law-statute-of-repose vs statute of limitations


Choice of Law

Determining which state's law governs is a question of law for the court to decide.  Torrington Co. v.
Stutzman, 46 S.W.3d 829, 848 (Tex. 2000).  Therefore, we review de novo the district court's decision to
apply the Minnesota useful life statute instead of the Texas statute of repose.  Minnesota Mining & Mfg.
Co. v. Nishika Ltd., 955 S.W.2d 853, 856 (Tex. 1996).

When the parties have not otherwise agreed by contract to a valid choice of law clause, the law of the
state with the most significant relationship to the particular substantive issue will be applied.  Duncan v.
Cessna Aircraft Co., 665 S.W.2d 414, 421 (Tex. 1984).  Texas has adopted the standards and factors set
forth in sections 6 and 145 of the Restatement (Second) of Conflict of Laws (1971) to determine choice of
law in tort cases.  See Gutierrez v. Collins, 583 S.W.2d 312, 318 (Tex. 1979).

“Section 6 sets out the general principles by which the more specific rules are to be applied."  Gutierrez,
583 S.W.2d at 318.  In turn, “Section 145 lists factual matters to be considered when applying the
principles of Section 6 to a tort case . . . ."  Id. at 319.  On appeal, Sico invokes these provisions to argue
that Texas's statute of repose governs this case because a statutory directive requires the application of
Texas law under section 6(1).  Alternatively, Sico argues that the factors under sections 6(2) and 145 point
to the application of Texas law.  We address each contention in turn.

A.        Statutory Directive

Section 6(1) states that “[a] court, subject to constitutional restrictions, will follow a statutory directive of its
own state on choice of law."  Restatement § 6(1).  Sico argues on appeal that section 71.031 of the Texas
Civil Practice and Remedies Code establishes a statutory directive to apply Texas law here.[4]

Sico did not raise this statutory directive argument in the district court.  To the contrary, Sico affirmatively
and repeatedly disclaimed the existence of a statutory directive to apply Texas law.  Sico told the district
court that “[t]here is no statutory directive, so choice of law must be determined by applying the 'most
significant relationship' analysis."  We decline to address an argument that was not asserted - and was
affirmatively disclaimed - in the district court.  See, e.g., Holland v. Hayden, 901 S.W.2d 763, 765 (Tex.
App. - Houston [14th Dist.] 1995, writ denied); Tex. R. App. P. 33.1(a).

B.        Most Significant Relationship

In applying the most significant relationship test, this court first must identify the relevant factors.

Under section 6(2), the following factors are relevant to the choice of law determination:

(a)       the needs of the interstate and international systems,

(b)       the relevant policies of the forum,

(c)       the relevant policies of other interested states and the relative interests of those states in the
determination of the particular issue,

(d)       the protection of justified expectations,

(e)       the basic policies underlying the particular field of law,

(f)        certainty, predictability and uniformity of result, and

(g)       ease in the determination and application of the law to be applied.

Restatement § 6(2)(a)B(g).

Section 145 lists the factual matters to be considered when applying section 6 to a tort case.  “The rights
and liabilities of the parties with respect to an issue in tort are determined by the local law of the state
which, with respect to that issue, has the most significant relationship to the occurrence and the parties
under the principles states in § 6."  Restatement § 145(1).  “These contacts are to be evaluated according
to their relative importance with respect to the particular issue."  Id. § 145(2).   In that regard, the court
should consider the following factors:

(a)       the place where the injury occurred,

(b)       the place where the conduct causing the injury occurred,

(c)       the domicile, residence, nationality, place of incorporation, and place of business of the parties, and

(d)       the place where the relationship, if any, between the parties is centered.  

Restatement § 145(2).  The number of contacts is not determinative; rather, the contacts must be
evaluated in light of state policies underlying the particular substantive issue.  Duncan, 665 S.W.2d at 421.

Beginning with the section 145 factors, we note the injury occurred in Texas to Willis, a Texas resident.  
Sico is a Minnesota corporation with its principal place of business in Minnesota.  It is undisputed that the
Pacer table at issue was designed, manufactured, and introduced into the stream of commerce in
Minnesota.  As discussed more fully below, there is no “relationship" between Willis and Sico.

Sico argues for the application of the Texas statute of repose based in large part on Willis's Texas
residency and the location of the accident in Texas.  Texas no longer uses the common law doctrine of lex
loci delicti, under which the place of injury determined choice of law.  Gutierrez, 583 S.W.2d at 318.  Place
of injury now is just one of multiple factors to be considered.  More importantly, place of injury is not an
important contact when - as in this case - the place of injury is fortuitous.  See Torrington Co., 46 S.W.3d
at 849 (citing Restatement § 145 cmt. e).

Sico has sold more than 220,000 Pacer tables since 1969.  Sico does not sell directly to end-users in the
educational market; instead, Sico sells its products to merchandise dealers who in turn sell to individual
buyers and school districts within their regions.  Customers who call Sico's 800 telephone number are
directed to a dealer. This evidence establishes both (1) the lack of any relationship between Sico and
Willis that could be “centered" in Texas; and (2) the fortuity of the place of injury in this case.  Under these
circumstances, the place of injury has little bearing on the analysis.  See Torrington Co., 46 S.W.3d at
849.  Similarly, Willis's Texas residency is not dispositive.  See Doctor v. Pardue, 186 S.W.3d 4, 12 (Tex.
App.- Houston [1st Dist.] 2005, pet. denied) (applying Wisconsin law governing charitable immunity in
connection with injuries sustained by Texas resident; “[t]he record indicates that volunteers from all over
the country participated in the [defendant's] . . . convention and air show, and any expectation by [the
defendant] . . . that it might be immune from liability for injuries sustained to participants, depending upon
the residence of the participants who were injured, would be unreasonable.").

A more significant factor in this case is the place where Sico's injury-causing conduct occurred.  See
Restatement § 145(2)(b).  “In applying the factual matters to be considered under section 145 . . . 'the
rights and liabilities of the parties with respect to an issue in tort are determined by the local law of the
state which, with respect to that issue, has the most significant relationship to the occurrence and the
parties.'"  Crisman v. Cooper Indus., 748 S.W.2d 273, 277 (Tex. App.- Dallas 1988, writ denied) (original
emphasis) (quoting Restatement § 145(1)).  As the Dallas Court of Appeals concluded, “[T]he 'issue in tort'
between appellant and appellee in the present case is the design, manufacture, and placing in the stream
of commerce" of a product alleged to have caused injury.  Crisman, 748 S.W.2d at 277B78; see also
Greenberg Traurig of New York v. Moody, 161 S.W.3d 56, 73 (Tex. App.- Houston [14th Dist.] 2004, no
pet.) (“Generally, the state where the act or omission occurs has a real interest in applying its law in order
to implement the state's regulatory policy as reflected in that law.").  The court's conclusion in Crisman
applies with equal force here.

The Pacer table was designed and manufactured in Minnesota by a Minnesota corporation having its
principal place of business in Minnesota.  While Sico vigorously disputes that its table is defective, Sico
does not dispute that the table entered the stream of commerce when it was shipped from Minnesota after
being manufactured there; according to Sico, its product “was not defective upon its entry into the
Minnesota stream of commerce."  There is no contention and no evidence that the Pacer table was
substantially changed after Sico shipped it from Minnesota.  Therefore, this factor supports the application
of Minnesota law.  Cf. Perry v. Aggregate Plant Prods. Co., 786 S.W.2d 21, 24 (Tex. App.- San Antonio
1990,  writ denied) (defendant's action in placing cement silo into stream of commerce in Texas where it
was designed and manufactured was a factor supporting application of Texas law).

Taken as a whole, the section 145 factors point to the application of Minnesota's useful life statute.  The
Texas situs of injury is fortuitous.  Willis and Sico had no relationship centered in Texas or anywhere else.  
The “issue in tort” is a Minnesota corporation's conduct in designing, manufacturing, and placing into the
stream of commerce a Pacer table that injured a student.  See Crisman, 748 S.W.2d at 277B78.  All of
Sico's conduct germane to this “issue in tort" occurred in Minnesota.

The Minnesota focus of Sico's conduct pertaining to the “issue in tort" dovetails with analysis of the policy
factors identified in section 6.  Minnesota has a policy interest in promoting the responsibility of Minnesota
companies that operate in Minnesota to design, make and distribute products.  See Danielson v. National
Supply Co., 670 N.W.2d 1, 8-9 (Minn. App. 2003); Fluck v. Jacobson Mach. Works, Inc., No. CX-98-1899,
1999 WL 153789 at *4 (Minn. App. March 23, 1999) (not released for publication).  This point is illustrated
by Fluck, in which the Minnesota Court of Appeals refused to apply the Colorado statute of repose to a
claim against a Minnesota corporation that designed, manufactured and placed its product into the stream
of commerce in Minnesota.  Fluck, 1999 WL 153789 at *1.  The product injured a Colorado resident in an
accident that occurred in Colorado.  Id.  In Fluck, as in this case, applying the Minnesota useful life statute
allowed the case to proceed; applying Colorado's seven-year statute of repose would have barred the
claim.  The Minnesota Court of Appeals concluded as follows:  “[W]e can find no basis for a Minnesota
corporation manufacturing a product in Minnesota to have the benefit of the protections of a statue of
repose promulgated in Colorado."  Id. at *4.

Sico points to Texas's policy interest in establishing a measure of repose for product manufacturers and
sellers, and posits that the statute serves as an inducement to conduct business in Texas.  See Burleson
v. Liggett Group Inc., 111 F. Supp. 2d 825, 829 (E.D. Tex. 2000).  This contention does not go as far as
Sico would suggest.  Although the Minnesota useful life statute's approach differs from a statute of repose
establishing a definite cut-off date beyond which litigation cannot be pursued, the underlying concept is
similar in that the defense is not tied to accrual of a particular litigant's cause of action.  Cf. Trinity River
Auth. v. URS Consultants, Inc.-Tex., 889 S.W.2d 259, 261, 263 (Tex. 1994) (“Unlike traditional limitations
provisions, which begin running upon accrual of a cause of action, a statute of repose runs from a
specified date without regard to accrual of any cause of action" and may “potentially cut off a right of
action before it accrues").

The differences identified in the operation of the Texas statute of repose and the Minnesota useful life
statute do not mean that Texas's policy goals are being subordinated or thwarted.  “Generally speaking,
application of another jurisdiction's laws is not contrary to the forum state's fundamental public policy
merely because application of the other state's law leads to a different result from the result that would be
obtained if the forum state's law were applied."  Nexen Inc. v. Gulf Interstate Eng'g Co., 224 S.W.3d 412,
421 (Tex. App.-Houston [1st Dist.] 2006, no pet.) (applying Alberta statute of repose rather than Texas
statute of repose pursuant to contractual choice of law provision).  “[I]f the public policies in the forum state
and [another state] . . . 'are the same, different approaches do not contravene [the policies] just because
one [approach] is somewhat stricter than the other.'" Id. at  421 (quoting Chesapeake Oper., Inc. v. Nabors
Drilling USA, Inc., 94 S.W.3d 163, 178 (Tex. App.-Houston [14th Dist.] 2002, no pet.)).  

“[T]he fact that the other state's law differs materially from that of the forum state does not itself show that
application of the other state's law would offend Texas public policy."  Nexen, Inc., 224 S.W.3d at 421.  
Sico cannot be surprised or unfairly prejudiced by the application of a statute enacted by the state in which
Sico is incorporated and manufactures its products.  See Doctor, 186 S.W.3d at 12 (not-for-profit
charitable corporation incorporated under Wisconsin law “could have no justified expectation” that it would
be governed by Texas charitable immunity statute in connection with liability arising from corporation's
activities in Wisconsin).

Sico North America, Inc. v. Willis (Tex.App.- Houston [14th Dist] Sep. 10, 2009)(Boyce)
(
choice of law when not agreed to in contract, statute of repose, products liability, defective folding table
used in schools, amputation of finger caught between panels)  
AFFIRMED: Opinion by
Justice Boyce   
Before Justices Anderson, Guzman and Boyce  
14-08-00158-CV  Sico North America, Inc v. James R. Willis Individually, and as Next Friend of John Willis
Appeal from 334th District Court of Harris County
Trial Court Judge:  
Sharon McCally
Upon review of the pertinent contacts and the respective interests of Minnesota and Texas, we conclude
that Minnesota and Minnesota law have the most significant relationship to the particular substantive issue
here.  Therefore, the district court did not err by applying the Minnesota useful life statute in this case.  
Sico's first issue is overruled.




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