City of Rochester v. Marcel A. Payeur, Inc. & a.

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THE SUPREME COURT OF NEW HAMPSHIRE
___________________________
Strafford
No. 2016-0212
CITY OF ROCHESTER
v.
MARCEL A. PAYEUR, INC. & a.
Argued: October 6, 2016
Opinion Issued: December 13, 2016
Primmer Piper Eggleston & Cramer PC, of Manchester (Thomas J.
Pappas, Matthew J. Delude, and Adam R. Mordecai on the brief, and Mr.
Pappas orally), for the plaintiff.
Preti, Flaherty, Beliveau, & Pachios LLP, of Concord (Kenneth E.
Rubinstein and Nathan R. Fennessy on the brief, and Mr. Rubinstein orally),
for defendant Chicago Bridge & Iron n/k/a CB&I, Inc.
McLane Middleton, Professional Association, of Manchester (Jennifer L.
Parent and Nicholas F. Casolaro on the brief, and Ms. Parent orally), for
defendant Whitman & Howard n/k/a AECOM Technical Services, Inc.
Morrison Mahoney, LLP, of Manchester (Ralph N. Suozzo), for defendant
Marcel A. Payeur, Inc., filed no brief.
Sheehan, Phinney, Bass & Green, P.A., of Manchester (Peter S. Cowan),
for defendant Wright-Pierce, filed no brief.
Gagliuso & Gagliuso Professional Association, of Merrimack (Richard C.
Gagliuso on the brief), for Associated Builders and Contractors, New
Hampshire/Vermont Chapter, as amicus curiae.
LYNN, J. This is an interlocutory appeal by the plaintiff, the City of
Rochester (City), from an order of the Superior Court (Houran, J.) dismissing
the City’s claims against two of the four defendants it sued for damages. On
appeal, the City asserts that the trial court erred in refusing to apply the
doctrine of nullum tempus occurrit regi (“time does not run against the king”)
so as to exempt the City’s claims against defendants Chicago Bridge & Iron
n/k/a CB&I, Inc. (CB&I) and Whitman & Howard n/k/a AECOM Technical
Services, Inc. (AECOM) from the bar of the six-year statute of limitations that
was in effect when CB&I and AECOM substantially completed their contract
with the City. See RSA 508:4, I (1983) (amended 1986). We affirm and
remand.
I
The following facts are drawn from the interlocutory appeal statement.
The City’s Department of Public Works owns and operates the Rochester Water
System, which provides water to residents of the City. The City operates three
water storage tanks, one of which is the Rochester Hill Water Storage Tank (the
Tank). AECOM designed the Tank and oversaw its construction by CB&I.
CB&I completed the Tank in 1985, and it was placed into service that same
year.
In June 2009, the City contracted defendant Marcel A. Payeur, Inc.
(Payeur) to service the Tank by recoating the Tank’s interior and exterior,
installing a mixer, and modifying the Tank to accommodate the mixer.
Defendant Wright-Pierce, a Maine corporation, performed the engineering and
design work for the modification project. Payeur substantially completed the
modification, under Wright-Pierce’s supervision, in November 2009.
In December 2011, the Tank developed a leak. The City had to evacuate
nearby residents, drain the Tank, and remove it from service. The City
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inspected the Tank and discovered that Payeur had failed to properly construct
the modifications in accordance with Wright-Pierce’s design.
The City filed suit against Payeur in November 2012, alleging breach of
contract, breach of warranty, negligence, and unjust enrichment. In April
2014, the City named CB&I, AECOM, and Wright-Pierce as additional
defendants. The City’s amended complaint alleged that Wright-Pierce had
failed to properly supervise Payeur’s 2009 modification work; it also alleged
that, in 1985, CB&I had failed to properly construct the Tank in accordance
with AECOM’s design, and AECOM had failed to adequately monitor CB&I.
CB&I and AECOM moved to dismiss the City’s claims against them,
arguing that the claims were time-barred by RSA 508:4. The City objected,
arguing that the doctrine of nullum tempus precluded the statute of limitations
from running against the City. The trial court granted CB&I and AECOM’s
motions to dismiss. Thereafter, the trial court approved, and we accepted, this
interlocutory appeal.
II
The statute of limitations is an affirmative defense and thus a matter as
to which defendants CB&I and AECOM bear the burden of proof. Glines v.
Bruk, 140 N.H. 180, 181 (1995). However, in ruling on the motion to dismiss,
the trial court assumed the factual allegations of the complaint to be true, and
ruled as a matter of law that the doctrine of nullum tempus was inapplicable
and that the statute of limitations barred the City’s claims against CB&I and
AECOM. Therefore, our review is de novo. See State v. Lake Winnipesaukee
Resort, 159 N.H. 42, 45 (2009) (“Because the trial court rejected the statute of
limitations defense as a matter of law, our review is de novo.”).
The City submits two issues for our review: (1) “Whether the doctrine of
nullum tempus applies to municipalities to bar the application of statutes of
limitation[s] to claims brought by a municipality”; and (2) “Whether the
doctrine of nullum tempus bars the application of RSA 508:4 to the City’s
claims here.”
III
“The doctrine of nullum tempus is a common law rule excepting the
sovereign from general limitations periods.” Lake Winnipesaukee Resort, 159
N.H. at 45. Although “nullum tempus endures as a recognized doctrine of law
in New Hampshire,” id., our case law applying the doctrine is sparse.1 We
1The historical justification for the doctrine is that the king (and, by analogy, modern day
sovereigns) cannot be expected to be as vigilant as individuals are in preserving their rights.
State v. Franklin Falls Co., 49 N.H. 240, 252 (1870). Sovereigns are impersonal and thus are
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applied the doctrine in Lake Winnipesaukee Resort, when we held that nullum
tempus exempted a state civil enforcement action from the current three-year
statute of limitations for personal actions, RSA 508:4, I (2010). Lake
Winnipesaukee Resort, 159 N.H. at 45-49. In In re Dockham Estate, 108 N.H.
80, 82 (1967), we declined to apply nullum tempus to bar the application of a
non-claim statute of limitations to a state action to recover an inmate’s cost of
care from his estate. But see Reconstruction &c. Corp. v. Faulkner, 100 N.H.
192, 194 (1956) (holding that a non-claim statute did not preclude a federal
government agency from asserting its claim after the running of the limitations
period). Additionally, we note that the New Hampshire legislature has codified
the doctrine with respect to adverse possession and prescriptive easements.
See RSA 236:30 (2009) (prohibiting prescriptive periods from running against
public highways); RSA 477:33 (2013) (prohibiting, in some circumstances, the
acquisition of prescriptive rights in state waters); RSA 477:34 (2013)
(prohibiting the acquisition of prescriptive rights in public grounds); RSA 539:6
(2007) (prohibiting adverse possession of state lands).
We have not previously determined whether nullum tempus applies to
claims asserted by municipalities.2
IV
The City urges us to apply the doctrine of nullum tempus to its contract
claims against the defendants. We decline to do so because applying nullum
tempus to a municipality’s contract claims is not supported by the public
limited to acting through agents such as state officials, who “are generally few in number and
fully occupied with the regular routine of official duties.” Id. Therefore, the doctrine is thought
to further “the great public policy of preserving the public rights, revenues, and property from
injury and loss, by the negligence of public officers.” Lake Winnipesaukee Resort, 159 N.H. at
45 (quotation omitted).
2 Other states faced with this issue have dealt with it in different ways. Some states do not extend
nullum tempus to municipalities in any circumstances. See, e.g., City of Lincoln, Neb. v.
Windstream Nebraska, Inc., 800 F. Supp. 2d 1030, 1035 (D. Neb. 2011) (“[N]ullum tempus . . .
only applies in favor of the sovereign power, and has no application to municipal corporations
. . . .” (quotation omitted)). Other states extend nullum tempus to municipalities to the same
extent that they apply the doctrine to their state government. See, e.g., Enroth v. Memorial Hosp.
at Gulfport, 566 So. 2d 202, 206 (Miss. 1990) (recognizing that, by state constitution and statute,
nullum tempus applies to state and all political subdivisions of state, including municipalities).
The remaining states that have addressed the issue apply nullum tempus to municipalities in a
limited fashion, using a variety of tests to determine when it applies. See, e.g., Fennelly v. A–1
Machine & Tool Co., 728 N.W.2d 163, 170 (Iowa 2006) (“[N]ullum tempus doctrine does not
exempt actions by municipalities and counties in Iowa from a general statute of limitations unless
the action involves a public or governmental activity, as opposed to a private or proprietary
activity.”); State v. Goldfarb, 278 A.2d 818, 822 (Conn. 1971) (“[A] subdivision of the state, acting
within its delegated governmental capacity, is not impliedly bound by the ordinary statute of
limitations.”); Brown v. Trustees of Schools, 79 N.E. 579, 579-80 (Ill. 1906) (applying nullum
tempus to municipalities with regard to “public rights” and “property held for public use,” but
declining to apply nullum tempus to municipalities with regard to “contracts or mere private
rights”).
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policy underlying nullum tempus and undermines the public policy underlying
statutes of limitations.3
The public policy supporting application of nullum tempus to adverse
possession claims against public property and state civil enforcement actions
does not support extending the doctrine to a municipality’s contract claims. In
cases of adverse possession, the very basis for the claim is that the claimant
has committed a trespassory invasion of the owner’s property rights that
continued for the applicable limitations period. See, e.g., Bonardi v.
Kazmirchuk, 146 N.H. 640, 642 (2001). “[T]he nature of the use must have
been such as to show that the owner knew or ought to have known that the
right was being exercised, not in reliance upon the owner’s toleration or
permission, but without regard to the owner’s consent.” Sandford v. Town of
Wolfeboro, 143 N.H. 481, 484 (1999) (emphasis added; brackets and quotation
omitted). Given the vast extent and wide variety of publicly-owned land, water
and easement rights, as well as governmental bodies’ need to rely on the finite
universe of public employees, who are otherwise occupied with their regular
duties, to detect encroachments on these rights, application of the doctrine of
nullum tempus to adverse possession claims serves the important purpose of
protecting public property rights from loss that could otherwise result from
failure to detect unknown encroachments.
Similarly, in the case of enforcement actions to recover fines or penalties
for violations of state statutes or local ordinances, governmental agents are not
always able to promptly discover the existence of such violations. State agents
“do not generally institute proceedings to punish violations of the laws, except
at the instigation of individuals.” State v. Franklin Falls Co., 49 N.H. 240, 252
(1870). As a result, “it may be doubted whether [government officials] are ever
aware of a very large proportion of the infringements on the rights of the state.”
Id. Thus, again in this context, nullum tempus operates to protect the public
good by preventing wrongdoers from benefitting from the limitations inherent
in governmental bodies’ enforcement prowess, to the detriment of public rights.
Conversely, public bodies such as municipalities are aware of the
contracts into which they enter. Thus, a municipality’s contractual
undertakings are unlikely to lead to unknown violations of public rights.
Rather, municipalities generally are as equipped as private individuals to
vigilantly enforce their contract rights in a timely fashion. Furthermore, when
a municipality enters into a contract, it acts as does any private party: “[A]
municipal corporation is bound by, and may sue and be sued on, all contracts
which it may legally enter into in the same manner as a private corporation or
3The City argues that if we apply nullum tempus to municipalities on a limited basis, we should
use either an “ultimate right at issue” test or a “discretionary function” test to determine when the
doctrine applies. However, in light of our holding, we need not decide at this time whether the
ultimate right at issue test, discretionary function test, or another test would be proper.
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an individual.” Great Lakes Aircraft Co. v. City of Claremont, 135 N.H. 270,
278-79 (1992) (quotation omitted); see also RSA 31:3 (2000) (authorizing
municipal corporations to make contracts); RSA 31:1 (2000) (stating that
municipalities may sue and be sued).
Additionally, municipalities cannot raise sovereign immunity as a
defense to contract claims. See Great Lakes, 135 N.H. at 279 (“The immunity
of government from liability on contracts has never been regarded as applicable
to local governmental units.”). Although sovereign immunity and nullum
tempus are distinct doctrines, both have their origins as incidents of
sovereignty. See Lake Winnipesaukee Resort, 159 N.H. at 45; Sousa v. State,
115 N.H. 340, 342 (1975). Thus, a municipality’s inability to raise sovereign
immunity as a defense to contract claims demonstrates that when a
municipality enters a contract, it is acting as does a private party and not as a
sovereign.
In sum, municipalities enter into contracts in the same manner as
private parties, and they are equally equipped to assert their contract rights as
are private parties. Because municipalities are not at a disadvantage to assert
their contract rights, the doctrine of nullum tempus is not necessary to protect
the public’s interest in those rights.4
Allowing a municipality to bring contract claims notwithstanding RSA
508:4 would undermine the public policy behind statutes of limitations.
Statutes of limitations “reflect the fact that it becomes more difficult and time-
consuming both to defend against and to try claims as evidence disappears and
memories fade with the passage of time.” Keeton v. Hustler Magazine, Inc., 131
N.H. 6, 14 (1988). Statutes of limitations both insure that defendants receive
timely notice of actions against them and protect defendants from stale or
fraudulent claims. Id. at 14; Dupuis v. Smith Properties, Inc., 114 N.H. 625,
629 (1974). “Such statutes thus represent the legislature’s attempt to achieve
a balance among State interests in protecting both forum courts and
defendants generally against stale claims and in insuring a reasonable period
during which plaintiffs may seek recovery on otherwise sound causes of
4 The City argues that RSA 477:33, RSA 477:34, and our case law support the application of
nullum tempus to municipalities. To the extent that the City contends that these authorities
support the application of nullum tempus to a municipality’s contract actions, we disagree for the
reasons stated in the text. Although RSA 477:33 and RSA 477:34 prohibit individuals from
acquiring prescriptive rights against public lands and state waters, which mirrors the effects of
nullum tempus, the statutes are silent regarding the common-law nullum tempus doctrine, both
generally and as applied to contract actions. The City also relies upon our case law for the
principle that “[a] public right once acquired cannot be lost to an individual by adverse use.”
Windham v. Jubinville, 92 N.H. 102, 104 (1942); see also Manchester v. Hodge, 74 N.H. 468, 470
(1908); Thompson v. Major, 58 N.H. 242, 244 (1878). However, each of these cases involved
adverse possession of public highways or lands, which is prohibited by statute. Consequently,
these cases provide no support for the application of nullum tempus to a municipality’s contract
action.
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action.” Keeton, 131 N.H. at 14. Because statutes of limitations are grounded
in public policy, parties cannot agree by contract made in advance of the
accrual of a cause of action for breach to extend or avoid application of the
limitations period. See West Gate Village Assoc. v. Dubois, 145 N.H. 293, 299
(2000).
Here, the trial court ruled that the City’s claims were time-barred by RSA
508:4 unless nullum tempus operated to exempt the City’s claims from that
statute of limitations. The former version of RSA 508:4 that governs this case
bars contract claims after six years, and the City did not bring its claims until
many years after the expiration of the limitations period. Permitting the City to
bring its contract claims would unfairly subject the defendants to the harms
against which statutes of limitations were designed to protect. Employees of
the City and the defendants may have changed jobs, retired, or died. The
memories of those witnesses that can still be located will no doubt have faded.
Other physical evidence may have been lost or destroyed. Furthermore,
because the defendants would not have expected such a stale claim to be
enforceable, they had no incentive to preserve evidence. Therefore, because the
passage of time has made it more difficult for the defendants to defend against
the City’s claims, it would be unfair and would undermine the public policy
supporting statutes of limitations to allow the City to bring its twenty-nine-
year-old contract claims.
Because applying the doctrine of nullum tempus to a municipality’s
contract claims is not supported by the public policy underlying nullum
tempus and undermines the public policy underlying statutes of limitations, we
conclude that nullum tempus does not bar the application of RSA 508:4 to the
City’s contract claims. Therefore, we affirm the trial court’s grant of the
defendants’ motions to dismiss. In light of our holding, we need not decide at
this time whether municipalities, in other contexts, may properly invoke
nullum tempus.
Affirmed and remanded.
DALIANIS, C.J., and HICKS, CONBOY, and BASSETT, JJ., concurred.
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