December 15, 2016 Article

Recent NH Supreme Court Opinion Changes the Scope of Liability for the Construction Industry

Construction Alert

NH Supreme Court rejects City’s bid to expand nullum tempus

Earlier this week, the New Hampshire Supreme Court issued a significant opinion holding that cities and towns are not exempt from the State’s statute of limitations in contract disputes.

In City of Rochester v. Marcel A. Payeur, Inc. et al., the City of Rochester sued multiple parties after a water tower that it had built in 1985 sprung a leak. New Hampshire has adopted the doctrine of nullum tempus, which means that statutes of limitations do not apply against the State. The question for this case was whether cities and towns are immune from statutes of limitation.

In rejecting the City’s argument, the NH Superior Court had focused on the nature of municipalities under New Hampshire law and determined that the policy underlying nullum tempus did not support the doctrine’s application to municipalities. The NH Supreme Court took a slightly different tact in affirming the trial court’s decision. Instead of focusing broadly on the nature of municipalities and their rights and responsibilities, the NH Supreme Court focused narrowly on the fact that the claims at issue were contract claims. The NH Supreme Court concluded that applying the doctrine to a municipality’s contract claims was not supported by the public policy underlying nullum tempus and actually would undermine the public policy underlying statutes of limitations.

This decision is a significant win for the New Hampshire construction industry and should help to limit the scope of liability for design professionals, contractors and subcontractors working on municipal projects by allowing the statute of limitations to establish an outside date within which claims can be presented.

Preti Flaherty attorneys Ken Rubinstein and Nathan Fennessy represented an ENR 50 Contractor who was named as a defendant in the litigation. McLane Middleton, representing a co-defendant, and Gagliuso & Gagliuso, representing amici Associated Builders and Contractors, also played important roles in securing this victory. 

For more information contact Kenneth E. Rubinstein, co-chair of the firm's Construction Law group.