NH Supreme Court Limits Applicability of Consumer Protection Act to Construction Defect Cases

The New Hampshire Supreme Court confirmed in Murray v. McNamara, No. 2013-630 (N.H. March 20, 2015) that contractors are exempt from liability under New Hampshire’s Consumer Protection Act (RSA 358-A) for transactions occurring more than three years prior to the plaintiff learning of the alleged violation of the statute (though they may still have liability under other causes of action).  This issue arose in the context of a construct defect claim based on defendants’ purported breach of the implied warranty of workmanlike quality.  The defendants, owners of a construction business, constructed the house for the original owner in 2004.  Four years later, the plaintiffs purchased the home. After living in the house for several months, the plaintiffs discovered mold in in the house that was so widespread it forced them to vacate the property while they attempted to remedy the problem. 

The Defendants argued that the transaction was exempt from liability under the CPA because it was brought more than three years after construction was completed.  RSA 358-A:3, IV-a provides that “[t]ransactions entered into more than 3 years prior to the time the plaintiff knew, or reasonably should have known, of the conduct alleged to be in violation of [the CPA]” are exempt from the CPA.”  The federal courts in New Hampshire had interpreted this provision as being different from a statute of limitation because it “focuses on the plaintiff’s knowledge of the defendant’s wrongful conduct” to determine whether a transaction is exempt from the CPA rather than “the plaintiff’s knowledge of his injury and its [causal] relationship to the defendants’ conduct.”  The NH Supreme Court had not yet considered the issue since the provision was amended in 1996, but concluded in Murray that it agreed with the federal court’s interpretation finding that

To determine whether a claim is exempt from the CPA, we look back from the time that the plaintiffs “knew or reasonably should have known” of the alleged violation. If the transaction at issue occurred more than three years before that time, then it is exempt. The person claiming the exemption bears the burden of proving that the transaction is exempt. See RSA 358-A:3, V (2009).

The Court found there was no dispute that the transaction at issue - defendants’ alleged construction of the house with latent structural defects -  was completed in 2004 and that plaintiffs purchased the home four years later.  Because the allegedly wrongful transaction occurred more than three years before the plaintiffs “knew or reasonably should have known” of it, the construction of the house was an exempt transaction pursuant to RSA 358-A:3, IV-a.  The Court therefore reversed the trial court’s ruling on the CPA  claim, but left in place the jury award on the warranty claim against the contractor.

 

CPA claims are regularly included in complaints by plaintiffs against contractors because they provide an opportunity to recover attorneys’ fees and double or treble damages.  This decision should help limit the potential exposure of contractors for past construction defect claims by removing the plaintiffs’ ability to recover damages under the CPA for projects completed more than three years before the plaintiff knew of the conduct giving rise to the claim.  Contractors, however, will continue to have potential exposure to liability under other causes of action such as breach of warranty or breach of contract.