UNITED STATES DISTRICT COURT DISTRICT OF NEW HAMPSHIRE
Continental Western Insurance Co.
v. Civil No. 18-cv-117-JL Opinion No. 2019 DNH 051 Superior Fire Protection, Inc.
v.
Hampshire Fire Protection Co., LLC
MEMORANDUM ORDER
A summary-judgment motion in this action to recover for
property damage after a burst sprinkler pipe flooded portions of
hotel turns on whether New Hampshire’s statute of repose for
construction damages, N.H. Rev. Stat. Ann. § 508:4-b, imposes a
time limit on contribution and common-law indemnification
claims. Plaintiff Continental Western Insurance Company, as
subrogee of the entity that owned the Holiday Inn Express hotel
in Rochester, New Hampshire, brought claims for negligence and
breach of contract against defendant Superior Fire Protection,
Inc., which inspected and tested the sprinkler system. Superior
Fire, in turn, filed a third-party complaint seeking common-law
indemnification and contribution from Hampshire Fire Protection
Company, which originally installed the sprinkler system. This
court has subject-matter jurisdiction over this action pursuant
to 28 U.S.C. § 1332(a) (diversity) and over the third-party claims pursuant to 28 U.S.C. § 1367(a) (supplemental
jurisdiction).
Hampshire Fire moves for summary judgment on Superior
Fire’s claims. The parties do not dispute that Hampshire Fire
installed the sprinkler system more than eight years before that
system damaged the hotel. Hampshire Fire’s motion therefore
presents the purely legal question of whether New Hampshire’s
eight-year construction statute of repose bars Superior Fire’s
indemnification and contribution claims against Hampshire Fire.
Concluding that it does, after reviewing the parties’
submissions and holding a telephonic conference in lieu of oral
argument,1 the court grants Hampshire Fire’s motion.
Applicable legal standard
“The court shall grant summary judgment if the movant shows
that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a). “A dispute is genuine if the evidence about the
fact is such that a reasonable jury could resolve the point in
the favor of the non-moving party. A fact is material if it
carries with it the potential to affect the outcome of the suit
under the applicable law.” DeAndrade v. Trans Union LLC, 523
1 The court’s practice is to hold oral argument on all dispositive motions, but counsel here indicated to the court that neither party desired it.
2 F.3d 61, 65 (1st Cir. 2008) (internal quotations omitted). When
“[t]he parties agree upon all material facts,” as Superior Fire
and Hampshire Fire do here, the court “is left to address pure
questions of law.” Bonneau v. Plumbers & Pipefitters Local
Union 51 Pension Tr. Fund ex rel. Bolton, 736 F.3d 33, 36 (1st
Cir. 2013).
Background
The facts, which the court draws from the parties’
submissions, are undisputed for purposes of this motion.2 In
2007, Hampshire Fire designed and installed an automatic
sprinkler system at the Holiday Inn Express in Rochester, New
Hampshire. Hampshire Fire completed the system’s installation
and testing by October 16, 2007. Hampshire Fire took no further
action with respect to the system.
The Holiday Inn Express contracted Superior Fire to inspect
and test the sprinkler system. It conducted multiple
inspections and tests over the four-year period between October
13, 2011, and October 9, 2015. The plaintiff alleges that, a
few months after the last inspection, part of the sprinkler
system in an unheated attic froze and broke on February 15,
2016, causing water damage to the hotel.
2 See Obj. (doc. no. 23) at 3 n.1 (“Superior Fire accepts the facts set out herein as undisputed for purposes of its Objection to [the] Motion for Summary Judgment.”).
3 As a result of the damage, Continental Western claims that
it made payments to or on behalf of its insured in the amount of
$719,061.44. It then brought this action against Superior Fire
on February 7, 2018, asserting one claim each for negligence and
breach of contract.3 Specifically, Continental Western claimed
in its complaint that Superior Fire designed, manufactured, and
installed the sprinkler system, as well as testing and
inspecting it, and that Superior Fire breached a duty to
exercise reasonable care in doing so and by failing to drain
water from the pipe before winter.4
Superior Fire, which only tested and inspected the
sprinkler system,5 filed a third-party complaint against
Hampshire Fire, which designed and installed the system, for
common-law indemnity and contribution.6 It alleges that any
damage resulting from the frozen pipe was caused by Hampshire
Fire’s design and installation, not Superior Fire’s testing and
inspection.7
3 Compl. (doc. no. 1) ¶¶ 12-33. 4 Id. ¶¶ 13-17. 5 Despite Continental Western’s claims, both parties to this motion agree that Hampshire Fire only designed and installed the system and that Superior Fire only tested and inspected it. 6 Third-Party Compl. (doc. no. 17) ¶¶ 14-21. 7 Id. ¶ 12.
4 Analysis
New Hampshire’s statute of repose for construction-related
claims provides:
Except as otherwise provided in this section, 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, including without limitation the design, labor, materials, engineering, planning, surveying, construction, observation, supervision or inspection of that improvement, shall be brought within 8 years from the date of substantial completion of the improvement, and not thereafter.
N.H. Rev. Stat. Ann. § 508:4-b, I. Hampshire Fire’s design and
installation of the sprinkler system constituted “the creation
of an improvement to real property” under this statute.8
“[S]ubstantial completion of [that] improvement” occurred no
later than October 16, 2007, more than eight years before
Superior Fire filed its third-party complaint on August 22,
2018.9 The only question before the court is whether Superior
8 An “improvement” under this statute means “an alteration to or development of real property that either (1) enhances or is intended to enhance its value or (2) improves or is intended to improve its use for a particular purpose.” Phaneuf Funeral Home v. Little Giant Pump Co., 163 N.H. 727, 731 (2012). Superior Fire does not dispute that the sprinkler system falls within this definition. See Obj. (doc. no. 23) at 4-8 (raising no argument and asserting no facts to the contrary). 9 “The term ‘substantial completion’ means that construction is sufficiently complete so that an improvement may be utilized by its owner or lawful possessor for the purposes intended.” N.H. Rev. Stat. Ann. § 508:4-b, II. Superior Fire also does not dispute the date of substantial completion or that it occurred more than eight years prior to the filing of any complaint in
5 Fire’s common-law indemnity and contribution claims fall within
the set of actions barred by this eight-year statute of repose.
A. Superior Fire’s claims
Superior Fire has brought two burden-shifting claims
against Hampshire Fire: common-law indemnification and
contribution. A review of the forms and bases for these claims
informs the statute-of-repose analysis.
“In New Hampshire, the right to indemnity has historically
existed: (1) where the indemnitee's liability is derivative or
imputed by law; (2) where an implied duty to indemnify exists;
or (3) where there is an express duty to indemnify.” Gray v.
Leisure Life Indus., 165 N.H. 327, 330 (2013) (quotations
omitted). During a telephone conference with the court, the
parties expressly agreed that Superior Fire’s argument is based
on the first of these scenarios. And reasonably so. No express
duty to indemnify exists here: neither party alleges the
existence of an indemnification agreement. And this is not one
of the limited situations wherein an implied duty to indemnify
may arise. See Hamilton v. Volkswagen of Am., Inc., 125 N.H.
561, 564 (1984) (“[I]ndemnity agreements are rarely to be
implied and always to be strictly construed.”). That is, it is
this action. See Obj. (doc. no. 23) at 4-8 (raising no argument and asserting no facts to the contrary).
6 not a case wherein Hampshire Fire “had agreed to perform a
service for” Superior Fire and “was assumed to have performed
negligently,” resulting in “a condition that caused harm to a
third person in breach of a non-delegable duty of” Superior
Fire. Id. at 563.
The form of common-law indemnification under which Superior
Fire proceeds “has been described as an equitable right implied
by law, which is based upon principles of restitution.” Gray,
165 N.H. at 328-29 (collecting cases). Under this theory, a
person who “has discharged a duty which is owed by him but which
as between himself and another should have been discharged by
the other, is entitled to indemnity from the other, unless the
payor is barred by the wrongful nature of his conduct.” Id. at
329 (quoting McCullough v. Company, 90 N.H. 409, 412 (1939)).
“The theory behind this principle ‘is that the indemnitee has
provided a benefit to the indemnitor by fully discharging the
indemnitor’s liability, making restitution appropriate.’” Id.
(quoting AVCP Reg. Housing Auth. v. R.A. Vranckaert, 47 P.3d
650, 658 (Alaska 2002)). Indemnification is thus available only
“if the indemnitee provided the indemnitor with protection from
liability.” Id. (quoting Restatement (Third) of Torts:
Apportionment of Liability, Reporters’ Note § 22 comment b
at 277).
7 Contribution is a concept separate and distinct from
indemnity: it involves shared liability as opposed to shifted
liability. “[W]hereas indemnity shifts ‘the entire burden of
loss from one tortfeasor who has been compelled to pay it, to
another whose act of negligence is the primary cause of the
injured party’s harm,’ contribution ‘is partial payment made by
each or any of jointly or severally liable tortfeasors who share
a common liability to an injured party.’” Gray, 165 N.H. at 330
(quoting 41 Am.Jur.2d Indemnity § 3 (2005)). In New Hampshire,
“a right of contribution exists between or among 2 or more
persons who are jointly and severally liable upon the same
indivisible claim, or otherwise liable for the same injury,
death or harm, whether or not judgment has been recovered
against all or any of them.” N.H. Rev. Stat. Ann. § 507:7-f.
B. Construction statute of repose
New Hampshire’s construction statute of repose requires
that “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 . . . shall be brought within 8 years from the date of
substantial completion of the improvement, and not thereafter.”
N.H. Rev. Stat. Ann. § 508:4-b, I. Hampshire Fire argues that
burden-shifting claims like Superior Fire’s fall within this
8 prohibition on actions after eight years have passed; Superior
Fire argues that they do not.
“A court interpreting New Hampshire law must ‘first look to
the language of the statute itself, and, if possible, construe
that language according to its plain and ordinary meaning.’”
United States v. Howe, 736 F.3d 1, 3 (1st Cir. 2013) (quoting
State v. Dor, 165 N.H. 198, 200 (2013)). As explained supra
Part III.A, through both of these claims, Superior Fire seeks to
apportion the damages arising out of an alleged deficiency in
the sprinkler system as between itself and Hampshire Fire — that
is, to recover either all or a portion of such damages, for
which it may be held liable, from Hampshire Fire. But the
statute prohibits, after eight years have passed, “all actions
to recover damages . . . arising out of any deficiency in the
creation of an improvement to real property . . . .” N.H. Rev.
Stat. Ann. § 508:4-b, I. As the New Hampshire Supreme Court has
explained, “[t]hat language unambiguously encompasses all types
of claims, as long as they arise from a deficiency in the
creation of an improvement to real property,” and thus the
statute of repose “applies to all types of claims regardless of
the theory of liability . . . .” Phaneuf, 163 N.H. at 731. By
its plain language, then, this statute includes indemnification
and contribution claims.
9 Where, as here, “the language of a statute is plain and
unambiguous,” the court need not “look beyond it for further
indications of legislative intent.” Id. Superior Fire offers
two arguments as to why the court should construe the statute
and depart from its plain meaning with respect to these burden-
shifting claims. Neither persuades the court.
1. Analogy to statute of limitations
First, Superior Fire argues that New Hampshire’s law
governing statutes of limitations mandates a different
conclusion. Under New Hampshire law, “[c]laims for
indemnification . . . do not accrue for the purposes of the
statute of limitations until a judgment has been paid by the
third-party plaintiff”; thus, the “statute of limitations cannot
possibly start to run on an indemnity claim until the party
seeking indemnification suffers a loss.” Jaswell Drill Corp. v.
Gen. Motors Corp., 129 N.H. 341, 347 (1987). Similarly, a
contribution claim accrues when “judgment has been rendered” or,
if it has not, when the party seeking contribution has
“discharged by payment the common liability” or “agreed while
action was pending to discharge the common liability . . . .”
N.H. Rev. Stat. Ann. § 507:7-g, II. Section 507:7-g, II
provides what is, in effect, a one-year statute of limitations
on such contribution claims. Id. Superior Fire argues that the
10 statute of repose cannot bar claims for indemnification or
contribution for the same reason that the statute of limitations
on those claims cannot begin to run until they accrue.10
This argument misconceives the difference between a statute
of limitations and a statute of repose, which “may be
distinguished both by their method of operation and their
underlying purpose.” Big League Entm't, Inc. v. Brox Indus.,
Inc., 149 N.H. 480, 483 (2003) (quotations and citations
omitted). “Statutes of limitation generally begin to run at the
time of injury or discovery of the injury” and “serve to place a
limit on the time in which a plaintiff may bring suit after a
cause of action accrues,” so as to “prevent[ ] . . . stale
claims . . . .” Id. “By contrast, statutes of repose . . .
usually run from an act of a defendant” and “extinguish a cause
of action after a fixed period of time regardless of when the
action accrues, potentially barring a plaintiff’s suit before
there has been an injury or before the action has arisen,” thus
“establish[ing] an absolute outer boundary in time within which
a claim may be asserted.” Id.
Section 508:4-b “functions as a statute of repose because
it begins to run from ‘the date of substantial completion of the
improvement,’ wholly independent of any accrual of the cause of
10 Obj. (doc. no. 23) at 6-7.
11 action.” Big League Entm't, 149 N.H. at 483 (quoting N.H. Rev.
Stat. Ann. § 508:4-b, I). And, in recognizing it as such, the
New Hampshire Supreme Court has twice explained that it was
“intended to promote the public interest by protecting the
building industry from infinite liability.” Winnisquam Reg'l
Sch. Dist. v. Levine, 152 N.H. 537, 540 (2005); Big League
Entm’t, 149 N.H. at 484. The Court reached that conclusion
drawing on the “legislative findings and stated purpose for the
current enactment of” § 508:4-b, which provide:
The general court finds that, under current law, builders, designers, architects and others in the building trade are subject to an almost infinite period of liability. This period of liability, based on the discovery rule, particularly affects the building industry and will eventually have very serious adverse effects on the construction of improvements to real estate in New Hampshire. Therefore, it is in the public interest to set a point in time after which no action may be brought for errors and omissions in the planning, design and construction of improvement to real estate. This act is determined to be in the public interest and to promote and balance the interests of prospective litigants in cases involving planning design and construction of improvements to real property.
Winnisquam, 152 N.H. 537 at 540 (quoting 1990 N.H. Laws 164:1).
As a statute of repose, § 508:4-b may preclude Superior
Fire’s claims for indemnification and contribution, even if
those claims would — as they would here — accrue after the
repose period has run. To conclude otherwise would open
defendants to “infinite liability perpetuated by the discovery
12 rule,” contrary to the recognized purpose of the statute as
recognized and articulated by New Hampshire’s highest court.11
Big League Entm’t, 149 N.H. at 484.
2. Statutory history
Superior Fire also argues that the history of New
Hampshire’s construction statute of repose supports its
interpretation. The prior incarnation of that statute
explicitly named “action[s] for contribution or indemnity” among
those covered. Specifically, it provided:
No action to recover damages for injury to property, real or personal, or for an injury to the person, or for bodily injury or wrongful death, arising out of any deficiency in the design, planning, supervision or observation of construction, or construction of an improvement to real property, nor any action for contribution or indemnity for damages sustained on account of such injury, may be brought against any person performing or furnishing the design, planning, supervision of construction or construction of such improvement to real property more than six years after the performance or furnishing of such services and construction.
11This court is not generally inclined toward exploration of legislative purpose, instead preferring to ascertain textual meaning. Here, however, the court is bound by the New Hampshire Supreme Court’s construction of the statute, which included a discussions of legislative purpose. Winnisquam, 152 N.H. 537 at 540. It is also noteworthy that the New Hampshire Supreme Court’s basis for identifying the purpose of § 508:4-b was an explanatory preamble adopted by the New Hampshire legislature, see 1990 N.H. Laws 164:1, but not codified with the rest of the construction statute of repose.
13 Deschamps v. Camp Dresser & McKee, Inc., 113 N.H. 344, 345
(1973) (quoting N.H. Rev. Stat. Ann. § 508:4-b, I (1965))
(emphasis added). The New Hampshire Supreme Court deemed it
unconstitutional in 1984.12 Eight years later, in 1990, New
Hampshire’s legislature enacted the statute of repose in its
present version, without specific language including
contribution and indemnity.
Superior Fire argues that this change in the language from
one version to the next signals the legislature’s intent to
exclude indemnification and contribution claims from the current
version of the statute.13 That inference is not as strong as
Superior Fire suggests, in light of the replacement statute’s
language. While it does not explicitly address indemnification
and contribution claims, it contains additional new language
that unambiguously encompasses those claims. Specifically, the
12It found that version to violate the equal protection clauses of the Fourteenth Amendment of the United States Constitution and the New Hampshire Constitution, part I, articles 1 and 12, in light of the class of defendants protected. Henderson Clay Prod., Inc. v. Edgar Wood & Assocs., Inc., 122 N.H. 800, 801 (1982); Antiniou v. Kenick, 124 N.H. 606 (1984). The current version “applies to all participants in the construction industry,” and has thus been found to satisfy constitutional requirements. Winnisquam, 152 N.H. at 540-41. 13Obj. (doc. no. 23) at 6 (“There can be no other explanation as to the inconsistencies of the language contained in the prior version and current version of [the statute] other than the legislature intended claims for indemnity and contribution to be excluded from the protection provided by the statute.”).
14 current version of the statute explicitly covers “all actions to
recover damages for injury to property . . . or economic loss
arising out of any deficiency in the creation of an improvement
to real property.” N.H. Rev. Stat. Ann. § 508:4-b, I (emphasis
added). The former version of the statute did not include this
“economic loss” language. Even were damages obtained through
indemnification and contribution in this case not “damages for
injury to property,” they would fall within the second category
of “damages for . . . economic loss” arising from a construction
deficiency. Inclusion of this category weighs against the
inference Superior Fire urges the court to make.
Although Superior Fire did not address this change or the
“economic loss” language in its briefing, the court questioned
its counsel about that provision during the March 15, 2019
telephone conference.14 During that conference, Superior Fire’s
counsel suggested that the “economic loss” referenced in this
statute refers to the same “economic loss” contemplated by the
“economic loss doctrine.” According to that common-law
doctrine, “parties bound by a contract may not ‘pursu[e] tort
recovery for purely economic or commercial losses associated
14On that telephone conference, the court also afforded the parties an opportunity to submit authority and additional briefing, if they so desired, with respect to this issue. Neither party did so.
15 with the contract relationship.’ The purpose of the doctrine is
‘to prevent tort law’s unreasonable interference with principles
of contract law.’” Schaefer v. Indymac Mortg. Servs., 731 F.3d
98, 103 (1st Cir. 2013) (quoting Plourde Sand & Gravel Co. v.
JGI E., Inc., 154 N.H. 791, 794-95 (2007)). More generally, it
provides that, “in the absence of a specific duty, no general
duty exists to avoid negligently causing economic loss.” Id.
Superior Fire’s counsel suggested, accordingly, that the
“economic loss” in the construction statute of repose refers to
claims for economic or commercial damages arising out of damage
to the property, not financial loss.
In making this argument, Superior Fire implicitly (though
never expressly, orally or in the briefing) invokes the canon of
statutory construction under which “a common-law term of art
should be given its established common-law meaning . . . .”
Johnson v. United States, 559 U.S. 133, 139, 130 (2010). But
the court does “not assume that a statutory word is used as a
term of art where,” as here, “that meaning does not fit.” Id.
Simply put, the term “economic loss” in the construction statute
of repose is not a reference to the common-law term or doctrine.
And here, such an interpretation would conflate “actions to
recover damages for . . . economic loss” with “actions to
recover damages for injury to property” or “to the person.”
N.H. Rev. Stat. Ann. § 508:4-b, I. Such a construction, then,
16 would run afoul of “the widely accepted rule that ‘all of the
words of a statute must be given effect and that the legislature
is presumed not to have used superfluous or redundant words.’”
Howe, 736 F.3d at 3 (quoting State v. Guay, 164 N.H. 696, 701
(2013)).
Superior Fire has offered no evidence, beyond mere
inference based on the statute’s history, that the legislature
excluded burden-shifting claims from the construction statute of
repose. But the New Hampshire Supreme Court has interpreted the
statute to codify the policy, as approved by the legislature,
that “it is in the public interest to set a point in time after
which no action may be brought for errors and omissions in the
planning, design and construction of improvement to real
estate.” Winnisquam, 152 N.H. at 540 (quoting 1990 N.H. Laws
164:1). And, though, as discussed supra, the court is
disinclined to rely on it as a tool of statutory construction,
it observes that the legislative history submitted by Hampshire
Fire further supports this expressed aim.15
Where the statute’s text itself unambiguously refutes
Superior Fire’s proposed inference, and absent any express
indication of exclusion, the court is disinclined to disregard
the plain language of the statute, which implicitly but clearly
15 See Reply Ex. A (doc. no. 25-1). See also supra n.11.
17 incorporates indemnity and contribution claims. See American
Tobacco Co. v. Patterson, 456 U. S. 63, 68 (1982) (“absent a
clearly expressed legislative intention to the contrary,” the
court assumes that statutory meaning “is expressed by the
ordinary meaning of the words used.”).
Conclusion
New Hampshire’s construction statute of repose bars actions
for indemnity and contribution brought more than eight years
after substantial completion of an improvement to real property.
More than eight years passed between installation of the
sprinkler system that caused damage to the Holiday Inn Express
and Superior Fire’s third-party claims for contribution and
indemnification. Hampshire Fire’s motion for summary judgment16
on those claims is, accordingly, GRANTED.
SO ORDERED.
Joseph N. Laplante United States District Judge
Dated: March 22, 2019
cc: Michael F. Wallace, Esq. Mark D. Wiseman, Esq. Mark S. Bodner, Esq. George D. Bogris, Esq. Clara E. Lyons, Esq. Douglas N. Steere, Esq.
16 Document no. 22.