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New Hampshire Supreme Court Refuses to Extend Statute of Limitations for Municipalities in Public Construction Context

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            In the matter of City of Rochester v. Marcel Payeur et al., the New Hampshire Supreme Court had occasion to consider whether the common law doctrine of Nullum Tempus Occurit Regi (literally “time does not run against the king”) tolled the the statute of limitations against breach of contract claims against private entities filed by municipalities.

            The doctrine of Nullum Tempus derives from common law and serves to protect the public’s interest in public rights and revenue and against injury to public property and lands.  The policy underlying the doctrine suggests that it is in the public’s interest to toll the statute of limitations for claims asserted by the government because the government is in a disadvantaged position to enforce the public’s rights against injury vigilantly, as the government’s agents are too few in number and too occupied with ordinary governmental duties to prevent or redress injuries to public rights seasonably.

            In the instant matter, the City of Rochester engaged the primary defendant to recoat a public water tank, to modify the tank and to install a mixer in the tank.  After the work was performed, the tank developed a leak.  During the investigation of the leak, the City of Rochester determined that in addition to improper modification work, the tank was constructed improperly when it was built.  The construction of the tank was completed in 1985.  Following its investigation, the City of Rochester filed suit against the contractor that performed the repair and modification work and the contractor that built the tank in 1985, among others.  The company that initially built the tank moved to dismiss the claims against it citing the statute of limitations found in NH RSA 508:4.  The Superior Court agreed with the company, and dismissed the claims against it as time barred.  The City of Rochester appealed.

            On appeal, the New Hampshire Supreme Court affirmed the trial court ruling.  In the opinion, the court reasoned that the public policy rationale supporting Nullum Tempus was inapplicable to municipal contracts, because municipalities function like private parties in the contracting context.  The court determined that municipalities are not disadvantaged in their contractual relationships and are equally equipped as private parties to enforce the terms of their agreements.  Accordingly, the court concluded that public policy ends advanced by Nullum Tempus were not served by application of that doctrine in connection with municipal contracts with private entities.  

            Additionally, the court resolved that applying Nullum Tempus in this circumstance would undermine the public policy interests supporting the statute of limitations.  Namely, that permitting municipalities to assert claims against contractors on an almost limitless basis would be contrary to the policy end of providing defendants timely notice of claims against them, which protects defendants from stale claims.  Further, the court noted that in this context, Nullum Tempus would likely subject contractors to claims that would be unduly difficult to defend, costly, and time-consuming, due to faded memories, lost or destroyed evidence and witnesses that may be dead, unavailable or simply not able to be located after a long passage of time.  In short, the court determined that the policy interests supporting the application of statute of limitations were more compelling in this context than those supporting Nullum Tempus.  Accordingly, the court affirmed the Superior Court’s dismissal of the claims as time barred.

              The decision in City of Rochester is a favorable one for contractors and subcontractors.  Not only does it reaffirm contractors’ expectations regarding the duration of their potential exposures, it signals the New Hampshire Courts’ intention to treat municipalities more like private entities in contracting.  For contractors, this decision should provide more certainty that municipalities will be held to the terms of the agreements they reach with private entities performing work for them.  Contractors, however, should anticipate that sophisticated municipalities will take additional steps to limit future exposures of this kind in light of the court’s decision.  As a result, contractors should exercise care in reviewing the terms of contracts with municipalities subsequent to this decision.  In order to limit exposure and fully understand the risks associated with any municipal contract, contractors should review proposed contracts with their New Hampshire construction attorney.