It is common for those of us representing construction professionals to be asked how long they are exposed to claims on any particular project. In New Hampshire, determining the relevant time frame can be complex, but there are relatively simple rules to apply in arriving at the answer.
New Hampshire has enacted a 3-year statute of limitations for actions arising out of contracts and torts. See NHRSA 508:4. The statute provides that all such actions must be brought within 3 years following the act or omission giving rise to the claim, or in the case of a contractual dispute, 3 years following the date the contract was breached.
Unfortunately, the analysis does not end there. The statute contains a caveat known as the “discovery rule” which provides that the 3-year limitations period will not begin to run until the aggrieved party discovers the injury and its causal connection to the wrongful act or breach. A showing that 1) the injured party did not discover the injury and its connection to the breach or wrongful act, and 2) could not reasonably have discovered it at the time it occurred, will delay the accrual of the limitations period until such knowledge does exist or reasonably should exist. As a result, in the not so distant past, the discovery rule subjected construction industry players to almost infinite liability for latent defects or damage discovered years or decades after the work was complete.
In response to these liability concerns, New Hampshire enacted a “Statute of Repose” which overlays the limitations period and establishes an overall time limit on actions for damages arising from improvements to property. See NHRSA 508:4-b. The statute provides that any action for such damages must be brought within 8 years following substantial completion of the improvement, regardless of when the damages were discovered.1
Recently, the New Hampshire Supreme Court extended the application of the Statute of Repose to include third-party actions for indemnity and contribution. See, Rankin v. South Street Downtown Holdings, Inc. (2019 WL 3562167). The Court ruled that the statutory language banning “all actions to recover damages for injury to property, injury to the person, wrongful death or economic loss arising out of any deficiency in the creation of an improvement to real property” was sufficiently broad to encompass third-party indemnity and contribution actions, as well as direct actions by the injured parties.
In the final analysis, the effect of the Statute of Repose is to sunset the injured party’s right to bring a claim 8 years after substantial completion of the improvements, even if the claim and its causal connection to the injury or breach have not yet been discovered. The parties protected by the statute include designers, contractors and consultants involved in completing the improvements.