Unpublished Disposition, 899 F.2d 19 (9th Cir. 1988)

MEMORANDUM^* 

Appellants, Lisa and James Roulston, appeal from the district court's dismissal of their product liability action against appellee, Foree Tire Company, for failure to file within the applicable statute of limitation. We have jurisdiction pursuant to 28 U.S.C. § 1291 and Federal Rule of Civil Procedure 54(b) and we affirm.

FACTS

The Roulstons were independent truck drivers who owned and operated their own business. On August 29, 1985, they were traveling from California to Florida when their truck developed a flat tire. They purchased a brand new truck tire from State Line Tire in Parker, Arizona. The following day in Harrison County, Texas, the new tire blew out and caused the Roulstons to lose control of their truck and crash. Following the accident, Lisa Roulston remained hospitalized until March 6, 1986. James Roulston was hospitalized for only ten days, but remained disabled and unable to work until June 1986.

In September 1985, the Roulstons submitted the tire to Materials Analysis, Inc., in Dallas, Texas. The company's final report, dated November 14, 1985, concluded that the tire failed due to manufacturing defects. On October 7, 1987, the Roulstons filed individual tort actions in the Federal District Court for Arizona against Foree, manufacturer of the tire, and David and Jane Doe Lowe, d/b/a State Line Tire, the seller. The Roulstons served Foree, but not the seller.

On November 2, 1987, Foree filed motions to dismiss the complaints and consolidate the cases. The district court consolidated the Roulstons' cases, and heard Foree's motion to dismiss, along with the Roulstons' motion to transfer venue to the United States District Court for the Eastern District of Texas. The district court dismissed the Roulstons' complaints against Foree and the seller. It found that their complaints were barred by Arizona's two-year statute of limitation. The court's order rendered the Roulstons' motion to transfer venue moot. But in a hearing on April 11, 1988, the district court reversed its dismissal of the claims against the seller of the tire, David and Jane Doe Lowe, d/b/a State Line Tire. It then granted the Roulstons' motion to transfer venue of their claims against the Lowes to the United States District Court for the Middle District of Florida.¹  The Roulstons appeal the dismissal of their complaints against Foree.

DISCUSSION

"It is well-settled that in diversity cases federal courts must apply the choice-of-law rules of the forum state." Ledesma v. Jack Stewart Produce, Inc., 816 F.2d 482, 484 (9th Cir. 1987). The Roulstons argue that under Arizona conflicts-of-law analysis the Texas statute of limitation should apply. Foree contends that Arizona law is clear and that the Arizona Supreme Court would apply its own statute of limitation. Although the resolution of this question is not clear,²  we need not reach it here. We hold that the Roulstons' claims are time barred under both the Texas and Arizona statutes of limitation.

All parties agree that if Arizona law applies, then the Roulstons were operating under the two-year statute of limitation found in Ariz.Rev.Stat.Ann. Sec. 12-542(1).³  But the Roulstons argue that the applicable Texas statute of limitation should apply to their case. While they concede that Texas also has a two-year statute of limitation for bringing a personal injury action, see Tex.Civ.Prac. & Rem.Code Sec. 16.003(a), they contend that they had disabilities sufficient to toll the running of the Texas statute.

Section 16.001 of the Texas Civil Practices & Remedies Code provides that the running of the limitation period is tolled for persons under a legal disability, including persons of "unsound mind." Arizona also has a tolling statute for persons under disability due to "unsound mind." See Ariz.Rev.Stat.Ann. Sec. 12-502(A).

In construing their tolling statutes, the Texas and Arizona courts have defined "disability" as being broader than legal incapacity. See, e.g., Sahf v. Lake Havasu City Ass'n for the Retarded, 150 Ariz. 50, 721 P.2d 1177, 1181 (Ct.App.1986) (holding that "a person of 'unsound mind' is unable to manage his affairs or to understand his legal rights or liabilities"); Adler v. Beverly Hills Hosp., 594 S.W.2d 153, 158 (Tex.Civ.App.1980) (holding that the term " ' [d]isability' evidently includes practical as well as legal incapacity to sue," and the court must look to "the plaintiff's ability in fact to care for his affairs, rather than ... invoking technical rules of legal incapacity"). Although in her affidavit Lisa Roulston states that her husband was hospitalized for ten days and unable to work for approximately nine months, she nowhere provides any evidence to show that he was unable to contact an attorney concerning his legal affairs. Similarly, while her affidavit states that she was hospitalized for approximately six months, she fails to state any facts showing that she was unable to contact an attorney or otherwise comprehend her legal rights. Accordingly, we conclude that the Roulstons have failed to allege sufficient facts to invoke either the Texas or Arizona tolling provisions.

The district court determined that the Roulstons' causes of action accrued on the date of the accident. Because they failed to file their complaints within two years of that date, the district court held their claims time barred. The Roulstons argue that their claims were timely under the Arizona discovery rule.⁴  We disagree.

In tort actions, "Arizona has long followed the rule that the cause of action accrues when the plaintiff knows, or in the exercise of reasonable diligence should have known, of the defendant's negligent conduct or when the plaintiff is first able to sue." Sato v. Van Denburgh, 123 Ariz. 225, 599 P.2d 181, 183 (1979) (citations omitted). At least two Arizona courts have applied the discovery rule to products liability cases. See Lawhon v. L.B.J. Institutional Supply, Inc., 159 Ariz. 179, 765 P.2d 1003, 1004-05 (Ct.App.1988); Anson v. American Motors Corp., 155 Ariz. 420, 747 P.2d 581, 584-87 (Ct.App.1987); see also Mack v. A.H. Robins Co., 573 F. Supp. 149, 151-55 (D. Ariz. 1983), aff'd, 759 F.2d 1482 (9th Cir. 1985).

Our job is to decide how much knowledge the Arizona Supreme Court would require before holding that the Roulstons' cause of action accrued. The Roulstons argue that they must have known about the defect, while Foree argues they only needed to know that the product was in some way causally connected to their injuries. Although no case is directly in point, we conclude that the Arizona Supreme Court would choose the latter formulation of the discovery rule, thus barring the Roulstons' complaints.

Since at least 1925, Arizona has utilized the discovery rule for actions based on fraud. See Guerin v. American Smelting and Ref. Co., 28 Ariz. 160, 236 P. 684, 687 (1925). The Arizona Supreme Court has recently stated that the "statute of limitations [for fraud], A.R.S. Sec. 12-543, has been interpreted to begin running when the defrauded party discovers or with reasonable diligence could have discovered the fraud." Mister Donut of America, Inc. v. Harris, 150 Ariz. 321, 723 P.2d 670, 672 (1986). The court also noted that " [a]s such, it may begin to run before a person has actual knowledge of the fraud or even all the underlying details of the alleged fraud." Id. (citing Coronado Dev. Corp. v. Superior Court, 139 Ariz. 350, 678 P.2d 535, 537 (Ct.App.1984)). In Coronado, the court of appeals held that the statute of limitations on the plaintiffs' fraud claim began to run once they had " 'knowledge of facts sufficient to make a reasonably prudent person suspicious of fraud, thus putting him on inquiry.' " Coronado Development Corp., 678 P.2d at 537 (quoting National Auto. & Casualty Ins. Co. v. Payne, 261 Cal. App. 2d 403, 67 Cal. Rptr. 784, 788 (1968)); accord Richards v. Powercraft Homes, Inc., 139 Ariz. 264, 678 P.2d 449, 451 (Ct.App.1983), aff'd in part, vacated in part on other grounds, 139 Ariz. 242, 678 P.2d 427 (1984).

Applying this rule to the present case, at the time of the accident the Roulstons "should have known such facts that would have prompted a reasonable person to investigate and discover the [defect]." Richards, 678 P.2d at 451. They knew that their brand new tire had blown and that this event was the cause of their injuries. Even though they may not have known that the tire was defective, they were put on reasonable notice to inquire into the condition of the tire, which was what they did when they submitted the tire for expert analysis in September 1985. These circumstances are sufficient to start the running of the statute of limitation. Cf. Mack, 573 F. Supp. at 154 (holding that "in Arizona a cause of action [for products liability] accrues once the plaintiff knows of the injury and the causal connection between the defendant's product and that injury" and that the "final element of requiring a plaintiff to have reason to know of the ... defect in the product is not required in Arizona").

AFFIRMED.