781 F.3d 972
8th Cir.2015Background
- E3 Biofuels (assignee of bankruptcy trustee) sued Biothane and Perennial Energy (PEI) after a 2007 boiler explosion during installation/start-up at an ethanol plant, alleging torts and breach of contract.
- Biothane contracted to supply and integrate two boilers (including design engineering); Biothane subcontracted installation/integration to PEI but retained overall responsibility.
- PEI engineer Ted Landers repeatedly attempted to light a boiler; gas accumulated and exploded. The boiler thereafter did not operate properly and the plant failed.
- E3 filed suit in 2011 (3 years, 364 days after the explosion). Defendants moved for summary judgment based on Nebraska’s two-year statute of limitations for professional negligence, Neb. Rev. Stat. § 25-222.
- The district court found diversity jurisdiction existed and granted summary judgment as time-barred; E3 appealed. The Eighth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject-matter jurisdiction (diversity) after assignment | Assignment from bankruptcy-related entity creates diversity; E3 is diverse | PEI: assignor/related-party citizenship (AltEn or assignor) destroys diversity or assignment was collusive | Court: assignment by bankruptcy trustee was proper; E3’s citizenship is that of its members; diversity exists |
| Whether defendants are "professionals" and provided "professional services" under § 25-222 | E3: defendants not professionals because personnel lacked Nebraska professional licenses | Defendants: engineering companies are professionals; they provided engineering/integration and supervision | Court: engineering firms are professionals; Biothane and PEI provided professional services (Biothane supervised/integrated) |
| Whether the act causing injury (lighting/testing boiler) was part of professional services | E3: lighting the boiler was ordinary (nonprofessional) negligence | Defs: lighting/testing occurred during installation/start-up as part of contracted engineering services | Court: acts occurred in the course of rendering professional services; § 25-222 could apply |
| Whether any longer limitations period equally applies (contract, general negligence, product liability, UCC) | E3: alternative statutes (5-yr contract, 4-yr negligence/builders/product/UCC) apply or are equally applicable | Defs: all claims arise from professional relationship, so § 25-222 displaces other periods | Court: Nebraska rule bars parsing claims; § 25-222 is the controlling statute; suit untimely and summary judgment affirmed |
Key Cases Cited
- OnePoint Solutions, LLC v. Borchert, 486 F.3d 342 (8th Cir.) (complete diversity and amount‑in‑controversy rules)
- Slater v. Republic‑Vanguard Ins. Co., 650 F.3d 1132 (8th Cir.) (standard of review for subject‑matter jurisdiction de novo)
- Knudsen v. United States, 254 F.3d 747 (8th Cir.) (factual statements in pleadings binding on party)
- Reinke Mfg. Co., Inc. v. Hayes, 590 N.W.2d 380 (Neb.) (engineers are professionals; professional‑services limitations apply)
- Georgetowne Ltd. P’ship v. Geotechnical Servs., Inc., 430 N.W.2d 34 (Neb.) (longer of equally applicable limitations governs)
- Churchill v. Columbus Cmty. Hosp., Inc., 830 N.W.2d 53 (Neb.) (test for whether defendant acted in a professional capacity)
- Stumpf v. Albracht, 982 F.2d 275 (8th Cir.) (two‑year professional malpractice statute applies when action arises from professional services)
- Olsen v. Richards, 440 N.W.2d 463 (Neb.) (acts undertaken while rendering professional services fall under professional malpractice statute)