Justia Federal District Court Opinions

Virginia law permits a plaintiff to take one voluntary nonsuit without prejudice to recommencement of the same action and, in a saving provision, gives a six-months grace period following the nonsuit within which the action may be recommenced free of the bar of any limitation period that would otherwise have run, subject only to the condition that the action be recommenced in the same state court in which the nonsuit was taken. The issue on this appeal is whether a federal court sitting in diversity must honor Virginia's restriction of the court within which a nonsuited plaintiff may recommence in order to invoke the saving provision. Because we construe the restriction to be an integral part of the several policies served by Virginia's statutes of limitations, we hold that it must be applied in these consolidated federal diversity actions. Accordingly, we find error in the district court's contrary conclusion, and on that basis reverse and remand for entry of a judgment dismissing the plaintiffs' actions as time-barred by the duly pleaded statute of limitations.

* As a critical feature of that state's voluntary nonsuit procedure,¹ Va.Code § 8.01-229(E)(3) (Cum.Supp.1981) provides:

If a plaintiff suffers a voluntary nonsuit as prescribed in § 8.01-380 the statute of limitation with respect to such action shall be tolled by the commencement of the nonsuited action, and the plaintiff may recommence his action within six months from the date he suffers such nonsuit, or within the original period of limitation, whichever is longer.

The operation of this basic tolling and saving provision is, however, expressly conditioned upon a special venue restriction found in the cross-referenced section, Va.Code § 8.01-380 A, which provides in pertinent part:

After a nonsuit no new proceeding on the same cause of action or against the same party shall be had in any court other than that in which the nonsuit was taken, unless that court is without jurisdiction, or not a proper venue, or other good cause be shown for proceeding in another court.

On December 6, 1979, each of the four plaintiffs in the instant actions commenced an action in the Circuit Court of Fairfax County, Virginia, against defendants Allstate Insurance Company (Allstate), Physical Measurements, Inc. (PMI), and Robert Miller, Jr. The actions arose out of physical examinations conducted by Miller on or before October 24, 1978, which were part of each plaintiff's application for employment with Allstate. Plaintiffs later learned that Miller was not a licensed physician and they sued defendants for assault, battery, and gross negligence resulting in personal injury.

On January 30, 1981, over defendants' objections, plaintiffs took voluntary nonsuits in the state actions. On February 11, 1981, they filed complaints, invoking diversity jurisdiction, in the U. S. District Court for the Eastern District of Virginia asserting the same causes of action alleged in the state court suits. Defendants Allstate and PMI² moved to dismiss the federal court actions for lack of subject matter jurisdiction³ and as time-barred by the concededly relevant two-year statute of limitations, Va.Code § 8.01-243(A) (1977). Unless first tolled by commencement of the nonsuited actions and further saved by the grace period provided by Virginia law, the two-year statute had run between the time the state court actions were commenced and the time the present federal actions were commenced.⁴

After consolidating the actions for pretrial proceedings, the district court ruled that it had subject matter jurisdiction⁵ and that the suits were not time-barred because the six-months grace period following voluntary nonsuits that is provided by Va.Code § 8.01-229(E)(3) (Cum.Supp.1981), had not expired when these federal actions were commenced.⁶ In the district court's view, the special venue restriction of state law-obviously not met in the federal actions-did not govern decision in the diversity cases. On this basis, because without the restriction the federal actions were commenced within the six-months grace period, the district court denied defendants' motion to dismiss the actions as time-barred.

From this interlocutory order rejecting their statute of limitations defense, defendants were permitted to appeal under 28 U.S.C. § 1292(b).

II

We have here yet another twist on the recurring and peculiarly difficult choice-of-law problem historically posed for federal courts required for any reason to apply state statutes of limitation. See Walker v. Armco Steel Corp., 446 U.S. 740, 744, 100 S.Ct. 1978, 1981, 64 L.Ed.2d 659 (1980). Whether encountered, as here, in a diversity case in which, under Erie's command, the state statute is being applied qua state law, or in a federal claim case where it is being "borrowed" in the absence of a federal statute, see, e.g., Johnson v. Railway Express Agency, Inc., 421 U.S. 454, 95 S.Ct. 1716, 44 L.Ed.2d 295 (1975), the difficult question has always been how much of state law governing limitation of actions is to be applied. Obviously, if any part is to be applied, the aspect of chronological length of the limitation period must be, and at least since Guaranty Trust Co. v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945), this much has been settled in diversity cases. The rub has come generally, as it does here, in deciding whether other, related aspects of the whole body of state limitation doctrine-tolling, saving, estoppel, etc.-shall also be applied.

That of course is the specific question here. No one doubts, indeed there is no dispute, that the two-year period of Va.Code § 8.01-243(A) controls. The question is whether the venue restriction, which in the Virginia statutory scheme operates as a condition to invocation of the six-months saving provision for timely commenced nonsuited actions, is also to apply. If it does, the actions here are time-barred, because the special condition for invocation has obviously not been met. If it does not, the actions are not time-barred because the federal actions were commenced, though not in the restricted venue, within the grace period of the saving provision.

Though the general problem, as indicated, has long been a troublesome one, we think that recent Supreme Court decisions now give a plain guide to decision here and specifically to decision that the venue restriction must be applied as a critical element of Virginia's policies respecting the time-barring of actions voluntarily nonsuited in its courts.

* The critical principle now established in the diversity context is that, except as a valid federal procedural rule might be in direct conflict, see Hanna v. Plumer, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965), or possibly as there might be a sufficiently powerful countervailing federal interest not embodied in a specific procedural rule, see Byrd v. Blue Ridge Rural Electric Cooperative, 356 U.S. 525, 78 S.Ct. 893, 2 L.Ed.2d 953 (1958), every aspect of state law that can properly be considered "an integral part of the several policies served by (a) state statute of limitations," Walker v. Armco Steel Corp., 446 U.S. at 751, 100 S.Ct. at 1985, is to be applied by a federal court in the course of applying the state limitation period. Cf. Board of Regents v. Tomanio, 446 U.S. 478, 100 S.Ct. 1790, 64 L.Ed.2d 440 (1980) (federal claim; state statute borrowed). The proper inquiry therefore in this and related cases is a two-step one: first, whether application of the state rule is precluded in any event by the existence of a directly conflicting federal rule of procedure or a sufficiently powerful countervailing federal interest otherwise grounded; and second, if not, whether the state rule is "an integral part of the several policies served by the state statute of limitations."

There is no federal rule of civil procedure in direct conflict either with the Virginia venue restriction itself or with the tolling and savings provisions whose operation it conditions. Only Fed.R.Civ.P. 3-in specifying the manner and time for commencing a federal action-might be thought to constitute even in diversity cases a generally preemptive federal tolling rule. As to this possibility the Supreme Court has recently held in this very context, reaffirming Ragan v. Merchants Transfer & Warehouse Co., 337 U.S. 530, 69 S.Ct. 1233, 93 L.Ed. 1520 (1949), that Rule 3 was not intended "to displace state tolling rules for purposes of state statutes of limitations." Walker v. Armco Steel Corp., 446 U.S. at 750-51, 100 S.Ct. at 1985. In consequence the Hanna v. Plumer displacement principle has no application here.

Neither are there discernible to us any countervailing federal interests deriving from other sources than the federal rules of civil procedure which, under Erie and its progeny, might require displacement of the state rule in question. To the extent federal/state forum shopping concerns are at all a factor, they militate against rather than for displacement of the state rule..⁷ Neither do we see how any other federal interest would be affected by strictly applying the state rule in accordance with Erie 's basic command.⁸

B

This leaves only the question whether the rule in question is so integral a part of Virginia's statute of limitations policies that it must be considered for Erie purposes part and parcel of the statute here pleaded in defense. That it is can be seen by analyzing the close interrelatedness and interdependence-reflected in the critical statutory cross-referencing-of the policies underlying Virginia's voluntary nonsuit procedure and the special tolling and saving provisions tied to it. The policies are thereby revealed to be so integrated in purpose and function that the venue restriction can only be seen as part and parcel of any statute of limitations pleaded in bar of a voluntarily nonsuited state action. Cf. Walker v. Armco Steel Corp., 446 U.S. at 751-52 & nn. 12, 13, 100 S.Ct. at 1985-1986 & nn. 12, 13 (interrelation of state service rule and statute of limitations).

The policies underlying Virginia's voluntary nonsuit procedure are manifestly those that traditionally have underlain this ancient procedure in its common law and statutory forms: to protect claimants having the laboring oar of proof from the common mischances of litigation, while at the same time protecting the courts and opposing parties from abuses of the nonsuit privilege.⁹ After recognizing the basic privilege, see Va.Code § 8.01-380 A (1977), Virginia law then rigorously conditions its exercise with threshold limitations: it can only be exercised once without prejudice, id. § 8.01-380 B; it must be exercised in timely fashion, before the claimant's proof has been put to test, id. § 8.01-380 A; it may not be exercised when related counter-, cross-, and third party claims are pending, id. § 8.01-380 C. Aside from these internal conditions, statutes of limitations inevitably stand in the wings as collateral barriers to free exercise of the nonsuit privilege since, in the nature of things, they frequently have run (or are about to run) when the need for nonsuit first occurs. The tolling and saving provision is the traditional-and Virginia's-accommodation to this extrinsic barrier. It serves that accommodating purpose, but inevitably in the process increases the risk of abuse. The venue restriction in turn responds to this. Its purpose is to minimize the risks of abuse by minimizing the potential benefits of being able once to recommence without prejudice and free of any limitations bar. In particular it scotches any opportunity to engage in secondary forum shopping with benefit of a trial run in a court of first choice. By this means claimants are encouraged to get it right the first time while a limited safety valve is yet preserved. The risk of wasted effort by the court of original venue choice is minimized, both by the in terrorem discouragement of nonsuits taken for forum shopping purposes, and, when nonsuit is taken, by the possibility that the earlier investment of judicial resources may be of value on retrial in the same court.

As is plain from this, both the tolling/saving provisions and the venue restriction are integral parts of the policies served by any Virginia statute of limitations which, but for the saving provision, would stand as a bar to a previously nonsuited action. The venue restriction is a "statement of a substantive decision" by Virginia, see Walker v. Armco Steel Corp., 446 U.S. at 751, 100 S.Ct. at 1985, that nonsuiting plaintiffs may only be saved from the running of applicable statutes of limitations by recommencing their actions within the grace period and in the same court whose processes were originally invoked. To fail to apply this critical restriction in a federal diversity case would be to fail to apply Virginia's limitation policies entire, a result forbidden by Erie and its progeny. See Walker v. Armco Steel Corp., 446 U.S. at 753, 100 S.Ct. at 1986.

III

The order of the district court is reversed and the action remanded for entry of judgment dismissing all claims as time-barred in the federal actions under Va.Code § 8.01-243(A).

REVERSED AND REMANDED WITH DIRECTIONS.

MURNAGHAN, Circuit Judge, dissenting:

There is no harm in making, indeed there is every reason, wherever possible, to make a major effort to achieve the correct legal result, even though the circumstances are challenging. But that does not authorize or justify a conclusion, however superficially appealing, not consistent with the law. In the interests of precedent and evenhandedness, we must remember that Congress legislates, not the courts. Such a situation presents itself here.

A diverse plaintiff filed an action in state court. He took a voluntary nonsuit, recreating the status quo before he filed suit at all.1 He then decided to refile in Federal court. Under Virginia law, since more than two years had elapsed, he was barred by limitations from suing in federal court, and, indeed, in any state court other than the court for the county in which he had originally proceeded, but then had taken a nonsuit. He was not time-barred in that one state court only because of the interaction of two Virginia statutes:

1) Virginia Code § 8.01-380(A), a venue statute restricting a new proceeding on the same cause as to which a nonsuit had been taken to the court in which the nonsuit had been entered.

2) Virginia Code § 8.01-229(E)(3) (Cum.Supp.1981), tolling in case of a prior voluntary nonsuit the statute of limitations to allow recommencement of the action within six months from the date of the nonsuit or within the original period of limitations, whichever is longer.2

The language of 28 U.S.C. § 1332 confers jurisdiction of "all civil actions ... between citizens of different States."3 An earlier case in this Court, Popp v. Archbell, 203 F.2d 287 (4th Cir. 1953) made clear that Virginia, by the language of § 8.01-380(A), "could not limit the jurisdiction of courts of the United States." Refiling in federal court following a nonsuit was held proper despite the attempted statutory restriction of any new proceeding to the court in which the nonsuit was taken because "a state venue statute can have no application to courts of the United States." Id. at 288.4

The majority's attempted distinction of Popp is not persuasive. "(S)uing in the state court does not amount to an election between state and federal courts and ... the pendency of an action for damages in a state court does not preclude the plaintiff from suing on the same cause of action in the federal court." Id. at 289. The distinction apparently asserted by the majority is that it is not the language of § 8.01-380(A) held ineffectual in Popp alone which bars plaintiff's action, but rather that language, in conjunction with the language of § 8.01-229(E)(3) granting the special six months grace period to a nonsuiting plaintiff.

However, § 8.01-229(E)(3) by its own language simply grants the six months, not conditioning it on where suit is brought, except that, as a matter of cross-reference, it makes itself applicable to "a voluntary nonsuit as prescribed in § 8.01-380." The Virginia-court-only provisions are expressed in § 8.01-380(A). It is by that very § 8.01-380(A) venue phraseology that the majority would erect a bar of limitations. The difficulty is that, thereby, the very thing not permitted in Popp has been accomplished. On February 11, 1981, each plaintiff had a cause of action that was not time barred by Virginia law. By reason of the six months' grace period he had until July 30, 1981 to file suit. But Virginia sought to condition exercise of the right to bring suit on its being filed in a state court. Its statutes said: "You have until July 30, 1981 to sue, but only in the Circuit Court of Fairfax County."

That creates a direct conflict with 28 U.S.C. § 1332 which says that, if a cause of action exists, and diversity and jurisdictional amount prerequisites are satisfied, suit may be brought in federal court. "The district courts shall have original jurisdiction of all civil actions...." (Emphasis supplied.)

The majority take the line that jurisdiction is not questioned by them. Rather, they contend, the federal district court clearly had jurisdiction, and their result depends only on a statute of limitations point of substantive law.5 The result is artistic, it is clever, and it may reach a more equitable end considering the case before us alone. But the result can only be achieved by disregarding necessary implications for other cases, where to follow the result will lead to disregard of the law. The result does not withstand analysis.6 The statutes, under the majority's rationale accomplish the same end here as if they had read:

The cause of action will be barred in two years if filed anywhere, including a federal district court, other than in a court of the Commonwealth of Virginia. The cause of action may be instituted in a Virginia court, dismissed and begun anew at any time within a period up to two years plus six months.

Treatment of two plaintiffs differently cannot depend simply on whether suit is begun in state or in federal court. This is as true whether the road travelled is one of "jurisdiction" or one of "limitations." Indisputably plaintiff could bring a "new proceeding" on February 11, 1981 in state court, and have the case treated as timely filed. Plaintiff could equally sue in federal court. 28 U.S.C. § 1332 and Popp make that clear. But plaintiff, under the reasoning of the majority as to the legitimate effect of the Virginia statutes, could not be deemed to have timely filed in the federal court. In short, the majority has approved the imposition of a limitations bar which has taken plaintiffs out of court as quickly as, for purely jurisdictional purposes, they got in. By a mere verbal formalism one should not be able to nullify the supremacy of federal legislation over a contrary state enactment where, whatever language is employed, jurisdictional or limitational, the result is the same.

The only question then is whether the sanction of a limitations bar, applicable if suit is filed in federal court, but inapplicable in a state court proceeding, may be imposed to force institution of suit in the state court. Can the unequal treatment stand, bearing in mind that practically it leads to dictation by a state statute that the case not be brought in federal court?7

The strongest argument of the majority derives from the fact that the recommencing of suit after a voluntary nonsuit was a second bite at the apple. Even, suggests the majority, if such a condition could not be imposed as to the initial filing of suit, it is all right to do so the second time around, when recommencing an action already previously brought and nonsuited. The plaintiff should have had his eyes open and his wits about him, the argument runs, and realized that the restriction to a state court for a suit utilizing the six months' grace period was one of the consequences of the initial choice.8

That argument can hardly survive Popp, however, for the plaintiff there could have selected a federal venue initially, yet opted for a state proceeding. No "waiver" principle was deemed applicable there, and no waiver of the right to proceed in federal court in order to utilize the six months' grace period should operate here. Otherwise, "suing in the state court" would "amount to an election between state and federal courts." Popp explicitly forbids such treatment.

The potentialities of the majority opinion for mischief are several. Suppose the suit were originally initiated in federal court, and then a voluntary dismissal without prejudice were taken pursuant to F.R.Civ.P. 41(a)(1). In the majority's view, when the case was recommenced in federal court, more than two years after the date on which limitations began to run, but within six months of the voluntary dismissal, the claim would be time barred if the voluntary dismissal were not construed as a "nonsuit" for the purposes of Va.Code § 8.01-229(E)(3). There would consequently be substantially different results depending on the initial decision, made well within the two year limitations period, whether to bring the original, and entirely separate, suit in federal court or across the street in state court.9

The majority apparently accepts that a plaintiff electing initially to sue in federal court would have to do so recognizing that he thereby abandoned the six months' limitations extension should he thereafter decide to discontinue and recommence. Had his initial choice been the state court, however, that advantage would not have been foreclosed to him.

That would, I submit, generate serious problems, for the whole thrust of Erie¹⁰ would be frustrated, by the simple expedient of labelling. A state would be able to deny equal treatment to a voluntary dismissal under the Federal Rules of Civil Procedure in circumstances where its effect is essentially identical to that of a voluntary nonsuit in a Virginia state court proceeding.¹¹

Consequently, it appears inescapable that the majority's position, if it is arguably to have any validity whatever, must be modified to acknowledge that a federal voluntary dismissal without prejudice does qualify as a voluntary nonsuit under § 8.01-229(E)(3). A dismissal under F.R.Civ.P. 41 may be with prejudice, in which case it would be unlike a voluntary nonsuit. Popp v. Archbell, supra, 203 F.2d at 289. But when without prejudice, a federal voluntary dismissal is the exact equivalent of a Virginia voluntary nonsuit. Cf. W. W. Sweeney, Nonsuit in Virginia, 52 Va.L.Rev. 751, 754-55 (1966). So, commencing initially in federal court, and, taking a voluntary dismissal without prejudice, a plaintiff should, under § 8.01-229(E), be able to file timely a new proceeding in federal court by claiming the benefits of the six months' grace period. Certainly, if recommencement were to occur in the same federal district court, that would be "the court ... in which the non-suit was taken."

That inexorable conclusion deriving from the majority's opinion has a disturbing aspect. Although the majority insist that they speak only of "limitations," not of "jurisdiction," the situation presents itself as one where the state has created a cause of action not cognizable in its own courts and exclusively to be begun, if at all, in the federal courts, and federal courts alone. If the plaintiff, having begun in federal court a case which he voluntarily dismissed without prejudice, sought thereafter to refile in state court (or, presumably, in any other federal district court than the one of original filing¹²), unfortunately, because of the linkage to § 8.01-380(A), he would be denied the advantages of the six months' grace period. The state court, and any federal court other than the one in which the predecessor case had been filed, would not be the court in which the nonsuit had been taken. Apparently, therefore, the plaintiff would be out of luck (and out of court).

Upon analysis, it all comes down, therefore, to an attempt, as the Virginia statutes are read by the majority, by a state to interfere with the docket of the federal court, denying jurisdiction to the federal court in a diversity case like the present one in favor of the state court, but barring the state court doors, while opening the federal court's portals should the case have originated and been refiled in federal court. That "right" in a state to confer exclusive cognizance of a matter to the federal courts is suspect, to say the least.

Is it not something of a stretch if, to preserve the validity of the Virginia statute, we must acknowledge a right to come into federal court on terms imposed by a state?

The varying results take no account of the fact that circumstances may change between the time of initial filing and the time of recommencement (under state law, the beginning of a wholly new piece of litigation). They also generate consequences at war with the rationale of Erie. The idea behind Erie was to allow diverse parties a federal forum, but to make resort to a federal forum lead to exactly the same treatment (except for elimination of the supposed bias towards non-residents) as in state court. Yet the majority would introduce substantial variations dependent solely and exclusively on where a filing took place. That contradicts the considerations which, until now, have been deemed controlling.¹³

Based on all the foregoing, it is, in my judgment, evident that the Virginia legislature gave no consideration to the impact of the two statutes (one restricting venue, the other granting a six months' grace period) on an initial suit or on a refiling in federal court. The legislative concerns were all exclusively directed at the functioning of the courts of the Commonwealth. "Let the Congress," the Virginia legislature appears to have decided, "make its own arrangements." The federal arrangements provide access to the six months' grace period where refiling is in federal court simply because, otherwise, the egalitarian teaching of Erie that the rule and result should be the same in a diversity suit, whether filed in federal or in state court, would be offended. The federal statute applies to all civil actions.

It is for those reasons that I dissent. Appellees do not present a particularly appetizing case, it is true. Still they are entitled to the benefit of the law.