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Armendariz v. Santa Fe County Board of Commissioners

United States District Court, D. New Mexico

August 6, 2018

GABRIEL ARMENDARIZ, ERIC DION COLEMAN, JACOB GOMEZ, TONY LOVATO, MATTHEW J. LUCERO, EDWARD R. MANZANARES, JOE MARTINEZ, CHRISTOPHER MAVIS, PHILIP TALACHY, FELIPE J. TRUJILLO, and JOSEPH VIGIL, on their own behalf and on behalf of a class of similarly situated persons, Plaintiffs,
v.
SANTA FE COUNTY BOARD OF COMMISSIONERS, and MARK GALLEGOS, in his individual and official capacity, and INDUSTRIAL COMMERCIAL COATINGS, LLC, Defendants.

          MEMORANDUM OPINION AND ORDER DENYING MOTION TO DISMISS PLAINTIFFS' THIRD CAUSE OF ACTION

         THIS MATTER comes before the Court upon a Motion to Dismiss Plaintiffs' Third Cause of Action (Claims Arising Under the New Mexico Tort Claims Act), filed on March 20, 2018 by Defendants Santa Fe County Board of Commissioners and Mark Gallegos (“County Defendants” or “Defendants” for purposes of this motion) (Doc. 59). Having reviewed the parties' briefs and applicable law, the Court finds that Defendants' motion is not well-taken and, therefore, is denied. The Court finds that class action tolling principles do not apply to Plaintiffs' state law claims. However, these claims survive because the Court also finds that Defendants have waived the statute of limitations defense, are estopped from asserting the defense, and that Plaintiffs' state law claims are equitably tolled.

         BACKGROUND

         This case is a putative class action arising from Defendants' renovation of the shower facilities at the Santa Fe Adult Correctional Facility (“ACF”) in 2014 when Plaintiffs and the class members were inmates at the ACF. Plaintiffs allege that they were exposed to dust, debris, and hazardous chemicals, which caused them injury.

         This federal action is a continuation of a prior state court class action by Plaintiffs, Case No. D-101-CV-2016-00671 in the First Judicial District Court, County of Santa Fe, State of New Mexico. The state court action was filed on March 11, 2016 by two of the named Plaintiffs in this case, Joe Martinez and Christopher Mavis, on their own behalf and on behalf of a class of similarly situated persons. The state court action raised timely claims under the New Mexico Tort Claims Act, NMSA 1978, §§41-4-1 et seq, and according to Plaintiffs, was brought within the two year limitations period set forth in NMSA 1978, § 41-4-15. See Doc. 63 at 1-5.

         The federal case was initiated on March 14, 2017 when Plaintiffs Mavis and Martinez joined with additional named Plaintiffs to file a Class Action Complaint for Damages Under 42 U.S.C. § 1983 (Doc. 1). The federal action brought claims under 42 U.S.C. § 1983 against the County Defendants on behalf of the Plaintiffs and a class of similarly situated persons based on the same underlying facts as the state court action. After Plaintiffs filed the original complaint in the federal case, parties agreed to litigate the two cases together in this case in federal court to conserve resources of both the parties and the courts. See Doc. 63 at 1-5. As part of that agreement, Plaintiffs were granted leave to amend the complaint to add Industrial Commercial Coatings, LLC (“ICC”) as a Defendant and to include Plaintiffs' claims against ICC, Santa Fe County and Gallegos under the New Mexico Tort Claims Act and New Mexico common law. Following the filing of the amended complaint, Plaintiffs dismissed the state case without prejudice.

         The currently filed complaint states four causes of action:

(1) Deprivation of Civil Rights under 42 U.S.C. §1983 against County Defendants;
(2) Supervisory Liability under §1983 against County Defendants;
(3) Claims under the New Mexico Tort Claims Act, NMSA 1978, ¶41-4-7 and §41- 4-12 against County Defendants; and (4) Claims against Defendant ICC under New Mexico Common Law.

Doc. 20. The Court recently allowed Plaintiffs to file an amended complaint to add what the Court considered to be minor changes, leaving intact the above description of the four causes of action. Doc. 128.

         DISCUSSION

         This motion concerns only the claims in the Third Cause of Action brought under the New Mexico Tort Claims Act, NMSA 1978, §41-4-7 and §41-4-12 (“Tort Claims Act”) against the County Defendants, with these defendants seeking dismissal of those claims because they are barred by the two-year statute of limitations. Defendants argue:

• Plaintiffs' state law claims under the Tort Claims Act) against the County Defendants are barred by the statute of limitations;
• The two-year statute of limitations was not tolled by the prior state court action filed by Plaintiffs Mavis and Martinez; and
• Even if a principle of cross-jurisdictional class action tolling applied, it would apply only to subsequent “individual” lawsuits by putative class members and not to successive class actions.

         Plaintiffs contend that class action tolling principles apply to their state law claims and if not, the Court should find that Defendants have either waived the limitations defense or that they should be estopped from asserting it.

         Plaintiffs' alleged injuries occurred in the spring of 2014, and so to be timely under the Tort Claims Act, the complaint should have been filed before the end of spring 2016, within the two-year limitations period of the Tort Claims Act. See NMSA §41-4-15(A). Instead, the complaint was filed on March 14, 2017, almost three years after the date of the alleged incidents resulting in harm and one year too late. Plaintiffs do not dispute the chronology or the fact that the Tort Claims Act limitations period has run on these claims, but they maintain that the filing of the state court case suspended the tolling of the statutory clock. Thus, the Court's inquiries here will be twofold:

• whether class action tolling principles apply; and if not,
• whether Defendants should be estopped from asserting a statute of limitations defense and allow Plaintiffs' claims to be equitably tolled.

         I. Class Action Tolling Principles

         A. Relevant Law

         The Supreme Court first addressed the interplay of class actions and statutes of limitations more than four decades ago. In American Pipe & Construction Co. v. Utah, 414 U.S. 538, 544, 552-53 (1974), the Supreme Court concluded that a timely-filed complaint seeking relief on behalf of a class under Rule 23 of the Federal Rules of Civil Procedure suspends the running of the statute of limitations for potential class members, and that, upon the denial of class certification, members of the unsuccessful class may intervene in the original case without erosion of their claims to the statute of limitations. 414 U.S. 538, 544, 552-53 (1974). The Court's stated purpose was to promote “efficiency and economy of litigation” which is a “principle purpose” of Rule 23. Id. at 553. In a case decided nine years later, the Court concluded that so-called American Pipe tolling applies not only when members of the pleaded class intervene in the original suit, but also when they file their own individual cases. Crown, Cork & Seal Co. v. Parker, 462 U.S. 345, 350, 353-54 (1983). There remained an open question in the wake of both these cases: did these tolling principles also apply to subsequent class actions?

         The Supreme Court answered this question very recently in China Agritech, Inc. v. Resh, holding that the equitable tolling rule does not apply to subsequently filed class action claims.[1]138 S.Ct. 1800 (2018). Thus, while American Pipe allows a putative class member to file an individual claim upon denial of class certification even if the statute of limitations would have by that time otherwise run out, China Agritech does not permit the maintenance of a follow-on class action past the expiration of the statute of limitations. The Court explained that “[e]ndless tolling of a statute of limitations is not a result envisioned by American Pipe.” 138 S.Ct. at 1809.

         B. Tolling Argument

         It is undisputed that this federal action was filed in March 2017, three years after the alleged injuries occurred and one year past the two-year limitations period under the Tort Claims Act. The question is whether the initial state court action tolled the running of the clock under the American Pipe rule.

         Defendants contend that Plaintiffs have no basis for any claimed tolling because the federal tolling rule in American Pipe does not provide that a state law class action filed in state court tolls the limitations period of a later cause of action filed outside that state's judicial system, that is, in another state or in the federal courts. Defendants point out that because Plaintiffs' Tort Claims Act claims arise under New Mexico law, this Court must apply New Mexico law and cannot allow Plaintiffs to assert claims in federal court that would be barred in a New Mexico court under the state's statute of limitations. See Erie Railroad v. Tompkins, 304 U.S. 64, 78 (1938); see also Leavens v. Foster, 132 F.3d 43 (10th Cir. 1997) (courts cannot give a cause of action a “longer life” in federal court than it would have had in the state court” (relying on application of Erie to diversity cases). The Court agrees that American Pipe itself does not provide a tolling mechanism for Plaintiffs' state law claims unless Plaintiffs can show that New Mexico would apply that federal rule to state law claims.

         Defendants claim that the state legislature has not provided for class-action tolling, and no New Mexico case has adopted American Pipe.[2] They refer to Barela v. Showa Denko K.K., a case from the District of New Mexico, where the plaintiff sought to bring state common law claims in a diversity action in federal court, despite the running of the applicable statutes of limitations. No. Civ. 93-1469 LH/RLP, 1996 WL 316544, at *3 (D.N.M. Feb. 28, 1996). The plaintiff argued that her claims were tolled during pendency of two prior class action lawsuits- one filed in the District of Maryland and another in the District of New Mexico-in which she was a putative class member. Id. at *2. Under Erie, the court was required to apply New Mexico state law to determine if the prior class action lawsuits served to toll the statute of limitations. The court concluded that American Pipe did not apply to the case because New Mexico had no statute providing such tolling and had yet to address whether American Pipe should be used to toll the statute of limitations for putative class members. Id. at *3-4 (“This Court does not believe that any overriding federal interest in class actions mandates application of American Pipe . . . in the absence of applicable state tolling law.”). Because American Pipe has no direct application to parallel state procedures, Defendants contend that Plaintiffs cannot rely on this federal tolling rule to toll their state law claims, and they should be dismissed.

         Plaintiffs distinguish Barela to minimize its impact. First, they claim that Barela did not address the issue at stake here. Barela addressed “whether the New Mexico Supreme Court would toll the New Mexico statutory period during the pendency of a class action brought outside its judicial system--in another state or in the federal courts.” 1996 WL 316544 at *4. They describe the issue here as whether the American Pipe rule applies to state court class actions, but the Court finds this to be too simplistic a description. Plaintiffs would have the Court consider this federal action to be a continuation of the state court class action. See Doc. 63 at 20 (“This action is not a “subsequent” class action; it is a continuation of the timely class action that was initially filed in state court.”). However, this case involves two class actions, one that was filed in state court and then voluntarily dismissed by Plaintiffs and the other one that was filed a year later in federal court (the instant action).[3] Second, Plaintiffs note that in a footnote, the court in Barela acknowledged that its holding was contrary to two opinions authored by the Hon. E.L. Mechem, Senior United States District Judge for the District of New Mexico in which Judge Mechem concluded that the New Mexico Supreme Court would apply American Pipe tolling in almost identical circumstances to the case at bar. Barela, 1996 WL 316544 at *2 n.4.

         Plaintiffs also contend that there is one New Mexico appellate decision that addresses the American Pipe rule demonstrating that New Mexico would follow it and its principles under the right circumstances. In Butler v. Deutsche Morgan Grenfell, Inc., a group of shareholders sued a corporation and its officers for fraud, misrepresentation, breach of fiduciary duty and violations of state securities law. 2006-NMCA-084, ¶ 19, 140 N.M. 111, 117. (Ct. App. 2006). The putative class action complaint was filed in 1997 in state court and in 2003, Butler joined as a defendant. His answer included cross-claims, counter claims and third-party claims, asserting several causes of action including defamation and antitrust violations. The court found all Butler's claims time-barred, and Butler contended that the American Pipe rule for putative class members applied to him, courtesy of the filing of the original complaint. The New Mexico Court of Appeals found that:

(1) the American Pipe rule of equitable tolling for putative class members did not apply to Butler because he was a defendant in the original class action and did not belong to the category of persons intended to be protected by the American Pipe rule; and
(2) the policy underlying the rule would not be served by allowing Butler to take advantage of tolling principles. The purpose of a statute of limitations is to “put defendants on notice of adverse claims and to prevent plaintiffs from sleeping on their rights, ” but the filing of the class action complaint would not have alerted defendants in that case to any of Butler's claims. Thus, there would be no reason to apply the tolling rule.

Id., 140 N.M. at 116-117. Defendants dismiss any significance to Butler because the New Mexico Court of Appeals finally concluded that it did not apply to the situation presented. Plaintiffs' view is that the Butler court applied the American Pipe rule to the particular facts of the case without any analysis or debate about whether the rule or its principles should be applied in New Mexico. In the end, the court did not apply the tolling rule was because the particular circumstances did not fit within its purpose-not ...


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