Kirk v. United States

• Decision Date: 15 March 1985
• Docket Number: Civ. No. 83-212-D.
• Citation: 604 F. Supp. 1474
• Parties: William L. KIRK, Individually and as Administrator of the Estate of Diane M. Kirk v. UNITED STATES of America.
• Court: U.S. District Court — District of New Hampshire

604 F. Supp. 1474

William L. KIRK, Individually and as Administrator of the Estate of Diane M. Kirk v. UNITED STATES of America.

Civ. No. 83-212-D.

United States District Court, D. New Hampshire.

March 15, 1985.

COPYRIGHT MATERIAL OMITTED

James R. Volker, Salem, Mass., for plaintiff.

Bruce E. Kenna, U.S. Atty., Concord, N.H., for defendant.

MEMORANDUM OPINION

DEVINE, Chief Judge.

Plaintiff William L. Kirk ("Kirk") has brought a claim in this court pursuant to the Federal Tort Claims Act ("FTCA"), 28 U.S.C. §§ 1346(b), 2671-2680. Plaintiff, owner of a house rife with problems, seeks money damages, premising his claim on the Farmers Home Administration's ("FmHA") negligent supervision and inspection during the construction of the imperfect home. Defendant argues in response that plaintiff's claim is barred by the applicable statute of limitations, that any negligence claim is without merit, and that its actions came within the ambit of a recognized exception to FTCA. As adduced from the evidence presented at trial, the relevant facts are as follows.

In April 1973 Charles Fitz ("Fitz") applied for a Rural Housing Loan from the FmHA pursuant to Title V of the Housing Act of 1949, 42 U.S.C. § 1471, et seq., for the construction of a ranch-style home on a one-acre undeveloped lot located at 49 Long Hill Road in Dover, New Hampshire. FmHA, which is an agency of defendant, accepted Fitz's application for a loan, and pursuant to regulations in effect at that time proceeded to assist Fitz in effectuating construction. These regulations, 7 C.F.R. § 1804, et seq. (1973), provided that the FmHA County Supervisor would approve the contractor selection and the construction contract, review plans and specifications for the building, approve any variances in construction plans, inspect the building construction, and determine if the construction complied with the conditions of the contract.

Fitz, with FmHA's approval, contracted with Albert Estes ("Estes") in April of 1973 to build a single-family home at 49 Long Hill Road. Estes met with FmHA's Construction Supervisor William West ("West") at that time to review and revise plans and specifications for the project. The design for the property's septic system was supplied by Fitz after approval of the system design by State authorities. The plans and specifications for the home as well as the construction contract between Fitz and Estes were approved in April 1973 by FmHA's Assistant County Supervisor Aaron Chadbourne. The construction contract granted FmHA the right to inspect and test all materials and workmanship as well as the right to reject any defective materials and workmanship.

Estes began construction at 49 Long Hill Road in June 1973 and completed work thereon in December 1973, the month Fitz took occupancy. West, in his capacity as FmHA's Construction Supervisor, visited the site on at least seven occasions between July 20, 1973, and August 28, 1974, to ensure compliance with design specifications. In January and June 1974 West observed foundation cracks, and FmHA directed Estes to repair these structural imperfections. During construction Fitz had ordered several unapproved variances, including relocation of the septic system from one end of the property to another. Pursuant to his obligation under the construction contract, Fitz had loam and sand brought to the site by dump truck in order to grade and backfill the site. West issued his final report in August 1974 indicating that construction was in conformity with FmHA's approved plans and specifications.

The FmHA file on the Fitz construction revealed that Fitz complained to FmHA in December 1974 about leakage and smell from the septic system. In February 1975 Estes agreed to open and repair the septic system. In February 1977 Fitz complained to FmHA about frost heaving and foundation cracking near the garage door and basement area. The foundation cracking was confirmed by FmHA officials in March 1977. The FmHA file does not reveal any further complaints. Fitz testified that Estes patched the foundation cracks and that he (Fitz) added six inches of fill to the leach field. Fitz did not experience any further problems with the foundation or the septic system during the years of his ownership. Neither did he experience problems with the electric circuitry or the water pump during his years of ownership. Fitz moved from the property in the summer of 1979.

Plaintiff became interested in purchasing the 49 Long Hill Road property in September 1979 after visiting the lot with realtor Larry Dubois. During that visit, plaintiff noticed that the foundation had been patched in several areas, a condition which the realtor attributed to settling. Plaintiff contacted FmHA at that time about obtaining mortgage financing for the 49 Long Hill Road property. In October 1979 plaintiff made an offer to buy the property for $40,500, an offer never submitted to Fitz by the Fischer Agency, the real estate firm selling the property for Fitz. FmHA approved plaintiff's application for a loan in October 1979. Plaintiff again offered to purchase the property for $41,000, the offer this time going to Walter Fischer of the Fischer Agency on October 26, 1979. Fischer purportedly had purchased the property from Fitz pursuant to a guaranteed sale contract, although the actual transfer of title between Fitz and Fischer was not accomplished until November 14, 1979. Plaintiff's second offer was never submitted to Fitz. Plaintiff offered to purchase the property for a second time from Fischer (a third time overall) on November 28, 1979, for $41,000, an offer which was accepted. Plaintiff and his wife occupied the premises in December 1979 under a rental agreement with Fischer until the transfer of title and closing on January 18, 1980.

Prior to closing, plaintiff made three separate personal inspections of the premises. In addition to the September 1979 inspection with Larry Dubois, plaintiff inspected the premises a few days later with his wife and Larry Dubois, and then in early October 1979 he inspected the premises with his wife and her parents. These inspections were cursory walk-through visits designed to ensure that basic utilities and amenities were present and functional. Plaintiff did not have a professional appraisal or inspection of the property to ensure the structural integrity of the home prior to purchase.

The first two purchase and sale agreements signed by plaintiff in October 1979 referenced the seller's obligation to update the plumbing, wiring, and heating system prior to the transfer of title. The third and last purchase and sale agreement was conditioned upon a functional septic system, with plaintiff accepting the responsibility of pumping out as well as inspecting the system prior to occupancy. While plaintiff did have the system pumped out, he did not endeavor to have it inspected. The last purchase and sale agreement also indicated that plaintiff accepted the house in its "as is" condition.

Plaintiff began to experience difficulties with the premises in June 1980 when he noticed that the ground around the leach field was wet and malodorous. In August 1980 the well pump failed. During the winter of 1980 and the spring of 1981 the foundation walls in the basement area developed serious cracks. Plaintiff hired Jack Wallace, a contractor, to repair the foundation walls in the fall of 1981. This remedial work revealed the cause of the cracked foundation: inadequate footings and frostwall in violation of FmHA's Minimum Property Standards ("MPS"), standards which had supposedly been achieved during the 1973 construction. Additional defects uncovered during the remedial work included inadequate insulation in the living room floor. According to Peter Rousseau, an excavation contractor, the septic system deficiencies were the result of inadequate depth of the system and a high water table.

Plaintiff first became aware of FmHA's involvement in the original construction of the 49 Long Hill Road property in October 1979, but did not gain access to the FmHA files, specifically the Fitz file, until the summer of 1981. Kirk submitted a Claim for Damage to FmHA on May 3, 1982, which was denied on October 26, 1982. The instant action was filed with the Court on April 22, 1983.

Before the Court can reach the merits of the case, it must initially determine whether plaintiff has brought suit in a timely manner. Under FTCA, 28 U.S.C. §§ 1346(b), 2671-2680, a tort claim against the United States must be presented in writing to the appropriate federal agency within two years of the time such claim accrues, and if it is not so presented, it shall be forever barred. 28 U.S.C. § 2401(b). In determining when a claim accrues, the Court follows "the lex loci rule—the applicable law is the law of the state where the claim arose." Hau v. United States, 575 F.2d 1000, 1002 (1st Cir.1978). Accordingly, the law of New Hampshire governs the issue of when plaintiff's cause of action accrued. Girard v. United States, 455 F.Supp. 502, 503 (D.N.H.1978).

It is well established in New Hampshire that a cause of action sounding in tort accrues at the time damages occur. Premium Management, Inc. v. Walker, 648 F.2d 778 (1st Cir.1981), citing Roberts v. Richard & Sons, Inc., 113 N.H. 154, 156, 304 A.2d 364 (1973). There is, however, a "discovery rule" in New Hampshire which provides an exception to the general rule. EIMCO-BSP Services Co. v. Davison Construction Co., 547 F.Supp. 57, 59 (D.N.H. 1982). Under the discovery rule, a cause of action will not accrue "until the plaintiff discovers or in the exercise of reasonable diligence should have discovered not only that he was injured but also that his injury may have been caused by the defendant's wrongful conduct." Id., quoting Brown v. Mary Hitchcock Memorial Hospital, 117 N.H. 739, 743, 378 A.2d 1138 (1977).

Application of the discovery rule to the facts presented in this case leads the...