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Saying he recognized that the result of his decision was “indeed harsh,” a federal judge has ruled that Pennsylvania’s two-year statute of limitations for auto accident cases cannot be tolled by the timely filing of a suit in U.S. District Court in New Jersey if that court was the wrong venue. And if the transfer of the case to the proper venue occurs after the statute of limitations has run, the case must be dismissed, U.S. District Judge Harvey Bartle III ruled. In his 15-page opinion in Lafferty v. St. Riel, Bartle found that the legal consequences of the transfer of a case from one federal court to another depend on the nature of the order. If the case is transferred “for the convenience of the parties” under Section 1404(a), Bartle said, courts apply the law of the state where the case was first filed. But if the case is transferred under Section 1406(a) due to improper venue, Bartle said, courts apply the law of the transferee state. For plaintiff Debra A. Lafferty, the distinction proved to be fatal to her case, Bartle found, because Pennsylvania law does not allow for tolling of the statute of limitations on the basis of a filing in a court outside Pennsylvania. “Unlike a transfer under Section 1404(a), a transfer under Section 1406(a) is not merely a change in courtrooms where the action can be properly filed and tried in either place,” Bartle wrote. According to court papers, Lafferty, a New Jersey resident, was driving in Lancaster County, Pa., on July 17, 2003, when she was struck by a truck driven by Gito St. Riel, an employee of Achenbach’s Pastries Inc. On July 11, 2005 — six days before the two-year statute of limitations was set to run — Lafferty and her husband filed suit in U.S. District Court in New Jersey. Lafferty’s husband, Randolph C. Lafferty, is an attorney with Youngblood Corcoran Lafferty & Hyberg in Linwood, N.J., and the case was filed by another lawyer in his firm, Daniel J. Cahill. Just 16 days later, U.S. District Judge Joseph E. Irenas transferred the case to the Eastern District of Pennsylvania after concluding that New Jersey was not the proper venue because the accident had occurred in Pennsylvania and both of the defendants resided in Pennsylvania. Court records show that after the case was transferred, the Laffertys were represented by attorney Arthur S. Novello of Dashevsky Horwitz DiSandro Kuhn & Novello in Philadelphia. Defense attorney Lloyd George Parry of Davis Parry & Tyler moved to dismiss the case as time-barred, arguing that the transfer occurred 10 days beyond the statute of limitations period. Novello responded by arguing that the federal courts have consistently held that a suit that is timely filed and later transferred cannot be dismissed on statute-of-limitations grounds. Now Bartle has sided with Parry, finding that Pennsylvania law does not allow for tolling of the statute of limitations unless the case is filed in a court within Pennsylvania — either a state court or one of Pennsylvania’s three federal courts. Under Section 5103(b)(1), Bartle said, Pennsylvania law “eliminates the need for a state court protective action when a lawsuit is filed in a Pennsylvania federal district court.” But Bartle found that the savings provision applies only to cases that begin in a federal court in Pennsylvania. “There are no provisions for tolling when a federal or state action is filed elsewhere,” Bartle wrote. “Nor is there anything in Section 5103(a) and (b)(1) which states that the filing in a federal transferor court outside of Pennsylvania constitutes the commencement of an action for statute of limitations purposes if it is later transferred to a Pennsylvania federal court,” Bartle wrote. In an interview, Parry said the Pennsylvania savings provision was designed to avoid the wasteful practice of filing parallel state court suits whenever a federal case presented both state and federal claims. Prior to the passage of the savings provision, Parry said, the plaintiffs lawyers in such cases routinely filed protective actions in state court to avoid being barred from pursuing their state claims in the event that the federal claims were dismissed. But Parry said the savings provision does not apply to cases filed in federal courts outside Pennsylvania. Novello urged Bartle to reject Parry’s argument, saying there was no basis for applying Pennsylvania procedural rules as substantive law in the federal courts. Adopting Parry’s argument, Novello said, would “serve to entirely usurp the authority of the federal courts and abrogate, in their entirety, the Federal Rules of Civil Procedure.” Instead, Novello argued that Bartle should apply only Rule 3 of the Federal Rules of Civil Procedure and hold that the case was timely filed. Bartle agreed that, if Rule 3 applied, Lafferty’s case would proceed because it would mean “the clock stopped on July 11, 2005, when the action was filed in the District of New Jersey.” But Bartle found that a series of decisions from the U.S. Supreme Court, beginning with the seminal 1938 decision in Erie R.R. Co. v. Tompkins, showed that state law must be applied when a federal court is presiding over a diversity suit. “For limitations purposes, the commencement of a diversity action is a matter of state, not federal, law. Rule 3 of the Federal Rules of Civil Procedure does not control,” Bartle wrote. “Accordingly, the statute of limitations for an action governed by Pennsylvania law is not tolled until it is commenced, that is, filed, with the prothonotary of a court of the commonwealth or in a federal court embraced within the commonwealth,” Bartle wrote. When a transfer occurs under Section 1406(a), Bartle said, courts must apply the law of the transferee state, including its statutes of limitations. Otherwise, Bartle said, “a plaintiff could use the accident of diversity jurisdiction to file in a district where venue is wrong or personal jurisdiction is absent in order to obtain the benefit of more favorable law, including a longer statute of limitations, than would be available if diversity did not exist.” Bartle concluded that “neither Rule 3 of the Federal Rules of Civil Procedure nor Section 1406(a) mandates the tolling of a Pennsylvania statute of limitations when a plaintiff files a diversity action in a federal court outside of Pennsylvania where venue is improper or personal jurisdiction is lacking and the action is later transferred to a federal court within Pennsylvania.” Instead, Bartle said, “only Pennsylvania law may do so. Unfortunately for plaintiffs, the commonwealth’s General Assembly has chosen to adopt limited saving provisions under Section 5103(a) and (b)(1).” In his closing paragraph, Bartle said he recognized that “the result for the plaintiffs is indeed harsh and puts them out of court, but the doctrine of Erie and its progeny compels this outcome.” Neither Cahill nor Novello could be reached for comment.

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