In the recent case of Township of Salem v. Miller Penn Development, LLC, the Pennsylvania Commonwealth Court invoked the often overlooked doctrine of nullum tempus occurrit regi. Read literally as “time does not run against the king,” as a general rule, nullum tempus allows the Pennsylvania state government or agencies to sue government contractors at any time, regardless of a statute of limitations defense. Nullum tempus also applies to claims brought by local governments, such as school districts, municipalities and counties, but only if the local government 1) brings its claims in its governmental capacity and 2) seeks to enforce an obligation imposed by law, as distinct from one arising out of a voluntary agreement.
What Happened in Miller Penn Development?
In Miller Penn Development, a developer constructed a 22 home residential development. The developer and the Township entered into an agreement requiring the developer to construct the development in accordance with all applicable ordinances. The developer failed to do so, and the Township sued for breach of contract and violation of an ordinance. Though the Township was aware of the non-compliance in 2002, it did not commence its lawsuit against the developer until 2010 – well beyond the applicable statute of limitations.
The developer, therefore, argued that the lawsuit was barred by the statutes of limitations (4 years for the contract claim and 6 years for the ordinance violation). The trial court rejected the developer’s argument and, following a trial, the court awarded the Township damages.
On appeal, the Commonwealth Court affirmed, and also rejected the developer’s statute of limitations argument. In doing so, the court invoked the doctrine of nullum tempus. The court held that nullum tempus applies to a claim for breach of contract brought by a local government entity where the contract is one that the local government is required to enter into as part of its public duties. The court looked to the Pennsylvania Municipalities Planning Code, which imposes a duty on municipalities to require developers to complete public improvements in compliance with certain ordinance requirements. Ultimately, the court held the Township was enforcing strictly public rights and could, therefore, sue the developer at any time.
What Does the Decision Mean for Pennsylvania Government Contractors?
As a practical matter, nullum tempus is a doctrine to be mindful of if you are performing public work as a general contractor in Pennsylvania. On projects for the Commonwealth, and its agencies (including, the Department of Transportation, the Department of General Services and SEPTA), you will not be able to successfully assert a statute of limitations defense. On projects for local government entities, the same rule applies, only if the local government entity brings the claim in its governmental capacity and seeks to enforce an obligation imposed by law (like the Township’s obligation to enforce ordinances).
As applied to construction projects, such as in Miller Penn Development, the local government may or may not be able to invoke nullum tempus. For example, the courts have held that a school district’s claim arising out of school facilities construction is subject to nullum tempus. This is because the Pennsylvania Public School Code requires school districts to provide school facilities. On the other hand, where there exists no statutory obligation for the local government to enter into the contract, nullum tempus may not apply. For instance, a court has declined to apply the doctrine to the construction of library for a school district because a school district is not obligated to construct libraries.
While there are legal arguments a contractor can make to avoid nullum tempus, the standard is quite difficult and unlikely to meet. Because of the implications of this rule, there are a few recommendations for contractors. First, you should consider incorporating language into subcontracts waiving the statute of limitations with regard to claims for indemnification arising out of the subcontractor’s work. Second, you should perform greater due diligence in selecting subcontractors to assure that the subcontractor will still be around in the event of a claim many years down the road. Third, you should review your document retention policy to make sure all documents are retained for a reasonable amount of time.
In the end, through its Miller Penn Development decision, the Commonwealth Court reinforced the notion that it’s good to be king.
Evan A. Blaker is a Partner at Cohen Seglias and a member of the Commercial Litigation, Labor & Employment, and Wealth Preservation Groups. He focuses his practice on a wide range of practice areas, including employment, personal injury, construction, commercial litigation/business disputes, including breach of fiduciary duty claims and commercial collections, with concentration on contractor supply houses.
Matthew L. Erlanger is an Associate at Cohen Seglias and a member of the Construction Group and concentrates his practice in construction litigation. Matt has experience assisting the Firm’s construction industry clients with research and with the preparation of motions and briefs in various construction-related matters.