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Bertha Building Corp. v. National Theatres Corporation.

decided: August 24, 1959.

BERTHA BUILDING CORPORATION
v.
NATIONAL THEATRES CORPORATION.



Author: Swan

Before: SWAN, HINCKS and MOORE, Circuit Judges.

SWAN, Circuit Judge: National Theatres Corporation has appealed from an order which denied its motion for summary judgment in this action for treble damages under section 4 of the Clayton Act, 15 U.S.C.A. § 15. The motion was based on the ground that the New York three year statute of limitations, prescribed by § 49(3) of the Civil Practice Act, barred the action. Without reaching the merits of the motion, Judge Zavatt denied it on the theory that defendant was precluded from relying on the three year statute by the doctrine of "the law of the case." His opinion is reported in 166 F.Supp. 805. Leave to appeal was granted under the Interlocutory Appeals Act, 28 U.S.C.A. § 1292(b).

For an understanding of the matters to be subsequently discussed, it is desirable to give a brief statement of what had occurred in the case prior to the making of defendant's motion for summary judgment.

The complaint was filed in the court below on September 5, 1951. It alleged that plaintiff is a California corporation which owned and operated a theatre in Los Angeles until forced to dispose of it by reason of violations by defendant of the anti-trust laws. Concededly plaintiff's alleged cause of action arose in California and accrued no later than July 4, 1935 - more than 16 years before the present action was commenced. Defendant's answer, filed December 26, 1951, pleaded three statutes of limitations: (1) The California three year statute, made applicable by New York's "borrowing statute," § 13 of the Civil Practice Act; (2) the New York three year statute, applicable to "An action upon a statute for a penalty or forfeiture where the action is given to the person aggrieved * * *," § 49(3) of the Civil Practice Act; and (3) the New York six year statute, applicable to "An action to recover upon a liability created by statute, except a penalty or forfeiture," § 48(2) of the Civil Practice Act.

In December 1955 a separate trial of defendant's limitation defenses in this case and in the companion case of Gumbiner Theatrical Enterprises, Inc. v. National Theatres Corporation, was had before Judge Galston. In a brief submitted to him defendant stated:

"If this court finds, as we believe it must, that the substantial and continuous business activities of National in California made it amenable to suit there, the three-year California statute is applicable by virtue of section 13 of the New York Civil Practice Act. Both claims would then be barred by the California statute without consideration of the questions whether the New York statute is six years or three years,*fn* or whether the institution of United States v. Paramount on July 20, 1938, operated to toll the New York statute during some or all of the time it was pending."

It was in this setting that there was submitted to and adopted by Judge Galston the following conclusion of law:

"Plaintiffs and defendant concede for the purposes of these cases, and the court concludes that the Statute of Limitations of New York, where these actions were instituted, is six years. Civil Practice Act of New York, Section 48."

However, his decision was that the California three year statute barred the actions. Accordingly he dismissed the complaints. His opinion is reported in, 140 F.Supp. 909. On appeal this court reversed and remanded in the case of Bertha Building Corporation on the ground that the plaintiff was entitled to a jury trial of the issue raised by defendant's plea of the California statute, namely, whether defendant was suable there. Bertha Building Corp. v. National Theatres Corp., 248 F.2d 833, 836, 841, cert. den. 356 U.S. 936. On the appeal the defendant did not urge the applicability of the New York three year statute. It was after the remand that defendant moved for summary judgment.

We agree with appellant that the doctrine of "the law of the case" does not preclude consideration of the merits of the motion. That doctrine was discussed at length in Dictograph Products Company v. Sonotone Corporation, 2 Cir. 230 F.2d 131, and the rigidity of the rule expressed in Commercial Union of America v. Anglo-South American Bank, 2 Cir. 10 F.2d 937 was expressly overruled. As explained in the Dictograph case, even when an issue has been decided by a district judge, another judge of the same court may nevertheless come to a different conclusion. Since Judge Galston decided that the California statute was a bar, he had no need to consider whether the three year or six year New York statute was applicable in the case of Bertha Building Corporation, and appellant's concession before him that the six year statute applied should not be regarded as conclusive in the motion subsequently brought on before Judge Zavatt. However, the doctrine of the law of the case, in the sense discussed in the Dictograph opinion, does not really fit these circumstances. The question is not one of overruling an earlier decision by another judge of the same court.

The question presented is really whether defendant is precluded by waiver and estoppel from contending that the action is barred by the three year New York statute of limitations. This question involves the public policy against piecemeal litigation and the timeliness of the motion. The problem is sometimes described as governed by "the law of the case." It was so described in Sorensen v. Pyrate Corporation, 9 Cir. 65 F.2d 982, 984-5. Judge Zavatt cited that case in support of his conclusion that

"The defendant should not now be permitted to ground a motion for summary judgment upon a contention which might have been presented, and which is contrary to its concession upon the trial and the appeal."

The Sorensen case is distinguishable. There, after trial on the merits and an appeal, in which the judgment was reversed and the cause remanded for determination of the plaintiff's damages, the defendant tried to plead that the contract was void because of the plaintiff's fraud - a defense which might have been raised when the case was tried on the merits. The court held that the law of the case precluded the tardy presentation of such factual defense. Here, defendant's motion raises a question of law only which, if sustained, would prevent the necessity of a jury trial on the suability of defendant in California as well as any litigation on the merits of plaintiff's cause. Under the particular circumstances of this case, we do not think that the defendant should be estopped. Cf. Emich v. General Motors Corp., 7 Cir., 229 F.2d 714, 718. Plaintiff has cited no authority for estopping a party from raising a question of law under such circumstances.

We now pass to a consideration of the merits of the motion. The present federal statute of limitations, 15 U.S.C.A. § 15 (b), is not applicable because it was enacted several years after the present action was brought. In the absence of an applicable federal statute of limitations, federal courts look to the statute of the forum.*fn1 Hence we must ascertain whether, if it shall be found that the three year California statute has been tolled,*fn** the six year or three year New York statute applies to plaintiff's federally created cause of action. The choice of the appropriate New York statute turns on an interplay of federal and state law. Whether the three year or six year statute is to be applied by the federal court, the latter must accept the statutes as construed and interpreted by the New York courts. It is for them to determine what is meant by the word "penalty" in the three year statute. But the purposes attributable to the federal anti-trust laws must be governed by federal law. Accordingly, to determine whether a suit for treble damages under section 4 of the Clayton Act has ...


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