The Travelers Indemnity Company v. Construction Services of New Hampshire, LLC

THE STATE OF NEW HAMPSHIRE

SUPREME COURT

In Case No. 2016-0649, The Travelers Indemnity Company
v. Construction Services of New Hampshire, LLC, the court on
November 29, 2017, issued the following order:

Having considered the briefs and oral arguments of the parties, the court
concludes that a formal written opinion is unnecessary in this case. The
defendant, Construction Services of New Hampshire, LLC (Construction
Services), appeals an order of the Superior Court (Anderson, J.) denying its
summary judgment motion. On appeal, Construction Services argues that the
trial court erred when it determined that the three-year statute of limitations
for the civil complaint filed against Construction Services by the plaintiff, The
Travelers Indemnity Company (Travelers), was tolled while a New Hampshire
Department of Labor (DOL) proceeding was pending. See RSA 508:4 (2010).
We affirm in part, reverse in part, and remand.

The trial court found, or the record reveals, the following facts.
Construction Services is a limited liability corporation that engages
subcontractors to do repairs following an insured fire-, wind- or flood-damage
claim. Insurance carriers refer work to Construction Services and
Construction Services then puts the work out for bid and engages
subcontractors to do the work. Construction Services employs a laborer, a
project manager/supervisor, and an office staff person.

Travelers issued a workers’ compensation policy to Construction Services
for the period running from November 17, 2008, through November 17, 2009.
Following a December 2009 audit of Construction Services’s payroll records,
Travelers notified Construction Services that Construction Services owed an
additional premium for the 2008-2009 policy year because the audit had
revealed that four of Construction Services’s subcontractors are actually
employees. In March 2010, Construction Services notified Travelers that it
disputed the audit results, asserting that the four subcontractors at issue “are
New Hampshire State registered businesses performing subcontracted work”
for Construction Services, and are not employees.

Thereafter, Construction Services requested the DOL to resolve the
dispute. See RSA 281-A:43, III (2010). According to the trial court, at some
point in 2010, the DOL determined that it lacked jurisdiction over three of the
four subcontractors. The DOL’s jurisdictional decision has not been provided
as part of the appellate record.
 The DOL proceedings, thus, focused solely upon the fourth
subcontractor, John Summers d/b/a Spyder Structures (Summers). The
additional premium for this single individual was $19,584.00. The sole issue
before the DOL was whether Summers is an employee or an independent
contractor for the purposes of determining whether Construction Services owed
Travelers the additional premium. See id.

In December 2010, following a hearing, the DOL determined that
Summers is a Construction Services employee and that Construction Services,
therefore, owed Travelers the additional premium of $19,584.00. Construction
Services unsuccessfully appealed that determination to the superior court. In
March 2013, the superior court upheld the DOL’s determination. The superior
court’s March 2013 decision was not appealed to this court.

In June 2015, Travelers filed the instant lawsuit seeking payment of the
entire additional premium billed for the 2008-2009 policy year. The lawsuit
alleged that, as a result of the DOL’s 2010 decision, which the superior court
upheld in March 2013, “the issues raised by Construction Services” relating to
whether the subcontractors are independent contractors or employees “have
now been fully and finally resolved,” but “Construction Services has failed,
neglected and refused to pay the balance due.”

Construction Services moved for summary judgment, apparently arguing
that Travelers’s lawsuit was untimely because it was filed more than three
years after Travelers’s 2010 demand for the additional premium. See RSA
508:4 (setting forth a three-year statute of limitations for personal actions).
Construction Services’s summary judgment motion and most of Travelers’s
opposition thereto have not been provided as part of the appellate record.

The trial court denied Construction Services’s summary judgment
motion, ruling that Travelers’s lawsuit was timely because it was filed within
three years of the superior court’s 2013 order upholding the DOL’s
determination in the Summers matter. The trial court stated that, because of
the doctrine of administrative tolling, the statute of limitations was tolled as to
the Summers claim and to the claims related to the three other contractors
while the Summers proceeding was pending both in the DOL and the superior
court.

The trial court relied upon equitable considerations in making this
determination. It ruled that tolling was proper because: (1) the “DOL has
expertise in the subject matter of this case [—] the employment status of
certain disputed subcontractors”; (2) “[u]nder the doctrine of primary
jurisdiction, this Court would have deferred to DOL had Travelers brought suit
during either the administrative proceeding or the appeal to this Court”; and (3)
Construction Services “was certainly aware of the entire dispute in 2010,
satisfying the primary goal behind the statute of limitations.” See N.H. Div. of

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Human Serv. v. Allard, 138 N.H. 604, 607 (1994) (explaining that, “[b]ecause
tolling of the limitations period” in Allard was “based on the exercise of our
equitable power, we . . . look[ed] to practical concerns,” such as whether “the
main purpose of the statute of limitations . . . [was] frustrated by tolling”).

The court rejected Construction Services’s argument “that[,] even if
Travelers was justified in delaying suit on Summers, its claims as to the other
three contractors should not be tolled as [the] DOL determined in 2010 that it
lacked jurisdiction over those individuals/entities,” because the court found
that the dispute between the parties concerned “a single increase in premium.”
Construction Services unsuccessfully moved for reconsideration.

Thereafter, the parties entered into a contingent settlement agreement in
which they agreed to a judgment amount. The stated purpose of their
agreement was to preserve Construction Services’s right to appeal the trial
court’s denial of its summary judgment motion. The trial court entered the
parties’ agreement as a court order. Construction Services subsequently filed
the instant appeal.

In reviewing the denial of a motion for summary judgment, we draw all
inferences from the facts in the light most favorable to the nonmoving party.
Goss v. City of Manchester, 140 N.H. 449, 450 (1995). If no genuine issue of
material fact exists, a motion for summary judgment may be granted, and the
moving party is entitled to judgment as a matter of law. See id. at 450-51. We
review the trial court’s application of law to the facts de novo. Rivera v. Liberty
Mut. Fire Ins. Co., 163 N.H. 603, 606 (2012).

“Although we apply our traditional summary judgment standard of
review to the legal issues and to the determination of whether a genuine issue
of material fact exists, we review the trial court’s decision to grant equitable
relief” — in the form of tolling the statute of limitations — “for an
unsustainable exercise of discretion.” Conant v. O’Meara, 167 N.H. 644, 648-
49 (2015). Although awarding equitable relief is within the authority of the
trial court, that “discretion must be exercised, not in opposition to, but in
accordance with, established principles of law.” Clapp v. Goffstown School
Dist., 159 N.H. 206, 210 (2009) (quotation omitted).

The general rule “is that the limitations period is not tolled during a
pending administrative proceeding unless that proceeding is a prerequisite to
pursuit of the civil action” at issue. Allard, 138 N.H. at 606. An administrative
proceeding “is a definitional prerequisite” to a superior court proceeding when
an agency has exclusive jurisdiction over a question. Id. The administrative
proceeding may be deemed a prerequisite to the court proceeding when the
agency and the superior court share jurisdiction over the question if the
“primary jurisdiction doctrine” and the general requirement that parties
exhaust administrative remedies apply. See id. at 606-07. The primary

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jurisdiction doctrine provides that “a court will refrain from exercising its
concurrent jurisdiction to decide a question until it has first been decided by a
specialized agency that also has jurisdiction to decide it.” Id. at 607 (quotation
omitted).

The trial court in this case applied administrative tolling because it
viewed the dispute between Travelers and Construction Services as involving a
single, increased premium. However, we agree with Construction Services that,
once the DOL determined that it lacked jurisdiction to decide whether the
subcontractors other than Summers are independent contractors or
employees, the dispute between the parties became divisible. No longer was
the dispute about a single, increased premium. Rather, following the DOL’s
jurisdictional decision, the parties had at least two separate disputes, one
involving Summers and the $19,584.00 additional premium associated with
him, and one involving the three other subcontractors and the additional
premium associated with them. We note that Travelers conceded at oral
argument that the outcome of the Summers matter — whether the superior
court upheld the DOL’s decision or not — was immaterial to the calculation of
the additional premium associated with the three other contractors.

With this understanding of the parties’ dispute, we first address the
timeliness of Travelers’s lawsuit as it relates to Summers. Construction
Services concedes that the applicable statute of limitations was tolled while the
Summers claim was before the DOL. However, Construction Services contends
that the tolling period ended once the DOL determined in 2010 that Summers
is an employee. Construction Services argues that the statute of limitations
was not tolled while its appeal of the DOL decision was pending because it “was
not entitled to a de novo hearing” in the superior court. Thus, Construction
Services asserts, administrative tolling does not render timely Travelers’s 2015
lawsuit as to Summers.

We have not previously decided whether, for the purposes of the
administrative tolling doctrine, an administrative matter is deemed “pending”
while on appeal to the superior court. Cf. Dobe v. Comm’r, N.H. Dep’t of Health
& Human Services, 147 N.H. 458, 460, 461-62 (2002) (upholding superior
court’s decision not to toll the statute of limitations while the plaintiff appealed
the decision of an agency employee to an agency tribunal because that appeal
was not a prerequisite to the plaintiff’s claim that the agency employee was
negligent); Burnett v. New York Central R. Co., 380 U.S. 424, 434-35 (1965)
(holding that a federal statute of limitations period was tolled while a related
state lawsuit was pending, including the time for filing an appeal or the
decision on appeal); Okoro v. City of Oakland, 48 Cal. Rptr. 3d 260, 264-65 (Ct.
App. 2006) (holding that, for purposes of a federal statute that tolls state
statutes of limitations while a state claim is pending in federal court and for 30
days after it is dismissed, a matter remains “pending” in the federal court
system through an appeal afforded as a matter of right). Nor need we decide

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this broad question in the instant case given the limited nature of Construction
Services’s appellate argument. Construction Services’s argument is premised
upon the assumption that an administrative matter is deemed “pending” while
on appeal to the superior court only if the appeal involves a de novo hearing.
We confine our review to the limited argument that Construction Services
makes in this appeal.

Construction Services offers no support for its contention that the
administrative tolling period includes an appeal of an agency decision only if
the appellant is entitled to a de novo hearing on appeal, and we are not aware
of any direct or analogous support for this contention in this or any other
jurisdiction. Both of the cases upon which Construction Services relies
concern when a legal malpractice claim begins to accrue for purposes of
applying the discovery rule; neither case involves the administrative tolling
doctrine. As the appealing party, Construction Services has the burden of
demonstrating reversible error. Gallo v. Traina, 166 N.H. 737, 740 (2014).
Based upon our review of the trial court’s decision, Construction Services’s
challenges to it, and the relevant law, we conclude that Construction Services
has not demonstrated reversible error with respect to the trial court’s
determination that Travelers’s lawsuit related to Summers was timely filed.
See id.

We next address whether Travelers’s lawsuit as it relates to the three
other subcontractors was timely filed. The DOL determined, in 2010, that it
lacked jurisdiction to decide the parties’ dispute as it related to those
subcontractors. Once the DOL made that determination, it had jurisdiction to
decide only whether Summers is an independent contractor or an employee
and, therefore, whether the part of the additional premium attributable to
Summers was valid. After the DOL made its 2010 jurisdictional decision,
which was not appealed, there was no administrative proceeding involving the
three other subcontractors, and, thus, there could not be any further
administrative tolling of the applicable statute of limitations for Travelers’s
claims related to them. Accordingly, the trial court erred when it relied upon
the doctrine of administrative tolling to find that Travelers’s 2015 lawsuit, as it
related to the subcontractors other than Summers, was timely.

Affirmed in part; reversed
in part; and remanded.

DALIANIS, C.J., and HICKS, BASSETT, and HANTZ MARCONI, JJ.,
concurred.

Eileen Fox,
Clerk

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