     Case: 11-40535     Document: 00511635960         Page: 1     Date Filed: 10/18/2011




            IN THE UNITED STATES COURT OF APPEALS
                     FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                     Fifth Circuit

                                                                            FILED
                                                                         October 18, 2011

                                     No. 11-40535                          Lyle W. Cayce
                                   Summary Calendar                             Clerk



COREY DALFREY; GILBERT JOINES,

                                                  Plaintiffs–Appellants
v.

BOSS HOSS CYCLES, INC.; B.H. WORKMAN & SONS INC.,


                                                  Defendants–Appellees



                   Appeal from the United States District Court
                        for the Southern District of Texas
                              USDC No. 3:11-CV-65


Before REAVLEY, SMITH, and PRADO, Circuit Judges.
PER CURIAM:*
        This case involves the interpretation of the Texas products liability statute
of repose in a personal injury suit arising out of a motorcycle accident. We find
that the district court correctly interpreted that statute and, therefore, AFFIRM
the district court’s grant of Boss Hoss Cycles’ motion to dismiss; however, we
REVERSE the district court’s dismissal of Appellants Corey Dalfrey’s and


        *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
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Gilbert Joines’s claims against B.W. Workman & Sons because those claims are
not “derivative” of the Appellants’ claims against Boss Hoss and are not barred
by the Texas products liability statute of repose.
           I. FACTUAL AND PROCEDURAL BACKGROUND
      Appellants Dalfrey and Joines were riding their motorcycles northbound
on Interstate 45 in Galveston County, Texas on August 15, 2009. Ahead of them
were Manuel and Renae Tezanos on their own motorcycle (the “Tezanos
motorcycle”). The Tezanos motorcycle experienced a rear axle failure resulting
in its crash. The rear axle failure of the Tezanos motorcycle also caused
shrapnel to fly back that, in part, caused Dalfrey and Joines to crash their
motorcycles.
      The Tezanos motorcycle was a 1995 Boss Hoss motorcycle. Appellee Boss
Cycles (“Boss Hoss”) operates by shipping motorcycle kits to those who order
them, and those people who order the kits are responsible for assembling the
motorcycles. In July 1995, Boss Hoss sent the kit that would become the
Tezanos motorcycle to Richardson Cycles in Fresno, California. Richardson
Cycles sold the Tezanos motorcycle to a consumer, Jason Teplitsky, in July 1997.
      After Teplitsky’s ownership but before the Tezanos purchased the
motorcycle, Butch Mullis owned the Tezanos motorcycle. Mullis hired Appellant
B.W. Workman & Sons (“Workman”) to fabricate a new key (the “Workman key”)
for the rear axle, which Workman did. This new Workman key was used in
reassembling the rear axle of the Tezanos motorcycle and was part of the
Tezanos motorcycle when the accident that gave rise to this suit occurred.
      On October 8, 2009, the Tezanos filed suit against Boss Hoss in Texas
state court, which Boss Hoss later removed to federal court. Dalfrey and Joines
were not party to the Tezanos’ October 2009 lawsuit but instead filed their own
lawsuit in Texas state court on December 23, 2010, raising a host of claims
against the Appellees. Boss Hoss removed that suit to the district court on

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February 2, 2011. One week later, Boss Hoss filed a motion to dismiss under
Federal Rules of Civil Procedure 12(b)(6) and 12(c). Dalfrey and Joines then
filed their first amended complaint, and Boss Hoss filed an amended motion to
dismiss. Dalfrey and Joines then filed a second amended complaint. On March
31, 2011, the district court dismissed all of Dalfrey’s and Joines’s claims against
both Boss Hoss and Workman. This appeal followed.
                            II. STANDARD OF REVIEW
        The appellate review standard for both a motion under Rule 12(b)(6) and
a motion under Rule 12(c) is de novo. Turbomeca, S.A. v. Era Helicopters LLC,
536 F.3d 351, 354 (5th Cir. 2008). To survive a motion to dismiss, “a complaint
must contain sufficient factual matter, accepted as true, to state a claim to relief
that is plausible on its face.” In re Great Lakes Dredge & Dock Co., 624 F.3d 201,
210 (5th Cir. 2010) (quoting Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009))
(internal quotation marks omitted). To meet this threshold of facial plausibility,
“the complaint’s factual allegations must be enough to raise a right to relief
above the speculative level.” Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S
544, 555 (2007)) (internal quotation marks omitted).                    In examining the
pleadings, we construe them “in the light most favorable to the plaintiff[s].” Id.
                                   III. DISCUSSION
A.      Boss Hoss
        The district court granted Boss Hoss’s motion to dismiss based on Texas’s
products liability statute of repose.1 That statute requires “a claimant [to]

        1
         Appellants urge error based on the fact that Boss Hoss never filed a motion to dismiss
Appellants’ Second Amended Complaint. Boss Hoss had a pending motion to dismiss
Appellants’ First Amended Complaint, but during the pendency of that motion, Appellants
filed their Second Amended Complaint. Since, as discussed below, the Second Amended
Complaint did not cure the defects from the First Amended Complain that caused the district
court to grant the motion to dismiss and the district court has the authority to dismiss a
complaint for failure to state a claim sua sponte, Lozano v. Ocwen Fed. Bank, FSB, 489 F.3d
636, 642 (5th Cir. 2007), there is no error applying Boss Hoss’s motion to dismiss to
Appellants’ Second Amended Complaint. See 6 Charles Alan Wright, Arthur R. Miller & Mary

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commence a products liability action against a manufacturer or seller of a
product before the end of 15 years after the date of the sale of the product by the
defendant.” Tex. Civ. Prac. & Rem Code § 16.012(b). The issue is whether the
operative “date of sale” for this action was the July 1995 date when Boss Hoss
sold the kit to Richardson Cycles, in which case the suit would be barred by the
statute, or the July 1997 date when Teplitsky, the first consumer, purchased the
assembled motorcycle from Richardson Cycles, in which case the suit would not
be barred by the statute.
      1.     Our Obligation under Erie
      Where federal jurisdiction is based on diversity, we apply the substantive
law of the forum state. Holt v. State Farm Fire & Cas. Co., 627 F.3d 188, 191
(5th Cir. 2010) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64[, 78] (1938)). “To
determine Texas law, we look to decisions of the state’s highest court, or in the
absence of a final decision by that court on the issue under consideration, we
must determine, in our best judgment, how the state’s highest court would
resolve the issue if presented with it.” Citigroup, Inc. v. Fed. Ins. Co., 649 F.3d
367, 371 (5th Cir. 2011) (internal quotation marks omitted). Here, the Texas
Supreme Court has not addressed the operative date of sale and so we are called
upon to make an “Erie guess.” Compliance Source, Inc. v. GreenPoint Mortg.
Funding, Inc., 624 F.3d 252, 259 (5th Cir. 2010) (internal quotation marks
omitted).
      Under Texas’s rules of statutory construction, “[w]e must construe statutes
as written and, if possible, ascertain legislative intent from the statute’s
language.” Helena Chem. Co. v. Wilkins, 47 S.W.3d 486, 493 (Tex. 2001). Our
starting point is the “plain and common meaning of the statute’s words[, and i]f
a statute’s meaning is unambiguous, we generally interpret the statute



Kay Kane, Federal Practice & Procedure § 1476 (3d ed. 1998).

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according to its plain meaning.” Texas ex rel. Texas Dep’t of Highways & Pub.
Transp. v. Gonzalez, 82 S.W.3d 322, 327 (Tex. 2002) (citations and internal
quotation marks omitted). That said, the Texas Supreme Court has said that
“[e]ven when a statute is not ambiguous on its face, we can consider other factors
to determine the Legislature’s intent.” Helena Chem., 47 S.W.3d at 493.
       2.     Application
       The interpretive difficulty with this statute is fixing the meaning of “date
of sale.”2 “A sale, in its most basic terms, includes the following elements: (1) the
thing sold, which is the object of the contract; (2) the consideration or price to be
paid for the thing sold; and (3) the consent of the parties to exchange the thing
for the price.” John Wood Grp. USA, Inc. v. ICO, Inc., 26 S.W.3d 12, 20 (Tex.
App.—Houston [1st Dist.] 2000, pet. denied). This definition conforms with
Black’s definition of sale. Black’s Law Dictionary 1454 (9th ed. 2009) (defining
sale as “the transfer of property or title for a price”) (citing U.C.C. § 2-106(1)).
By its “plain and common meaning,” sale is a broad term.
       Appellants contend that we should adopt a consumer-centric view of the
language and fix the operative date as when the product is sold to an end-user
or consumer. Appellants admit that there are no cases interpreting the Texas
statute of repose in this way. They point us to cases from other jurisdictions
interpreting statutes of repose as requiring the date of sale to be to the ultimate
consumer. See, e.g., Witherspoon v. Sides Const. Co., Inc., 362 N.W.2d 35, 40
(Neb. 1985). The cases cited by Appellants in support, however, are inapposite

       2
         Appellants also posit that “claimant” should be interpreted such that if any “party
seeking relief,” Tex. Civ. Prac. & Rem Code §§ 16.012(a)(1), 82.001(1), files an action within
fifteen years of the “date of sale” then the statute should be tolled to the advantage of
subsequent claimants who file actions after the fifteen year term of repose has lapsed. We
reject adopting this interpretation in light of the Texas Supreme Court’s rejection of tolling in
a case involving the Texas medical malpractice statute of repose, Methodist Healthcare Sys.
of San Antonio, Ltd., L.L.P. v. Rankin, 307 S.W.3d 283, 286 (Tex. 2010), and this court’s
refusal to toll this statute in a case involving CERCLA preemption. Burlington N. & Santa
Fe Ry. Co. v. Skinner Tank Co., 419 F.3d 355, 363–64 (5th Cir. 2005).

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to the interpretation of the Texas statute because those states’ statutes all
describe the statutory period in which to file suit as beginning with the “use” or
consumption of the product. See, e.g., N.C. Gen Stat. § 1-50(6) (2008) (fixing the
statutory period for suit at six years “after the date of initial purchase for use or
consumption”), amended by N.C. Gen. Stat § 1-46.1 (2010). The Texas statute
is undeniably broader, as the starting date is the unqualified “date of sale of the
product by the defendant [manufacturer or seller].” Tex. Civ. Prac. & Rem Code
§ 16.012(b).
       Appellees point out that according to the Texas products liability statute
of repose, a broad scope would not be unheard of. Appellees cite to three other
states’ statutes of repose that fix the date of sale as the first sale. See, e.g., 735
Ill. Comp. Stat.5/13-213(b). We think that based on Texas’s rules of statutory
construction and the plain meaning of the statute, the relevant “date of sale”
under the Texas products liability statute of repose is the date of first sale
regardless of whether that sale is to a consumer. Applying that definition to the
facts of this case, Boss Hoss sold the Tezanos motorcycle kit to Richardson
Cycles based on Richardson Cycles’ order and Richardson Cycle paid Boss Hoss
for that kit. Based on this deal, Boss Hoss delivered the Tezanos motorcycle kit
to Richardson Cycles in July 1995. As Appellants did not file their suit until
December 2010, more than fifteen years after the July 1995 date of sale, their
suit is barred under the Texas products liability statute of repose. Tex. Civ.
Prac. & Rem Code § 16.012(b). Therefore, the district court was correct in
dismissing Appellants’ claims against Boss Hoss.3

       3
         Appellants also urge error based on the fact that the district court considered evidence
from the Tezanos’ suit, which was beyond the pleadings, and did not convert Boss Hoss’s
motion to dismiss into a summary judgment motion. This is not error because we have held
that in considering a motion to dismiss, the district court may “take judicial notice of matters
of public record.” Norris v. Hearst Trust, 500 F.3d 454, 461 n.9 (5th Cir. 2007) (allowing the
district court to take judicial notice of a summary judgment in state court in ruling on a Rule
12(b)(6) motion).

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B.      Workman
        In addition to granting Boss Hoss’s motion to dismiss, the district court
sua sponte dismissed Appellants’ claims against Workman because they were
“derivative of its suit against Boss Hoss.” Dalfrey v. Boss Hoss Cycles, Inc., No.
3:11-CV-65, slip op. at 1 n.1 (S.D. Tex. Mar. 31, 2011). Perhaps, the district
court considered Appellants’ claims against Workman to be based on the
Tezanos motorcycle being a defective product under § 16.012(a)(2) of the Texas
Civil Practice and Remedies Code. If this were the case, then the statute of
repose would have begun running when Boss Hoss first sold the kit to
Richardson in July 1995 and would bar the Appellants’ claims. This is an
incorrect interpretation of the Appellants’ claims against Workman.          The
Appellants allege that Workman was negligent in designing and manufacturing
the Workman key that was put into the Tezanos motorcycle after Boss Hoss sold
the kit and after Richardson Cycles assembled it, but before the accident.
Workman’s defective product is not the Tezanos motorcycle as a whole but only
the Workman key. There is nothing to suggest, in the absence of any filings of
Workman, that the statute of repose has run on Appellants’ claims against
Workman nor any other reason that Appellants claims against Workman should
be dismissed. Therefore, we reverse the district court’s sua sponte dismissal of
Appellants’ claims against Workman.
                              IV. CONCLUSION
        For the foregoing reasons, we AFFIRM the district court’s dismissal of
Appellants’ claims against Boss Hoss but REVERSE the district court’s
dismissal of Appellants’ claims against Workman.




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