CONSOLIDATED GRAIN & BARGE CO. v. STRUCTURAL SYSTEMS, INC.

CONSOLIDATED GRAIN & BARGE CO. v. STRUCTURAL SYSTEMS, INC.
2009 OK 14
212 P.3d 1168
Case Number: 105918
Decided: 03/03/2009

THE SUPREME COURT OF THE STATE OF OKLAHOMA

Consolidated Grain & Barge Company, Plaintiff,
v.
Structural Systems, Inc., Defendant.

FEDERAL CERTIFIED QUESTION

¶0 Pursuant to Oklahoma's Revised Uniform Certification of Questions of Law Act, 20 O.S.2001, §§ 1601-1611, the United States Court of Appeals for the Tenth Circuit asks this Court whether the phrase "period of limitation" as used in

CERTIFIED QUESTION ANSWERED.

William D. Mahoney, Irving, Texas, and Marc L. Bovos, Poteau, Oklahoma, for plaintiff.
Gerald P. Green, Andrea D.W. Moates, Larry G. Cassil, Jr., Oklahoma City, Oklahoma, for defendant.

TAYLOR, V.C.J.

¶1 Pursuant to the Revised Uniform Certification of Questions of Law Act, 20 O.S.2001, §§ 1601-1611, the United States Court of Appeals for the Tenth Circuit certified the following question of law to this Court:

Oklahoma's borrowing statute provides that "[t]he period of limitation applicable to a claim accruing outside of this state shall be that prescribed either by the law of the place where the claim accrued or by the law of this state, whichever last bars the claim." Okla. Stat. tit. 12, § 105. Should "period of limitation" in Okla. Stat. tit. 12, § 105 be interpreted to include statutes of repose, including Oklahoma's statute of repose for construction tort claims, id. § 109?

We answer the question narrowly. We hold that the phrase "period of limitation" as used in

I. Facts and Procedural Background

¶2 The following basic facts in this case are gleaned from the summary judgment record submitted with the certification order, the summary judgment order of the United States District Court for the Eastern District of Oklahoma dated July 30, 2007, as corrected July 31, 2007, and the certification order. Consolidated Grain & Barge Co.(CGB), a Missouri corporation with its principle place of business in Wayne City, Illinois, contracted with Structural Systems, Inc. (SSI), a corporation

¶3 On October 31, 2005, CGB's insurer, Nationwide Agribusiness Insurance Company,

¶4 On October 26, 2006, CGB's insurer filed a subrogation action

¶5 SSI removed the action to the federal district court for the eastern district of Oklahoma on the basis of diversity in citizenship. SSI moved for summary judgment, asserting the suit is barred by Arkansas' five-year statute of repose.

¶6 The federal district court determined that Oklahoma's borrowing statute did not apply "as the question was one of whether to apply Arkansas' or Oklahoma's substantive statute of repose." It also determined that under Oklahoma's common-law choice-of-law rules, Arkansas' substantive five-year statute of repose on construction claims governs the action. Accordingly, the federal district court found the action is time-barred and dismissed the petition.

¶7 On appeal, the United States Court of Appeals for the Tenth Circuit found no controlling Oklahoma authority on the question of whether Oklahoma's borrowing statute applies to statutes of repose. In certifying the question, the federal appellate court noted that Wisconsin has interpreted the phrase "period of limitation" in the Wisconsin borrowing statute to include both procedural statutes of limitations and substantive statutes of repose, citing Wenke v. Gehl Co., 682 N.W.2d 405 (Wis. 2004).

II. Statutory Time Bars

¶8 Oklahoma recognizes two categories of statutory time bars. If the time period operates to bar the right to a cause of action, the statute falls into the substantive-law category and is referred to as a statute of repose. Reynolds v. Porter,

¶9 A statute of limitation prescribes a time period within which an action may be initiated, and that time period begins to run when the cause of action accrues.

¶10 On the other hand, a statute of repose prescribes a time period within which an action may be initiated and that time period begins to run from a specific act or event, such as substantial completion of construction. Reynolds,

¶11 In practical terms, a statute of repose marks the boundary of a substantive right, while a statute of limitation operates procedurally to bar the remedy after a substantive right has vested. Reynolds,

Before the contemporary concept of "statutes of repose" became popular, the term "statute of repose" was commonly used to refer to general limitations periods that simply provided peace, or "repose," to potential litigants, taking away the remedy for an otherwise valid claim. A modern court has aptly explained how this understanding evolved:

Early treatise writers and judges considered time bars created by statutes of limitations, escheat and adverse possession as periods of repose.

Reynolds v. Porter

Id

The Wisconsin Supreme Court proceeded to reject the procedural/substantive law dichotomy:

This explanation is helpful. To repeat, in most states, "a statute of limitation merely extinguishes the plaintiff's remedy." Id. This, however, was not and is not the law in Wisconsin. In Wisconsin, we adopted the minority proposition that "the limitation of actions is a right as well as a remedy, extinguishing the right on one side and creating a right on the other." . . . Under Wisconsin law, "statutes of limitation [are viewed as] substantive statutes because they create and destroy rights." . . . .

Id

¶12 As to the procedural/substantive law dichotomy of statutory time limits, Oklahoma subscribes to the majority view as explained in Reynolds, while Wisconsin takes the minority view as explained in Wenke. Accordingly, Wenke is not persuasive authority that guides our answer to the certified question.

III. Time Bars on Construction Torts

¶13 Oklahoma's statute prescribing a time limit on a construction tort,

No action in tort to recover damages

(i) for any deficiency in the design, planning, supervision or observation of construction or construction of an improvement to real property,
(ii) for injury to property, real or personal, arising out of any such deficiency, or
(iii) for injury to the person or for wrongful death arising out of any such deficiency,

shall be brought against any person owning, leasing, or in possession of such an improvement or performing or furnishing the design, planning, supervision or observation of construction or construction of such an improvement more than ten (10) years after substantial completion of such an improvement.

Section 109 has long been categorized as a statute of repose, St. Paul Fire & Marine Ins. Co. v. Getty Oil Co.,

¶14 The Arkansas statutory time limitation relied upon by the federal district court is codified at Ark. Code Ann. § 16-56-112(a) and reads:

No action in contract, whether oral or written, sealed or unsealed, to recover damages caused by any deficiency in the design, planning, supervision, or observation of construction or the construction and repair of any improvement to real property or for injury to real or personal property caused by such deficiency, shall be brought against any person performing or furnishing the design, planning, supervision, or observation of construction or the construction or repair of the improvement more than five (5) years after substantial completion of the improvement.

Section 16-56-112(a) is a statute of repose that operates to entirely cut off the right of action even if it does not accrue within five years after substantial completion. Rogers v. Mallory, 941 S.W.2d 421, 423 (Ark.1997). Fraud will toll the running of the five-year time period in § 16-56-112(a), Curry v. Thornsberry, 128 S.W.3d 438, 441 (Ark.2003), but fraud and tolling are not involved in this case.

¶15 In addition to the different limitation periods, two other differences in the above-quoted statutes are pertinent. First, Oklahoma's § 109 expressly relates to an "action in tort " while Arkansas' § 16-56-112(a) relates to an "action in contract." The federal district court order notes that the Arkansas statute applies to contracts and that none of CGB's claims sound in contract but proceeded to apply the Arkansas statute of repose rather than a statutory limitation on torts, citing Rogers v. Mallory, supra.

¶16 The second difference is that Oklahoma's § 109 applies to deficiency in construction while Arkansas' § 16-56-112(a) applies to deficiency in construction and repair. The petition alleged that CGB hired SSI to replace parts of the grain conveyor system, while the federal district court stated the work consisted "solely of construction and repair," and the Tenth Circuit stated that CGB alleged "negligence in repairing the conveyor belt system." It appears that the damages in this case arose out of "repair" to an existing system rather than out of "construction" of an improvement to real property. Although the Arkansas statute expressly applies to deficient repair to an improvement to real property, Oklahoma's § 109 does not mention repair to an improvement to real property. In answering the certified question, we do not consider nor do we decide that the work performed on the conveyor belt in this case constitutes construction of an improvement to real property that would trigger § 109, with or without the aid of the borrowing statute.

IV. The Uniform Statute of Limitation on Foreign Claims Act

¶17 As pointed out in Wenke, 682 N.W.2d at 423-424, a majority of states catagorize statutes of limitations as procedural law. As a general rule, the forum state applies its procedural law to a foreign claim. Stephens v. Household Fin. Corp.,

¶18 In 1965, Oklahoma adopted the Uniform Statute of Limitations on Foreign Claims Act of 1957. 1965 Okla. Sess. Laws, ch. 98 (codified at 12 O.S.Supp.1965, §§ 104-108). The Act defined a claim arising out of the state: "As used in this act, 'claim' means any right of action which may be asserted in a civil action or proceeding and includes, but is not limited to, a right of action created by statute."

¶19 Apparently, borrowing the shorter limitation period was not acceptable. In 1970, the Legislature amended Oklahoma's borrowing statute to apply the period of limitation to a claim accruing outside this state that last bars the claim. 1970 Okla. Sess. Laws, ch.31 (codified at

¶20 Plaintiff contends that the phrase "period of time" in § 105 is not ambiguous, that it is not subject to interpretation, and that it cannot be construed to apply only to procedural statutes of limitations and to exclude substantive statutes of repose. Plaintiff argues that § 105 is a choice of law rule to be followed; that the 1970 amendment to § 105 intended to provide expansive access to Oklahoma courts; and that § 105 unambiguously includes all periods of limitations, substantive or otherwise.

¶21 Defendant also contends that § 105 is unambiguous but that "period of limitation" connotes only the procedural limitation on the remedy. Defendant takes the position that there is no legislative history to support plaintiff's legislative intent argument. Defendant argues that plaintiff would have this Court construe the phrase "period of limitation" to open Oklahoma courts to stale claims from other jurisdictions that may be contrary to public policy.

¶22 We consider the meaning of the phrase "period of limitation" in § 105 under of our established rules of statutory construction. The primary goal in reviewing a statute is to ascertain legislative intent, if possible, from a reading of the statutory language in its plain and ordinary meaning. State ex rel. Oklahoma State Dept. of Health v. Robertson,

¶23 Here, the word "limitation" in the phrase "period of limitation" in § 105 is not questioned. At issue is the meaning of the word "period." The ordinary meaning of "period" is an interval of time characterized by the occurrence of certain conditions or events, The American Heritage Dictionary 975 (1969), The American Heritage Dictionary 922 (2d College Ed. 1991), or a period of time in which something is completed. Webster's Third New International Dictionary 1680 (2002). In turn, the ordinary meaning of "period of limitation" is "time of limitation."

¶24 Section 105 expressly relates to the "period of limitation applicable to a claim accruing outside this state." (Bold added.) Accrual is a condition that triggers an ordinary statute of limitation, affecting the remedy and not the right to a cause of action.

¶25 The use of the word "period" in other statutes related to limitations on remedies supports a reading of "period of limitation" in § 105 as procedural law and not substantive law.

¶26 Reading § 105 to affect remedies and not substantive rights to actions for damages is also consistent with the language in the titles to the legislative measures enacting the borrowing statute, § 105, and the construction-tort time limitation, § 109. Both the titles to the 1965 legislative measure enacting § 105 and the 1970 measure amending § 105 indicated the bills were "PROVIDING FOR APPLICATION OF STATUTES OF LIMITATION IN ACTIONS ON CLAIMS ARISING OUTSIDE THE STATE." 1965 Okla. Sess. Laws, ch. 98 (title to Senate Bill 124, originally enacting § 105); 1970 Okla. Sess. Laws, ch.31 (title to House Bill 1507, amending the § 105). On the other hand, the title to the legislative measure enacting § 109 indicated intent to limit the right to recover damages. The title to the 1967 legislative measure enacting § 109 read, "PROVIDING FOR THE LIMITATION OF ACTION TO RECOVER DAMAGES ARISING FROM DESIGN, PLANNING OR CONSTRUCTION OF AN IMPROVEMENT TO REAL PROPERTY." 1967 Okla. Sess. Laws, ch. 360 (title to Senate Bill 232, originally enacting § 109).

¶27 While the title to the measure enacting the construction tort statute indicates intent to enact a time limitation on the right to recover damages, we find the titles to the measures enacting and amending the borrowing statute indicate intent that they relate to time limitations on remedies that may be available in this state to enforce claims accruing in another state. Accordingly, Oklahoma's borrowing statute,

V. Summary

¶28 When CGB's insurer filed this subrogation action in the Oklahoma district court on October 26, 2006, CGB's right to a damages action under Arkansas law had been extinguished for more than a year and CGB no longer had a claim under Arkansas law.

CERTIFIED QUESTION ANSWERED

Edmondson, C.J., Taylor, V.C.J., and Hargrave, Watt, Winchester, Colbert, and Reif, JJ., concur.

Opala, J., concurs by separate writing.

Kauger, J., concurs in result.

FOOTNOTES

1 The Tenth Circuit's certification order states that SSI is an Oklahoma corporation, the petition filed in Oklahoma district court in LeFlore County alleges SSI is an Arkansas corporation and the statement of facts in SSI's brief submitted to the Tenth Circuit states that SSI is a corporation formed and existing under Arkansas law.

2 Nationwide Agribusiness is a mutual insurance company with its principle place of business in Des Moines, Iowa, that primarily insures agricultural businesses.

3 The right of subrogation may be created by agreement, by statute, or by equity. See 83 C.J.S. Subrogation § 5 (1991); 16 Couch on Insurance § 222.31 (3rd ed. 2000). Apparently, the right of subrogation in this case rests on the subrogation clause in the insurance policy that allowed the insurer the right to subrogation once the insurer paid CGB for the loss from the fire.

4 The statement of the case in SSI's motion to dismiss submitted to the federal district court states that the petition in the first subrogation action alleged negligent installation of a grain conveyor system that resulted in fire and caused damages to CGB.

5 The statement of undisputed material facts in SSI's motion to dismiss submitted to the federal district court included a statement that the "work completed by SSI for CGB consisted solely of construction or repair of an improvement to real property."

6 Although a contract may be interpreted according to the law of the place where it is made and its performance is contemplated, the remedy available to enforce the contract is determined by the law of the forum. Aetna Cas. & Sur. Co. of Hartford, Conn. v. Gentry, 1942 OK 366, 132 P.2d 326, Syllabus by the Court, No. 2. A remedy in our state district court is available to an insurer to enforce subrogation arising by equity or by agreement. Lawyers' Title Guar. Fund v. Sanders, 1977 OK 210, 571 P.2d 454; Republic Underwriters Ins. Co. v. Fire Ins. Exch., 1982 OK 67, 655 P.2d 544.

7 The statement of undisputed material facts in SSI's motion to dismiss submitted to the federal district court included a statement that the State of Oklahoma has no interest in the resolution of this case. Proposition I in SSI's motion to dismiss urged that federal district court venue was not proper in Oklahoma and sought transfer to federal district court in Arkansas.

8 A cause of action accrues when a litigant first can maintain the action to a successful conclusion. Sherwood Forest No. 2 Corp. v. City of Norman, 1980 OK 191 , ¶10, 632 P.2d 368, 370. The three elements of actionable negligence are: (1) the existence of a duty on the part of the defendant to protect the plaintiff from injury; (2) a violation of that duty; and (3) injury proximately resulting therefrom, Sloan v. Owen, 1977 OK 239, ¶7, 579 P.2d 812, 814; and in order to maintain a negligence action to a successful conclusion, the litigant must allege injury or damages that are certain and not speculative. Martin v. Griffin Television, Inc., 1976 OK 13, ¶¶24-25, 549 P.2d 85, 92-93. The cause of action to recover damages for a tortious wrong accrues when all three elements of the tort are present. MBA Commercial Const., Inc. v. Roy J. Hannaford Co., Inc., 1991 OK 87, ¶¶14-15, 818 P.2d 469, 472.

9 Wenke v. Gehl Co. involved a 1997 injury in Iowa caused by a baling machine that was first sold in 1981 in Iowa. An Iowa statute limited the bringing of a product liability action more than 15 years after the product was first sold. The issue addressed by the Wisconsin Supreme Court was whether Wisconsin's borrowing statute reached Iowa's product liability statute of repose. The Wisconsin Supreme Court held that the intent of the borrowing statute was to include foreign statutes of repose within the phrase "period of limitation."

10 Only two other states, Pennsylvania and West Virginia, adopted the Uniform Statute of Limitations on Foreign Claims Act of 1957. In 1978, the National Conference of Commissioners on Uniform State Laws withdrew the Uniform Statute of Limitations on Foreign Claims Act of 1957 from recommendation for enactment because it was obsolete. See Prefatory Note to the Uniform Conflict of Laws-Limitations Act of 1982, 12 U.L.A. 156 (2008).

11 See note 8, supra.

12 Under Arkansas' substantive-law statute, the five-year time period within which CGB could file suit against SSI began to run in September of 2000; CGB's cause of action accrued in November of 2003, when CGB suffered fire damages; and CGB's right to a cause of action to recover those damages expired at the end of August of 2005.

OPALA, J., concurring

¶1 I join the court's pronouncement. I write separately to highlight the analysis underlying my own conclusion which coincides with that of the court's opinion. My view tracks faithfully the centuries-old rules of statutory construction for distinguishing between the two time-bar categories that govern extinguishment of rights and extinguishment of remedies in actions.

¶2 In the Anglo-American system of law legal bars that restrict the time for bringing an action are divided into two distinct rubrics. The most familiar of these is that known as a statute of limitations. The limitations' time bar operates solely on the remedy and may be equitably tolled by a variety of factors that will interrupt, suspend, revise and extend its running.1 The other rubric of time restrictions is variously known as (a) conditions upon the exercise of a right, (b) substantive-law time bars, (c) time bars upon the exercise of a right rather than on invocation of the remedy and (d) statutes of repose.2 The latter class of time bar operates on the right as distinguished from the remedy. Its lapse will extinguish the right forever, whereas the expiration of a limitation period extinguishes only the remedy.

¶3 The dichotomous division of legal time bars into those that extinguish only the remedy and those that snuff out the very right in the claim has been faithfully reflected in this court's jurisprudence ever since statehood.3 This carefully followed and guarded distinction has antecedents in the English law.4 The separate time bars our jurisprudence preserves are not interchangeable. The bars that apply to remedies will not be used to bar rights and vice versa.5

¶4 Typical of the statutes that invariably fall into the class of substantive-law time bars are those that will extinguish one's right before a cause of action would ever accrue. Those are often enactments whose time bars run from an event or occurrence that usually happens before an action's accrual. In contrast to them, a limitation period's beginning, which is remedial, always coincides with a cause's accrual - the point of time at which an action may first be brought.

¶5 The plaintiff invokes here the "borrowing statute," whose provisions are found in

¶6 The §109 time bar does not fall within the range of the words "limitation period" used in §105. This is so because the §109 bar constitutes a condition upon the exercise of a right described in that section. The borrowing statute's language is crystal-clear. It refers to a "period of limitation" as the time span which may be borrowed from the law of this state. "Period of limitation" can mean only one thing - a period that runs from a claim's accrual. The time bar in

¶7 The simple bottom-line answer to the federal court's certified question is: One who by statute is given the option "to borrow" one of Oklahoma's "longer" limitation periods - a remedial time bar - may not instead select this state's substantive-law time bar as one's substitute choice exercisable under the borrowing statute.

¶8 In short, the time bar in §109 is unavailable for the plaintiff to borrow when invoking the terms of §105.

FOOTNOTES

1 Matter of the Estate of Speake, 1987 OK 61, ¶13, 743 P.2d 648, 652-653 (ordinary limitations may be tolled); Thompson v. Anchor Glass Container Corp., 2003 OK 39, ¶ 7 n.13, 73 P.3d 836 , 838 (Tolling is a term of art which refers to the temporary suspension of statutory time bar for bringing a suit because of either some "disability" on the part of the plaintiff which prevents that person from commencing the action or some activity on the part of the defendant forestalling prosecution of the claim against the defendant. Black's Law Dictionary (5th ed.1979) at 1334 defines the verb 'to toll' as: "To suspend or stop temporarily as the statute of limitations is tolled during the defendant's absence from the jurisdiction and during the plaintiff's minority"); Resolution Trust Corp. v. Grant, 1995 OK 68, 901 P.2d 807 (the "discovery rule" allows the limitations period to be tolled in tort cases); see also Lester v. Smith, 2008 OK CIV APP 97, 198 P.3d 402 , 403-404.

2 The law's time limits for bringing an action are either remedial or substantive. The former, called statute-of-limitation time bars, extinguish uninvoked remedies; the latter destroy unexercised or unasserted rights. Right-targeting legislative time bars are often referred to as statutes of repose. A statute of repose bars potential liability by limiting the time during which a cause of action may arise. It serves to bar a claim even before it accrues. In practical terms, a statute of repose marks the boundary of a substantive right whereas a statute of limitation interposes itself only procedurally to bar the remedy after a substantive right has vested. Neer v. Oklahoma Tax Commission, 1999 OK 41,¶19, 982 P.2d 1071, 1078-79; Reynolds v. Porter, 1988 OK 88, ¶6, 760 P.2d 816, 820; Lester v. Smith, supra note 1, 198 P.3d at 403-404.

3 Neer v. Oklahoma Tax Commission, supra note 2 at ¶19, 982 P.2d at 1078-79; Reynolds v. Porter, supra note 2 at ¶6, 760 P.2d at 820; Trinity Broadcasting Corp. v. Leeco Oil Co., supra note 4, 692 P.2d at 1366-1367; Stephens v. Household Finance Corp., 1977 OK 137 , ¶¶15-16, 566 P.2d 1163, 1166; Hiskett v. Wells, 1959 OK 273, ¶0 syl.1, ¶¶11-15, 351 P.2d 300, 304; Brookshire v. Burkhart , 1929 OK 428, 283 P. 571, 577; Kerley v. Hoehman, 1916 OK 1062, 183 P. 980, 74 Okla. 299; see also Lester v. Smith, supra note 1, 198 P.3d at 403-404.

4 For the historical background of the English law's dichotomous division into rights and remedies, see Opala, Praescriptio Temporis and Its Relation to Prescriptive Easements in the Anglo-American Law, 7 Tulsa L.J. 107 (1971).

5 See Wenke v. Gehl Co., 682 N.W.2d 405 (Wis.2004) for a rare departure from the Anglo-American jurisprudence which should be regarded as aberrational.

6 Kinzy v. State ex rel. Oklahoma Firefighters Pension and Retirement System, 2001 OK 24, ¶11, 20 P.3d 818, 823; Reynolds v. Porter, supra note 2, 3, at ¶7, 760 P.2d at 820; Sherwood Forest No. 2 Corp. v. City of Norman, 1980 OK 191, ¶10, 632 P.2d 368, 370; Oklahoma Brick Corp. v. McCall, 1972 OK 70, ¶10, 497 P.2d 215, 217.

7 The provisions of 12 O.S.2001 §109 are:

No action in tort to recover damages
(i) for any deficiency in the design, planning, supervision or observation of construction or construction of an improvement to real property,
(ii) for injury to property, real or personal, arising out of any such deficiency, or
(iii) for injury to the person or for wrongful death arising out of any such deficiency,
shall be brought against any person owning, leasing, or in possession of such an improvement or performing or furnishing the design, planning, supervision or observation of construction or construction of such an improvement more than ten (10) years after substantial completion of such an improvement.

8 Statutory limitation bars claims upon which no action has been brought within a specified time after the claim's accrual. Kinzy v. State ex rel. Oklahoma Firefighters Pension and Retirement System, supra note 6 at ¶11, 20 P.3d at 823.