Nw. Ark. Conservation Auth. v. Crossland Heavy Contractors, Inc.

47 F.4th 705

NORTHWEST ARKANSAS CONSERVATION AUTHORITY, Plaintiff - Appellant,

v.CROSSLAND HEAVY CONTRACTORS, INC.; Fidelity & Deposit Company of Maryland, Defendants - Appellees.

No. 21-2498

United States Court of Appeals, Eighth Circuit.

Submitted: April 12, 2022

Filed: August 30, 2022

Counsel who presented argument on behalf of the appellant and appeared on the appellant brief was Marshall Dale Evans, of Fayetteville, AR. The following attorneys appeared on the appellant brief; Paul Edward Danielson, of Booneville, AR., E. Kent Hirsch, of Fayetteville, AR., Samuel E. Ledbetter, of Little Rock, AR., and David A. Danielson, of Fayetteville, AR.

Counsel who presented argument on behalf of the appellee and appeared on the appellee brief was David Michael Donovan, of Little Rock, AR. The following attorneys appeared on the appellee brief; John Everett, of Farmington, AR., Constance Clark, of Fayetteville, AR., and William Jackson Butt, II, of Fayetteville, AR.

Before COLLOTON, MELLOY, and GRUENDER, Circuit Judges.

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 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.

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, 25 L.Ed. 194 (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, 58 S.Ct. 785, 82 L.Ed. 1224 (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 , 205 Ark. 929, 171 S.W.2d 475, 478 (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 , 209 Ark. 478, 190 S.W.2d 977 (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 (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. , 261 N.C.App. 88, 819 S.E.2d 101, 103-04 (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 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. , 113 Wash.2d 288, 778 P.2d 1047, 1049 (1989).

Other courts focus on the rights...