Montgomery County v. Microvote Corp.

• Decision Date: 25 June 2001
• Docket Number: No. CIV.A. 97-6331.,CIV.A. 97-6331.
• Citation: 152 F.Supp.2d 784
• Parties: MONTGOMERY COUNTY, Plaintiff, v. MICROVOTE CORPORATION, Carson Manufacturing Company, Inc., and Westchester Fire Insurance Company, Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

152 F.Supp.2d 784

MONTGOMERY COUNTY, Plaintiff, v. MICROVOTE CORPORATION, Carson Manufacturing Company, Inc., and Westchester Fire Insurance Company, Defendants.

No. CIV.A. 97-6331.

United States District Court, E.D. Pennsylvania.

June 25, 2001.

COPYRIGHT MATERIAL OMITTED

John M. Elliott, Timothy T. Myers, Brian J. McCormick, Jr., Krista K. Beatty, Elliott, Reihner, Siedzikowsky, North and Egan, P.C., Union Meeting Corporate Center V, Blue Bell, PA, for Montgomery County.

Samuel E. Klein, Robert C. Clothier, III, Hope S. Freiwald, Louise E. Moyer, Dechert, Price & Rhoads, Philadelphia, PA, Robert J. Kerns, Landis, Kerns and Associates, Lansdale, PA, Walter E. Bravard, Jr., John R. Price, Indianapolis, IN, for Microvote Corporation.

Robert T. Carlton, Jr., Jennifer B. Grills, Ellsworth, Wiles & Chalphin, P.C., J. Stephen Woodside, Ellsworth, Carlton & Waldman, PC, Philadelphia, PA, for Westchester Fire Insurance Co., Inc.

Robert T. Carlton, Jr., Ellsworth, Wiles & Chalphin, P.C., Philadelphia, PA, for Universal Bonding Insurance Company.

MEMORANDUM

ROBERT F. KELLY, District Judge.

This is the second in a series of three decisions on Post-trial Motions filed by the parties, the Plaintiff, Montgomery County, Pennsylvania ("the County"), and two Defendants, Microvote Corporation ("Microvote") and Westchester Fire Insurance Company ("Westchester"), following a ten day jury trial. The issue presented for the jury's determination as to the County's claim against Westchester was whether Westchester was liable to the County under a performance bond. Presently before the Court are Westchester's Post-trial Motions which include: (1) Motion for Judgment as a Matter of Law on Statute of Limitations; (2) Motion for Relief from Judgment; and (3) Motion to Set Aside Judgment or for New Trial.

I. MOTION FOR JUDGMENT AS A MATTER OF LAW—STATUTE OF LIMITATIONS.

Westchester separately renews its Motion originally made at trial, pursuant to Federal Rules of Civil Procedure 50(b) and 59, for judgment as a matter of law against the County for Count VI of the County's Complaint, the action on the performance bond. Westchester claims this cause of action is barred by a one year statute of limitations pursuant to 42 Pa. C.S.A. section 5523(3).¹ Because the County filed this action on October 10, 1997, Westchester contends that the County's cause of action must have accrued no later than October 10, 1996 for this claim to be timely. The leading Pennsylvania case in this area is Turner Construction, Inc. v. American States Insurance Co., 397 Pa.Super. 29, 579 A.2d 915 (1990), app. denied, 527 Pa. 603, 589 A.2d 693 (1991), in which the court held that the cause of action on a performance bond accrues at the time of the principal's default. Id. at 919. Westchester contends that the County had "discovered" Microvote's alleged "default" by June 28, 1996 at the latest, and any action on the performance bond should have been brought within one year of that date, or by June 28, 1997. Because this action was not filed on or before June 28, 1997, Westchester contends that it is time-barred.

Westchester also argues that the posting of the performance bond was discretionary and the County is not entitled to invoke the doctrine of nullum tempus occurit regi ("nullum tempus") on this claim.² The United States Court of Appeals for the Third Circuit ("Third Circuit") explained the doctrine of nullum tempus as follows:

under the doctrine of nullum tempus, statutes of limitations are not applicable to actions brought by the Commonwealth or its agencies unless a statute expressly so provides. The rationale of this rule is that the Commonwealth, as a plaintiff, seeks the vindication of public rights and the protection of public property.

City of Phila. v. Lead Indus. Ass'n, Inc., 994 F.2d 112, 118 (3d Cir.1993) (citations omitted). While Westchester states that if the County is an agency of the Commonwealth, its claims would not be time barred, it also cites City of Philadelphia v. Holmes Electric Protective Co. of Philadelphia, 335 Pa. 273, 6 A.2d 884 (1939), in which the Pennsylvania Supreme Court stated that "the immunity of the sovereign from subjection to statutes of limitations does not, in the absence of express provisions to the contrary, extend to municipalities, counties, townships or boroughs." Id. at 887 (citations omitted). The Holmes Electric court added that nullum tempus is only available to political subdivisions such as counties in the following very limited circumstances:

statutes of limitations cannot be pleaded against such political subdivisions when they are seeking to enforce strictly public rights, that is, when the cause of action accrues to them in their governmental capacity and the suit is brought to enforce an obligation imposed by law as distinguished from one arising out of an agreement voluntarily entered into by the defendant.

Id. Because the County is a political subdivision and not a Commonwealth party, Westchester claims that in order to enjoy the benefit of nullum tempus, the County's claim against the performance bond must: (1) accrue to it in its governmental capacity; and (2) seek enforcement of an obligation imposed on Westchester by law rather than a voluntary agreement.

The Third Circuit applied this test in Lead Industries and held that the city was not entitled to the benefit of nullum tempus in a suit against manufacturers of lead pigment and their trade association to recover the costs of abating lead-based paint from HUD-associated housing units. 994 F.2d at 120-21. Westchester argues that this case resembles Lead Industries because the claims involved are common law contract and tort claims arising out of voluntary agreements. Id. at 120. Westchester also states that the County and Microvote voluntarily contracted to purchase and sell voting machines and the County has not alleged that it was required by law, as an agency of the legislature, to purchase voting machines. Section 2642(c) of the Election Law, 25 P.S. § 2642, authorizes County Boards of Elections to purchase voting machines. Further, 25 P.S. section 3031.2 provides that any County may, by a majority vote of its qualified electors, authorize and direct the use of an electronic voting system. 25 P.S. § 3031.2. These Pennsylvania provisions, according to Westchester, are purely permissive and, under the Third Circuit's analysis in Lead Industries, the County is not entitled to the benefit of nullum tempus because the County did not have an obligation to purchase the electronic voting machines by law rather than by voluntary agreement. Lead Indus., 994 F.2d at 120-21.

Moreover, Westchester states that, even if the County was obligated by law to purchase voting machines, it was not obligated to obtain a performance bond. This issue is controlled, according to Westchester, by 16 P.S. section 5001(c), which makes the posting of a 50% performance bond a matter solely within the discretion of County Commissioners.³ Westchester distinguishes the instant case from other situations which mandate that parties post a performance bond, such as (1) the Miller Act, 40 U.S.C. § 270a, which mandates that contractors post a performance bond and a payment bond on all federal government construction contracts; and (2) Pennsylvania's Public Works Contractors Bond Law of 1967, 8 P.S. §§ 191-202, which mandates that the contracting body obtain from every contractor a performance bond and payment bond for 100% of the contract price. Additionally, Westchester notes that the County Commissioners did not obtain a bond from Sequoia Pacific, the company with which it contracted for the replacement voting machines. Rather, Sequoia Pacific posted a letter of credit subject to New York law.

The County labels Westchester's voluntary bond argument contrived and states "it is undeniable that the Commissioners did not waive such a requirement and in fact demanded that the Performance Bond be procured, which it was." (County's Opp'n Westchester's Mot. for J. as Matter of Law at 9.) The County distinguishes Lead Industries because in that case, the Performance Bond and contract were entered into voluntarily. Id. at 9 n. 3 (citing Lead Indus., 994 F.2d at 119). Here, they were mandated by Pennsylvania law and the Montgomery County electorate. Id. at 9. More importantly, the County notes that Westchester fails to recognize or even acknowledge this Court's prior Memorandum Opinion which rejected Westchester's arguments against nullum tempus and the statute of limitations. See Montgomery County v. MicroVote, 23 F.Supp.2d 553 (E.D.Pa.1998). In that prior decision, this Court stated:

In the instant case, the County has a duty "[t]o purchase, preserve, store and maintain primary and election equipment of all kinds, including voting booths, ballot boxes and voting machines." 25 P.S. § 2642(c). Further, the County's citizens voted to replace their manual voting machines with electronic machines. The County was then required by law to purchase electronic machines. 25 P.S. § 3031.4(a). Therefore, a claim arising out of the contract to purchase the DREs [electronic voting machines] accrues to the County in its governmental capacity and would be brought to enforce an obligation imposed by law. Thus, the County may invoke [the doctrine of] nullum tempus to defeat a statute of limitations.

Id. at 556.

Westchester attempts to distinguish this Court's prior reliance on Altoona Area School District v. Campbell, 152 Pa. Cmwlth. 131, 618 A.2d 1129, 1135 (1992), appeal denied, 535 Pa. 639, 631 A.2d 1010 (1993), regarding the issue of whether the performance bond can be viewed separately from the underlying transaction to determine the applicability of nullum tempus. Montgomery County v. MicroVote, 23 F.Supp.2d at 555. Westchester states that Campbell is distinguishable because the court in that case decided first that nullum tempus did not apply because the underlying contract...