Cashman v. CHS, Inc.

Filing 15

Opinion and ORDER granting 6 Motion for Judgment on the Pleadings. Signed by U. S. District Judge Roberto A. Lange on 6/6/13. (SLW)

FILED
JUN 06 20t3
UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA

CENTRAL DIVISION

MARK CASHMAN, Personal
Representative of the MARGUERITE
CASHMAN ESTATE,
Plaintiff,
vs.
CHS, INC.,
Defendant.

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CIV 13-3002-RAL

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OPINION AND ORDER
GRANTING MOTION FOR
JUDGMENT ON THE
PLEADINGS

This case arises out of a propane gas explosion on October 12, 2007, at the house of
Darrick Van Dyke ("VanDyke"), which caused extensive fire damage to the neighboring house
ofMarguerite Cashman. Doc. 1 at~ 12. Defendant CHS had supplied propane gas to Van Dyke.
Doc. 1 at~7. In 2013, roughly five and a halfyears after the explosion and fire, Mark Cashman
("Cashman"), the personal representative of the estate of Marguerite Cashman, filed this suit
against CHS based on diversity jurisdiction, 28 U.S.C. § 1332. Doc. 1 at ~~ 1, 3. Cashman
alleges that CHS is strictly liable for manufacturing, designing, and distributing an unreasonably
dangerous product and for failing to provide adequate warning of a possible propane leak
through a gas detector. Doc. 1 at~~ 18,30. CHS under Federal Rule of Civil Procedure 12(c)
filed a motion for judgment on the pleadings claiming that the three-year statute of limitations
under S.D. Codified Law (HSDCL") § 15-2-12.2 has run. Doc. 6 at ~ 1. Because the three-year
statute of limitations has in fact run, CHS is entitled to judgment on the pleadings.

I. Facts From Complaint
On this motion for judgment on the pleadings, all facts pleaded by Cashman are
presumed to be true and all inferences are made in Cashman's favor. See Ashley Cnty., Ark. v.

Pfizer, Inc., 552 F.3d 659, 663 (8th Cir. 2009). Cashman's Complaint filed January 23, 2013,
and other matters of public record embraced by the pleadings provide the facts in resolving the
motion. See Faibisch v. Univ. of Minnesota, 304 F.3d 797, 802-03 (8th Cir. 2002).
The estate of Marguerite Cashman is being probated in Jerauld County, South Dakota.
Doc. 1 at,-r 1. CHS is a corporation incorporated under the laws of Minnesota, with its primary
place of business in Minnesota. Doc. 1 at ,-r 2. More than $75,000 is legitimately at stake,
triggering diversity jurisdiction under 28 U.S.C. § 1332.
CHS is in the business of designing, selling, marketing, transporting, and distributing
propane gas. Doc. 1 at,-r 15. CHS was the provider of propane gas to Van Dyke's house. Doc.
1 at,-r 16. In its natural state, propane gas is odorless, colorless, and highly flammable. Doc. I
at,-r 8. Because ofthe reasonably foreseeable dangers associated with the use of propane gas, it
is customary to add a marking odorant, ethyl mercaptan. Doc. 1 at,-r 9. This marking odorant
can fade after exposure to other materials or may be masked by competing odors. Doc. 1 at,-r 10.
According to Cashman's Complaint, because the marking odorant can easily fail, a propane gas
detector is ordinarily used in conjunction with the use of propane gas. Doc. 1 at,-r 28. CHS did
not supply a propane gas detector for Van Dyke's house. Doc. 1 at,-r 30.
On October 12,2007, undetected propane gas accumulated in Van Dyke's house. Doc.
1 at,-r 12. This gas ignited and exploded into flames consuming Van Dyke's house and causing
extensive damage to the neighboring house of Marguerite Cashman. Doc. 1 at,-r 12. In 2009,
Marguerite Cashman brought suit against Van Dyke alleging negligence, strict liability, and res
ipsaloquiturinSouth Dakota state court. Cashman v. VanDyke, 2012 SD43,,-r 4,815 N.W.2d
308,310. During discovery in Cashman v. Van Dyke, Cashman learned of actions by CHS
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which allegedly led to the fire. Doc. I at ~ 23. On January 23, 2013, Cashman filed the present
suit alleging that CHS is strictly liable for the Van Dyke home explosion and resulting damages
to the Marguerite Cashman home. Doc. I at ~~ 18,30. CHS filed a motion for judgment on the
pleadings, claiming that the three-year statute of limitations has run under SDCL 15-2-12.2.
Doc. 6.

II. Discussion
A. Judgment on the Pleadings Standard
"Judgment on the pleadings should be granted only ifthe moving party clearl y estab Iishes
that there are no material issues of fact and that it is entitled to judgment as a matter of law."
Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir. 1999). On a motion for
judgment on the pleadings, materials outside the pleadings must be ignored, but if certain
materials are part of the public record or are necessarily embraced by the pleadings, the court
may consider them. Id. "When evaluating a motion for judgment on the pleadings, a court must
accept as true all factual allegations set out in the complaint, and must construe the complaint
in the light most favorable to the plaintiff, drawing all inferences in his favor." Wishnatsky v.
Rovner, 433 F.3d 608,610 (8th Cir. 2006).

B. Statute of Limitations
In this diversity jurisdiction case, South Dakota law governs and supplies the statute of
limitations. Sieg v. Kames, 693 F.2d 803,804-05 (8th Cir. 1982). The statute oflimitations for
a products liability claim in South Dakota is three years as set forth in SDCL 15-2-12.2:

An action against a manufacturer, lessor, or seller of a product,
regardless of the substantive legal theory upon which the action
is brought, for or on account ofpersonal injury, death, or property

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damage caused by or resulting from the manufacture,
construction, design, formula, installation, inspection,
preparation, assembly, testing, packaging, labeling, or sale ofany
product or failure to warn or protect against a danger or hazard in
the use, misuse, or unintended use of any product, or the failure
to provide proper instructions for the use of any product may be
commenced only within three years ofthe date when the personal
injury, death, or property damage occurred, became known or
should have become known to the injured party.
SDCL 15-2-12.2. In South Dakota, a lawsuit is commenced upon the service of a summons.
SDCL 15-2-30. Therefore, for this action to be timely, CHS must have received service ofa
summons in this case within three years of date when the "property damage occurred, became
known or should have become known" to Cashman. SDCL 15-2-12.2.
The damage became known or should have become known to Cashman when the fire
occurred on October 12,2007, damaging the Marguerite Cashman home. See Moore v. Michelin
Tire Co., 1999 SD 152, ~ 22,603 N.W.2d 513, 519 (determining that the accident date is when
the injury became known and the cause of action accrued). At the very latest, the damage was
known in 2009 when Marguerite Cashman brought suit against Van Dyke. Cashman, 2012 SD
43, ~ 4,815 N.W.2d at 310. Once a cause of action has accrued, neither death nor disability will
suspend the running of the statute of limitations. 51 Am. Jur. 2d Limitations of Actions § 219
(2011). The cause of action against CHS thus accrued when the property damage "became

known or should have become known" to Marguerite Cashman. SDCL 15-2-12.2. As personal
representative, Cashman received this cause of action uninterrupted, with the statute of
limitations running from the date of accrual. Cashman did not serve a summons on CHS until
January 23, 2013, well past the three year time limitation in SDCL 15-2-12.2. BecauseCashman

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should have known about the damage in October of2007, and must have known in 2009, the suit
commenced in 2013 is barred by the three-year limitation under SDCL 15-2-12.2.
Cashman nevertheless argues that the actions of CHS were not known until September
30,2010, when Marguerite Cashman received some discovery in the state court case Cashman
v. Van Dyke, and therefore service of the summons on January 23,2013 was within the three­
year statute of limitations. Doc. 1 at ~ 13. However, a "cause of action against a manufacturer
accrues when the ... injury becomes known or should become known to the injured party."
Moore, 1999 SD 152,

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22,603 N.W.2d at 519 (citing SDCL 15-2-12.2). What triggers the

running of SDCL 15-2-12.2 is that the injured party knows or should know that the damage has
occurred, not full knowledge of exactly how and why an event occurred. See SDCL 15-2-12.2.
C. Relation Back Argument

Cashman contends that this case is preserved from the three-year statute oflimitations
because it relates back to the 2009 state court suit of Cashman v. Van Dyke under SDCL 15-6­
15(c). SDCL 15-6-15(c) is akin to Rule 15(c) of the Federal Rule of Civil Procedure. Relation
back is an issue "of procedure and is controlled by the Federal Rules of Civil Procedure."
Crowderv. Gordons Transps., Inc., 387 F.2d 413, 416 (8th Cir. 1967). Rule 15(c) ofthe Federal
Rules of Civil Procedure in "[i]ts plain language makes clear that it applies not to the filing of
a new complaint, but to the filing of an amendment stating a claim which arose out of the
conduct set forth in the original pleading." Morgan Distrib. Co. v. Unidynamic Corp., 868 F.2d
992, 994 (8th Cir. 1989) (internal citation and quotation marks omitted). Cashman is not
amending the prior state court action to name CHS as a defendant, but has started a new federal

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court case. Thus, Rule 15{c) does not cause Cashman's complaint in this case to relate back to
the time of the filing of the state court case against Van Dyke.
Some jurisdictions allow for state law in a diversity jurisdiction case to save a claim if
the state law affords a more forgiving principle ofrelation back. See Saxton v. ACF Indus., Inc.,
254 F.3d 959, 962 (lith Cir. 2001). However, SDCL 15-6-15(c), like Rule 15(c), clearly states
that relation back only applies to amendments of a pleading. SDCL 15-6-15(c). Thus, neither
Rule 15(c) ofthe Federal Rules of Civil Procedure nor SDCL 15-6-15(c) allow the Complaint
filed in 2013 in this case to relate back to a separate state court complaint filed against a different
party in 2009.

D. Fraud Argument
Cashman argues thatthe statute oflimitations is tolled because offraudulentconcealment
byCHSandcitestoSDCL 15-2-3. Doc. 11

at~5.

UnderSDCL 15-2-3, in "an action for relief

on the ground of fraud the cause of action shall not be deemed to have accrued until the
aggrieved party discovers, or has actual or constructive notice of, the facts constituting the
fraud." Rule 9(b) of the Federal Rules of Civil Procedure requires that "in alleging fraud or
mistake, a party must state with particularity the circumstances constituting fraud or mistake.
Malice, intent, knowledge, and other conditions ofa person's mind may be alleged generally."
A specific pleading of fraud is to lIinclude such matters as the time, place and contents of false
representations, as well as the identity ofthe person making the misrepresentation and what was
obtained or given up thereby." Commercial Prop. Invs., Inc. v. Quality Inns In!'l, Inc., 61 F.3d
639,644 (8th Cir. 1995) (internal citation and quotation marks omitted). "One of the main
purposes of the rule is to facilitate a defendant's ability to respond and to prepare a defense to

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charges of fraud." Id. The closest Cashman's Complaint comes to suggesting fraud is the
recurrent allegation that "Defendant kept facts regarding its potential liability from the Plaintiff."
Doc. 1 at m113, 23, 32, 35. Cashman's Complaint did not identify any of the circumstances of
fraud that must be pleaded with particularity in order for CHS to properly prepare a defense.
Because no allegation of fraud was pleaded with any particularity, let alone the particularity
required under Rule 9(b), the statute oflimitations is not tolled under SDCL 15-2-3.
Rather than relying on the Complaint, Cashman bases the fraud claim on an affidavit of
his attorney, filed in resistence to CHS's motion. When ruling on a motion for judgment on the
pleadings, a court draws the facts from the pleadings, but may consider materials that are part
of the public record necessarily embraced by the pleadings. Faibisch, 304 F.3d at 802-03.
Affidavits presenting new theories ofthe case are not typical or contemplated when a motion for
judgment on the pleadings is filed. To consider evidence outside the pleadings, the court must
under Rule 12(d) treat the motion "as one for summary judgment under Rule 56. t! Cashman does
not argue that this Court should treat the motion as a summary judgment motion and has not
sought to amend the Complaint. The affidavit of Cashman's attorney is outside of pleadings to
be considered in ruling on a motion for judgment on the pleadings.
Even ifthe affidavit ofCashrnan's attorney is considered, the allegation offraud still fails.
First, Cashman's reliance on SDCL 15-2-3 is misplaced because SDCL 15-2-3 applies only to
"an action for relief on the ground of fraud ...." In order for fraud to toll the statute of
limitations under SDCL 15-2-3, the party must assert a claim seeking relief based upon fraud.
Sisneyv. Best, Inc., 2008 SD 70, ~ 10,754 N.W.2d 804,809-10. Cashman is not making a fraud
claim in the Complaint. Doc. 1.

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Second, the affidavit ofCashman's attorney does not contain allegations sufficient to set
forth a fraud claim. The required elements of actionable fraud in South Dakota are (1) "that a
representation was made as a statement offact which was untrue and known to be untrue by the
party making it, or else recklessly made;" (2) "that it was made with intent to deceive and for the
purpose of inducing the other party to act upon it;" (3) "and that he did in fact rely on it and was
induced thereby to act to his injury or damage." N. Am. Truck & Trailer, Inc. v. M.C.1.
Commc'n Servs., Inc., 2008 SD 45, ~ 8,751 N.W.2d 710, 713 (quoting Northwest Realty Co. v.
Colling, 147 N.W.2d 675, 683 (S.D. 1966). The affidavit of Cashman's attorney states that
counsel for CHS said that CHS had settled with Van Dyke, that CHS's investigation suggested
that Van Dyke had been doing something with the furnace that led to the explosion, and that
CHS's attorney thought the settlement agreement required Van Dyke to handle all other claims
arising from the fire. Doc. 10 at ~~ 4-5. Even ifthese matters had been alleged in the Complaint,
the matters in the affidavit fall short of satisfying all elements of a viable cause of action for
fraud.
Third, there is no fraudulent concealment even taking the content ofthe affidavit as true
because "[p ]ersons with knowledge ofthe basic operative facts cannot claim concealment." Glad
v. Gunderson, Farrar, Aldrich & DeMersseman, 378 N.W.2d 680,683 (S.D. 1985). Cashman
was aware ofthe basic operative facts ofhis cause ofaction at the very latest in 2009 when a suit
was ftled against Van Dyke. Indeed, a house fire is a rather obvi ous form ofnotice that "property
damage occurred, became known or should have become known to the injured party." SDCL
15-2-12.2. CHS was not concealing that it supplied gas to the Van Dyke home, a fact Cashman
knew. Indeed, the attachment to the affidavit, Doc. 10-2, reveals that Cashman's attorney made

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a strategic decision to leave CHS out ofhis state court case and notified Van Dyke's counsel on
May 17,2010 as follows: "I don't know what CHS supposedly did to cause this accident. Ifthey
are the responsible party, then Darrick [Van Dyke] needs to bring them into the case." Doc. 10­
2. So, even if the affidavit of Cashman's counsel is considered, the three year time period has
run and the claim filed in this Complaint in 2013 is barred.

III. Order
For the reasons explained above, it is hereby
ORDERED that the Defendant's Rule 12(c) Motion for Judgment on the Pleadings,
Doc. 6, is granted.
tI..

Dated June~, 2013.

BY THE COURT:

UNITED STATES DISTRICT JUDGE

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