MRL Development I, LLC v. Whitecap Investment Corp.

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
______
No. 14-4738
______
MRL DEVELOPMENT I, LLC;
MICHAEL R. LUCHT,
Appellants
v.
WHITECAP INVESTMENT CORP. d/b/a Paradise Lumber;
GREAT SOUTHERN WOOD PERSERVING, INC.;
PUTNAM LUMBER AND EXPORT COMPANY;
PUTNAM FAMILY PROPERTIES, INC.
______
On Appeal from District Court
of the Virgin Islands
(D.C. No. 3-13-cv-00048)
District Judge: Honorable Curtis V. Gomez
______
Argued December 7, 2015
Before: FISHER, KRAUSE, ROTH, Circuit Judges.
(Filed: May 17, 2016)
Jared D. Bayer, Esq.
Thomas G. Wilkinson, Jr., Esq. [ARGUED]
Cozen O'Connor
1650 Market Street
One Liberty Place, Suite 2800
Philadelphia, PA 19103
David A. Bornn, Esq.
The Bornn Firm
5079 Norre Gade, Suite 1
Charlotte Amalie
St. Thomas, VI 00802
Counsel for Appellants
Chad C. Messier, Esq.
Alex M. Moskowitz, Esq. [ARGUED]
Lisa M. Komives, Esq.
Dudley Topper & Feuerzeig
1000 Frederiksberg Gade
P.O. Box 756
St. Thomas, VI 00804
John S. Baker, IV, Esq.
Lee M. Hollis, Esq.
2
S. Andrew Kelly, Esq. [ARGUED]
Lightfoot Franklin & White
400 20th Street North
The Clark Building
Birmingham, AL 35203
Daryl C. Barnes, Esq.
Sunshine S. Benoit, Esq.
Bryant Barnes Blair & Benoit
1134 King Street, 2nd Floor
P.O. Box 224589
Christiansted, St. Croix, VI 00820
Robert A. Carlson, Esq. [ARGUED]
Lana M. Naghshineh, Esq.
Ryan M. Charlson, Esq.
Lee Hernandez Landrum Garofalo & Blake
100 North Biscayne Boulevard, Suite 605
Miami, FL 33132
Counsel for Appellees
______
OPINION OF THE COURT
______
FISHER, Circuit Judge.
3
Michael Lucht (and his company, MRL Development
I, LLC), purchased treated lumber for a deck on his vacation
home in the Virgin Islands. The lumber allegedly decayed
prematurely. After replacing rotten deck boards, Lucht
brought suit against the retailer, wholesaler, and treatment
company of the lumber.
Lucht purchased the lumber between 2002 and 2006.
He began replacing deck boards in 2010, but he claims he did
not discover the severity of the problem until the fall of 2011.
Lucht and MRL filed suit in February 2013, alleging the
following claims against the appellees: (1) a Uniform
Commercial Code contract claim; (2) a common law contract
claim; (3) a breach of warranty claim; (4) a negligence claim;
(5) a strict liability claim; and (6) a deceptive trade practices
claim under the Virgin Islands Deceptive Trade Practices Act
(“DTPA”). The appellees are the retailer, Whitecap
Investment Corporation, d/b/a Paradise Lumber (“Paradise”);
the wholesaler, Putnam Lumber & Export Company and
Putnam Family Properties, Inc. (“Putnam”); and the treatment
company, Great Southern Wood Preserving, Inc. (“Great
Southern”).
The District Court granted summary judgment against
Lucht and MRL on the basis that all claims were time-barred.
We agree, except that we will review the tort claims under the
gist of the action doctrine, and will affirm on that basis.
I.
A.
The underlying product at the heart of this dispute, the
lumber, was pressure treated by Great Southern. It offers
various services, one of which is called Yellawood and one
designated as “Treatment Services Only” (“TSO”). Under the
TSO process, Great Southern does not purchase the lumber
4
itself, but rather treats lumber purchased by the customer to
the customer’s requested treatment level. Great Southern does
not test the lumber for retention or penetration levels when it
fills a TSO lumber order. Yellawood is lumber that has been
purchased and pressure treated by Great Southern. It is tested
for retention and penetration levels and includes a warranty.
Great Southern supplied primarily TSO lumber to
Putnam on a wholesale basis, order-by-order. The TSO
lumber has a green tag. The appellees assert that the
appellants purchased TSO lumber rather than Yellawood
lumber, and Lucht stated on the record that he believes the
tags on the lumber were green.
The lumber that the appellants purchased was for a
home that MRL acquired in the Virgin Islands to serve as a
vacation home for Lucht and a rental property for MRL.
Lucht began renovating the home, a project which extended
from 2002 to December 2006. As part of this project, Lucht
added a deck which he constructed with pressure-treated
lumber that was purchased from Paradise.
After finishing the deck, at the latest in December
2006, Lucht visited the home every three months. Lucht
alleges that, starting in 2010, each time he visited the home he
had to replace a few boards in the deck. A year after he
started replacing the boards, in the fall of 2011, he asserts that
he had a meeting with a carpenter friend who informed Lucht
that he had been replacing bad lumber all over the island.
Lucht contends that he then realized that the problem with his
deck was widespread and would likely continue.
B.
The appellants filed their complaint in this action in
5
the Virgin Islands Superior Court in February 2013. They
amended their complaint on March 7, 2013. The appellees
thereafter removed the case to the District Court of the Virgin
Islands based on diversity jurisdiction. In addition, the
appellees asserted various cross-claims against each other.
Putnam filed the first dispositive motion (pertinent to
this appeal), requesting that the District Court dismiss the
appellants’ contract, breach of warranty, and DTPA claims.
The District Court granted this motion.1 Thereafter, Great
Southern and Putnam filed motions for summary judgment,
and Paradise joined in each motion. The appellees also filed
motions for summary judgment on the cross-claims. The
District Court granted the appellees’ motions for summary
judgment against appellants, dismissed the motions regarding
the cross-claims as moot, and entered judgment in favor of
the appellees.
The District Court found that the appellants’ contract
claims were time-barred because (1) they were subject to the
U.C.C.’s four-year statute of limitations; (2) the discovery
rule is inapplicable under the U.C.C.; and (3) the statute of
limitations had thus expired in December 2010 prior to the
filing of the complaint. Similarly, the District Court found the
warranty claim was time-barred. As to the negligence and
strict liability claims, the District Court found that although
the applicable two-year statute of limitations is subject to the
discovery rule, Lucht discovered the rotting lumber in 2010,
his investigation of the issue was insufficient, and he was
therefore ineligible for tolling of the limitations period.
Finally, the District Court found that the DTPA claims were
subject to the two-year statute of limitations in the version of
the DTPA in place at the time of filing the complaint, rather
1
The appellants have not appealed that decision.
6
than under the amended statute (which provided a six-year
statute of limitations) because the claims accrued at or before
the time of purchase in 2006. Accordingly, the District Court
held that the DTPA claims were time-barred.
The appellants timely appealed the District Court’s
dismissal.
II.
The District Court had jurisdiction under 28 U.S.C.
§ 1332(a) and 48 U.S.C. §§ 1612(a) and 1613 because the
parties meet the requirements for diversity jurisdiction. This
Court has appellate jurisdiction under 28 U.S.C. § 1291.2 The
appellants appealed only the District Court’s order granting
summary judgment. We apply “a plenary standard in
reviewing orders entered on motions for summary judgment,
applying the same standard as the District Court.” Blunt v.
Lower Merion Sch. Dist., 767 F.3d 247, 265 (3d Cir. 2014).
We must therefore consider “whether there are any genuine
issues of material fact such that a reasonable jury could return
a verdict for the [appellants].” Banks v. Int’l Rental &
2
Although we recently determined that our jurisdiction
over cases arising from the Virgin Islands District Court has
been altered by the 1984 Revised Organic Act and the 1990
amendment by the Virgin Islands legislature to 4 V.I. Code §
76(a), we also indicated that there was “no reason not to
incorporate the federalism principles applicable throughout
the circuit into our relationship with the Virgin Islands
courts” and to act otherwise would “subvert[] the dual aims of
Erie [R.R. Co. v. Tompkins, 304 U.S. 64 (1938)].” Edwards v.
HOVENSA, LLC, 497 F.3d 355, 360–61 (3d Cir. 2007). Thus,
jurisdiction is proper in this action as the parties are diverse.
Id.
7
Leasing Corp., 680 F.3d 296, 297 n.1 (3d Cir. 2012). In doing
so, we must apply the substantive laws of the Virgin Islands,
including its statutes of limitations. HOVENSA, 497 F.3d at
360 (“The fact that the District Court of the Virgin Islands is
an Article IV court rather than an Article III court does not
preclude the application of Erie.”).
The appellees have advanced some arguments that
were not relied upon by the District Court in granting
summary judgment. The appellants argue that this Court
should not consider any grounds other than those considered
by the District Court. New Castle Cty. v. Nat’l Union Fire Ins.
Co. of Pittsburgh, 174 F.3d 338, 342 (3d Cir. 1999) (“[A]s a
general rule, we will consider only issues passed upon by the
court below.”). However, “[i]nasmuch as our review is
plenary, ‘we may affirm the District Court on any grounds
supported by the record,’ even if the court did not rely on
those grounds.” Blunt, 767 F.3d at 265 (quoting Nicini v.
Morra, 212 F.3d 798, 805 (3d Cir. 2000)). Accordingly, this
Court may consider the other arguments that have been
advanced by the appellees.
III.
We will undertake a review of the appellants’ claims in
the order they appear in the appellants’ amended complaint,
starting with the breach of contract and warranty claims,
moving next to the tort claims, and ending with the DTPA
claims.
A.
The appellants asserted two breach of contract
claims—one against Putnam and one against Paradise—
pursuant to the U.C.C. and common law; and a breach of
warranty claim against all of the appellees. Common law
contract and warranty claims have a six-year statute of
8
limitations under the Virgin Islands Code. V.I. Code tit. 5, §
31(3)(A). The parties agree that the discovery rule3 is
applicable to common law claims. The parties disagree,
however, about whether the U.C.C. supplants the common
law claims in this action and precludes the application of the
discovery rule, which would in turn bar the appellants’
claims. V.I. Code tit. 11A, § 2-725.
In order to apply the correct statute of limitations, we
must first determine whether the appellants’ common law
claims may stand or are supplanted by the U.C.C. This will
allow us to then determine the applicability of the discovery
rule and apply the correct statute of limitations.
1.
In assessing whether the U.C.C. displaces a common
law claim, this Court begins with two basic principles. First,
the U.C.C. “must be liberally construed and applied to
promote its underlying purposes and policies.” V.I. Code tit.
11A, § 1-103(a); N.J. Bank, N.A. v. Bradford Sec. Operations,
Inc., 690 F.2d 339, 345 (3d Cir. 1982). Second, “[u]nless
displaced by the particular provisions of [the U.C.C.], the
principles of law and equity . . . supplement its provisions.”
V.I. Code tit. 11, § 1-103(b). Thus, the U.C.C. displaces the
common law only “insofar as reliance on the common law
would thwart the purposes of the Code.” N.J. Bank, 690 F.2d
at 346. Where the U.C.C. supplants common law contract
claims, the common law action will be barred. Id.
3
We have, at various times, described the discovery
rule as postponing the accrual date of a cause of action or,
more precisely, as tolling the running of the limitations period
once the action has accrued. See G.L. v. Ligonier Valley Sch.
Dist. Auth., 802 F.3d 601, 613 n.10 (3d Cir. 2015).
9
We must decide whether the Virgin Islands U.C.C.
supplants the appellants’ common law claims. The Virgin
Islands Supreme Court has not spoken on this issue. Where
this occurs, we are “required to predict how the Supreme
Court of the Virgin Islands would decide an issue of
territorial law, and should seek guidance from Superior Court
decisions in undertaking this endeavor.” HOVENSA, 497 F.3d
at 361 n.3. The Superior Court of the Virgin Islands,
however, “is not the highest court of the Territory [or] even
an intermediate appellate court, but rather a trial court.” Id. at
361. Accordingly, we are not bound by Superior Court
decisions. Id.; see also Commissioner of Internal Revenue v.
Estate of Bosch, 387 U.S. 456, 465 (1967) (“[D]ecrees of
lower state courts should be attributed some weight [but] the
decision is not controlling where the highest court of the State
has not spoken on the point.” (internal quotation marks
omitted)).
The parties have cited two Territorial Court decisions
for their separate positions regarding the applicability of the
U.C.C.’s statute of limitations. The Superior Court has
subsumed the role of the Territorial Court and we will review
those decisions as if they were decided by the Superior Court.
The Virgin Islands Territorial Court in White v. S&E
Bakery, Inc., 26 V.I. 87 (Terr. Ct. 1991), found that the
plaintiff in that action could go forward with claims under
both the U.C.C. and the common law statutes of limitation.
White, 26 V.I. at 90. However, White has never been cited by
any other Virgin Islands court, and the opinion did not
address the purview of the U.C.C. Additionally, the plaintiff
in White had filed his action within the four-year statute of
limitations that is provided by the U.C.C., and thus the
finding that the claim qualified under both statute of
limitations was unnecessary. Id.
10
Six years earlier in Fombrun v. Controlled Concrete
Prods., Inc., 21 V.I. 578 (Terr. Ct. 1985), the Territorial Court
addressed the purview of the U.C.C. and found that a contract
for the sale of goods was supplanted by the U.C.C. Id. at 581–
82. Although earlier, Fombrun provides a clearer analysis and
the White court failed to cite it or discuss the prior holding in
Fombrun.
Despite Fombrun’s persuasive qualities, these cases do
not provide a clear picture of what the current law is on this
issue as we would be forced to pick between two
contradictory holdings—one of which failed to recognize that
it was creating such a division. Thus, given that the Territorial
Court decisions are not controlling on this Court because the
Virgin Islands Supreme Court has not spoken on the subject,
Estate of Bosch, 387 U.S. at 465, and no other Virgin Islands
courts have cited either case (other than the District Court in
citing Fombrun), we will have to look elsewhere to make our
prediction.
Consequently, we will analyze the application of the
U.C.C. by applying a plain meaning interpretation of whether
lumber qualifies as a “good” to determine whether the
appellants’ common law contract and warranty claims should
be supplanted by the U.C.C. See In re Am. Home Mortg.
Holdings, Inc., 637 F.3d 246, 254–55 (3d Cir. 2011).
“Goods” are “all things (including specially manufactured
goods) which are movable at the time of identification to the
contract for sale.” V.I. Code tit. 11A, § 2-105(1). The
contracts at issue in this case are clearly governed by the
U.C.C. The appellants allege that they had oral contracts,
memorialized by invoices, with Putnam and Paradise, for the
purchase of lumber. Lumber is a thing that is movable at the
time of identification to the alleged contract for sale. Under a
plain reading of the definition of “goods,” lumber is included
11
and the appellants’ claims fall within the purview of the
U.C.C.4
This conclusion is bolstered by the purpose of the
U.C.C. “[t]o introduce a uniform statute of limitations for
sales contracts, thus eliminating jurisdictional variations and
providing needed relief for concerns doing business on a
nationwide scale.” V.I. Code tit. 11A, § 2-725 cmt. As such,
failure to apply the U.C.C. in this situation would thwart the
U.C.C.’s purpose to provide uniform limitations periods for
claims involving contracts for the sale of goods, including
lumber.
2.
Because the U.C.C. applies, we will now address the
appellants’ argument that the discovery rule applies to the
U.C.C.
The Virgin Islands Code provides a six-year statute of
limitations for actions involving a contract “except when, in
special cases, a different limitation is prescribed by statute.”
V.I. Code tit. 5, § 31. The Virgin Islands U.C.C., on the other
hand, provides that an action for breach of contract is subject
4
The District Court similarly concluded that the
U.C.C. statute of limitations governed the claims against all
appellees for breach of warranty. The appellants do not argue
on appeal that, because the bulk of the lumber shipped from
Great Southern to Putnam was TSO lumber, the alleged
contracts at issue were for services and not goods; instead,
they argue that U.C.C. and common law contract claims may
be asserted simultaneously. The argument that these contracts
were for services is therefore waived, and we need not
address it. See, e.g., In re Surrick, 338 F.3d 224, 237 (3d Cir.
2003).
12
to a four-year statute of limitations. V.I. Code tit. 11A, § 2-
725(1). This statute of limitations is restricted by the
subsection that follows, subsection two, which provides that
“[a] cause of action accrues when the breach occurs,
regardless of the aggrieved party’s lack of knowledge of the
breach. V.I. Code tit. 11A, § 2-725(2) (hereinafter referred to
as “subsection two”). Subsection four of that provision,
however, states that “[t]his section does not alter the law on
tolling of the statute of limitations nor does it apply to causes
of actions which have accrued before this title becomes
effective.” V.I. Code tit. 11A, § 2-275(4) (hereinafter referred
to as “subsection four”).
The appellants argue that, despite subsection two’s
instruction that the aggrieved party’s knowledge is not to be
considered, subsection four’s pronouncement allows for the
application of the discovery rule to U.C.C. claims. The
appellees argue, and the District Court found, that subsection
two prohibits the application of the discovery rule and
subsection four refers to equitable tolling.
One Virgin Islands court has found that the discovery
rule does not apply to the U.C.C. Fombrun, 21 V.I. at 582–
83. This case is a Territorial Court case, however, and the
court did not undergo a review of subsection two in
conjunction with subsection four. The Fombrun court did not
undertake a review of what comprises “the law on tolling.”
This Court must therefore interpret the statute to determine
whether the discovery rule is applicable because neither the
Virgin Islands legislature nor the Virgin Islands Supreme
Court has provided the parameters for what constitutes “the
law on tolling.”
When interpreting a statute, this Court must give effect
to the legislature’s intent. In re Am. Home Mortg., 637 F.3d at
13
254. This determination begins with the statute and if the text
is plain, this Court need not inquire further. Id. at 255. If the
legislature’s intent is made plain, “it is unnecessary for us to
refer to other canons of statutory construction, and indeed we
should not do so.” Id. at 254–55. Moreover, just because
party opponents may “proffer different interpretations of the
statutory language does not make the language ambiguous. It
just makes the court’s role difficult in deciding which
interpretation is persuasive.” Id. at 256.
Given the parties’ differing interpretations, this Court
must determine which interpretation of the two subsections is
correct. We have indicated that both the discovery rule and
equitable tolling require diligence on the part of the plaintiff
with the potential consequence of losing the benefit of either
doctrine.5 The two doctrines differ, however, as to their
purposes in application. G.L., 802 F.3d at 613 n.10, 614 n.12
(citing William A. Graham Co. v. Haughey, 646 F.3d 138,
150 (3d Cir. 2011); Oshiver, 38 F.3d at 1390).
The discovery rule focuses on the plaintiff’s
knowledge of injury, whereas equitable tolling focuses on the
time to bring an action despite discovery of the injury. Id. at
614 n.2. Given the difference between the two doctrines, the
two § 2-725 subsections each stand alone, subsection two
referring to the discovery rule and subsection four referring to
equitable estoppel. Such a reading is consistent with this
5
Oshiver v. Levin, Fishbein, Sedran & Berman, 38
F.3d 1380, 1390 (3d Cir. 1994) (citing Keystone Ins. Co. v.
Houghton, 863 F.2d 1125, 1127 (3d. Cir. 1988), abrogated on
other grounds by Klehr v. A.O. Smith Corp., 521 U.S. 179
(1997) (for the discovery rule); Reeb v. Econ. Opportunity
Atlanta, Inc., 516 F.2d 924, 930 (5th Cir. 1975) (for equitable
tolling)).
14
Court’s preference to construe a statute in a way that gives
meaning to all provisions. Kendall v. Russell, 572 F.3d 126,
143 (3d Cir. 2009) (“It is a well known canon of statutory
construction that courts should construe statutory language to
avoid interpretations that would render any phrase
superfluous.”).
Subsection two encompasses the discovery rule
because it relies on the plaintiff’s knowledge or imputed
knowledge, coinciding with subsection two’s prohibition on
considering the “aggrieved party’s lack of knowledge of the
breach.” V.I. Code tit. 11A, § 2-725(2). This leaves
subsection four, which refers to “tolling”, to be applied where
equitable tolling is at issue. In contrast, reading the two
subsections together as the appellants request would
essentially read subsection two out of the statute, rendering
the “phrase superfluous.” See Kendall, 572 F.3d at 143; see
also Hull v. Eaton Corp., 825 F.2d 448, 456–57 (D.C. Cir.
1987) (finding that identical language of a statute was clear
and weighed against the application of the discovery rule).
Such a result is consistent with our prior holdings.
We have previously found the discovery rule
inapplicable to conversion actions under Pennsylvania’s
U.C.C. Menichini v. Grant, 995 F.2d 1224, 1229–31 (3d Cir.
1993). In making that finding, our focus centered on the
U.C.C.’s “objectives of negotiability, finality, and uniformity
in commercial transactions.” Id. at 1230. Similar objectives
are found in the Virgin Islands U.C.C.’s official comment
regarding the statute of limitations:
[the purpose of this section is] [t]o introduce a
uniform statute of limitations for sales
contracts, thus eliminating jurisdictional
variations and providing needed relief for
15
concerns doing business on a nationwide scale
whose contracts have heretofore been governed
by several different periods of limitation
depending upon the state in which the
transaction occurred.
V.I. Code tit. 11A, § 2-725 cmt. In accordance with this
focus, we find that the discovery rule does not apply to
contract claims covered by the Virgin Islands U.C.C.
3.
Under the applicable four-year statute of limitations,
the appellants’ contract claims are time-barred. A claim for
breach of contract accrues when the breach occurs. This
precludes the consideration of the plaintiff’s knowledge of the
breach. Id. § 2-725(1). The appellants’ contract claim is
clearly time-barred as the breach of the contract occurred in
December 2006, at the latest, when the last of the lumber was
purchased from Paradise. As the appellants did not file this
action until February 2013, the two contract claims fall
outside of the four-year limitations period.
The breach of warranty claims are also time-barred.
Where the underlying contract falls within the U.C.C., the
warranty claim will also be subject to the U.C.C.’s
application. Id. §§ 2-313, 2-314, 2-315 (referencing
warranties in relation to the contract for the sale of goods to
which they attach). A breach of warranty claim starts to
accrue “when tender of delivery is made, except that where a
warranty explicitly extends to future performance of the
goods and discovery of the breach must await the time of
such performance the cause of action accrues when the breach
is or should have been discovered.” Id.; § 2-725.
16
The final tender of delivery of the lumber was made in
December 2006, when the last lumber was bought for the
renovation of the home. Thus, the warranty claim is time-
barred if there is no explicit warranty extending to future
performance of the lumber.
The term “explicit” under the U.C.C. is defined as “not
implied merely or conveyed by implication; distinctly stated;
plain in language; clear; not ambiguous; express;
unequivocal” or “that which is so clearly or distinctly set
forth that there is no doubt as to its meaning.” Jones &
Laughlin Steel Corp. v Johns-Manville Sales Corp., 626 F.2d
280, 291 n.25 (3d Cir. 1980) (internal quotation marks and
citation omitted). Moreover, the defendant’s knowledge of the
plaintiff’s expectations or the possible reliance by the plaintiff
on the defendant’s expertise does not transform
“representations regarding the performance of existing
products . . . into explicit warranties of future performance.”
Id.
No reasonable jury could find, based on Lucht’s
statements during his deposition, that an explicit warranty of
future performance was made. Lucht stated that he: (1) never
had contact with or heard of Putnam or Great Southern prior
to this suit, (2) was not told by any Paradise employee that the
lumber was treated a certain way or that it would last for a
certain amount of time, (3) did not request a specific type of
treatment of the lumber and purportedly relied on the
representation that the lumber was pressure treated, (4) could
not recall exactly what the tags on the end of the individual
pieces of lumber stated but remembered that the tags were
green, and (5) did not receive a warranty or any other
representations from Putnam. Great Southern also provided
evidence that the Yellawood tags, which provide a limited
warranty, are not green and that the majority of the lumber
17
sold to Putnam is TSO lumber, which has no warranty and
has green tags. Additionally, the invoices from Paradise to
Lucht do not state that Lucht received a warranty.
Lucht also stated in his deposition that he had no
knowledge of whether his contractor informed Paradise that
he needed a certain type of treated lumber or that he indicated
at any time what type of lumber he needed when he picked up
orders from Paradise. Lucht did state that he relied on
Paradise to furnish the correct lumber, but he provided no
evidence that suggests that his reliance was justified or that
Paradise had reason to know of such reliance. Lucht indicated
that he relied only on his architect to specify, and his
contractor to pick, the correct type of lumber.
The appellees made no warranties. Given the record,
there is no genuine issue of material fact that Lucht was given
any type of explicit warranty of future performance.
The only other available avenue of recovery for the
appellants would be equitable tolling under subsection four of
the U.C.C.’s statute of limitations provision. The appellants,
however, have failed to assert this argument in this appeal.
Rather, the appellants focus on the discovery rule in their
briefs and the only parties to address such an argument,
interestingly, are the appellees. Accordingly, this Court will
not consider this argument as it has been waived by the
appellants. In re Surrick, 338 F.3d at 237 (“Failure to identify
or argue [an] issue in [the] opening brief constitutes waiver of
[an] argument on appeal.”).
B.
Three issues arose in the District Court regarding the
appellants’ tort claims, whether the claims were: (1)
18
precluded by the gist of the action doctrine, (2) timely filed,
or (3) precluded by the economic loss doctrine. Because the
appellants’ tort claims are barred by the gist of the action
doctrine, we will not undertake a review of the other two
issues.
This Court has found that the gist of the action
doctrine applies in Virgin Islands actions. Addie v. Kjaer, 737
F.3d 854, 868–69 (3d Cir. 2013). “[T]he ‘gist of the action
doctrine’ bars plaintiffs from bringing a tort claim that merely
replicates a claim for breach of an underlying contract.”
Werwinski v. Ford Motor Co., 286 F.3d 661, 680 n.8 (3d Cir.
2002) (applying Pennsylvania law). “[W]hile the existence of
a contractual relationship between two parties does not
prevent one party from bringing a tort claim against another,
the gist of the action doctrine precludes tort suits for the mere
breach of contractual duties”; the plaintiff must instead point
to “independent events giving rise to the tort.” Addie, 737
F.3d at 865–66. “[T]he important difference between contract
and tort actions is that the latter lie from the breach of duties
imposed as a matter of social policy while the former lie for
the breach of duties imposed by mutual consensus.” Bohler–
Uddeholm Am., Inc. v Ellwood Grp. Inc., 247 F.3d 79, 103
(3d Cir. 2001) (quotation marks and citation omitted).
A claim arises from contract, rather than social policy,
when it is one:
(1) arising solely from a contract between the
parties; (2) where the duties allegedly breached
were created and grounded in the contract itself;
(3) where liability stems from a contract; or (4)
where the tort claim essentially duplicates a
breach of contract claim or the success of which
is wholly dependent on the terms of a contract.
19
Id. at 866 (quoting eToll, Inc. v. Elias/Savion Advertising,
Inc., 811 A.2d 10, 19 (Pa. Super. Ct. 2002)).
The appellants assert that their tort claims are
supported by the public policy that sellers have a duty not to
distribute defective and unreasonably dangerous construction
products. This public policy argument, however, runs counter
to the gist of the action doctrine. The appellants’ negligence
and strict liability claims and alleged injuries arise solely
from the allegation that the purchased lumber was not
appropriately treated for use as building material in the Virgin
Islands: a breach of a duty established, if at all, from a
contract or warranty rather than a tort. The appellants have
not asserted any other injury to themselves or to renters of the
home. The appellants’ tort claims “essentially duplicate [the]
breach of contract claim[s].” Jefferson v. Bay Isles Assoc.,
L.L.L.P., Civil No. ST-09-CV-186, 2011 WL 3853332, 59
V.I. 31 at *10 (Super. Ct. Feb. 1, 2011) (quoting eToll, 811
A.2d at 19). As a result, the appellants’ tort claims are barred
by the gist of the action doctrine.
C.
The appellants’ DTPA claim against Putnam was
previously dismissed and was not appealed. The only DTPA
claims pending on appeal are those against Great Southern
and Paradise. Those claims are time-barred.
The appellants assert that the DTPA’s six-year statute
of limitations, which went into effect in October 2013, rather
than the two-year statute of limitations that was in place at the
time their complaint was filed in February 2013, applies. The
appellants’ assertion is incorrect.
The appellants argue that the six-year statute of
20
limitations applies because the Virgin Islands legislature
voiced social policy concerns in the amendment’s bill. The
text of the bill indicates that the legislature was concerned
that other states “provide greater protection to their citizens
and businesses while the laws of the Virgin Islands fail to
give the same strong protections and remedies.” Bill No. 30-
0123, 30th Leg., Reg. Sess. (V.I. 2013).
There is a presumption against applying legislation
that would revive otherwise untimely claims. This
presumption is based on the principle “that the legal effect of
conduct should ordinarily be assessed under the law that
existed when the conduct took place.” Kaiser Aluminum &
Chem. Corp. v. Bonjorno, 494 U.S. 827, 855 (1990) (Scalia,
J., concurring); see also Vartelas v. Holder, 132 S. Ct. 1479,
1486 (2012); In re Exxon Mobil Corp. Sec. Litig., 500 F.3d
189, 196 (3d Cir. 2007), as amended (Nov. 20, 2007). In
applying this presumption, we are guided by:
a two-part test for determining whether a
particular statute applies retroactively. At the
first stage, a court must determine if Congress
has expressly prescribed the statute’s intended
reach. If Congress has done so, the inquiry ends
. . . If the statute is ambiguous or contains no
express command, a court must examine
whether the statute would have an adverse
effect if it were held to be retroactive; that is to
say, “whether it would . . . increase a party’s
liability for past conduct . . . .”
Lieberman v. Cambridge Partners, LLC, 432 F.3d 482, 488–
89 (citation omitted) (quoting Landgraf v. USI Film Prods.,
511 U.S. 244, 280 (1994)).
21
The language used by the Virgin Islands legislature
and cited by the appellants does not meet the first step of the
Lieberman test. A social policy concern that consumers be
protected does not meet the specificity requirement that a
legislature enunciate an express and unambiguous intent that
expired claims should be revived. Thus, the appellants’
DTPA claims are subject to the two-year statute of limitations
unless the second Lieberman step is met.
The DTPA statute of limitations began “running from
the date the violation of the statute occurred, not the date the
violation was discovered.” Island Insteel Sys., Inc. v. Waters,
296 F.3d 200, 214 (3d Cir. 2002). Each DTPA claim that the
appellants have asserted and the applicable DTPA
enumerated prohibited activities—misrepresentation of the
quality or standard of the goods, or misrepresentation of a
material fact or failing to state a material fact “if such use
deceives or tends to deceive”—involve pre-sale conduct. See
V.I. Code tit. 12A, § 102; App. at 122–23 (appellants’ DTPA
claims only allege pre-sale conduct). Any DTPA violation
therefore occurred at the latest in December 2006 when the
last of the allegedly defective lumber was purchased.
Consequently, retroactively applying the six-year
statute of limitations period would impermissibly increase the
appellees’ liability. See Lieberman, 432 F.3d at 492
(explaining that “resurrection of previously time-barred
claims ‘increases a party’s liability’ by abolishing complete
defense to a suit” (quoting In re Enter. Mrtg. Acceptance Co.,
LLC Sec. Litig., 391 F.3d 401, 409-10 (2d Cir. 2005)).
Because the Lieberman test is not met, the appellants had to
file by December 2008 under the two-year statute of
limitations. They failed to do so and their DTPA claims are
22
time-barred.6
IV.
For the reasons set forth above, we will affirm the
order of the District Court.
6
Moreover, even if we were to apply the six-year
statute of limitations, which we have found does not apply,
the appellants’ DTPA claims are time-barred.
23