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Gantes v. Kason Corp.

July 23, 1996

SAMUEL GANTES, ADMINISTRATOR AD PROSEQUENDUM OF GRACIELA GONZALEZ, ON BEHALF OF THE ESTATE OF GRACIELA GONZALEZ AND ON BEHALF OF THE HEIRS-AT-LAW OF GRACIELA GONZALEZ, PLAINTIFF-APPELLANT,
v.
KASON CORPORATION, DEFENDANT-RESPONDENT, AND OTTO CUYLER ASSOCIATES AND XYZ CO. I-V (BEING FICTITIOUS BUSINESS ENTITIES WHOSE IDENTITIES ARE CURRENTLY UNKNOWN), DEFENDANTS.



On appeal from the Superior Court, Appellate Division, whose opinion is reported at 276 N.J. Super. 586 (1994).

As Modified October 2, 1996.

The opinion of the Court was delivered by Handler, J. Justices Pollock, O'hern and Stein join in Justice HANDLER's opinion. Justice Garibaldi filed a separate Dissenting opinion in which Justice Coleman joins. Chief Justice Wilentz did not participate.

The opinion of the court was delivered by: Handler

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

Samuel Gantes, etc., et al. v. Kason Corporation, et al. (A-31-95)

Argued October 10, 1995 -- Decided July 23, 1996

HANDLER, J., writing for a majority of the court.

The issue on appeal is whether, under a choice-of-law analysis, the New Jersey statute of limitations or the Georgia ten-year statute of repose is applicable to a products-liability action brought in a New Jersey court by a Georgia resident against a New Jersey corporation.

Graciela Gonzalez was employed at Dutch Quality House, a chicken processing plant in Gainesville, Georgia. On February 27, 1991, Gonzalez was killed at work when she was struck in the head by a moving part of a shaker machine. The machine was manufactured more than thirteen years before the fatal accident by Kason Corporation (Kason), in its principal place of business in Linden, New Jersey. Samuel Gantes, also a Georgia resident, is the administrator ad prosequendum for the estate and heirs of Gonzalez.

Gantes, asserting that the machine was defective, brought a personal-injury action based on claims of survivorship and wrongful-death against Kason Corporation, Otto Cuyler Associates, and various unidentified defendants, in the Law Division, Union County, New Jersey. The action was filed within New Jersey's two-year statute of limitations for personal-injury actions, but beyond Georgia's ten-year statute of repose applicable to products-liability claims against manufacturers.

The trial court determined that Georgia's statute of repose applies to bar Gantes' action and granted Kason's motion for summary judgment. On appeal, the majority of the Appellate Division affirmed the decision of the trial court, finding that New Jersey's interest in deterring the manufacture of unsafe products within its borders is not significant enough to warrant application of New Jersey's limitations law. Based on the Dissent in the Appellate Division, the appeal is before the Supreme Court as of right.

HELD:

Because Georgia's policy in enacting its ten-year statute of repose does not give rise to a governmental interest that outweighs New Jersey's substantial interest in deterring the manufacture and distribution of unsafe products within the State, the New Jersey statute of limitations is applicable to this cause of action.

1. The cause of action was brought in New Jersey; therefore, the question of which statute to apply must be determined in accordance with New Jersey's choice-of-law rule. Under New Jersey's flexible "governmental-interest" standard, the law that applies is the law of the state with the greatest interest in resolving the particular issues raised in the underlying litigation. (pp. 5-6)

2. The first prong of the governmental-interest analysis requires inquiry into whether there is an actual conflict between the laws of the respective states. The Georgia statute of repose bars the commencement of strict products-liability actions after ten years from the date of the first sale for use or consumption of the personal property causing the injury. Because Gonzalez's accident occurred more than ten years after Kason made its first sale for use of the shaker machine, the action is barred by Georgia's ten-year statute of repose. New Jersey law provides that personal-injury actions, including those based on strict-products liability, are governed by a two-year statute of limitations. Gantes' suit would not be barred by the New Jersey statute because the complaint was filed less than two years after Gonzalez's death. (pp. 6-7)

3. The second prong of the governmental-interest analysis requires a determination of the interest that each state has in resolving the specific issue in dispute. Whether the policy that underlies a state law gives rise to a governmental interest calling for the application of that state's law depends on the nature of the contacts that the state has to the litigation and to the parties. The Georgia ten-year statute of repose was enacted to address problems generated by the open-ended liability of manufacturers so as to eliminate stale claims and stabilize products liability underwriting. The purpose underlying the New Jersey statute of limitations is to encourage diligent and timely prosecution of claims, and to penalize dilatoriness and serve as a measure of repose. The shaker machine was manufactured in, and placed into the stream of commerce from, New Jersey. New Jersey has a substantial interest in encouraging the manufacture and distribution of safe products for the public and, conversely, in deterring the manufacture and distribution of unsafe products within the state. That interest is furthered through the recognition of claims and the imposition of liability based on principles of strict products-liability law. (pp. 7-13)

4. The Court disagrees with the rationale employed in Seals and the lower courts' reliance on that decision. This action is materially connected to New Jersey by the fact that the allegedly defective product was manufactured in and then shipped from the State by Kason. Therefore, New Jersey has a cognizable and substantial interest in deterrence that would be furthered by the application of its statute of limitations in this case. That interest is not outweighed by countervailing concerns over creating unnecessary and discriminatory burdens on domestic manufacturers or by fears of forum shopping and increased litigation in the courts of this State. (pp. 13-17)

5. Georgia's special policy concerns over the impact of "open-ended liability" on its insurance industry and stale claims on its courts do not, in the context of this litigation, give rise to a governmental interest that must be protected by applying its statute of repose to foreclose this lawsuit in New Jersey. Furthermore, no Georgia law is frustrated by the application of New Jersey's statute of limitations to enable this action to proceed in New Jersey. Moreover, the fact that statutes of repose are generally considered substantive in nature does not compel its selection here. Although Gantes is a Georgia resident, that contact with the State of Georgia does not implicate the policies of its statute of repose. (pp. 17-22)

6. Application of New Jersey law will not undermine Georgia's interest in compensating its injured residents because that interest is not actually implicated or compromised by allowing a products-liability action brought by a Georgia resident to proceed against a non-Georgia manufacturer. Moreover, although Georgia's contacts with the litigation and the parties are numerically greater, they are not more significant or weighty than those of New Jersey. (pp. 22-24)

7. Neither the trial court nor the Appellate Division addressed Kason's forum non conveniense argument. Because Kason did not file a petition for certification in conjunction with an appeal as of right, that issue is not properly before the Court. Nonetheless, it is noted that a dismissal pursuant to that doctrine cannot occur if it will result in significant hardship to Gantes. A dismissal of this action will cause such a hardship. If this action cannot proceed in New Jersey, Gantes will be left with no forum in which to proceed and will be denied recovery altogether. (pp. 24-26)

Judgment of the Appellate Division is REVERSED.

JUSTICE GARIBALDI, Dissenting in which JUSTICE COLEMAN joins, is of the view that the majority's opinion subjects New Jersey businesses to an increased risk of litigation that would be time-barred in the state where the injured person lives and where the accident occurred, that increases forum shopping, and further taxes an already overburdened court system, without offering any countervailing benefit to a New Jersey resident or business.

JUSTICES POLLOCK, O'HERN, and STEIN join in JUSTICE HANDLER's opinion. JUSTICE GARIBALDI filed a separate Dissenting opinion in which JUSTICE COLEMAN joins. CHIEF JUSTICE WILENTZ did not participate.

The opinion of the Court was delivered by

HANDLER, J.

In this case, a young woman, working in a chicken processing plant in Georgia, was killed when struck in the head by a moving part of a machine. The machine had been manufactured more than thirteen years before the fatal accident by a New Jersey corporation with its principal place of business in Linden, New Jersey.

Representatives of the decedent, asserting that the machine was defective, brought this personal-injury action based on claims of survivorship and wrongful-death against the New Jersey manufacturer in the Law Division in Union County. The action was filed within New Jersey's two-year statute of limitations for personal-injury actions, but beyond Georgia's ten-year statute of repose applicable to products-liability claims against manufacturers. Because of the conflict between the two statutes, the case poses a fundamental choice-of-law issue over which statute applies and whether, depending on that choice, the action will be barred.

I

Graciela Gonzalez was a twenty-two year-old who lived in Georgia with her husband and two small children. She was employed at a chicken processing plant called Dutch Quality House in Gainesville, Georgia. On February 27, 1991, Ms. Gonzalez was killed at work when she was struck in the head by a moving part of a shaker machine. Plaintiff Samuel Gantes, also a Georgia resident, is the administrator ad prosequendum for the estate and heirs of the decedent.

The shaker machine was manufactured by defendant Kason Corporation, which is a New Jersey corporation with its principal place of business in Linden, New Jersey. It was disputed below whether the machine was manufactured at defendant's New Jersey plant, or at one of its plants in New York. However, for purposes of the Disposition by summary judgment, the courts below assumed that defendant manufactured the machine in New Jersey.

Evidence indicating New Jersey manufacture included the original certification to the trial court of Kason's president, Lawrence H. Stone. This certification expressly stated that defendant manufactured the shaker machine, a forty-eight inch "Kason Vibroscreen," in the Linden, New Jersey plant. In addition, numerous documents affixed to Stone's original certification, consisting of correspondence, invoices, receipts, and the like, indicate that the machine was manufactured in and shipped from New Jersey. They indicate that defendant originally sold the shaker machine in 1977 to Salvo Corporation of Fall River, Massachusetts, for shipment to Snyder's Potato Chips in Berlin, Pennsylvania. Thus, all of the correspondence from defendant regarding that original sale and shipment to Snyder's Potato Chips contain a New Jersey return address. With one exception, all of the receipts, invoices and other similar documents regarding that sale and shipment contain defendant's New Jersey letterhead. In addition, the "purchase order" sent from Salvo Corporation to defendant was directed to a New Jersey address belonging to defendant. Finally, the Federal Express invoice that documents the shipment of the machine to Snyder's Potato Chips reflects that defendant made that shipment from its offices in Linden, New Jersey. The "Instruction Manual" for the Kason Vibroscreen, another document affixed to Stone's original certification, also supports the Conclusion that defendant manufactured the machine in New Jersey. That manual lists defendant's Linden, New Jersey address and telephone number as the point of contact for "additional information or assistance." *fn1

It is undisputed that defendant placed the shaker machine into the stream of commerce in November 1977 when it shipped the machine to Snyder's Potato Chips in Pennsylvania. After April 1985, Snyder's Potato Chips sold the machine to Otto Cuyler Associates. Otto Cuyler Associates later sold the machine to Dutch Quality House, Ms. Gonzalez's Georgia employer.

On February 23, 1993, plaintiff filed this action on behalf of the estate and heirs of Ms. Gonzalez against defendant Kason Corporation and Otto Cuyler Associates and various unidentified business entities. The complaint seeks money damages based on strict liability. Defendant filed an answer that contained a general denial of liability, as well as numerous affirmative defenses, crossclaims for contribution and indemnification against all co-defendants. The trial court, in a published opinion, 278 N.J. Super. 473 (Law Div. 1993), determined that Georgia's statute of repose applies and bars plaintiff's action, and granted defendant's motion for summary judgment. The Appellate Division affirmed that judgment. 276 N.J. Super. 586 (1994). Based on a Dissent in the Appellate Division, the appeal is before us as of right. R. 2:2-1(a)(2).

II

The issue before the Court is whether to invoke the Georgia statute of repose or the New Jersey statute of limitations. Because the action was brought in New Jersey, the issue must be determined in accordance with this State's choice-of-law rule. New Jersey's rule applies a flexible "governmental-interest" standard, which requires application of the law of the state with the greatest interest in resolving the particular issue that is raised in the underlying litigation. Veazey v. Doremus, 103 N.J. 244, 247-49, 510 A.2d 1187 (1986); see State Farm Mutual Automobile Ins. Co. v. Estate of Simmons, 84 N.J. 28, 36-37, 417 A.2d 488 (1980); O'Keeffe v. Snyder, 83 N.J. 478, 490, 416 A.2d 862 (1980).

A.

The initial prong of the governmental-interest analysis entails an inquiry into whether there is an actual conflict between the laws of the respective states, a determination that is made on an issue-by-issue basis. Veazey, (supra) , 103 N.J. at 248. The particular issue to be resolved in this case -- whether the action was filed timely -- is subject to an obvious and direct conflict between Georgia's ten-year statute of repose and New Jersey's two-year statute of limitations.

The Georgia statute of repose bars the commencement of strict products-liability actions "after ten years from the date of the first sale for use or consumption of the personal property causing or otherwise bringing about the injury." O.C.G.A. § 51-1-11(b)(2). See Chrysler Corp. v. Batten, 264 Ga. 723, 450 S.E. 2d 208, 212 (Ga. App.) (noting "strict-liability actions filed more than ten years after the 'date of the first sale for use or consumption of' the product are completely barred"), rev'd on other grounds, 264 Ga. 723, 450 S.E. 2d 208 (Ga. 1994); LFE Corp. v. Edenfield, 187 Ga. App. 785, 371 S.E. 2d 435, 436 (Ga. 1988) (ruling that where statute of repose was enacted both before injury occurred and before complaint was filed, statute applies even if first sale occurred before statute's enactment). Ms. Gonzalez's accident occurred more than ten years after defendant made its "first sale for use" of the shaker machine, in November 1977. It is undisputed that this action is barred by Georgia's ten-year statute of repose applicable to products-liability actions.

New Jersey law provides that personal-injury actions, including those based on strict-products liability, are governed by a two-year statute of limitations. N.J.S.A. 2A:14-2. It is clear that under New Jersey's statute of limitations, plaintiff's suit would not be barred because ...


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