Legislature Enacts Statute of Limitations for State

In a first step to curbing the unlimited enforcement powers of the State, the New Hampshire legislature has passed a law that will provide a three-year statute of limitations for the State when pursuing any personal or civil enforcement action. The new law becomes effective on January 1, 2018. Prior to the enactment of this law, the New Hampshire Supreme Court had concluded – in State v. Lake Winnipesaukee Resort, LLC, 159 N.H. 42, 45 (2009) – that the State had no time limit to pursuing an enforcement action under the centuries old common law doctrine of nullum tempus.

Late last year, in a case handled by Preti Flaherty attorneys Ken Rubinstein and Nathan Fennessy, the New Hampshire Supreme Court revisited the scope of nullum tempus in City of Rochester v. Marcel A. Payeur, Inc. et al. Case No. 2016-0212 (N.H. Dec. 13, 2016), finding that the doctrine did not apply in the context of a breach of contract action brought by a municipality. In reaching its decision in City of Rochester, the court showed skepticism toward the idea that the State, when acting as a private participant in the market, would enjoy the benefits of the doctrine in pursuing a breach of contract action.

Shortly after the decision in City of Rochester, the New Hampshire legislature took up the issue in the legislative session. The new law establishes that the State may not wait more than three years after obtaining “actual knowledge” of the wrongful conduct before pursuing an enforcement action or civil action unless the State “demonstrates the delay was not unreasonable or prejudicial to the defendant, or that the detriment to the public caused by the delay outweighs the detriment to defendant.” The law also provides that the “limitation shall not apply to any violation or wrong that is ongoing or has otherwise not been corrected.” Although the exceptions contained in the new law could swallow the rule, the enactment of a statute of limitation is a good first step to providing contractors with degree of certainty when their potential liability on a State project will end.