Opinion
No. 83-161 No. 83-182
Decided April 2, 1984
1. Appeal and Error — Dismissal of Complaint — Standards for Review In evaluating the propriety of the trial court's granting of a motion to dismiss, the supreme court must assume that all the facts alleged by the plaintiff are true and construe all reasonable inferences from those facts favorably to the plaintiff, and if the facts as alleged would constitute a basis for legal relief, the motion to dismiss should be denied.
2. Appeal and Error — Dismissal of Complaint — Standards for Review In evaluating the propriety of trial court's granting of the State's motion to dismiss plaintiffs' claims for indemnity and breach of contract as barred by sovereign immunity, the supreme court must assume that the plaintiffs entered valid contracts with the State which the State had subsequently breached, and the decision of the trial court must be reversed unless the suits were barred by sovereign immunity.
3. States — Sovereign Immunity — Waivers The supreme court could not say that the plain meaning of the last sentence of the statutory provision which empowers the water supply and pollution control commission to review, approve, and co-sign contracts for engineering services related to the construction of sewerage systems, which sentence provides that nothing in the statute shall be construed to place any additional financial obligation on the State, clearly conveys a legislative intent to repeal the waiver of sovereign immunity in the statute abrogating State sovereign immunity for claims based on express or implied contracts. RSA 149:4, XIII, 491:8.
4. Statutes — Construction and Application — Legislative Intent The fact that there were extended debates in the Senate regarding sovereign immunity during 1967, the same year in which the statutory provision which empowers the water supply and pollution control commission to review, approve, and co-sign contracts for engineering services related to the construction of sewerage systems was enacted, lead the supreme court to conclude that a senate so concerned with sovereign immunity would have been much more explicit if it had intended to repeal a waiver of sovereign immunity when it enacted that statutory provision in the same year. RSA 149:4, XIII.
5. Statutes — Construction and Application — Legislative Intent A close reading of the applicable statutes convinces the supreme court that the legislature fully intended the State to pay its share of the entire cost of a sewerage treatment facility contract, not just the exact amount specified in the contracts, where the legislative history showed that the State is to be liable for a percentage of the entire cost, as defined by federal law, and where the language of the federal statute clearly indicates the government's contemplation of liability for expenses in excess of the exact dollar amount specified in the original contract before charges or add-ons. RSA 149-B:1 (Supp. 1983); Water Pollution Control Act Amendments of 1956, ch. 518, 6(e), 70 Stat. 498, 503 (1956), superseded by Federal Water Pollution Control Act Amendments of 1972, Pub.L. No. 92-500, 212(i), 86 Stat. 816, 844 (1972) (codified at 33 U.S.C.A. 1292 (West 1978)).
6. Statutes — Construction and Application — Sections Considered Together The clear meaning of the statute governing State contributions to municipalities for water pollution control convinced the supreme court that the legislature intended payment based on the entire cost of the project, and the legislature could not simultaneously have intended to repeal the waiver of sovereign immunity in the statute abrogating State sovereign immunity for claims based on express or implied contracts, since a legislature cannot intend two mutually exclusive results by the same statute. RSA 149:4, XIII, 149-B:1 (Supp. 1983), 491:8.
7. Environmental Law — Statutes — Construction Nothing in the supreme court's opinion holding that the legislature intended the State to pay its share of the entire cost of the project under the statute which empowers the water supply and pollution control commission to review, approve, and co-sign contracts for engineering services related to the construction of sewerage systems and the statute governing state contributions to municipalities for water pollution control, should be construed as permitting damages in excess of those authorized by Public Law 660 of the 84th Congress, which defines "construction" for purposes of the Water Pollution Control Act Amendments of 1956. RSA 149:4, XIII, 149-B:1 (Supp. 1983); Water Pollution Control Act Amendments of 1956, ch. 518, 6(e), 70 Stat. 498, 503 (1956), superseded by Federal Water Pollution Control Act Amendments of 1972, Pub.L. No. 92-500, 212(i), 86 Stat. 816, 844 (1972) (codified at 33 U.S.C.A. 1292 (West 1978)).
8. Statutes — Construction and Application — Legislative Intent Although the legislature, if it was dissatisfied with the court's holding in Morgenroth Assoc's, Inc. v. Town of Tilton, 121 N.H. 511 (1981), that the statute relating to contracts for construction of sewerage systems was merely permissive and that the statute waiving the State's immunity from suit on express or implied contracts permitted a suit against the State based on an implied-in-fact contract, has had ample opportunity to limit the State's liability, it has not seen fit to alter either of those statutes and the supreme court would not do so in the present case. RSA 149:4, XIII, 491:8.
9. States — Sovereign Immunity — Actions Barred Where plaintiffs, a corporation and a municipality, brought separate actions against the State for breach of contracts involving the planning and construction of a sewerage treatment facility, the supreme court held that to the extent that any of the plaintiffs' claims sounded in indemnity and were implied in law, the trial court properly ruled that they are barred by sovereign immunity. RSA 149:4, XIII, 491:8.
Gallagher, Callahan Gartrell P.A., of Concord (Stephen J. McAuliffe and Sarah H. Mulhern on the brief, and Mr. McAuliffe orally), for Anderson-Nichols Company, Inc.
Cleveland, Waters Bass, of Concord (Michael C. Moyers on the brief, and Deborah A. Monteith, of Hartford, Connecticut, orally), for the City of Berlin.
Gregory H. Smith, attorney general (Edward L. Cross, Jr., assistant attorney general, on the brief and orally), for the State.
The plaintiffs, in separate actions consolidated on appeal, alleged that they either expressly or impliedly entered into a series of contracts with the State and that the State breached these contracts. The State in each case moved to dismiss the plaintiffs' claims for indemnity and breach of contracts as barred by sovereign immunity. The Trial Court (Dunn, J.) granted the motions to dismiss, and the plaintiffs appealed. We reverse in part and affirm in part.
The plaintiffs, Anderson-Nichols Company, Inc. (ANCO) and the City of Berlin (city), allege that in 1970, 1974, and 1976 they executed contracts with the State through the Water Supply and Pollution Control Commission (WSPCC). These contracts involve the planning and construction of a sewerage treatment facility. The contracts call for the federal government to provide seventy-five percent of the funding, the State to provide twenty percent and the city five percent. The plaintiffs contend that when the WSPCC signed these contracts and assumed certain contractual duties, the WSPCC either expressly or impliedly entered into binding contracts. They further allege that under these contracts the State is liable for twenty percent of the entire cost of the project, not just twenty percent of the exact dollar amount specified in the contract. In addition, the plaintiffs contend that the State is liable in equity and law for its breaches of these contracts.
[1, 2] "In evaluating the propriety of the trial court's action [in granting a motion to dismiss], we must assume that all the facts alleged by the plaintiff are true and construe all reasonable inferences from those facts favorably to the plaintiff." Morgenroth Assoc's, Inc. v. Town of Tilton, 121 N.H. 511, 516, 431 A.2d 770, 77 (1981) (citing Lawton v. Great Southwest Fire Ins. Co., 118 N.H. 607, 610, 392 A.2d 576, 578 (1978)). "If the facts as alleged would constitute a basis for legal relief, the motion to dismiss should be denied." Royer Foundry Mach. Co. v. N.H. Grey Iron, Inc., 118 N.H. 649, 651, 392 A.2d 145, 146 (1978); see also Jarvis v. Prudential Ins. Co., 122 N.H. 648, 651, 448 A.2d 407, 409 (1982). Accordingly, we must assume that the plaintiffs entered valid contracts with the State which the State has subsequently breached. Therefore, the decision of the trial court must be reversed unless the suits are barred by sovereign immunity.
The legislature has waived sovereign immunity in RSA 491:8 for "any express or implied contract with the State." The State, however, contends that the last sentence of RSA 149:4, XIII, revives sovereign immunity with respect to contracts entered into by the WSPCC, to the extent that twenty percent of the exact dollar amount specified in the contract is exceeded. Essentially, the State concedes that it is liable for the exact terms of the contract, but argues that sovereign immunity still precludes suits for breach of contract for damages in excess of those authorized by the exact amount specified in the contract. See RSA 149:4, XIII. For the reasons set forth below, we do not believe that the legislature intended to repeal the waiver of sovereign immunity in RSA 491:8 when it enacted RSA 149:4, XIII.
The last sentence of RSA 149:4, XIII, at issue provides: "Except for the financial assistance available to municipalities under the provisions of RSA 149-B, nothing herein shall be construed to place any additional financial obligation on the state, the commission, or its personnel." We cannot say that the plain meaning of this language clearly conveys a legislative intent to repeal the waiver of sovereign immunity in RSA 491:8. The legislature is well aware of the importance of sovereign immunity and has evinced the ability clearly to waive or refuse to waive sovereign immunity. See RSA 99-D:1. ("It is not intended to . . . waive the sovereign immunity of the State . . . .")
Although RSA 99-D:1 was not enacted until 1978, the legislature was also informed and concerned about sovereign immunity in 1967, when RSA 149:4, XIII, was enacted. In 1967, the Senate had extended debates regarding sovereign immunity when considering a limited waiver of sovereign immunity from liability in tort for up to and including $1,000. See N.H.S. JOUR. 667-69, 694-95, 743-47 (1967). Senator Leonard even noted that Chief Justice Lampron "gave an opinion and said this law was antiquated." Id. at 744. This bill was eventually returned to committee for more study due to concern about the cost to the cities and towns if it was enacted. Id. at 747. Certainly, a senate this concerned with sovereign immunity would have been much more explicit if it had intended to repeal a waiver of sovereign immunity when it enacted RSA 149:4, XIII, in the same year.
A close reading of the applicable statutes convinces us that the legislature fully intended the State to pay its share of the entire cost of this project, not just the exact amount specified in the contracts. In RSA 149:4, XIII, the amount of money available to municipalities for these projects is controlled by the terms of RSA chapter 149-B: "Except for the financial assistance available to municipalities under the provision of RSA 149-B . . . ." RSA 149:4, XIII.
RSA 149-B:1 formerly provided:
"The state of New Hampshire shall . . . pay annually 30 percent of the yearly amortization charges, meaning principal and interest, on the original costs resulting from the acquisition and construction of sewage disposal facilities by municipalities . . . in accordance with . . . RSA 149:4, XIII, for the control of water pollution. The word construction shall include engineering services . . . . The term `original costs' as used herein shall mean the entire cost of the construction as defined in Public Law 660, 84th Congress . . . ."
(Emphasis added.) This statute has been amended several times since first enacted. In 1977 the amount of the State's participation was reduced from thirty percent to twenty percent. See RSA 149-B:1 (Supp. 1983) (legislative history). In both 1979 and 1982, the statute was amended generally, and in 1983, several minor changes were made. Id.
It is significant that the legislature has not seen fit to alter any of the above-quoted language while otherwise amending the statute. RSA 149-B:1 (Supp. 1983) still includes engineering services and still provides that the State will be liable for the percentage of the "entire" cost as defined by federal law. Public Law 660 of the 84th Congress provided:
"As used in this section the term `construction' includes preliminary planning to determine the economic and engineering feasibility of treatment works, the engineering, architectural, legal, fiscal, and economic investigations and studies, surveys, designs, plans, working drawings, specifications, procedures, and other action necessary to the construction of treatment works; and the erection building, acquisition, alteration, remodeling, improvement, or extension of treatment works; and the inspection and supervision of the construction of treatment works."
Water Pollution Control Act Amendments of 1956, ch. 518, 6(e), 70 Stat. 498, 503 (1956), superseded by Federal Water Pollution Control Act Amendments of 1972, Pub.L. No. 92-500, 212(1), 86 Stat. 816, 844 (1972) (codified at 33 U.S.C.A. 1292 (West (1978)).
It is apparent from this section that the federal government did not limit the meaning of the "entire cost of construction" to include merely the exact amount specified in the contracts. Rather, the language "alteration, remodeling, [or] improvement" used in the statute clearly indicates the government's contemplation of liability for expenses in excess of the exact dollar amount specified in the original contract before changes or add-ons.
[6, 7] A legislature cannot intend two mutually exclusive results by the same statute. The clear meaning of RSA 149-B:1 (Supp. 1983) convinces us that the legislature thereby intended payment based on the entire cost of the project. The legislature cannot simultaneously have intended to repeal the waiver of sovereign immunity in RSA 491:8. Nothing in this opinion should be construed as permitting damages in excess of those authorized by the above-quoted federal statute.
On several occasions, this court has made statements and rulings concerning the State's liability when it enters into a contract. See e.g., Estate of Cargill v. City of Rochester, 119 N.H. 661, 668, 406 A.2d 704, 708 (1979) ("RSA 491:8 (State, contracts, no limit)"). In Morgenroth Assoc's, Inc. v. Town of Tilton, 121 N.H. 511, 518, 431 A.2d 770, 774 (1981) we held that RSA 149:4, XIII was merely permissive and, therefore, that RSA 491:8 permitted a suit against the State based on an implied-in-fact contract.
If the legislature was dissatisfied with this interpretation of RSA 149:4, XIII or it wanted to limit the State's liability under RSA 491:8, it has had ample opportunity to do so. Since Morgenroth Assoc's, Inc. v. Town of Tilton supra was decided in 1981, the legislature has amended RSA 149-B:1 twice. See RSA 149-B:1 (Supp. 1983) (legislative history). The legislature has not seen fit to alter RSA 149:4, XIII, or RSA 491:8, and we will not do so now.
To the extent that any of the plaintiffs' claims sound in indemnity and are implied in law, the trial court properly ruled that they are barred by sovereign immunity. See Morgenroth Assoc's, Inc. v. Town of Tilton, supra at 516, 431 A.2d at 773 ("the superior court has authority under RSA 491:8 to hear only those claims against the State based on implied in fact contracts . . .").
We note that nothing in this opinion should be construed to mean that the State has not limited or cannot limit its liability.
Reversed in part; affirmed in part.