The doctrine of Nullum Tempus is a legal doctrine whereby ordinary statutes of limitation do not apply to the government unless they are specifically made applicable. When the State had enacted its most recent statutes of limitation, it was presumed that the statutory language was broad enough to evidence the State's intent to be bound by those time limitations.
Last November, in the case of State v Lombardo Brothers Mason Contractors, Inc. et. al., the Connecticut Supreme Court handed down a ruling which, it claimed, merely reaffirmed the common law doctrine of Nullum Tempus. However, as will be discussed below, by holding that nothing has changed, the Connecticut 1 Supreme Court has completely changed the way contractors, design and insurance professionals will have to approach public works projects.
The facts of the Lombardo Brothers case are relatively straightforward. The University of Connecticut system is a state-run university. The defendants were the various contractors who had worked on the design and construction of the library at the UConn Law School. Once the project was completed, the State found numerous defects with the construction which led to water infiltration. The state commenced its lawsuit in 2008 seeking reimbursement of the repair costs. It was not disputed that the case was brought well after the statutes of limitation expired. All parties moved to dismiss, and the State claimed that they were exempt under the Nullum Tempus doctrine. The Connecticut Supreme Court, relying on the "great public policy of preserving public rights, revenues, and property from injury and loss, by the negligence of public officers", affirmed that Nullum Tempus has always existed in Connecticut common law, and that in the absence of specific statutory language making statutes of limitation applicable to the State (which was not present), they could not serve as a bar to these otherwise untimely claims.
In essence, the Connecticut Supreme Court held Nullum Tempus has always been a part of Connecticut law. However, the reemergence of this doctrine long presumed dead has led to concerns throughout the public works construction industry. For instance, as a result of the Court's November 2012 decision, the design professional defendants here are defending a lawsuit relating to a building they designed between 18 and 20 years ago, and the contractor defendants are defending a lawsuit relating to a building they built between 16 and 18 years ago. The obvious issue which arises relates to records retention. In the digital age, this means not only retention of traditional paper records (which gets increasingly expensive when, as a practical matter, you cannot discard older records), but also the retention of obsolete software and computer systems capable of reading and showing plans, schematics and other documents which would be necessary to defend against these future claims.
Other practical considerations involve the sale and purchase of design firms. For instance, when you are purchasing a design firm, you are now purchasing (and effectively warranting) all of the past public work project designs the purchased firm undertook. Will the purchasing party's insurance policy cover all of these projects? Does the subject of the purchase have any insurance that will cover these projects? Further, to the extent that a licensed individual sealed any of these plans, would liability follow the individual through death and the probate of his estate? If so, this would have to be addressed when the individual set forth his estate plans.
Contractors will have to deal with similar issues relating to insurance and bonding. As a practical matter, insurance agents and sureties, in calculating the amount of premiums to charge for a particular policy or bond, previously presumed that there would be some period after which they could be assured that they would no longer be exposed to liability. Now, with potentially perpetual liability, the premiums for these products is sure to be adjusted accordingly. Further, and similar to the issue faced by design professionals, potential perpetual liability will affect the sale or transfer of the contractor. The purchasing contractor will be assuming the liabilities of the purchased contractor and will have to effectively warrant the purchased contractor's previous public work.
The above issues have been posed as open questions because the industry is only now coping with the effects of this decision. Clearly, each of the above issues, from document retention to effectively warranting the work of your predecessor to having to obtain insurance sufficient to cover claims made decades later, will impose a significant cost on design and construction firms undertaking state work. Accordingly, while the state may be trumpeting the Lombardo Brothers decision as a great victory, such a view may be shortsighted in light of the added costs which will necessarily find their way into competitive bids. As to the contractor or design professional looking to undertake such a project, they would be cautioned to discuss these perpetual liability issues with all those who they would normally involve in such a project (insurance and surety professionals, subcontractors and suppliers, amongst others) so as to ascertain the true cost of taking on the project so that these increased costs can be reflected in the bid.
1 New York and New Jersey courts have recognized the abolition of the Nullum Tempus doctrine in those states, while the doctrine is alive and well in Pennsylvania and Massachusetts.
If you have any questions about the information set forth in this Legal Alert, call us at 914-428-2100.