UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

FIBERLINK COMMUNICATIONS 

CORPORATION,

Plaintiff-Appellee,  No. 01-1425

v.

JOHN PATRICK JAMES MAGARITY,

Defendant-Appellant. 

Appeal from the United States District Court

for the Eastern District of Virginia, at Richmond.

Dennis W. Dohnal, Magistrate Judge.

(CA-00-198-3)

Submitted: October 16, 2001

Decided: December 27, 2001

Before WIDENER, WILKINS, and TRAXLER, Circuit Judges.

Vacated and remanded by unpublished per curiam opinion. 

COUNSEL

David G. Shuford, Charles M. Sims, LECLAIR RYAN, P.C., Richmond, Virginia, for Appellant. Douglas M. Garrou, John Gary Maynard, III, Wendell L. Taylor, HUNTON & WILLIAMS, Richmond,

Virginia, for Appellee. 
Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c). 

OPINION

PER CURIAM: 

John Patrick James Magarity appeals the dismissal of his suit

against Fiberlink Communications Corporation on the basis that it

was time-barred under the two-year statute of limitations imposed by

California law. Because the existing record does not support the

application of California law, we vacate the judgment against

Magarity and remand for further proceedings. 

I.

Before the rift that gave rise to this litigation, Magarity was affiliated with Fiberlink as an employee, an investor, and a member of the

board of directors. He was recruited for these roles by his lifelong

friend, Fiberlink president James Sheward. Magarity never had a written contract with Fiberlink, but he and Sheward negotiated an oral

agreement governing his relationship with the company. Magarity and

Sheward finalized this oral agreement while riding in an airplane

together in April 1994. 

Magarity began working for Fiberlink in April 1994. He initially

worked in California, where both Sheward and Magarity lived and

worked prior to Magarity’s recruitment. In January 1996, Magarity

moved to Richmond, Virginia, and opened a Fiberlink office there.

After this move, the relationship between Fiberlink and Magarity

deteriorated. Fiberlink fired Magarity on September 3, 1997, and later

removed him from its board of directors. 

The disputes that led to Magarity’s discharge also produced this

suit. Fiberlink initiated the litigation by filing a complaint in the Eastern District of Virginia on March 28, 2000. Four weeks later,

Magarity filed a counterclaim alleging breach of contract. As is relevant here, Magarity alleged that Fiberlink promised him a portion of

2 FIBERLINK COMMUNICATIONS v. MAGARITY
its common stock as a "signing bonus" but never delivered the stock

to him. 

At trial before a magistrate judge (by consent of the parties),

Magarity and Sheward offered conflicting evidence regarding the

terms of their agreement. The magistrate judge resolved these conflicts in Magarity’s favor, finding as a fact that the agreement

included a provision granting Magarity the right to receive Fiberlink

common stock immediately upon joining the company. (This determination is not in dispute on appeal.) The magistrate nevertheless dismissed Magarity’s claim, holding that it was time-barred under

California law. In so holding, the magistrate judge noted the general

proposition that the forum state, Virginia, "requires that the substantive law of the state in which a contract was made governs issues of

construction and interpretation of the instrument." J.A. 592. The magistrate judge reasoned that this rule applied because Magarity’s claim

"involves an interpretation of what the oral contract consisted of." Id.

Then, the magistrate determined (without explanation) that California

was the "place of contracting," id., and that Magarity’s claim was

therefore subject to California law, including its two-year limitations

period. The magistrate concluded that Magarity’s claim was untimely

because it accrued—and the statute of limitations began to run—on

the day Magarity was terminated: 

[I]t is unreasonable to conclude that he should have instituted formal action against his then-current employer, while

he was being reassured as to the validity of his position. . . .

At the same time, it is appropriate to fix the point for when

the claim accrued as being when Magarity was on notice

that Fiberlink was clearly adverse to him after his unsuccessful efforts up to that point. 

Id. at 594. Because Magarity was terminated on September 3, 1997,

the magistrate judge ruled that the two-year statute of limitations

expired before this litigation commenced on March 28, 2000.1

1The magistrate judge stated that the statute of limitations on Magarity’s claim stopped running when Fiberlink filed its suit, not when

Magarity subsequently countersued. This is correct only if Magarity’s

claim relates back to the claims asserted by Fiberlink. See Al-Abood v.

El-Shamari, 217 F.3d 225, 234 & n.5 (4th Cir. 2000). That issue has not

been raised on appeal. 

FIBERLINK COMMUNICATIONS v. MAGARITY 3
II.

A.

We begin our analysis with a review of applicable rules. When

exercising jurisdiction over claims arising under state law, federal

courts look to the law of the forum state to determine the applicable

statute of limitations. See Ragan v. Merchs. Transfer & Warehouse

Co., 337 U.S. 530, 532 (1949). The federal court should apply the

limitations regime of the forum state so that the outcome of the litigation will not depend on the choice of forum. See Guar. Trust Co. v.

York, 326 U.S. 99, 110 (1945) ("[I]f a plea of the statute of limitations

would bar recovery in a State court, a federal court ought not to afford

recovery."). Thus, whenever the forum state applies its own limitations period, the same period applies in federal court, even if the

forum state (and, by extension, the federal court) would apply foreign

law to the underlying claim. See Barry v. Donnelly, 781 F.2d 1040,

1042 n.3 (4th Cir. 1986) (noting that claim filed in Eastern District

of Virginia was governed by District of Columbia law but subject to

Virginia statute of limitations). 

The forum state here is Virginia, and we therefore must examine

Virginia law. Virginia generally requires the application of its own

statutes of limitations. See Hospelhorn v. Corbin, 19 S.E.2d 72, 73

(Va. 1942). For oral contracts, the limitations period is three years.

See Va. Code Ann. § 8.01-246(4) (Michie 2000). 

In some cases, Virginia applies a foreign limitations period in addition to its own, pursuant to a "borrowing statute." This statute provides, "No action shall be maintained on any contract which is

governed by the law of another state or country if the right of action

thereon is barred either by the laws of such state or country or of this

Commonwealth." Va. Code Ann. § 8.01-247 (Michie 2000). Thus, if

the contract between Magarity and Fiberlink is "governed by the law

of another state," then Magarity’s claim is subject to the statute of

limitations imposed by that state (as well as § 8.01-264(4)). This rule

lies at the heart of this appeal. 

B.

Without citing the borrowing statute, the magistrate judge applied

the California statute of limitations. Magarity contends that this was

4 FIBERLINK COMMUNICATIONS v. MAGARITY
error under Virginia law for two reasons. First, he argues that borrowing principles do not apply because his claim is governed by Virginia

law, not the law of another state. Second, he asserts that even if a foreign statute of limitations applies, the record does not support the

selection of California as the appropriate state. We agree with the second assertion. 

In support of his first argument, Magarity contends that his claim

is not "governed by the law of another state" for purposes of § 8.01-

247 because the claim alleges a breach of contractual obligations and

the breach occurred in Virginia; thus, he asserts, Virginia law controls. We believe this argument misconstrues the statute, however.

While we have not found any Virginia case law interpreting § 8.01-

247, the plain meaning of the statutory language is clear. The statute

refers to the law that governs the "contract," not the law that governs

the claim. The law governing a contract is the law relating to the

validity and interpretation of the contract itself, rather than the law

regarding performance and breach. Thus, even if Virginia law controls the issues presented by Magarity’s claim (a question we do not

decide), the claim is subject to a borrowed statute of limitations if the

validity and interpretation of the underlying contract are governed by

the law of another state. 

This conclusion implicates Magarity’s second argument, which

challenges the magistrate judge’s choice of California as the state

from which to borrow a statute of limitations. To determine whether

this ruling was correct, we again turn to Virginia law. In Virginia, the

validity and interpretation of a contract are governed by the law of the

state in which the contract was formed. See Lexie v. State Farm Mut.

Auto. Ins. Co., 469 S.E.2d 61, 63 (Va. 1996). It is therefore necessary

to determine where the contract between Magarity and Fiberlink was

formed. 

Unfortunately, it is impossible to make that determination based on

the existing record. It is undisputed that the contract at issue here was

executed on an airplane, but there is no evidence in the record indicating where the airplane was at the time (or even where the flight originated and landed). Consequently, we must vacate the magistrate

judge’s decision to apply California law. 

FIBERLINK COMMUNICATIONS v. MAGARITY 5
On remand, the magistrate judge may be able to determine where

the airplane was at the time the contract was formed. If the plane was

flying over California, then Virginia law would presumably require

the application of the California statute of limitations. If its location

cannot be established, however, then the appropriate course under

Virginia law is unclear.2 In that event, it will likely be necessary for

the magistrate judge to certify questions of law to the Virginia

Supreme Court.3

III.

There remains one additional question for our consideration. Fiberlink argues that even if we find California law inapplicable, the dismissal of Magarity’s claim may be upheld on the alternative basis that

the claim was time-barred under Virginia law. We conclude that this

argument raises an issue that should be addressed by the magistrate

judge (instead of or in addition to the issue discussed in the preceding

section). 

2While it is probably not uncommon for contracts to be formed on airplanes, ships, or other conveyances in unknown locations, we have found

only one case involving this scenario. See Lewis v. Atlas Corp., 158 F.2d

599, 601 (3d Cir. 1946). That court held that Illinois law governed the

contract because, with the exception of the signing of documents on an

airplane, all acts related to the contract occurred in Illinois. Under this

rule, California law would govern the contract between Magarity and

Fiberlink. We have no indication that Virginia would adopt this rule,

however. Cf. Jones v. R.S. Jones & Assocs., 431 S.E.2d 33, 34 (Va.

1993) (noting that Virginia has rejected application of the "most significant relationship" test to tort claims). 

3Virginia law authorizes certification of questions to the Virginia

Supreme Court by "the Supreme Court of the United States, a United

States court of appeals for any circuit, a United States district court, or

the highest appellate court of any state or the District of Columbia." Va.

Sup. Ct. R. 5:42(a). We anticipate that questions from a magistrate judge

exercising jurisdiction with consent of the parties will be regarded as

questions from "a United States district court." Cf. Chelette v. Harris,

229 F.3d 684, 686 (8th Cir. 2000) (holding that magistrate judges exercising jurisdiction by consent have power to certify questions for immediate appeal pursuant to 28 U.S.C.A. § 1292(b) (West 1993)), cert.

denied, 531 U.S. 1156 (2001). 

6 FIBERLINK COMMUNICATIONS v. MAGARITY
At the core of Fiberlink’s argument is a challenge to the determination by the magistrate judge that Magarity’s claim did not accrue until

the day he was terminated. In support of this determination, the court

relied on Zukowski v. Dunton, 650 F.2d 30 (4th Cir. 1981). This reliance was misplaced, however. Zukowski rejected the application of a

statute of limitations under circumstances similar to those here, but

this decision was based on equitable principles, not a determination

of when the claim accrued. See id. at 35. Furthermore, Zukowski

applied the equitable doctrine of Maryland, not Virginia. 

Under Virginia law, the statute of limitations on payment obligations begins to run the moment payment is due. See Investor Assocs.

v. Copeland, 546 S.E.2d 431, 436 (Va. 2001). Payment of Magarity’s

signing bonus was due as soon as he began working for Fiberlink in

April 1994. Thus, the limitations clock began to run in April 1994,

not in September 1997. 

The limitations clock may have been paused for some period, however, or Fiberlink may be estopped from asserting a statute of limitations defense. See Jenkins v. Ford Motor Co., 498 S.E.2d 445, 449

(Va. Ct. App. 1998) (discussing equitable constraints on application

of statute of limitations). Magarity has asserted that equitable principles apply, and, indeed, the magistrate judge applied such principles

in reaching its (erroneous) determination that the limitations period

began when Magarity was terminated. For these reasons, and in light

of the fact-specific and discretionary nature of equitable tolling and

estoppel, we will not consider the application of these doctrines in the

first instance. Instead, we will allow the magistrate judge to determine

when Magarity’s claim accrued and whether he may benefit from

equitable considerations. 

IV.

For the reasons stated above, we vacate the decision of the magistrate judge and remand for further proceedings. On remand, the magistrate judge should (a) attempt to determine what foreign statute of

limitations applies under § 8.01-247 of the Virginia Code and whether

that statute bars Magarity’s claim or (b) consider whether Magarity’s

claim is barred under the Virginia statute of limitations. 

VACATED AND REMANDED

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