NW AR Conservation Authority v. Crossland Heavy Contractors ( 2022 )

United States Court of Appeals
For the Eighth Circuit
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No. 21-2498
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Northwest Arkansas Conservation Authority,
lllllllllllllllllllllPlaintiff - Appellant,
v.
Crossland Heavy Contractors, Inc.; Fidelity & Deposit Company of Maryland,
lllllllllllllllllllllDefendants - Appellees.
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Appeal from United States District Court
for the Western District of Arkansas - Fayetteville
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Submitted: April 12, 2022
Filed: August 30, 2022
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Before COLLOTON, MELLOY, and GRUENDER, Circuit Judges.
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COLLOTON, Circuit Judge.
The Northwest Arkansas Conservation Authority is a public corporation
created to handle wastewater treatment for municipalities in northwest Arkansas.
After a series of pipeline failures, the Authority sued the pipeline contractor and its
surety, alleging deficient construction. The Authority sued outside the time periods
specified in the relevant statutes of limitations and repose, but asserted that the time
did not run against its claims, because the Authority was suing as a public entity
seeking to vindicate public rights. The district court* concluded that the rights the
Authority sought to enforce were merely proprietary, and that its claims were
therefore time-barred. We affirm.
I.
A group of municipalities formed the Northwest Arkansas Conservation
Authority “to address the treatment and disposal of bio-solids” in Benton and
Washington Counties. The municipalities formed the Authority pursuant to
Arkansas’s Joint County and Municipal Solid Waste Disposal Act, Ark. Code Ann.
§ 14-233-101 et seq. This Act permits two or more municipalities to pool their
resources and create a shared sanitation authority. Id. § 14-233-104(a)(1). The Act
then vests the newly created authority with corporate personhood, see id. § 14-233-
107, and empowers it “to own, acquire, construct, reconstruct, extend, equip,
improve, operate, maintain, sell, lease, contract concerning, or otherwise deal in or
dispose of” public sanitation projects. Id. § 14-233-104(b)(1).
In 2007, the Authority contracted with an engineering firm to design and
oversee the construction of roughly 47,000 linear feet of sewer pipeline. After
receiving bids, the Authority awarded the construction contract to Crossland Heavy
Contractors, Inc. Fidelity & Deposit Company of Maryland issued a performance
bond for the project. Crossland completed construction of the project in June 2010.
Between early 2016 and mid-2020, the pipeline suffered repeated failures.
These failures caused sewage overflows onto neighboring property. An inspection
in 2018 revealed that ninety-six percent of the pipeline’s sections had deviations in
*
The Honorable P.K. Holmes, III, United States District Judge for the Western
District of Arkansas.
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diameter greater than the acceptable five percent. A consultant retained by the
Authority issued a report attributing the failures to Crossland’s inadequate bedding
of the pipe.
The Authority sued Crossland and Fidelity in Arkansas state court in January
2020, nine-and-a-half years after the completion of the pipeline. As relevant here, the
Authority asserted claims for breach of contract, negligence, breach of express and
implied warranties, and products liability against Crossland. The complaint also
asserted a claim for breach of contract against Fidelity. The defendants later removed
the case to federal court.
Crossland and Fidelity moved to dismiss the complaint. Crossland asserted
that the Authority’s claims against it were defeated by the five-year statute of repose
for actions predicated on construction contracts. See Ark. Code Ann. § 16-56-112(a).
Fidelity similarly asserted that the Authority’s breach-of-contract claim was barred
by the six-month statute of limitations for actions on bonds. See id. § 18-44-508(b)
(2020). The Authority responded that the common-law doctrine of nullum tempus
occurrit regi—“time does not run against the king”—meant that the statutes of
limitations and repose did not run against its claims.
The district court granted the motions to dismiss in relevant part. The court
reasoned that the Authority could not invoke nullum tempus, as its claims sought to
enforce the Authority’s proprietary rights, rather than rights “in which the public in
general has an interest.” Without the benefit of nullum tempus, the statutes of
limitations and repose had run against the Authority’s claims. We review the district
court’s decision de novo, accepting as true the factual allegations in the complaint.
We apply the substantive law of Arkansas. EMC Ins. Cos. v. Entergy Ark., Inc., 924
F.3d 483, 485 (8th Cir. 2019). Where there is no Arkansas Supreme Court case on
point, we predict how that court would rule if it were to confront the same issue. Id.-3-
II.
The doctrine of nullum tempus occurrit regi provides that the sovereign is
exempt from the running of statutes of limitations unless the statute in question
expressly provides otherwise. Nullum tempus has its roots in early English law. As
Blackstone explained it, the law presumed “that the king is always busied for the
public good, and therefore has not leisure to assert his right within the times limited
to subjects.” 1 William Blackstone, Commentaries *247. Upon achieving their
independence, the former American colonies assumed the same prerogative. United
States v. Thompson, 98 U.S. 486, 489-90 (1878). Many States, including Arkansas,
have since opted to maintain the doctrine as a matter of public policy. These States
justified the doctrine based on the need to protect public rights and property against
losses caused by dilatory public servants. Guar. Tr. Co. of N.Y. v. United States, 304
U.S. 126, 132-33 (1938); Hill v. State, 23 Ark. 604, 610 (1861).
Although the Arkansas Supreme Court has long recognized nullum tempus, that
court has cabined the doctrine’s potential beneficiaries. The court has often said that
nullum tempus applies “only to the sovereign itself, and not to public corporations or
other such governmental agencies to whom powers are delegated.” E.g., Hart v.
Sternberg, 171 S.W.2d 475, 478 (Ark. 1943) (internal quotation omitted). The task
of governing the entire sovereignty “might well have excused a king from asserting
his rights,” but it afforded “no reason” why the officers of a subordinate public entity
should not be expected to “be reasonably diligent in the discharge of the very duties
they were selected to execute.” City of Ft. Smith v. McKibbin, 41 Ark. 45, 49-50
(1883).
The Authority asserts, however, that it falls within an exception to this general
rule. In Jensen v. Fordyce Bath House, 190 S.W.2d 977 (Ark. 1945), the Arkansas
Supreme Court reiterated that nullum tempus is generally “an attribute of sovereignty
only, and cannot be invoked by counties or other subdivisions of the state.” Id. at 979
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(internal quotation omitted). But after taking stock of the development of nullum
tempus in other jurisdictions, the court expanded the doctrine to encompass
subordinate public entities in certain circumstances. The court explained that a
county official could invoke nullum tempus if he was seeking to enforce a right
“belonging to the public and pertaining purely to governmental affairs, and in respect
to which [the county] represents the public at large or the state.” Id. (internal
quotation omitted). The court distinguished suits to enforce public rights from suits
to enforce contract rights or other rights belonging to the entity “in a proprietary
sense.” Id. (internal quotation omitted). The court concluded that the plaintiff in
Jensen, a county tax collector seeking to recover delinquent state taxes, could invoke
nullum tempus, because he was seeking to enforce a “sovereign right of the state.”
Id. at 978-81.
The Arkansas case law interpreting this exception is limited, but some insights
may be gleaned from looking to the treatment of nullum tempus in other jurisdictions.
Some jurisdictions have abolished nullum tempus altogether. E.g., Shootman v. Dep’t
of Transp., 926 P.2d 1200, 1207 (Colo. 1996). Others have preserved the doctrine,
but declined to extend it to public entities other than the State itself. E.g., Bd. of Sch.
Comm’rs of Mobile Cnty. v. Architects Grp., Inc., 752 So.2d 489, 491-92 (Ala. 1999).
Still others, like Arkansas, have extended nullum tempus to subordinate public
entities in certain situations. Of these jurisdictions, most determine whether a
subordinate entity can invoke the doctrine by drawing some sort of public-proprietary
distinction. See 54 C.J.S. Limitations of Actions § 45 (2022) (citing cases).
Yet even in the latter jurisdictions, courts differ in how they decide whether
nullum tempus applies. One group asks whether the public entity’s suit stems from
the entity’s performance of a public function. See, e.g., Town of Littleton v. Layne
Heavy Civil, Inc., 819 S.E.2d 101, 103-04 (N.C. Ct. App. 2018). These courts use
various tests to determine whether the function at issue is public or proprietary. A
court may consider, for example, whether the function “is one in which only a
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governmental agency could engage,” id. (internal quotation omitted), whether the
function benefits the State as a whole or just local citizens, Hamilton Cnty. Bd. of
Educ. v. Asbestospray Corp., 909 S.W.2d 783, 785 (Tenn. 1995), or whether the
function is traceable to a sovereign power delegated by the State. Wash. Pub. Power
Supply Sys. v. Gen. Elec. Co., 778 P.2d 1047, 1049 (Wash. 1989).
Other courts focus on the rights sought to be enforced through the public
entity’s lawsuit. Some rights-focused courts have looked broadly to the subject
matter underlying the lawsuit. The Oklahoma Supreme Court, for example,
concluded that a municipal improvement authority was seeking to enforce the
public’s right to an “adequate water supply” when it sued a group of contractors for
the negligent construction of a water main. Okla. City Mun. Improvement Auth. v.
HTB, Inc., 769 P.2d 131, 132-36 (Okla. 1988). Others have taken a more
circumscribed view and focused on the nature of the entity’s cause of action. See,
e.g., City of Rochester v. Marcel A. Payeur, Inc., 152 A.3d 878, 882-83 (N.H. 2016);
cf. Baltimore County v. RTKL Assocs., Inc., 846 A.2d 433, 444 (Md. 2004)
(preserving the public-function test generally, but declining to “impose that
mish-mash regime on contract actions”). On this view, nullum tempus does not apply
to actions that sound in contract or tort, at least insofar as the rights at issue arise from
the public entity’s voluntary arrangements. See City of Philadelphia v. Lead Indus.
Ass’n, 994 F.2d 112, 119-20 (3d Cir. 1993) (applying Pennsylvania law); Okla. City
Mun. Improvement Auth., 769 P.2d at 142 & n.32 (Opala, J., dissenting). These
claims accrue to a public entity in the same manner as a private party, City of
Philadelphia, 994 F.2d at 120, and unlike Blackstone’s “continually busied”
sovereign, a subordinate entity is well-equipped to “vigilantly enforce” its rights.
City of Rochester, 152 A.3d at 882.
Against this backdrop, the Authority first urges that nullum tempus applies
because the construction and maintenance of sewer pipelines are governmental
functions. Even were we inclined to agree about the nature of these functions, we
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think the Arkansas Supreme Court’s decisions are more consistent with the public-
rights approach than with its public-function counterpart. In Jensen, the court
explained that it was “well settled” that statutes of limitations would apply against
public entities “where the enforcement of mere private or proprietary rights are
involved.” 190 S.W.2d at 979. It was only where the entity was “seeking to enforce
a right in which the public in general has an interest” that it would be exempted from
the statute of limitations. Id. (internal quotation omitted). In the Arkansas court’s
most recent word on the subject, it emphasized again that an entity may invoke
nullum tempus where “the ‘rights’ at issue belong to the public.” Ark. Dept. of Env’t
Quality v. Brighton Corp., 102 S.W.3d 458, 469 (Ark. 2003). Whether or not the
Authority was engaged in a public function when it contracted with Crossland to
construct the pipeline, we think the appropriate question is whether the rights it is
now seeking to enforce are public rights.
The Authority argues that this public-rights approach is inconsistent with
principles of municipal immunity. In Arkansas, a municipal corporation was
historically entitled to immunity from tort suits for actions taken while it was engaged
in a public function. See Kirksey v. City of Fort Smith, 300 S.W.2d 257, 259 (Ark.
1957). The Authority points out that the Arkansas Supreme Court has held that cities
operating waterworks and sewer systems were performing public functions. Id. at
259-60. It asserts that nullum tempus is best understood as the sword accompanying
immunity’s shield, and that it would be illogical to interpret one doctrine more
narrowly than the other.
We find this plea for symmetry unpersuasive. The Arkansas Supreme Court
abolished common-law municipal immunity in 1968. Parish v. Pitts, 429 S.W.2d 45,
51 (Ark. 1968). The state legislature responded by enshrining the immunity in
statute, see Ark. Code Ann. § 21-9-301, but in so doing, the legislature severed
municipal immunity from its common-law roots. The statute did away with the
public-proprietary distinction of the common law and replaced it with a blanket
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immunity (insofar as the entity is not covered by liability insurance). Augustine v.
City of West Memphis, 662 S.W.2d 813, 814 (Ark. 1984); see White v. City of
Newport, 933 S.W.2d 800, 801-03 (Ark. 1996). If, as the Authority supposes,
municipal immunity and nullum tempus are still best understood as two sides of the
same coin, there would be no reason for nullum tempus to adopt a public-proprietary
distinction that has been abandoned for municipal immunity.
Even if we consider the two doctrines as they appeared in the common law, the
Arkansas Supreme Court did not treat them as coterminous. Before 1945, a
municipal corporation was entitled to immunity if it was engaged in a public function,
see City of Little Rock v. Holland, 42 S.W.2d 383, 384 (Ark. 1931), but under no
circumstance could invoke nullum tempus. See City of Fort Smith, 41 Ark. at 49-50,
53. When the Arkansas Supreme Court eventually recognized that non-sovereign
entities could rely on nullum tempus, the court could have imported a public-function
analysis from its municipal-immunity jurisprudence, but it did not do so. Instead, the
court has focused on whether an entity invoking nullum tempus seeks to enforce
public rights. See Jensen, 190 S.W.2d at 979-80. Governmental immunity, like
nullum tempus, is ultimately traceable to the prerogatives of the crown. But the two
doctrines have evolved to support distinct public policies, see City of Shelbyville v.
Shelbyville Restorium, Inc., 451 N.E.2d 874, 876-77 (Ill. 1983), and have traveled
divergent paths in Arkansas law. The breadth of common-law municipal immunity
thus has little bearing on the proper scope of nullum tempus.
The Authority contends alternatively that even if nullum tempus applies only
where an entity seeks to enforce public rights, the Authority satisfies that standard by
its effort to ensure “proper construction of a functional sanitary sewer system,
adequate disposal of wastewater, and the recovery of public funds.” The Authority
adds that the pollution caused by overflowing sewage implicates rights to public
health or to a clean environment.
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In Jensen and Brighton, the Arkansas Supreme Court contrasted public rights
that would support nullum tempus with contractual or other proprietary rights.
Brighton Corp., 102 S.W.3d at 469; Jensen, 190 S.W.2d at 979. In drawing the line
between public and proprietary rights, the court looked to the “character” of the
actions at issue, rather than the public actor’s broader policy objectives. Brighton
Corp., 102 S.W.3d at 469 (internal quotation omitted); Jensen, 190 S.W.2d at 979(internal quotation omitted). In each case, the actor was entitled to invoke nullum
tempus because its lawsuit was predicated on enforcing a particular public right: in
Brighton, the Department of Environmental Quality sued to enforce environmental
regulations, 102 S.W.3d at 469; the tax collector in Jensen sued to exercise the
“sovereign right” to collect state taxes. 190 S.W.2d at 980.
Perhaps the right to a well-functioning sewer system or to a clean environment
can be characterized as “public” in the abstract. But these are not the rights at issue
in the Authority’s action against Crossland and Fidelity. The Authority did not sue
to enforce statutes or regulations, and a victory would not allow it to exercise any
sovereign right. Instead, the Authority proceeded against Crossland and Fidelity on
private-law theories: breach of contract, negligence, breach of warranty, and products
liability. Each cause of action seeks to redress a broken promise to the Authority, or
to obtain damages for harm caused by Crossland’s deficient performance in carrying
out its promised obligations. The rights at issue are thus the Authority’s proprietary
rights, not the rights of the public.
These proprietary interests are not transformed into public rights just because
the Authority spent public money to repair the pipeline. Every action by a public
entity impacts the public fisc to some degree. But if financial implications alone were
enough to invoke nullum tempus, then the public-rights exception would swallow the
general rule that statutes of limitations and repose run against municipal entities. On
this point, Jensen is again instructive. There, the court distinguished the tax
collector’s claim for delinquent taxes from the claim at issue in Clarke v. School
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District No. 16, 106 S.W. 677 (Ark. 1907). In Clarke, a school district sued to
recover funds wrongly paid out by the county treasurer, but the statute of limitations
ran against the school district, because the action did not involve the exercise of a
sovereign right. See Jensen, 190 S.W.2d at 979-80; Clarke, 106 S.W. at 678. Here,
as in Clarke, the damages sought would replenish the public entity’s coffers, but the
relief would not vindicate a distinct public right. The Authority therefore cannot
invoke nullum tempus to avoid the statutes of limitations or repose.
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The judgment of the district court is affirmed.
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