NH Construction Law
  • Home
  • Blog
  • Links

#76:  Indemnity and the Statute of Repose

4/24/2019

0 Comments

 
New Hampshire’s statute of repose for construction claims, RSA 508:4-b, puts a time limit of eight years from the date of substantial completion on the filing of most lawsuits challenging construction and design deficiencies in the creation of an improvement to real property, after which time no suit can be brought regardless of whether the claim was latent and not discoverable for most or all of that period.  In this respect it is unlike the statute of limitations, RSA 508:4, whose three-year clock does not start ticking until the claim “accrues” -- which may be more than three years after the breach of duty occurs if the breach and resulting injury were neither discovered nor reasonably discoverable until later.
 
The statute of limitations operates differently with respect to indemnity claims, which “do not accrue for the purposes of the statute of limitations until a judgment has been paid by the third-party plaintiff” because the “statute of limitations cannot possibly start to run on an indemnity claim until the party seeking indemnification suffers a loss.”  Jaswell Drilling Corp. v. General Motors Corp., 129 N.H. 341, 347 (1987).  Often a suit brought within that three year limitations period will result in a judgment beyond it, yet still allow the loser’s indemnification suit against the indemnitor to proceed even though filed well more than three years after the underlying claim accrued.  But what if the party seeking indemnification suffers that judgment, that “loss,” more than eight years after substantial completion of the improvement giving rise to the underlying claim?  Does the statute of repose shut out his right to indemnity?
 
A recent decision from New Hampshire’s federal district court says it does.  In Continental Western Insurance Co. v. Superior Fire Protection, Inc., 2019 WL 1318274
(D.N.H. March 22, 2019), the inspector/tester of a sprinkler system was sued by the subrogee of the hotel where the system had failed, and in turn sought indemnity or contribution from the installer of the system.  The installer, having substantially completed its work more than eight years prior to the lawsuit, sought refuge under the statute of repose.  The inspector/tester countered that its claim for indemnity did not accrue until it was sued by the subrogee.  But “accrual” is not the trigger under the statute of repose, said the Court.  Rather, substantial completion is the trigger, barring indemnity and contribution claims “even if those claims would — as they would here — accrue after the repose period has run.”  The installer’s motion for summary judgment was granted.
 
What is somewhat unusual about this case is the fact that the underlying action by the subrogee against the inspector/tester was not itself barred by the statute of repose (because the allegedly deficient inspection/testing of the sprinkler system was not a  “deficiency in the creation of an improvement to real property,” and in any event occurred years after that improvement was substantially complete).  In most construction settings the would-be indemnitee, if sued within eight years of substantial completion of the improvement at issue, will still be timely in seeking indemnity from an indemnitor -- as long as he doesn’t wait to suffer a judgment first.  And he doesn’t need to wait.  As Judge McNamara noted in Penta Corporation v. Town of Newport, No. 212-2015-CV-00011, 2015 WL 11182532 (Merrimack Super. Ct., Nov. 20, 2015), “While technically the right to indemnity arises when a judgment is rendered in favor of another, it has long been the practice to try indemnity claims, when properly pled, along with an underlying action.”  Indemnity claimants would be well served to file their cross-claims against potential indemnitors in the underlying action, before the eight-year repose clock winds down.
 
Quaere: Continental Western concerned a claim of derivative or equitable indemnity, not one of express contractual indemnity.  If there had been such a contractual right to indemnity, would a claim for breach of that contract still have been barred by the statute?

0 Comments

    Author

    Frank Spinella

    Archives

    April 2025
    March 2025
    January 2025
    December 2024
    November 2024
    October 2024
    September 2024
    August 2024
    July 2024
    June 2024
    April 2024
    March 2024
    February 2024
    December 2023
    November 2023
    October 2023
    September 2023
    August 2023
    July 2023
    June 2023
    May 2023
    April 2023
    March 2023
    February 2023
    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    January 2019
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014

    Categories

    All

    RSS Feed

Proudly powered by Weebly