City of Colorado Springs v. Timberlane Associates

Citation824 P.2d 776
Decision Date27 January 1992
Docket NumberNo. 90SC645,90SC645
PartiesCITY OF COLORADO SPRINGS, a municipal corporation, Petitioner, v. TIMBERLANE ASSOCIATES, a Colorado general partnership; Investment Builders Corporation, a Colorado corporation; John W. Dawson; and Joseph M. Birdsell, Individually, Respondents.
CourtSupreme Court of Colorado

Anderson, Johnson & Gianunzio, Gregory L. Johnson, Kelly Dude, Colorado Springs, for petitioner.

Susemihl, Lohman, Kent, Carlson & McDermott, P.C., Peter M. Susemihl, Catherine Woelk-Rudisill, Colorado Springs, for respondents.

Colorado Mun. League, Kathleen E. Haddock, Denver, for amicus curiae Colorado Mun. League.

Gorsuch, Kirgis, Campbell, Walker and Grover, Joseph B. Wilson, Denver, for amicus curiae Colorado Ass'n of Mun. Utilities.

Justice VOLLACK delivered the Opinion of the Court.

The City of Colorado Springs (the City) appeals from a court of appeals ruling that statutes of limitations run against cities when they act in a proprietary capacity, such as when operating a public utility. We affirm the court of appeals result on different grounds.

I.

In September of 1975, Timberlane Associates (Timberlane) owned an apartment complex in the City of Colorado Springs. The apartment complex received its natural gas from the City. Late in 1975, a City employee changed the gas meter at the complex, replacing a five-dial meter with a new six-dial meter. Following the installation, City employees failed to correctly read the new six-dial meter. As a result, the City underbilled Timberlane for natural gas supplied from late 1975 until sometime in April of 1981.

The City discovered its billing error in or about May of 1981, and in September of that year, presented Timberlane with a bill in the amount of $57,692.79 for the previously consumed natural gas.

The City did not file suit to collect its debt until July 1, 1986, five years after its discovery of the billing error. Both parties filed motions for summary judgment. The district court initially entered an order in favor of Timberlane. The district court later found for the City, however, after the City filed a Motion for Amendment of Findings and Judgment. Concluding that the statute of limitations did not bar the action, the district court awarded the City the full amount due, plus eight percent interest and costs. Timberlane then filed a Motion for Amended Findings or, Alternatively, Judgment Notwithstanding the Verdict. The district court denied this motion while reversing the portion of its prior ruling that awarded interest on the unpaid charges to the City.

The court of appeals reversed in City of Colorado Springs v. Timberlane Associates, 807 P.2d 1177 (Colo.App.1990), holding that the City was barred from collecting unpaid gas charges incurred before July 1, 1980, more than six years before the City filed suit. The court of appeals held that the applicable statute of limitations, section 13-80-110, 6A C.R.S. (1986), 1 ran against the City because it was acting in a proprietary capacity by operating a public utility. Accordingly, the City was barred from collecting any charges underbilled six years prior to the date of filing the action, specifically from late 1975 until 1980. The City was allowed, however, to collect charges underbilled from 1980 through April of 1981.

The City now contends that the court of appeals erred in holding that statutes of limitations run against governmental entities when the governmental action underlying the suit can be characterized as proprietary or private, as opposed to governmental or public. The City argues that Colorado courts have never distinguished between governmental functions when ascertaining whether statutes of limitations are tolled. Further, because such a distinction is unduly difficult to apply, the City argues that the distinction should be rejected. The City urges this court to apply the general rule that statutes of limitations apply only where the General Assembly has expressly authorized, or where necessary by statutory implication.

II.

The City's appeal presents the larger question of when statutes of limitations run against local governments. We agree with the City's contention that whether a local government acts in a proprietary capacity or governmental capacity is not a viable means by which to determine the running of limitations. We have noted that such a function distinction does not lend itself to predictable patterns in characterizing local government action. City and County of Denver v. Mountain States Tel. and Tel. Co., 754 P.2d 1172 (Colo.1988). We recognize that in keeping with the General Assembly's abrogation of sovereign immunity, we can no longer cloak the state's political subdivisions in immunity from the running of statutes of limitations. See Evans v. Board of County Comm'rs, 174 Colo. 97, 482 P.2d 968 (1971). 2 We agree with the New Jersey Supreme Court's observation that sovereigns now subject to suit should be required to bring their own in a timely manner. New Jersey Educ. Facilities Auth. v. Gruzen Partnership, 125 N.J. 66, 592 A.2d 559, 561 (1991). We thus reject the common law immunity and conclude that statutes of limitations run against local governments, except where the General Assembly expressly authorizes otherwise. Because we are departing from the prior course of law in this area, we begin our analysis with a general review of immunity from statutes of limitations.

III.

The origin of governmental immunity from statutes of limitations is found in the English common law rule of "nullum tempus occurrit regi," or, "time does not run against the king." 3 Labelled the royal prerogative, the rule protected the king when he brought suit in the posture of a plaintiff. United States v. Thompson, 98 U.S. 486, 489, 25 L.Ed. 194 (1878); United States v. Hoar, 26 F.Cas. 329, 330 (C.C.D.Mass.1821) (No. 15,373). No defense of limitations or laches could defeat an action brought by the king.

Justice Story articulated the rationale behind the common law nullum tempus rule, as follows:

The true reason, indeed, why the law has determined, that there can be no negligence or laches imputed to the crown, and, therefore, no delay should bar its right, though sometimes asserted to be, because 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 Bl. Comm. 247), is to be found in the great public policy of preserving the public rights, revenues, and property from injury and loss, by the negligence of public officers. And though this is sometimes called a prerogative right, it is in fact nothing more than a reservation, or exception, introduced for the public benefit, and equally applicable to all governments.

Hoar, 26 F.Cas. at 330. The rule prevented the public from suffering from the negligence of the king's servants. Thompson, 98 U.S. at 489.

The nullum tempus doctrine was imparted to the colonies as an incident of sovereignty when the colonies achieved their independence. Id.; see New Jersey Educ. Facilities Auth. v. Conditioning Co., 237 N.J.Super. 310, 567 A.2d 1013, 1016 (1989) (noting that doctrine was incorporated into American law after the colonial period), aff'd in part and rev'd in part, New Jersey Educ. Facilities v. Gruzen Partnership, 125 N.J. 66, 592 A.2d 559 (1991); see also Commonwealth v. Owens-Corning Fiberglas Co., 238 Va. 595, 385 S.E.2d 865, 870 (1989) (Poff, S.J., dissenting) (noting that the statute exempting the Commonwealth from limitations "has a history of more than 200 years, beginning soon after the revolution ... by the act of October, 1778").

Many of the several states continued to follow the nullum tempus doctrine, subjecting themselves to limitations where the legislature has made an express declaration, or where it is necessary by implication. Hoar, 26 F.Cas. at 330; cf. New Jersey Educ. Facilities Auth., 567 A.2d at 1016 ("A majority of American jurisdictions follow the doctrine in its traditional version."). Thus, a majority of states, when filing lawsuits in the posture of plaintiffs, are immune from statutes of limitations, except where their respective legislatures have decided otherwise.

The contemporary nullum tempus doctrine is grounded not on notions of royal privilege, but on considerations of public policy. Guaranty Trust Co. v. United States, 304 U.S. 126, 132, 58 S.Ct. 785, 788, 82 L.Ed. 1224 (1937) ("[T]he source of its continuing vitality where the royal privilege no longer exists is to be found in the public policy ... of preserving the public rights, revenues, and property from injury and loss, by the negligence of public officers.").

A. Application of the Nullum Tempus Doctrine to Local Governments

While its application to the several states is well settled, the nullum tempus doctrine has not been uniformly applied to their political subdivisions. Cf. Northampton County Area Community College v. Dow Chem., U.S.A., --- Pa. ----, 598 A.2d 1288 (1991) (Papadakos, J., dissenting) (analyzing which local authorities can invoke the nullum tempus doctrine). Some jurisdictions fully shield their political subdivisions from limitations on actions under the nullum tempus doctrine, while a minority of jurisdictions have declined to extend the nullum tempus doctrine to local government. 4

A majority of jurisdictions, however, provide local governments with limited immunity from statutes of limitations, premised on the notion that political subdivisions do not possess the full attributes of sovereignty held by the states. 5 In these jurisdictions, limited immunity turns on whether the local government is acting in a public or governmental capacity, as opposed to a corporate or private capacity. 6

The distinction in the local governments' actions is justified by local governments' dual nature. Eugene McQuillin, Municipal Corporations [hereinafter Municipal Corporations ] § 2.09 ...

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