# Northwest Arkansas Conservation Authority v. Crossland Heavy Contractors, Inc.

> District Court, W.D. Arkansas · December 2, 2020

URL: https://www.frixlaw.com/law-library/cases/10010906

## Case

- **Court:** District Court, W.D. Arkansas
- **Decided:** December 2, 2020
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
FAYETTEVILLE DIVISION

NORTHWEST ARKANSAS CONSERVATION
AUTHORITY PLAINTIFF

v. Case No. 5:20-cv-05077

CROSSLAND HEAVY CONTRACTORS,
INC., et al. DEFENDANTS

OPINION AND ORDER

Before the Court are Defendants Crossland Heavy Contractors, Inc. (“Crossland”) and
Fidelity & Deposit Co. of Maryland’s (“Fidelity”) motions (Docs. 7, 9) to dismiss. Defendants
also filed briefs in support (Docs. 8, 10). Plaintiff Northwest Arkansas Conservation Authority
(“NACA”) filed a response (Docs. 19, 21) and brief in opposition (Docs. 20, 22) to each motion.
Defendants then filed a joint reply (Doc. 27) with leave of Court. For the reasons set forth below,
Crossland’s motion to dismiss will be granted in part and denied in part. Fidelity’s motion to
dismiss will be granted.
I. Background
NACA is a nonprofit corporation “created in 2002 pursuant to ARK. CODE ANN. § 14-233-
101 to address the treatment and disposal of bio-solids for the public in Washington and Benton
counties in Arkansas.” (Doc. 3, p. 2). NACA comprises the municipalities of Bentonville, Bethel
Heights, Cave Springs, Centerton, Elm Springs, Highfill, Lowell, Springdale, Rogers, and
Tontitown. NACA was tasked with planning the Little Osage Creek Wastewater Improvements
and Gravity Sewer and the Brush Creek Wastewater Improvements and Gravity Sewer project (the
“Project”). On January 18, 2007, NACA entered into a contract with USI Consulting Engineers,
Inc. (“USI”) to design and oversee the Project, specifically the construction of approximately
47,000 linear feet of 30-inch and 36-inch diameter pipeline. NACA invited multiple companies
to bid on the project before Crossland was eventually awarded the construction contract. On
February 2, 2009, Crossland, as principal, executed a performance bond requiring Fidelity, as
surety, to pay NACA $9,602,350.00 should Crossland fail to perform all work in accordance with

the contract between NACA and Crossland.
Construction of the project was completed in June of 2010. In 2016, a small pipeline failure
was reported, which Crossland repaired. Several more pipeline failures occurred between 2017
and 2019, resulting in sewage overflows and third-party repairs. An independent assessment of
the pipeline was conducted in 2018, revealing that 96% of the pipeline sections had ovality1
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exceeding the acceptable 5% for pipes of that age. On July 24, 2019, NACA sent Crossland a
notice of breach of warranties, guarantee, contract, and negligence. NACA requested that
Crossland cure any deficiencies related to the project, or in the alternative, compensate NACA.
Crossland did not offer to completely cure the deficiencies. Pursuant to the contract, NACA then
submitted its claims against Crossland to the American Arbitration Association, but Crossland
declined to participate, stating NACA did not timely invoke the claims procedure. NACA alleges
it has incurred damages in the amount of $61,892,360.00 because of Crossland’s actions. On July
24, 2019, Crossland notified Fidelity of Crossland’s performance failures, and Fidelity refused
payment on the performance bond.
NACA filed a complaint against Crossland and Fidelity in the Circuit Court of Benton
County, Arkansas on January 24, 2020. NACA’s complaint alleges six claims against Crossland:
breach of contract, negligence, breach of express warranty, breach of implied warranty, products

1 Ovality, or out-of-roundness, measures a cross-section of pipe’s deviation from a perfect
circle. It is determined by the difference in the maximum diameter and minimum diameter of the
pipe.
liability, and indemnity. Additionally, NACA raises a breach of contract claim against Fidelity
for violation of the performance bond.
II. Legal Standard
In ruling on a motion to dismiss, the Court must “accept as true all facts pleaded by the

non-moving party and grant all reasonable inferences from the pleadings in favor of the non-
moving party.” Gallagher v. City of Clayton, 699 F.3d 1013, 1016 (8th Cir. 2012) (quoting United
States v. Any & All Radio Station Transmission Equip., 207 F.3d 458, 462 (8th Cir. 2000)). “[A]
complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is
plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quotations omitted). Pleadings
that contain mere “labels and conclusions” or “a formulaic recitation of the elements of the cause
of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2009).
III. Analysis
A. Statute of Repose
Crossland argues that NACA’s claims are barred by the statute of repose found in ARK.

CODE ANN. § 16-56-112(a). A statute of repose provides a “timeliness” defense limiting the time
in which an action may be brought, similar to a statute of limitations. Unlike a statute of
limitations, however, a statute of repose can “cut off entirely an injured person’s right of action
before it accrues, when that action does not arise until after the statutory period has elapsed.”
Curry v. Thornsberry, 128 S.W.3d 438, 441 (Ark. 2003). ARK. CODE ANN. § 16-56-112(a)
provides:
No action in contract, whether oral or written, sealed or unsealed, to recover
damages caused by any deficiency in the design, planning, supervision, or
observation of construction or the construction and repair of any improvement to
real property or for injury to real or personal property caused by such deficiency,
shall be brought against any person performing or furnishing the design, planning,
supervision, or observation of construction or the construction or repair of the
improvement more than five (5) years after substantial completion of the
improvement.

See Rogers v. Mallory, 941 S.W.2d 421, 423 (Ark. 1997) (“Thus, § 16-56-112(a) is more
accurately described as a ‘statute of repose’ rather than a ‘statute of limitations.’”). The Arkansas
Supreme Court has broadly interpreted the statute of repose to apply to theories of recovery
sounding in both contract and tort, holding that it encompasses “all actions which arise out of a
construction contract where property damage has allegedly resulted from any deficiency in design,
planning, supervision or observation of construction or the construction and repair of any
improvement to real property.” Okla Homer Smith Furniture Mfg. Co. v. Larson & Wear, Inc.,
646 S.W.2d 696, 698 (Ark. 1983) (“Here, it is obvious that the legislative purpose was to enact a
comprehensive statute of limitations protecting persons engaged in the construction industry from
being subject to litigation arising from work performed many years prior to the initiation of the
lawsuit.”). “Improvements” to real property include buried pipe. DePriest v. Peikert, 200 S.W.2d
804, 805–06 (Ark. 1947).
On its face, the statute of repose bars many of NACA’s claims. NACA argues that the
statute of repose is inapplicable to NACA’s product liability claim because the pipe at issue is a
“mass produced fungible product,” and at least one federal court in Arkansas has predicted that
the Arkansas Supreme Court would determine manufacturers of mass produced fungible products
are not entitled to use the statute of repose as a defense because actions against them do not arise

out of construction contracts but out of negligence in manufacturing. Brown v. Overhead Door
Corp., 843 F. Supp. 482, 485 (W.D. Ark. 1994). However, Crossland did not manufacture the
pipe at issue, but was only responsible for installation of the pipe. “Protection [of the statute of
repose] extends ‘to the kinds of economic actors who perform acts of individual expertise akin to
those commonly thought to be performed by architects and contractors—that is to say, to parties
who render particularized services for the design and construction of particular improvements to
particular pieces or real property.’” Id. at 491 (quoting Dighton v. Fed. Pac. Elec. Co., 506 N.E.2d
509, 515 (Mass. 1987)). Because Crossland was not a manufacture of the pipe, the statute of
repose applies, and NACA’s products liability claim against Crossland is barred. Additionally,

NACA’s claims for breach of contract, breach of implied warranty, breach of express warranty,
and negligence arise out of the construction contract between NACA and Crossland, and these
claims are also barred by the statute of repose.
B. Exceptions to the Statute of Repose
i. Accepted-Work Doctrine
NACA argues an exception to the statute of repose applies because the defect in the pipe
could not be detected, citing ARK. CODE ANN. § 16-56-112(h)(2)(B). Subsection (h) of that statute
reinstates and codifies the accepted-work doctrine in Arkansas, which provides additional
protection from third-party liability for contractors who construct or repair publicly owned
improvements to public real property. This section of the statute is inapplicable to NACA’s claims

against Crossland. Crossland’s statute of repose defense comes from subsection (a), not (h), of
ARK. CODE ANN. § 16-56-112, and these claims do not involve third-party liability.
ii. Nullum Tempus Occurrit Regi
NACA contends that it is exempt from statutes of limitations and repose under the doctrine
of nullum tempus occurrit regi (“nullum tempus”).2 Although the Arkansas Supreme Court has
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determined nullum tempus can protect the state from statutes of limitation, no court has applied
Arkansas’s nullum tempus doctrine to protect the state from statutes of repose. However, at least

2 “Nullum tempus occurrit regi,” or “time does not run against the king,” is the legal
principle that the statute of limitations does not bar actions by the sovereign.
one federal court in Arkansas has applied nullum tempus in the context of the doctrine of laches
based on the reasoning that “laches is an equitable doctrine ‘premised upon the same principles
that underlie statutes of limitations: the desire to avoid unfairness that can result from the
prosecution of stale claims.’” City of Stamps, Ark. v. Alcoa, Inc., Civil No. 05-1049, 2006 WL

2254406, at *10 (W.D. Ark. Aug. 7, 2006) (quoting Midwestern Mach. Co., Inc. v. Nw. Airlines,
Inc., 392 F.3d 265, 276 (8th Cir. 2004)). Statutes of repose are “based on considerations of the
economic best interests of the public as a whole and are substantive grants of immunity based on
a legislative balance of the respective rights of potential plaintiffs and defendants struck by
determining a time limit beyond which liability no longer exists.” Ray & Sons Masonry
Contractors, Inc. v. U.S. Fidelity & Guar. Co., 114 S.W.3d 189, 200 (Ark. 2003) (internal citation
and quotation omitted). Although statutes of repose are different from statutes of limitation in that
statutes of repose “constitute[] a substantive definition of rights rather than a procedural limitation
provided by a statute of limitation,” the policy reasons for statutes of repose are similar to statutes
of limitation. Id. (quoting Langley v. Pierce, 313 S.C. 401, 404 (S.C. 1993)). If Arkansas applies

nullum tempus to statutes of limitation to protect the state from a procedural bar to its claims (and
if Arkansas likely would apply nullum tempus to protect the state from an equitable bar like
laches), then because of the policy similarities between statutes of limitation and statutes of repose,
Arkansas’s nullum tempus doctrine likely also would protect the state from losing its claims to the
statute of repose.
Assuming nullum tempus applies to the statute of repose, NACA must still demonstrate
that it may benefit from the doctrine. Nullum tempus generally “applies only to the sovereign itself
and not to public corporations or other such governmental agencies to whom powers are
delegated.” Hart v. Sternberg, 171 S.W.2d 475, 478 (Ark. 1943) (internal punctuation omitted).
However, there is an exception “where a subordinate political subdivision or agency is seeking to
enforce a right in which the public in general has an interest.” Jensen v. Fordyce Bath House, 190
S.W.2d 977, 979 (Ark. 1945) (allowing nullum tempus where the plaintiff was a county tax
collector seeking to collect delinquent taxes).

NACA has not shown that it is seeking to enforce a right in which the public in general has
an interest. Instead, NACA is “seeking to enforce a contract right, or some right belonging to it in
a proprietary sense.” Id. In Arkansas Dep’t of Envtl. Quality v. Brighton Corp., the Arkansas
Supreme Court did not apply the statute of limitations to the Arkansas Department of
Environmental Quality because “the ‘rights’ at issue belong to the public—i.e., the enforcement
of environmental regulations intended to improve the environment for the benefit of the public.”
102 S.W.3d 458, 469 (Ark. 2003). Similarly, in City of Stamps, Arkansas v. Alcoa, Inc., an
Arkansas federal district court applied nullum tempus to claims of public nuisance and violations
of the Resource Conservation and Recovery Act and Arkansas Solid Waste Management Act, but
notably did not apply the doctrine to individual trespass and direct negligence claims. 2006 WL

2254406, at *10.
The public policy underlying nullum tempus does not support its use in this case. In City
of Rochester v. Marcel A. Payeur, Inc., the Supreme Court of New Hampshire explained that
nullum tempus “protect[s] the public good by preventing wrongdoers from benefitting from the
limitations inherent in governmental bodies’ enforcement prowess, to the detriment of public
rights.” 152 A.3d 878, 882 (N.H. 2016). This concern is most important in adverse possession
claims against the state due to “the vast extent and wide variety of publicly-owned land, water and
easement rights, as well as governmental bodies’ need to rely on the finite universe of public
employees, who are otherwise occupied with their regular duties, to detect encroachments on these
rights.” Id. This case is different for several reasons. Although NACA was created pursuant to
ARK. CODE ANN § 14-233-101, it has a corporate structure which allows it to effectively vindicate
its rights. Furthermore, this case centers around a contract NACA knowingly entered into, and “a
municipality's contractual undertakings are unlikely to lead to unknown violations of public

rights.” Id. Finally, the breach of contract, breach of warranty, and negligence claims all arise out
of that contract and its subject matter, rather than out of some more general harm to the public.
For the foregoing reasons, NACA is not entitled to nullum tempus exemptions from the
statute of repose. Therefore, the negligence, products liability, warranty, and breach of contract
claims are barred.
C. Indemnification Claim Against Crossland
NACA also brings an indemnification claim against Crossland based on an indemnity
provision in the contract between NACA and Crossland. NACA alleges it has “has expended
money to third parties, including payments to abate the nuisance and remediate environmental
damage caused by Crossland.” (Doc. 3, p. 31). For example, NACA alleges that after the pipe

failure in March of 2019, DECO was hired to repair the pipes. To the extent that these payments
were for repairs to the Project itself, there is no claim for indemnification because the indemnity
provision expressly excludes damage to “the Work itself.” (Doc. 3, p. 31).
However, NACA also argues that it has made “payments to abate the nuisance and
remediate environmental damage caused by Crossland.” (Doc. 3, p. 31). NACA cannot recover
from Crossland upon a “mere showing that the indemnitee has incurred liability” but instead
NACA must demonstrate that it “has suffered actual loss by payment or satisfaction of a judgment
or by other payment under compulsion.” Larson Mach., Inc. v. Wallace, 600 S.W.2d 1, 13 (1980).
At this early stage in the litigation, NACA’s allegations that it has made compulsory payments to
third parties to remediate environmental damage caused by Crossland’s actions support a claim
for indemnification. Crossland’s motion to dismiss the indemnity claim will be denied.3
2F
E. Breach of Contract Claim Against Fidelity
Finally, Separate Defendant Fidelity argues that Plaintiff’s breach of contract claim against
it should be dismissed because the statute of limitations has run. ARK. CODE ANN. § 18-44-508(b)
sets forth the statute of limitations for performance bonds, stating “[n]o action shall be brought on
the bond after six (6) months from the date final payment is made on the contract, nor outside the
State of Arkansas.” In its motion, Fidelity states that final payment on the Project was made no
later than December 2010. NACA does not challenge the applicability of this statute or that suit
was filed after the statute of limitations. Instead, NACA argues that nullum tempus exempts it
from the statute of limitations.
As discussed in greater detail above, NACA is not entitled to nullum tempus protections
on those claims against Crossland that are extinguished by the statute of repose. The same
reasoning—that NACA is seeking to enforce a private, contractual right—applies to NACA’s

breach of contract claims against Fidelity as surety. As with contract claims against Crossland,
there is no threat of “unknown violations of public rights” with this breach of contract claim.
NACA was aware of the performance bond and could have brought this claim within the statutory
time period. Therefore, NACA’s claim against Fidelity will be dismissed.
IV. Conclusion
IT IS THEREFORE ORDERED that Crossland’s motion to dismiss (Doc. 7) is GRANTED
IN PART AND DENIED IN PART. NACA’s breach of contract, negligence, implied warranty,

3 Indemnification claims are not extinguished by the statute of repose. Ray & Sons
Masonry Contractors, Inc., 114 S.W.3d at 202–03.
express warranty, and products liability claims against Crossland are DISMISSED WITH
PREJUDICE. Plaintiff’s indemnity claim against Crossland remains pending.
IT IS FURTHER ORDERED that Fidelity’s motion to dismiss (Doc. 9) is GRANTED.
NACA’s breach of contract claim against Fidelity is DISMISSED WITH PREJUDICE.
IT IS SO ORDERED this 2nd day of December, 2020.
/s/P. K. Holmes,

P.K. HOLMES, III
U.S. DISTRICT JUDGE

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10010906. Public record. Not legal advice.