A Pennsylvania Political Subdivision Can Waive the Benefits of Nullum Tempus
The Commonwealth of Pennsylvania and its agencies are generally immune from the running of the statute of limitations under the well-established doctrine of nullum tempus occurit regi (“time does not run against the king”). Commonwealth, Department of Transportation v. J.W. Bishop & Co., 497 Pa. 58, 439 A.2d 101 (1981). The nullum tempus doctrine is also available to Pennsylvania political subdivisions, such as counties or school districts, when they are seeking to enforce strictly public rights. Montgomery County v. Microvote Corp., 320 F.3d 440 (3d Cir. 2003) (applying nullum tempus doctrine in a suit by the county against the vendor of voting machines and its surety, where the county was required by law to procure the machines); Mt. Lebanon School District v. W.R. Grace & Co., 414 Pa. Super. 455, 607 A.2d 756 (1992) (applying nullum tempus where plaintiff school district was required by the Pennsylvania constitution and by statute to erect school buildings, and contracted with private contractors to that end).
Recently, in Selinsgrove Area School District v. Lobar, Inc., No 2310 C.D. 2010, slip op. (Pa. Cmwlth. Sept. 27, 2011), the Pennsylvania Commonwealth Court, in a two to one decision, held that the Selinsgrove Area School District (the District) had waived, by virtue of certain language contained in its contract, the doctrine of nullum tempus in its contract with Lobar, Inc. (Lobar) for the construction of a school building. The District and Lobar entered into a contract on April 1, 1996 for the construction of the Selinsgrove Area Intermediate School (the School). Twelve years later, on May 13, 2008, the School District sued Lobar and alleged that Lobar neglected to properly install the School’s roof. Lobar joined its roofing subcontractor, American Roofing, Inc. (American) as an additional defendant in the lawsuit. Lobar and American each filed motions for summary judgment contending that the School District’s complaint was time-barred by the statute of limitations. The trial court granted both motions and the School District appealed.
On appeal, the Commonwealth Court affirmed the trial court’s ruling and held that the School District could contractually waive its right to invoke the doctrine of nullum tempus. Further, the court held that the School District did so in Section 13.7 of the General Conditions of the Contract (which, apparently, was the 1987 edition of the American Institute of Architect’s AIA Document A201, General Conditions of the Contract for Construction).
Section 13.7 of the General Conditions was titled “Commencement of Statutory Limitation Period,” and Section 13.7.1 set forth the time period that “any applicable statute of limitations shall commence to run.” Specifically, regarding “acts or failures to act occurring prior to the relevant date of Substantial Completion, any applicable statute of limitations shall commence to run … not later than such date of substantial completion.” Slip Op. at 3. The section further provided that the statute of limitations commenced to run on acts or failures to act that occurred subsequent to the date of Substantial Completion but before the issuance of the final Certificate for Payment “not later than the date of issuance of the final Certificate for Payment.” Id. Finally, as to acts or failures to act that occurred after the date of the issuance of the final Certificate for Payment, the contract section provided that the statute of limitations commenced to run:
... not later than the date of any act or failure to act by the Contractor pursuant to any warranty… the date of any correction of the Work or failure to correct the Work by the Contractor .. or the date of actual commission of any other act or failure to perform any duty or obligation by the contractor or Owner, whichever occurs last.
According to the court, “[s]uch clear and unambiguous language clearly demonstrated the intent of the contracting parties to give effect to the applicable statute of limitations, carefully defining the starting point thereof, and thereby negating the applicability of the doctrine of nullum tempus.” Slip Op. at 4. The court held:
... where a Commonwealth agency has offered and entered into a contract addressing applicable statutes of limitations with no mention of the nullum tempus doctrine, it would be fundamentally unfair and contrary to public policy in general to permit the agency to nullify the provisions of the same contract by subsequently invoking the doctrine. Accordingly, with respect to the contract at issue, we hold that the trail court properly found that the District waived any applicability of the doctrine of nullum tempus.
This decision is significant in Pennsylvania because a large number of construction contracts let by counties, school districts and other political subdivisions utilize the AIA General Conditions of the Contract for Construction. Section 13.7 of the current edition of the General Conditions, AIA Document A201-2007, states:
The Owner and Contractor shall commence all claims and causes of action, whether in contract, tort, breach of warranty or otherwise, against the other arising out of or related to the Contract in accordance with the requirements of the final dispute resolution method selected in the Agreement within the time period specified by applicable law, but in any case not more than 10 years after the date of Substantial Completion of the Work. The Owner and Contractor waive all claims and causes of action not commenced in accordance with this Section 13.7. (emphasis added)
If this section of the form AIA General Conditions is not modified by the public owner, the public owner may find that it may have waived the benefits of the nullum tempus doctrine and therefore is subject to an affirmative statute of limitations defense.
The School District has applied for re-argument of the Commonwealth Court’s decision, so the September 27th opinion in Selinsgrove Area School District v. Lobar, Inc., may not be the final word on the waiver of nullum tempus.