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New Hampshire Supreme Court Carves Unusual Exception To Statute Of Limitations

On Behalf of | Jun 8, 2015 | Litigation

All civil claims brought in New Hampshire are subject to a statute of limitations. The statute of limitations is a deadline that is intended to bar old or stale claims from being filed. Most civil claims, but not all, are subject to a 3-year state of limitations. The 3-year clock starts to run the moment the plaintiff realizes, or in the exercise of reasonable diligence, should have realized that they have been injured or damages by the defendant’s conduct. Once that 3-year clock has expired, any claim against the defendant will most likely be barred.

On May 15, 2015, the Supreme Court issued an opinion in the case called Conant v. O’Meara. In Conant, the plaintiffs hired an attorney, Timothy O’Meara, after Mr. Conant’s wife, Anita, was severely injured in an automobile accident in Pennsylvania. Shortly after filing suit, the parties disputed how much O’Meara was to be compensated for his services.

This dispute was exacerbated when the plaintiffs discovered that the defendant in the automobile accident case only had $11,000,000 of insurance coverage, but that Anita needed $23,000,000 to sustain her for the rest of her life. To further complicate matters, the Conants believed that Attorney O’Meara made an unauthorized demand to settle the case for the $11,000,000 of insurance coverage.

After a heated discussion between Attorney O’Meara and his clients, it appears that Attorney O’Meara agreed to reduce his fee. At a settlement conference and the case resolved for $11,500,000 and Attorney O’Meara was to receive $750,000 up front and $1,250,000 would be held in escrow and arbitrated as to how it should be divided. On March 2009, an arbitration panel divided the $1,250,000 roughly 2/3 to O’Meara and 1/3 to his clients.

The Conants filed a complaint with the Attorney Disciplinary Office which culminated in a decision on September 18, 2012 that disbarred Attorney O’Meara. The Supreme Court, in its disbarment order, concluded that Attorney O’Meara lied under oath when he testified at the 2009 arbitration hearing regarding his entitlement to a $2,000,000 fee.

On October 17, 2012, the Conants filed an action against O’Meara to disgorge the fees. The trial court found that Attorney O’Meara had violated his fiduciary responsibilities to the Conants and ordered that his fees be returned. Attorney O’Meara appealed arguing that the 3-year statute of limitations had expired when the Conants filed their lawsuit in October 2012.

On appeal, the New Hampshire Supreme Court held that the 2009 arbitration decision could not stand as binding the Conants to the fee distribution because it was procured by Attorney O’Meara’s fraud; namely his lying to the arbitrators regarding an alleged agreement to reduce his fee to $2,000,000. More importantly, the Supreme Court held that an action that essentially sets aside a prior decision for fraud may not be bound by the statute of limitations; finding that there is a universally “recognized need for correcting injustices, which in certain instances are sufficiently a gross and demand a departure from the rigid adherence to the [statute of limitations].”

However, the watch word is that the fraud must be exceptionally egregious. It is not fraud that was obtained simply because a witness is possibly guilty of perjury. Rather it must be shown that the fraud was a deliberately planned and executed scheme to defraud the court such that the “judicial machinery cannot perform in the usual manner as a partial of adjudicating cases.” In the O’Meara case, the fraud was perpetrated by an attorney who deliberately lied to the arbitration panel regarding his entitlement to a $2,000,000 fee.

Again, this is a very narrow exception to the statute of limitations defense and in the Conant case was applied due to particularly egregious conduct by an attorney. The unanswered question is where is the dividing line between what is “garden variety” fraud and fraud sufficient to impact the impartial function of a judiciary.

Andrew J. Piela is a Director at Hamblett & Kerrigan, P.A. Mr. Piela concentrates his practice in civil litigation, family law, probate and land use litigation. You can reach Attorney Piela by e-mail at [email protected].