Court Opinion

ID: 164728
Source: CourtListenerOpinion
Date Created: 2010-08-14 08:32:10+00
Date Added: 2024-06-11T17:24:45.279749
License: Public Domain

F I L E D
                                                                 United States Court of Appeals
                                                                         Tenth Circuit

                                                                         JUN 7 2004
                    UNITED STATES COURT OF APPEALS

                            FOR THE TENTH CIRCUIT                   PATRICK FISHER
                                                                             Clerk

    CURTIS DELASHAW;
    JENNICE DELASHAW, husband
    and wife, d/b/a Delashaw Farm,

               Plaintiffs-Appellants,

    v.                                                  No. 02-7145
                                                  (D.C. No. 02-CV-121-S)
    TYSON FOODS, INC.; THE PORK                         (E.D. Okla.)
    GROUP, INC.,

               Defendants-Appellees,

         and

    DANIEL YOUNT, d/b/a Daniel Yount
    Construction,

               Defendant.

                            ORDER AND JUDGMENT          *

Before HENRY , MURPHY , and TYMKOVICH , Circuit Judges.

*
      This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
      After examining the briefs and appellate record, this panel has determined

unanimously to grant the parties’ request for a decision on the briefs without oral

argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore

ordered submitted without oral argument.

      Plaintiffs Curtis and Jennice Delashaw filed a petition in Oklahoma state

court in February 2002, asserting a number of contract and tort claims against

defendants-appellees Tyson Foods, Inc. and the Pork Group, Inc. (collectively the

“Tyson Defendants”). Pursuant to 28 U.S.C. §§ 1332, 1441, and 1446, the Tyson

Defendants removed the case to federal court. The only claim at issue in this

appeal is plaintiffs’ claim that the Tyson Defendants were negligent in designing

and overseeing the construction of swine barns on plaintiffs’ property. 1 The

district court granted summary judgment in favor of the Tyson Defendants on

plaintiffs’ negligence claim, concluding that the claim was barred by the two-year

statute of limitations in Okla. Stat. tit. 12, § 95(3). Our jurisdiction arises under

1
       The district court entered summary judgment in favor of the Tyson
Defendants on each of plaintiffs’ other claims, and plaintiffs are not challenging
the entry of summary judgment on their other claims. In addition, plaintiffs are
not appealing the dismissal of the claims they asserted against defendant Daniel
Yount. With respect to defendant Yount and the appellate jurisdictional issue
referred to in the order entered by this court on December 27, 2002, we have
determined that plaintiffs’ claims against defendant Yount were fully adjudicated
in the orders entered by the district court on November 13, 2002 and December
18, 2002. We are therefore satisfied that the district court fully adjudicated all of
plaintiffs’ claims and that its orders were final and subject to appeal.

                                          -2-
28 U.S.C. § 1291, and we reverse the entry of summary judgment against

plaintiffs on their negligence claim and remand this matter to the district court for

further proceedings.

                                          I.

      The district court summarized the factual background pertaining to the

parties’ dispute as follows:

             Sometime in 1993, Tyson and Plaintiffs had discussions
      regarding the possibility of Plaintiffs producing swine for Tyson
      under a contractual arrangement. In order for this contract with
      Tyson to come to fruition, Plaintiffs necessarily had to possess swine
      production barns. Tyson required that these swine barns be built
      according to its plans and specifications. On July 8, 1993, Tyson and
      Curtis Delashaw entered into a written contract wherein Tyson was
      obligated to provide certain supplies and materials for the
      construction of the swine barns in exchange for Curtis Delashaw’s
      promise to repay Tyson for such supplies and materials.
      Additionally, on November 16, 1993, Curtis Delashaw entered into a
      separate construction contract with Defendant Daniel Yount . . . for
      the construction of the swine barns. Yount completed construction
      of the swine barns in June 1994. Plaintiffs began producing swine
      for Tyson pursuant to a four-year swine production contract entered
      into in April 1994.

             Plaintiffs began experiencing problems with the swine barns
      almost immediately after construction was completed in June 1994.
      The record establishes Plaintiffs discovered the following problems
      in 1994: conduit lines not properly buried with some lines above the
      ground, light switches causing shocks, wiring deficiencies in the
      lactation area causing short outs, sows’ heads being stuck between
      feeding troughs and feeding tubes, improper functioning of automatic
      curtain machines, substandard construction of loading ramps and
      walkway rails, improper installation of water spouts, cracking of
      concrete floors, and faulty welding and fabrication of breeding pens.
      Other problems with the swine barns surfaced thereafter including

                                         -3-
      faulty stainless steel feed troughs in the Spring of 1995, the
      replacement of feeder tubes in 1996 and 1998, the replacement of the
      computer that runs the exhaust and curtain machines in 1998, and the
      malfunctioning of the irrigation system in 1997. The construction
      problems were so pervasive with the swine barns that Curtis
      Delashaw testified [at his deposition that] he was expressing
      complaints to Tyson in July and August 1994 that “everything was
      shoddy done and incomplete and put up wrong.” (Deposition of
      Curtis Delashaw, p. 112, lines 5-7).

             On February 12, 2002, Plaintiffs filed their petition against the
      Tyson Defendants . . . seeking monetary damages for the repair or
      replacement of the swine barns, the loss of swine production, and
      other business related losses. On March 12, 2002, the Tyson
      Defendants . . . filed their notice of removal.

Deferred and Stipulated App. (App.) at 311-12 (footnote omitted).

      The Tyson Defendants moved for summary judgment on all of the claims

asserted in plaintiffs’ petition, arguing that the claims were barred by the

applicable statutes of limitation. In response to the motion, plaintiffs argued that

they were asserting tort claims related to two specific problems with the swine

barns, an allegedly defective ventilation system and allegedly defective slats, 2 and

plaintiffs argued that those claims did not accrue under Oklahoma’s “discovery

rule” until after February 2000. 3 As a result, plaintiffs argued that their tort

2
       According to plaintiffs, “[s]lats are expensive flooring on which hogs
stand, built from perforated concrete slabs specially designed, constructed and
reinforced to span the waste pit in this type of facility.” Aplts. Br. at 2 n.1.
3
      As noted above, plaintiffs filed their state-court petition in February 2002.

                                          -4-
claims related to the ventilation system and slats were not barred by the two-year

limitations period in Okla. Stat. tit. 12, § 95(3).

      The district court rejected plaintiffs’ argument. While the court agreed

with plaintiffs that the two-year limitations period in Okla. Stat. tit. 12,

§ 95(3) was subject to Oklahoma’s discovery rule, the court nonetheless

concluded that “[a]pplication of the discovery rule to the facts herein results in a

finding that Plaintiffs’ tort claims are barred by the two-year limitation period.”

App. at 318. The court explained its reasoning as follows:

               As asserted in their complaint, the essence of Plaintiffs’ claims
      . . . involves the allegation that the Tyson Defendants’ “design and
      construction of [the swine barns] and equipment were inadequate,
      negligent and not of workmanlike quality” thereby resulting in
      numerous deficiencies in the finished product. The undisputed
      evidence establishes that the majority of these alleged deficiencies
      were known by Plaintiffs as early as 1994. . . .

             In an attempt to counter this admitted knowledge of
      deficiencies with the swine barns in 1994, Plaintiffs isolate two
      problems as the heart of their lawsuit - the slats and ventilation
      system - which Plaintiffs contend were not known until within two
      years of the filing of this action. Plaintiffs argue their recent
      knowledge of the existence of problems with the slats and the
      ventilation system creates . . . a question of fact with respect to the
      application of the discovery rule. The court disagrees. In [Samuel
      Roberts Noble Found., Inc. v. Vick, 840 P.2d 619 (Okla. 1992)], the
      Oklahoma Supreme Court rejected a similar argument. The plaintiff
      in Vick brought suit against Vick, a soil engineer hired by plaintiff to
      perform soil tests for the construction of a new building. Id. at 621.
      The building was completed in 1984 and it immediately began to
      show signs of an infirm foundation, including tiles popping up and
      doors sticking. Id. In 1987, Plaintiff received an opinion from an
      independent consultant which identified the source of the problems.

                                           -5-
      Id. Plaintiff filed its suit against Vick within two years of the receipt
      of the 1987 report. Id. The Oklahoma Supreme Court held that
      Plaintiff’s tort claim against Vick was barred by application of the
      discovery rule. Id. at 626. The Court determined Plaintiff had
      sufficient knowledge of the existence of a problem with the
      foundation by at least 1985 when it admittedly noticed the slab had
      moved. Id. at 626. The fact plaintiff did not know of the exact
      nature or source of the problem until the 1987 consultant opinion did
      not prevent the application of the discovery rule from barring its
      claim against Vick. Id.

             A similar application of the discovery rule bars Plaintiffs’ tort
      claims in the instant case. The undisputed evidence is that Plaintiffs
      knew of the multitude of problems with the design and construction
      of the swine barns as early as 1994. . . . The fact Plaintiffs claim
      they did not know of specific deficiencies in the slats and ventilation
      system until recently does not negate their knowledge of the many
      problems associated with the design and construction of the swine
      barns in 1994. The court rejects Plaintiffs’ premise that proper
      application of the discovery rule requires knowledge of the exact
      nature or source of the defect.

App. at 318-20.

      In this appeal, plaintiffs are appealing only the dismissal of their

negligence claim. In addition, plaintiffs are seeking to impose liability on the

Tyson Defendants only for the allegedly defective ventilation system and slats.

We also note that, for purposes of this appeal only, the Tyson Defendants have

conceded that they “owed a duty to Plaintiffs to ensure that the barns were well

designed and properly constructed,” and that they “breached [their] duty to

Plaintiffs, and that said breach proximately caused the multitude of barn defects

that Plaintiffs listed in their Petition.” Aplees. Br. at 7-8.

                                           -6-
                                          II.

      Under Oklahoma law, “[a] cause of action for an injury based on

negligence must be brought within two years of the accrual of the cause of

action.” Samuel Roberts Noble Found., Inc. v. Vick, 840 P.2d 619, 624 (Okla.

1992) (citing Okla. Stat. tit. 12, § 95(3)). “The statute is, however, subject in

certain instances to a ‘discovery rule.’ The discovery rule provides that the

limitations period does not begin to run until the date the plaintiff knew or should

have known of the injury.” Id.

      The Oklahoma Supreme Court has recognized that Oklahoma’s discovery

rule has significant limitations. Most importantly, to trigger the running of the

statute of limitations under the discovery rule, “[i]t [is] not necessary that the

plaintiff have knowledge of the exact nature or source of the defects, but only the

knowledge that a problem existed.” Id. at 625-26 (emphasis in original).

According to the Oklahoma Supreme Court, a plaintiff may also be deemed to

have constructive knowledge of certain facts.

      Properly limited, [the] discovery rule should encompass the precept
      that acquisition of sufficient information which, if pursued, would
      lead to the true condition of things will be held as sufficient
      knowledge to start the running of the statute of limitations. This rule
      obtains because a reasonably prudent person is required to pursue his
      claim with diligence.

Daugherty v. Farmers Coop. Ass’n, 689 P.2d 947, 950-51 (Okla. 1984) (citation

omitted). Thus, while a plaintiff need not have knowledge of the exact nature or

                                          -7-
source of a defect, “[a] plaintiff is chargeable with knowledge of facts which he

ought to have discovered in the exercise of reasonable diligence.” Id. at 951.

       Under Oklahoma law, “[t]he party asserting the limitations defense has the

burden to present evidence reasonably tending to establish the time-bar.”       MBA

Commercial Constr., Inc. v. Roy J. Hannaford Co.       , 818 P.2d 469, 472

(Okla. 1991). Further, “[w]hether an action is barred by the applicable statutory

time limitation is a question of fact to be determined upon the evidence in each

case.” Id. Nonetheless, the Oklahoma Supreme Court has recognized that

“summary judgment on a statute of limitations defense in favor of the asserting

party is appropriate where the evidence is sufficient to support a finding of fact of

the time-bar and where the evidence establishes there is no dispute as to the time

the limitation period began to run.”    Id. at 472-73. This is consistent with the

standard for granting summary judgment under Fed. R. Civ. P. 56(c), which

provides that summary judgment “shall be rendered forthwith if the pleadings,

depositions, answers to interrogatories, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to any material fact and

that the moving party is entitled to a judgment as a matter of law.”

       “We review the district court’s grant of summary judgment de novo,

applying the same legal standard used by the district court.”       Simms v. Okla.

ex rel. Dep’t of Mental Health & Substance Abuse Servs.         , 165 F.3d 1321, 1326

                                            -8-
(10th Cir. 1999). Having conducted the required de novo review, we conclude

that the district court committed reversible error in granting summary judgment in

favor of the Tyson Defendants on plaintiffs’ negligence claim.

       As a starting point, it is clear from the Oklahoma cases that the purpose of

Oklahoma’s discovery rule is to postpone the accrual of a tort claim until the

plaintiff has actual or constructive knowledge of sufficient facts to prosecute the

claim. Consequently, the two-year limitations period will not begin to run with

respect to “hidden defects” until the defects are discovered or should have been

discovered by the plaintiff.   See Lee v. Phillips & Lomax Agency, Inc.   , 11 P.3d

632, 635 (Okla. 2000) (holding, in case involving claim for negligent roof repairs,

that “[w]here the negligent repair causes damages or a hazard which is hidden, the

two-year statute of limitations does not begin to run until the property owner

learned or, in the exercise of reasonable care and diligence should have learned of

the harm through discovery of the hazardous condition caused by the hidden

defect”) (quotation and brackets omitted).

       The district court determined that “the record supports a finding that

Plaintiffs first became aware of the specific problems related to the slats and

ventilation in either 2000 or 2001.” App. at 315. We do not need to address the

issue of when plaintiffs first became aware of the problems with the slats and

ventilation system, however, because the Tyson Defendants are not arguing that

                                           -9-
plaintiffs had actual knowledge of the alleged defects with the slats and

ventilation system more than two years before they filed suit. Instead, the Tyson

Defendants are relying exclusively on the district court’s constructive knowledge

analysis, which posits that plaintiffs had constructive knowledge of the alleged

defects relating to the slats and ventilation system in 1994 when they were “first

alerted to the many problems with the design and construction of the swine

barns.” Id. at 321.

       We conclude that there is insufficient evidence in the record to support the

district court’s constructive knowledge determination. To begin with, the mere

fact that plaintiffs were aware of a number of other significant problems with the

swine barns as early as 1994, without more, does not end the constructive

knowledge inquiry. Rather, it is simply the starting point.   See Anderson v.

Brouwer , 160 Cal. Rptr. 65, 68 (Cal. Ct. App. 1979) (holding, in case involving

alleged construction defects in office building, that “[w]hether the statute of

limitations ran on defects appearing subsequent to April 1971 depends upon

whether a reasonable inspection and investigation when the first defects appeared

would have led to the discovery of the later appearing defects,” and that “whether

an inspection and further inquiry after discovery of the initial defects would have

shown the extent of the deficiencies that subsequently appeared is normally

a question of fact”); Mills v. Forestex Co. , 134 Cal. Rptr. 2d 273, 294 n.15

                                            -10-
(Cal. Ct. App. 2003) (noting, in case involving alleged construction defects in

residential homes, that “[a] progressively developing or continuing wrong may

give rise to a new cause of action, and start a new limitations period running, with

each successive manifestation of a latent defect,” and that “[t]he test is whether

a reasonable inspection and further inquiry after discovery of the initial defect

would have disclosed the full extent of the problem”) (quotations omitted).

       The district court also misapplied the Oklahoma Supreme Court’s decision

in Vick . In Vick , the court held that a building owner’s negligence claim against a

soil engineer accrued when the owner first became aware of indications (       i.e. ,

“[t]iles popped up and doors began to stick”) that the building had problems with

its foundation even though the owner did not learn of the exact cause of the

problems until several years later. 840 P.2d at 621, 624-26. As the court

explained, “[e]ven though there was some uncertainty as to the reasons for the

problem, the observation of doors sticking and tiles popping off alerted [plaintiff]

that a problem existed.”   Id. at 626.

       The holding in Vick does not control the discovery rule issue in this case,

however, because it was undisputed that the plaintiff in       Vick was “[a]lmost

immediately” aware of specific problems that would have put a reasonable person

on notice that the building may have a defective foundation.        Id. at 621. As a

result, the Vick court’s reasoning was based on the premise that a reasonable

                                           -11-
investigation of the known problems at the time they were initially discovered

would have led to a discovery of the defective foundation.   4
                                                                 By contrast, plaintiffs

here claim that the problems with the slats and ventilation system are separate and

distinct from the other design and construction problems that they were aware of

between 1994 and 1998, and the Tyson Defendants have failed to make an

evidentiary showing to rebut plaintiffs’ claim. Further, the Tyson Defendants

have made no evidentiary showing that the problems with the slats and ventilation

system would have been discovered if a reasonable investigation of the other

known problems had been conducted.

      In sum, we conclude that there are genuine issues of material fact

concerning: (1) whether the problems with the slats and ventilation system were

related to the other design and construction defects that plaintiffs were aware of

between 1994 and 1998; and (2) whether a reasonable investigation of the other

4
        In addition to Vick , the Tyson Defendants are also relying on the decision
of the Ohio Court of Appeals in      Jones v. Hughey , 794 N.E.2d 79 (Ohio Ct. App.
2003). However, like Vick , Jones is distinguishable. In Jones , the court held that
the plaintiff was on notice of a potential defect with respect to the roof of a house
he had purchased at the time he initially moved into the house and became aware
of numerous water leaks. 794 N.E.2d at 85. As a result, the court rejected the
plaintiff’s claim that he did not have sufficient knowledge regarding the defect to
trigger the running of the statute of limitations until several years later when work
was performed on the roof.      Id. at 83, 85. The situation in Jones was therefore
very different from the situation in this case, as it was undisputed that the
plaintiff in Jones was aware of specific problems related to the roof that would
have put a reasonable person on notice that the roof may be defective.

                                          -12-
known defects would have led to a discovery of the problems with the slats and

ventilation system.

      The judgment of the district court is REVERSED as to plaintiffs’

negligence claim, and this matter is REMANDED to the district court for further

proceedings consistent with this order and judgment.

                                                  Entered for the Court

                                                  Michael R. Murphy
                                                  Circuit Judge

                                       -13-