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SMITH v. BELL SPORTS

August 8, 1996

DALE SMITH and SUSAN MARSH, Plaintiffs,
v.
BELL SPORTS, INC., JOHN DOE CORPORATIONS I THROUGH X, fictitious distributors and/or component parts manufacturers whose names are presently unknown, Defendants.



The opinion of the court was delivered by: LARIMER

 INTRODUCTION

 This action arises from plaintiff Dale Smith's injury in an auto race at Watkins Glen on July 21, 1991, allegedly caused by a defective helmet manufactured by Bell Sports, Inc. ("Bell"). On July 20, 1994 -- the last day of the limitations period for their negligence and product liability causes of action -- Dale Smith and Susan Marsh filed a complaint in the Western District of New York. *fn1" However, they failed to serve Bell until over eight months later and Bell moved to dismiss the complaint under Fed. R. Civ. P. 4(m). On September 8, 1995, this Court granted Bell's motion and the action was dismissed.

 On November 13, 1995, plaintiffs refiled their complaint in the Western District of New York and simultaneously filed an identical complaint in New York State Supreme Court (King's County). Both complaints allege the same causes of action set forth in their original complaint. On December 18, 1995, Bell removed the state court action to the United States District Court for the Eastern District of New York. Upon joint motion of the parties, the Eastern District action was transferred to this Court.

 Bell now moves to dismiss both actions pending before this Court based on the statute of limitations. In the alternative, Bell contends that under the controlling law (which they argue is New York), Ms. Marsh's loss of consortium and negligent infliction of emotional distress claims must be dismissed because they are not legally cognizable. They also argue that at the very least, one of the actions now pending before you must be dismissed as duplicative.

 Plaintiffs' contend that their actions are timely under New York's saving statutes CPLR § 306-b(b) and U.C.C. § 2-725(3), which must be applied by a federal court sitting in diversity. They further argue that under New York choice of law rules, New Jersey has the greater interest in this case and that Ms. Marsh's loss of consortium and negligent infliction of emotional distress claims are viable under New Jersey law.

 Bell's Motions To Dismiss

 I. The Timeliness of Plaintiffs' claims.

 It is clear that plaintiffs' second complaint -- filed on November 13, 1995 -- is untimely unless the filing is protected by New York savings statutes. Plaintiffs contend that the subsequent complaint, filed after this Court's prior dismissal, was timely filed pursuant to two New York statutes, CPLR § 306-b(b) and U.C.C. § 2-725(3).

 The first issue then is whether these New York statutes apply at all in this federal court action. And, even if the statutes apply generally, the second issue is whether plaintiffs have met the particular requirements of either of these savings statutes.

 A. The Applicability of the New York Savings Statutes

 Bell contends, in essence, that in this action in federal court only Rule 4(m) applies and no New York statutes are applicable since a dismissal under rule 4(m) has "the effect of negating the fact that a complaint was ever filed." Gleason v. McBride, 869 F.2d 688, 691 (2d Cir. 1989). In Bell's view, only the filing date of the second complaint is relevant. Since that date was well after the limitations period expired, in Bell's view, the action must be dismissed.

 If this action pleaded only federal causes of action, Bell's contention might have merit. This is, however, a diversity action and under such circumstances this Court sits and operates as if it were a state court and must apply state substantive law. Under controlling United States Supreme Court and Second Circuit authority, it is clear that this principle applies as well to state statute of limitation issues, including service and tolling provisions.

 It is well-established that "state statutes of limitations govern the timeliness of state law claims under federal diversity jurisdiction." Personis v. Oiler, 889 F.2d 424, 426 (2d Cir. 1989) (citing Guaranty Trust Co. v. York, 326 U.S. 99, 89 L. Ed. 2079, 65 S. Ct. 1464 (1945)). "State law also determines the related questions of what events serve to commence an action and to toll the statute of limitations in such cases." Id. (citing Walker v. Armco Steel Corp., 446 U.S. 740, 64 L. Ed. 2d 659, 100 S. Ct. 1978 (1980)). In Walker, 446 U.S. at 752-53, the Supreme Court held that federal courts sitting in diversity were required to apply state service requirements that were considered an "integral part of the state statute of limitations." See also West v. Conrail, 481 U.S. 35, 39 n.4, 95 L. Ed. 2d 32, 107 S. Ct. 1538 (1987) (explaining that:

 
(when the underlying cause of action is based on state law, and federal jurisdiction is based on diversity of citizenship, state law not only provides the appropriate period of limitations but also determines whether service must be effected within that period. (Citation omitted.) Respect for the State's substantive decision that actual service is a component of the policies underlying the statute of limitations requires that the service rule in a diversity suit 'be considered part and parcel of the statute of limitations.'

 (quoting Walker, 446 U.S. at 752)).

 In Personis, 889 F.2d at 426-27, the Second Circuit was asked to decide whether a New York statute that allowed a sixty-day extension of the statute of limitations by delivering a summons to a state official and having the summons served within that sixty-day period should be applied to a federal court diversity action. The court concluded that it should, stating that:

 
by making the length of the limitations period depend on the manner in which a plaintiff attempts to effect service, section 203(b)(5) constitutes an 'integral part' of New York's statute of limitations. Since federal law neither offers an alternate method of obtaining the statutory extension nor states a conflicting rule of procedure implicitly prohibiting the availability of the statute in diversity suits, federal courts may give a state service provision like section 203(b)(5) full legal effect.

 Id.

 In Diffley v. Allied-Signal, Inc., 921 F.2d 421, 423 (2d Cir. 1990), the Second Circuit held that a New York savings statute similar to one of the provisions at issue here applied to revive the plaintiffs' claims in a diversity action. In Diffley, the New York plaintiffs' original suit was dismissed for lack of diversity after it was learned that one of the putative foreign corporations was, in fact, a New York corporation. Prior to the dismissal, the New York corporation merged into a Delaware corporation. However, the district court refused to allow the plaintiffs to amend their complaint to redesignate the defendant corporation based on the then-existing diversity of citizenship. The statute of limitations expired. Id. at 422-23.

 The plaintiffs then refiled their action in reliance on the state savings provision, CPLR § 205(a). The defendants argued that the complaint was time-barred and that CPLR § 205(a), should not ...


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