Woessner v. Air Liquide, Inc.

Opinions of the United

2001 Decisions States Court of Appeals

for the Third Circuit

3-7-2001

Woessner v. Air Liquide, Inc.

Precedential or Non-Precedential:

Docket 99-5237

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Filed March 7, 2001

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 99-5237

AMELIA WOESSNER,

Appellant

v.

AIR LIQUIDE. INC., a Delaware Corporation;

CARDOX INC, a California Corporation;

GEN ELEC CO; D ELEC MOTORS INC;

INTL SWITCHBOARD; OLSEN ENG CORP

Appeal from the United States District Court

for the District of New Jersey

(D.C. Civil Action No. 96-cv-552)

District Judge: Honorable Joseph E. Irenas

Submitted Under Third Circuit LAR 34.1(a)

December 11, 2000

Before: SCIRICA, AMBRO, Circuit Judges and

POLLAK, District Judge.**

(Opinion filed: March 7, 2001)

Kevin P. McCann

Walter H. Iacovone

Chance & McCann

201 West Commerce Street

P.O. Box 278

Bridgeton, New Jersey 08302

Counsel for Appellant

_________________________________________________________________

**Honorable Louis H. Pollak, Senior United States District Judge for the

Eastern District of Pennsylvania, sitting by designation.

Richard T. Smith

Margolis Edelstein

216 Haddon Avenue

Suite 200

Westmont, New Jersey 08108

Counsel for Appellee International

Switchboard Corp.

Richard P. Maggi

McDermott & McGee

75 Main Street

P.O. Box 192

Millburn, New Jersey 07041

Counsel for Appellee

Olsen Engineering Corp.

OPINION OF THE COURT

AMBRO, Circuit Judge

Amelia Woessner ("Woessner") appeals from the grant of

summary judgment in favor of the two remaining

defendants in this diversity action -- Inter national

Switchboard Corporation ("International Switchboard") and

Olsen Engineering Corporation ("Olsen"). She contends that

the District Court erred in its analysis of New Jersey's

choice of law doctrine by applying Delaware's builder's

statute, 10 Del. Code S 8127, to bar her pr oducts liability

claims. Furthermore, Woessner ar gues that neither the

builder's statute of Delaware nor New Jersey should

preclude her action because her injuries wer e the result of

alleged defects in production machinery and therefore were

not covered by the scope of either builder's statute. We

affirm the grant of summary judgment of the District Court

because it properly applied Delaware law in this case and

correctly found that Delaware's builder's statute precluded

Woessner's cause of action.

I. Factual and Procedural History

In 1972, Cardox, Inc. ("Cardox") planned the construction

of a carbon dioxide recovery plant adjacent to its existing

facilities in Delaware City, Delaware. Car dox contracted

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with Olsen to provide design and engineering services for

that construction. One component of the construction was

a 2,300 volt motor control center, also known as a

switchgear. That motor control center was manufactured by

International Switchboard to the specifications demanded

by Olsen and was integrated into the production process of

the facility in 1973. Cardox was later acquir ed by Air

Liquide, Inc. ("Air Liquide"), a Delawar e corporation, which

continued to operate the facility.

Woessner was employed as a field technician by "D"

Electric Motors (" `D' Electric") on July 29, 1994, the day of

her injury. "D" Electric is located in V ineland, New Jersey

and Woessner is a New Jersey resident. In her capacity as

a field technician, Woessner visited Air Liquide at its

request on that day to provide an evaluation of a motor that

was not functioning. Unable to make repairs to the motor

on site, Woessner sought to remove it for repair at the "D"

Electric facility in New Jersey. Before r emoving the motor,

Air Liquide officials asked Woessner to evaluate the

attached motor control center. While examining the motor

control center with an electrical tester , Woessner was

severely burned by an explosion.

This products liability action was brought by Woessner in

1996, alleging that the motor control center was defective in

that it contained exposed electrical components.

Jurisdiction was based on the diversity of the parties. 28

U.S.C. S 1332. The District Court made two determinations

relevant to this appeal. On January 7, 1999, the Court

granted the motion of International Switchboar d to

establish that the law of Delaware will gover n the

determination of liability. On March 17, 1999, the Court

then granted summary judgment in favor of Olsen and

International Switchboard, predicting that Delaware's

builder's statute would bar Woessner's claims against them.

All of the defendants not involved in this appeal, including

"D" Electric, General Electric Co. and Car dox, have either

settled or been dismissed from this action, and thus the

entry of summary judgment was a final order which is ripe

for appeal to this Court. 28 U.S.C. S 1291.

II. Standard of Review

The District Court's grant of summary judgment is

subject to plenary review in this Court. Hurley v. Atlantic

3

City Police Dept., 174 F.3d 95, 128 n.29 (3d Cir. 1999), cert.

denied, 528 U.S. 1074 (2000). Similarly, W oessner is

entitled to plenary review of the District Court's prediction,

interpretation and application of the gover ning state

substantive law. Nationwide Mut. Ins. Co. v. Buf fetta, 230

F.3d 634, 637 (3d Cir. 2000). W e are required to apply the

same test that should have been used initially by the

District Court -- whether the movant can demonstrate that

there is no genuine issue as to any material fact and it is

entitled to judgment as a matter of law. Fed. R. Civ. P.

56(c); Omnipoint Communications Enters., L.P . v. Newtown

Township, 219 F.3d 240, 242 (3d Cir .), cert. denied, 121 S.

Ct. 441 (2000). In doing so, we view the evidence and draw

all inferences in the light most favorable to the non-movant.

Whiteland Woods, L.P. v. Township of West Whiteland, 193

F.3d 177, 180 (3d Cir. 1999).

III. Analysis

As an initial matter, we note that the District Court was

required to apply the law of the forum state, including its

choice of law provisions. Klaxon Co. v. Stentor Elec. Mfg.

Co., 313 U.S. 487, 496 (1941); Robertson v. Central Jersey

Bank & Trust Co., 47 F.3d 1268, 1273 (3d Cir. 1995). New

Jersey has rejected the strict lex loci delicti ("place of the

wrong") rule for determining the choice of law based on the

place where the tort occurred. V eazey v. Doremus, 510 A.2d

1187, 1189 (N.J. 1986). In its place, the New Jersey courts

have substituted "the more flexible gover nmental-interest

analysis in choice-of-law decisions." Id.[citations omitted].

It is the District Court's application of this gover nmental-

interest analysis to which Woessner objects on appeal.

Before discussing the governmental-inter est analysis, we

observe that the scope of our review of the choice of law

question will not be as broad as the District Court's

determination. The District Court found that Delaware law

applied with respect to all issues of liability. We need not

delve that far, for we note that the application of New

Jersey's choice of law test proceeds on "an issue-by-issue

basis." Veazey, 510 A.2d at 1189."Conflicts principles do

not dictate that all legal issues presented by a single case

should be decided under the laws of a single state. The

evaluation of significant relationships and governmental

4

interests takes place issue by issue and can lead to the

application of different bodies of law." Johnson Matthey Inc.

v. Pennsylvania Mfrs. Ass'n Ins. Co., 593 A.2d 367, 374

(N.J. Super. Ct. App. Div. 1991). We are convinced, at least

as to the question of which builder's statute applies in this

case, that the District Court properly applied the law of

Delaware.

New Jersey's governmental-interest test r equires a two-

step inquiry. "The first step in the analysis is to determine

whether a conflict exists between the law of the interested

states. . . . If an actual conflict exists, the next step is to

identify the governmental policies underlying the law of

each state and how those policies are af fected by each

state's contacts to the litigation and to the parties." Veazey,

510 A.2d at 1189. Thus, we begin with whether a conflict

exists between the builder's statutes of New Jersey and

Delaware.

"The Delaware `Builder's Statute' pr ovides a six year

limitations1 period on actions for damages, indemnification,

_________________________________________________________________

1. The builder's statutes of both New Jersey and Delaware are technically

statutes of repose and not statutes of limitation. Though both work to

extinguish claims after the running of a given period, a statute of repose

differs in two respects from a statute of limitation. First, the time

period

of a statute of repose does not run from the accrual of a cause of action,

as does a statute of limitations. "With the above backdrop it is safe to

assert that our statute is not at all a typical statute of limitations,

for the

time within which suit may be brought commences with the completion

of services and construction and is thus `entir ely unrelated to the

accrual of any cause of action.' " O'Connor v. Altus, 335 A.2d 545, 553

(N.J. 1975) (citation omitted); see City of Dover v. International

Telephone

& Telegraph Corp., 514 A.2d 1086, 1089 (Del. 1986) ("The statute in

question is truly a statute of repose. It pr events a claim from arising,

whereas a statute of limitations bars an accrued cause of action.").

Secondly, statutes of repose serve a dif ferent purpose than traditional

statutes of limitation. "Statutes of limitations are designed to stimulate

litigants to prosecute their suits diligently and to avoid burdening our

courts with stale claims....[T]he statute of r epose does not serve to

limit

stale claims as such. Rather, the statute literally confers immunity ten

years after the performance of services or construction when an injury

occurs due to a defect or unsafe condition, r egardless of any intended

useful life of a product." Van Slyke v. Worthington, 628 A.2d 386, 388

(N.J. Super. Ct. Law Div. 1992) (citations omitted).

5

or contribution for damages resulting fr om personal

injuries arising out of any deficiency in the construction or

improvement to any real property or the design, planning,

supervision, or observation of any such construction." City

of Dover v. International Telephone & T elegraph Corp., 514

A.2d 1086, 1088-89 (Del. 1986); see 10 Del. Code S 8127.

The six year period runs from the earliest of any of a variety

of dates signaling the completion of construction. 10 Del.

Code S 8127(b). There is a governmental interest in such

laws. The Delaware Supreme Court has noted that builder's

statutes have been enacted in as many as 47 states and

that "[t]hey are prophylactic measures taken by the

Legislatures to lessen the construction pr ofessionals'

exposure to the almost unlimited liability which has

resulted from the demise of the privity doctrine and the

imposition of a discovery rule in tort cases." Becker v.

Hamada, Inc., 455 A.2d 353, 355 (Del. 1982).

The New Jersey builder's statute, N.J. Stat. Ann. 2A:14-

1.1, does not differ from that of Delawar e in any respect

material to this litigation. "N.J.S.A. 2A:14-1.1 was adopted,

effective May 18, 1967, as a legislative r esponse to the then

expanding liability concepts in this jurisdiction concerning

the legal responsibility of contractors, ar chitects, engineers,

and others involved in creating improvements to real

estate." Brown v. Jersey Cent. Power & Light Co., 394 A.2d

397, 404 (N.J. Super. Ct. App. Div. 1978). The primary

distinction between the two is that Delaware's statute

provides that no actions may be brought against the

builder after six years, while New Jersey has chosen to do

similarly after ten years. Compare 10 Del. Code S 8127(b)

with N.J. Stat. Ann. 2A:14-1.1. Of course, because the

current action was brought almost twenty-three years after

the construction of the Cardox facility, the action would be

time-barred by either statute, assuming either applied in

this case. Indeed, Woessner has made no ef fort to

distinguish between New Jersey's and Delawar e's builder's

statutes and has "submitted that the outcome is the same

regardless of which statute of repose is applied." Br. of

Woessner at 15.

Even assuming, arguendo, that the builder's statutes of

New Jersey and Delaware differed other than as noted, an

6

evaluation of the relative governmental interests can lead

only to the conclusion that the District Court pr operly

applied Delaware law. Woessner notes the following

considerations favoring the employ of New Jersey law:

Woessner was a New Jersey resident, was employed by a

New Jersey company, sought medical assistance in New

Jersey and was the beneficiary of public aid in New Jersey.2

"New Jersey has a clearly recognized gover nmental interest

in the compensation of its domiciliaries." Pine v. Eli Lilly &

Co., 492 A.2d 1079, 1082 (N.J. Super. Ct. App. Div. 1985).

Indeed, this consideration is closely related to New Jersey's

interest in assuring that its residents ar e productive and do

not become the beneficiaries of public assistance. Schum v.

Bailey, 578 F.2d 493, 501 (3d Cir .1978) (Gibbons, J.,

concurring).

These domicile-related considerations ar e not, however,

so important under the governmental-inter est analysis to

be dispositive of our inquiry. Moreover , the compensation of

Woessner is only tangentially related to the relevant

governmental interests that underlie the builder's statutes.

This point was made in Fantis Foods, Inc. v. North River Ins.

Co., 753 A.2d 176, 180 (N.J. Super. Ct. App. Div. 2000).

Though Fantis Foods involved the application of the

governmental-interest test to an action for property

insurance coverage between two companies whose principal

offices were in New Jersey, the Court concluded that New

York law should apply because the insur ed building was

located in New York. Id. at 177.

Notwithstanding New Jersey's undeniable inter est in

protecting the rights of its insureds and in promoting

responsiveness on the part of its insur ers, those

"wholly domestic" concerns [citation omitted] --the only

such factors in the case pertaining to New Jersey--

_________________________________________________________________

2. Woessner's argument assumes that this Court must make a choice of

law determination with respect to all issues of liability, and as such its

focus is on considerations relevant to the question of which state's

products liability law applies. We find this argument unhelpful to the

resolution of the choice of law determination, as New Jersey courts have

unambiguously held that they must proceed on an"issue-by-issue"

basis. See Veazey, 510 A.2d at 1189; Johnson Matthey, 593 A.2d 367 at

374.

7

have considerably less weight than the inter ests of New

York in the condition, maintenance and r epair of

structures within its borders; the r espective

responsibilities, financial and otherwise, of property

owners and insurers with respect ther eto; and relevant

considerations of hazard, sequence and causation

when collapse occurs or is threatened.

Fantis Foods, 753 A.2d at 180. We believe the choice of law

analysis for this tort claim to be no differ ent.

At root here is each state government's interest in the

premises liability concerns of its contractors and related

builders. It is the location of the building, not the

individuals who might have been tortiously har med,3 that is

relevant to the choice of which builder's statute to apply.

Indeed, at least one New Jersey court has recognized that

the state governmental interest inher ent in each builder's

statute cannot be divorced from the situs of that

construction. In Van Slyke v. Worthington, 628 A.2d 386

(N.J. Super. Ct. Law Div. 1992), the Superior Court, Law

Division, held that New Jersey's builder's statute did not

apply because all of the alleged injuries occurr ed in New

York buildings, and thus New York law should apply. The

court stated:

I find that New York's contacts and inter est in this case

are more significant than that of New Jersey's. New

Jersey's only interest in this suit lies in ensuring the

compensation of its domiciliary--plaintiffs. Clearly, this

interest would not be furthered thr ough the operation

of New Jersey's substantive law and therefor e the

operation of N.J.S.A. 2A:14-1.1. . . . Additionally, New

York has a far more compelling inter est in regulating

dangers inherent in construction activity conducted on

its soil. The forgoing [sic] inter nal state needs would

not be advanced by application of the [New Jersey

builder's] statute to New York realty. Clearly New York

_________________________________________________________________

3. It is for this reason that we find W oessner's argument that she was

only fortuitously located in Delaware and thus New Jersey law should

thus apply to her, see Blakesley v. Wolford, 789 F.2d 236, 243 (3d Cir.

1986), to be unpersuasive.

8

State has the paramount interest in this litigation and

therefor its substantive law should gover n this case.

Van Slyke, 628 A.2d at 391-92. W e find Van Slyke and

Fantis Foods to be compelling, and thus we pr edict that a

New Jersey court applying New Jersey's choice of law

analysis would find that Delaware's inter est in the conduct

of construction activities in that State outweigh New

Jersey's interest in the compensation of its r esidents.

We turn to the District Court's analysis of Delaware's

builder's statute and determine whether the Court

appropriately awarded Olsen and Inter national Switchboard

the benefits of that statute. The statute bars, after six years

from the earliest of certain defined dates marking the

termination of construction, any claim arising"[f]rom any

alleged deficiency in the construction or manner of

construction of an improvement to real pr operty and/or in

the designing, planning, supervision and/or observation of

any such construction or manner of construction." 10 Del.

Code S 8127(b)(1). Woessner argues that this statute should

not bar her action against International Switchboard and

Olsen because the motor control center was not an

"improvement to real property" covered by the statute.4

Whether the motor control center is an "impr ovement"

under the statute is a question of law and thus

appropriately resolved on a motion for summary judgment.

Hiab Cranes & Loaders, Inc. v. Service Unlimited, Inc., C.A.

No. 82C-FE-98, at 3 (Del. Super. Ct. Aug. 16, 1983).

"Improvement" is defined in the statute to "include

buildings, highways, roads, streets, bridges, entrances and

walkways of any type constructed thereon, and other

structures affixed to and on land, as well as the land itself."

10 Del. Code S 8127(a)(2). This list, however , is intended to

be exemplary and not exhaustive. "As a matter of statutory

construction, the words `shall include' ar e properly

interpreted to indicate that the term`structure'

encompasses items not expressly enumerated in the

_________________________________________________________________

4. Woessner appears not to challenge on appeal the District Court's

conclusion that both Olsen and International Switchboard performed or

furnished construction services and wer e not merely suppliers of

construction equipment.

9

statute." City of Dover, 514 A.2d at 1089 (finding that a

utility pole can be a "structure" within the meaning of the

statute because "it is unquestionably affixed to land").

Delaware courts have employed various means to

determine whether a particular construction is an

"improvement" to land. The first case addressing the issue,

Hiab Cranes & Loaders, Inc. v. Service Unlimited, Inc., C.A.

No. 82C-FE-98 (Del. Super. Ct. Aug. 16, 1983), looked to

the definition of improvement in other states and found

that two approaches were widely employed-- a common

law fixture analysis and a "common sense" interpretation

defining the term according to common usage. Hiab at 3-4.

On the first approach, the Hiab court cited Pennsylvania

law for the proposition that "while a fixture is, by definition,

an improvement to real property, the converse is not true;

an improvement to real property[,] in the ordinary sense of

the term, need not be a fixture." Hiab at 4 (citing Keeler v.

Commonwealth Dep't of Transp., 424 A.2d 614, 616 ( Pa.

Commw. Ct. 1981)). Of the second approach, the Hiab

court cited with approval Brown v. Central Jersey Power &

Light Co., 394 A.2d 397, 405-06 (N.J. Super . Ct. App. Div.

1978), which contrasted permanent parts of the mechanical

systems necessary to the normal function of a building

from those "chattels brought into a structure after it is

architecturally and mechanically suitable for occupancy for

the purpose intended, . . . e.g., furnitur e, production

machinery, appliances, etc."-- the former being

improvements, the latter not. Id. at 405-06. The Hiab court

went on to find that a building's furnace was an

improvement covered by the statute. Hiab at 5.

Woessner argues that the motor contr ol center is not an

improvement to real property because it is "production

machinery" as noted in Brown, and her claims therefore are

not barred by Delaware's builder's statute. This argument

is unpersuasive for several reasons. First, the only

reference in Delaware case law to the fact that "production

machinery" is not covered is the citation of Brown

contained in the Hiab decision of the Delaware Superior

Court.5 Yet because the furnace in Hiab was not

_________________________________________________________________

5. The genesis of the "production machinery" comment in Brown further

demonstrates why the motor control center should be covered by

10

"production machinery," this refer ence is, at best, dicta.

More importantly, a subsequent Delaware case found

production machinery to be an improvement to real

property. Davis v. Catalytic, Inc., Nos. 82C-AU-39, 82C-OC-

84, 1985 WL 189329 (Del. Super. Ct. 1985). In Davis, the

Superior Court analyzed the Hiab decision's use of a

"common sense" approach and found that, under that

approach, a "slurry cooler" was an impr ovement to real

property and its builder was entitled to pr otection under 10

Del. Code S 8127. Davis, 1985 WL 189329, at * 5. The

"slurry cooler" was a sizable free-standing structure bolted

to the concrete floor and affixed to the adjacent pieces of

the production process. Id. It is similar to the motor control

center here, which was also bolted to the concr ete floor and

affixed to the other elements of the production process. See

Standard Chlorine of Delaware, Inc. v. Dover Steel Co., 1988

WL 32044, *2 (Del. Super. Ct. March 31, 1988) (holding

that a liquid storage tank "attached to the r ealty through a

system of pipes, valves, manifolds, wires, scaf folds,

catwalks and a foundation" was an improvement to

property). Furthermore, both the motor control center and

"slurry cooler" were an integral part of the respective

purposes of the buildings. See Windley v. Potts Welding &

Boiler Repair Co., 888 F. Supp. 610, 613 (D. Del. 1995)

(finding a preheater that was "central to the plant's

function" to be an improvement). Thus, we pr edict that a

Delaware court would find the motor contr ol center to be

an improvement under the "common sense" approach

employed in Hiab and Davis.

_________________________________________________________________

Delaware's builder's statute. The Brown decision relied heavily uponIlich

v. John E. Smith Sons Co., 367 A.2d 1216 (N.J. Super. Ct. Law Div.

1976), which held that a defendant who wired a meat grinding machine

during the conversion of a building from a theater to a butcher shop

could not claim the benefit of the builder's statute in New Jersey. Brown,

394 A.2d at 405. There was no evidence that the meat grinding machine

was in any way affixed to the building and the court expressly stated

that it was not a fixture. Ilich, 367 A.2d at 1217-18. The court in Brown,

however, described Ilich as involving a "meat grinding production

machine," and seems to have extrapolated ther efrom the general

comment that production machines were not covered by the builder's

statute. Brown, 394 A.2d at 405. Obviously, production machines that

are fixtures, as the motor contr ol center was, can be covered by the

builder's statute. Davis, 1985 WL 189329, at *5.

11

We caution, however, that the "common sense" approach

advocated by Woessner was not adopted by the Delaware

Supreme Court in its only statement on the matter. In City

of Dover, that Court seemed to employ a fixtur es analysis

by relying on the "other structures affixed to and on land"

clause in the definition of "improvement." City of Dover, 514

A.2d at 1089-90 (citing 10 Del. Code S 8127(a)(2)). The

Court stated that a "utility pole can be consider ed a

`structure' within the meaning of the statute. Since it is

unquestionably affixed to land, it can be consider ed an

`improvement' covered by that statute." Id. at 1090.

Employing a strict fixtures analysis lends even stronger

support to the conclusion that the motor contr ol center was

an improvement, as it had been installed in 1973, was

affixed to the concrete floor by bolts for the entire lifetime

of the structure leading up to the accident and was an

integral part of the production process. Seen in this light,

the motor control center is indistinguishable from a circuit

breaker box,6 which was also held to be a "permanent

fixture" in Kirkwood Dodge, Inc. v. Fr ederic G. Krapf, Jr.,

Inc., C.A. No. 84C-DE-81, slip. op. at 3-4 (Del. Super. Ct.

May 9, 1989).7

We are convinced that the motor contr ol center was

intended to be a permanent fixture for the lifetime of the

Air Liquide facility and that it was covered by the Delaware

builder's statute. Alternatively, were we to employ the

"common sense" approach to improvements, we are

convinced that the motor control center was an

improvement, indeed an indispensible one, to the Air

Liquide facility.

For the reasons noted, we conclude that the District

Court properly granted summary judgment in favor of both

Olsen and International Switchboard.

_________________________________________________________________

6. Indeed, one of Woessner's expert witnesses likened the motor control

center to a "circuit breaker box in the home."

7. The Court in Kirkwood Dodge went on to hold, however, that a

supplier of a standard circuit breaker box did not "furnish construction"

under the builder's statute. Kirkwood Dodge, Inc., at 4-5.

12

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

13