 1, 1974. As a general rule, a statute of limitations begins to run when a person has notice of an invasion of his legal rights or a person has been put on notice of his right to a cause of action. Kelley v. School Board of Seminole County, 435 So. 2d 804, 806 (Fla.1983). In a breach of warranty action, the statute of limitations begins to run when the contract is breached, and the breach occurs when the defect is discovered or should have been discovered. Dubin v. Dow Corning Corp., 478 So. 2d 71, 73 (Fla. 2d D.C.A.1985). For instance, in a warranty suit over a leaking roof, the statute of limitations begins to run when the owner has noticed the first leak. Kelley v. School Board of Seminole County, 435 So. 2d 804, 806 (Fla.1983).

In Kelly Tractor Co. v. Gurgiolo, 369 So. 2d 992 (Fla. 3d D.C.A.1979), the court applied the repealed Sec. 672.725 to a breach of express warranty action. Gurgiolo purchased from Kelley Tractor two engines covered by an express warranty for future performance. Kelley Tractor delivered the engines in October 1968. For the next seven and a half years, Gurgiolo had significant mechanical difficulties with the engines. Finally, on June 30, 1976, Gurgiolo filed suit against Kelley Tractor. Because the cause of action had accrued prior to January 1, 1975, the Florida district court applied the four year statute of limitations in Sec. 672.725 and found that the action was barred.

In an earlier case, Fenner v. Florentine Forge, Inc., 342 So. 2d 136 (Fla. 1st D.C.A.1977), the trial court on February 11, 1975, dismissed the plaintiff's complaint as barred by the four year statute of limitations in Sec. 672.725(1). In reversing the trial court, the court of appeals did not consider when the plaintiff's cause of action accrued. The court simply stated that Sec. 672.725(1) was repealed effective January 1, 1975, so the plaintiff's action on a written warranty not under seal was governed by the five year statute of limitations set forth in Sec. 95.11(3) (1973).

With this apparent conflict between Florida's courts of appeals, we must decide what is the correct procedure. We are persuaded by the reasoning of Kelly Tractor Co. v. Gurgiolo and the rule that the timing of the cause of action determines the applicable statute of limitations.

In this case, the breach of warranty was the rusting of the buses. By August 1, 1974, Dade County learned of the rust problems on both series of buses. Dade County's cause of action accrued at that time, prior to the repealing of Sec. 672.725. Thus, the four year statute of limitations in Sec. 672.725 applies to this case. Dade County did not file its first complaint until August 15, 1978. Consequently, Sec. 672.725 bars the action.

Even if we applied the five year statute of limitations, Dade County's suit would still be time-barred. As discussed earlier, Dade County's cause of action arose at least by August 1, 1974. Dade County filed its first complaint on August 15, 1978. Because of Dade County's failure to file a pre-trial stipulation, the district court on August 3, 1979, dismissed the complaint. Such an action was probably too harsh a penalty. See Pond v. Braniff Airways, Inc., 453 F.2d 347 (5th Cir. 1972) (dismissal with prejudice for failure of plaintiff's counsel to submit a proposed pretrial order is reversible). After Dade County was unsuccessful in moving the court to vacate its order of dismissal, Dade County decided not to appeal the order of dismissal.

Instead, on June 25, 1980, Dade County filed a second complaint virtually identical to the first complaint. When faced with the defendants' motion for summary judgment on the statute of limitations defense, the district court ruled the refiled complaint related back to the date of the filing of the first complaint. The district court erred in applying the relation back doctrine to the filing of a new second complaint. Although the filing of a federal action will initially toll the running of the statute of limitations, the subsequent voluntary dismissal of the federal action has the effect of placing the parties in a position as if the suit had never been filed. Attache Resort Motel, Ltd. v. Kaplan, 498 So. 2d 501 (Fla. 3d D.C.A.1986), See Stein v. Reynolds Securities, Inc., 667 F.2d 33 (11th Cir. 1982) (dismissal of an earlier suit without prejudice does not authorize a subsequent suit brought outside of the otherwise binding statute of limitations). At the time of its filing, June 25, 1980, Dade County's second complaint was time-barred by Fla.Stat. Sec. 95.11(2) (b), a five year statute of limitations.

Dade County contends that the defendants are estopped from asserting any statute of limitations defense because Dade County relied on the defendants' persistent efforts to repair the buses and their express representations that the work would be performed. Estoppel requires (1) words, acts, conduct, or acquiescence causing another to believe in the existence of a certain state of things, (2) willfulness or negligence with regard to the acts, conduct, or acquiescence, and (3) detrimental reliance by the other party upon the state of things so indicated. Matter of Garfinkle, 672 F.2d 1340, 1347 (11th Cir. 1982). Attempted repairs do not toll the statute of limitations, but repairs coupled with deception may create an estoppel. R.A. Jones & Sons, Inc. v. Holman, 470 So. 2d 60, 66, n. 11 (Fla. 3d D.C.A.1985). In this case, the defendants at first attempted to repair the buses but eventually disavowed any further responsibility to repair. Dade County was not free to sleep on their rights, just because the defendants undertook repairs. Dade County has presented no evidence of deception on the part of the defendants, so the defendants are not estopped from bringing the statute of limitations defense.

Additionally, Dade County alleges that the defendants waived their statute of limitations defense when they moved the court to vacate its order of dismissal of the first complaint. Seven months later, the defendants filed a notice of withdrawal of their motion to vacate the order of dismissal. Defendants stated that they originally filed the motion to vacate, so the district court would consider their statute of limitations defense. Once they realized Dade County was taking no action to overturn the dismissal of its suit, the defendants withdrew their motion. Waiver requires (1) the existence at the time of the waiver a right, privilege, advantage, or benefit which may be waived; (2) the actual constructive knowledge thereof; and (3) and intention to relinquish such right, privilege, advantage, or benefit. Matter of Garfinkle, 672 F.2d 1340, 1347 (11th Cir. 1982). We do not regard the defendants' activities as an intentional relinquishment of a known right. See Fireman's Fund Ins. Co. v. Vogel, 195 So. 2d 20 (Fla. 2d D.C.A.1967); Gilman v. Butzloff, 155 Fla. 888, 22 So. 2d 263 (1945).

For the foregoing reasons, we find Dade County's suit barred by the statute of limitations, and we REVERSE the district court's judgment in favor of Dade County.