ROBERT McNAMARA v. City of Nashua

United States Court of Appeals
For the First Circuit
No. 10-1322
ROBERT McNAMARA,
Plaintiff, Appellant,
v.
CITY OF NASHUA,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Joseph A. DiClerico, Jr., U.S. District Judge]
Before
Boudin, Selya and Stahl,
Circuit Judges.
Jennifer A. O'Brien with whom Ronald M. Davids and Davids &
Cohen, P.C. were on brief for appellant.
Beth A. Deragon with whom Charles P. Bauer and Gallagher,
Callahan & Gartrell, P.C. were on brief for appellee.
January 13, 2011

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BOUDIN, Circuit Judge. This is an appeal by Robert
McNamara seeking review of a decision that granted summary judgment
dismissing as time-barred his complaint against the City of Nashua,
New Hampshire ("the City")--a complaint based on what he claims to
be inadequate pension payments. The story began a decade ago with
McNamara's suspension without pay from the City's Fire Department
on August 25, 2000, following an investigation into charges of
sexual harassment. After a hearing, McNamara was discharged on
October 18, 2000; he subsequently filed a grievance over that
discharge which he settled with the City on March 29, 2001.
The stipulated settlement pertinently provided that the
harassment allegations would be purged from McNamara's file but he
could not reenter any fire station without prior approval; that he
would be allowed to resign as of February 4, 2001; and that he would
"be made whole, up and [sic] to and including February 4, 2001," but
that any claims for overtime pay since June 2000 were waived. The
City and the Board of Fire Commissioners also agreed to "coordinate
. . . activities with Mr. McNamara in order to preserve his rights
with the New Hampshire Retirement System and any other benefit he
is entitled to under contract, law or by any other source."
McNamara claims that, at the time he signed the
stipulation, he was told that his "pension would be maintained
whole" by signing and that he "would remain 'in service' for the
purpose of [his] pension and . . . would continue to receive pay

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NHRS is the vehicle through which pensions are funded, 1
managed and paid for employees of the state and for policemen,
firemen and various teachers. See N.H. Rev. Stat. Ann. § 100-A:1
et seq. (2001). The City pays regular assessments to NHRS to cover
part of the pension obligations for firefighters like McNamara and
the state contributes the balance. Id. § 102:10.
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until [his] pension began." He also claims that city officials
threatened that he would lose his pension entirely if he did not
sign the agreement and that he was without his normal counsel at the
time of the signing.
After McNamara signed the settlement agreement, the City
tendered McNamara its general release and offered a check for the
amount of salary it calculated that was owed for the period through
his new resignation date. Without disputing the amount, McNamara
executed the release on May 10, 2001. By the terms of the release
McNamara
discharge[d] [the City] . . . of and from any
and all causes of action . . . including but
not limited to, any and all claims for . . .
medical bills, wages, sick day or vacation
compensation and any and all other damages and
expenses whatsoever, past, present and future
. . . upon or by reason of any matter, cause
or thing whatsoever arising from or related to
his suspension from [the Nashua Fire
Department].
In August 2001, McNamara began receiving pension payments not from
the City but from the New Hampshire Retirement System ("NHRS").1
In November 2001, at McNamara's request, the City amended
the agreement to assist McNamara in obtaining supplemental medical
benefits from NHRS by specifying that his effective date of

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retirement would be deemed June 20, 2001, rather than February 4,
2001; but under the amendment this did not vary the amount of pay
due to him. Both sides advised NHRS of the amendment.
In March 2006, almost five years after the pension
payments began, an attorney for McNamara wrote to NHRS saying that
McNamara believed that his pension payments were too low. In a
nutshell, McNamara asserts that he was not credited for in-service
time between his suspension in August 2000 and the date he received
his first pension check in August 2001 and, because his pension is
calculated based in part on his three highest-paid years of
employment, see N.H. Rev. Stat. Ann. § 102:15, this failure resulted
in a reduction in his regular pension payments.
On August 22, 2008, McNamara sued the City in federal
district court. The complaint contains four counts: (1) violation
of Fourteenth Amendment rights under 42 U.S.C. § 1983 (2006);
(2) breach of contract; (3) breach of the covenant of good faith and
fair dealing; and (4) fraudulent inducement. The City moved for
summary judgment which the district court eventually granted upon
finding all of McNamara's claims to be time-barred. This appeal
followed.
Getting a grip on McNamara's claims is no easy matter,
but the core claim as developed, whether sounding in contract or
breach of the covenant of fair dealing, is that the City misreported
his period in service to NHRS despite commitments to make him whole

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and to help him secure the pension due to him; and, as a result, his
pension payments are smaller than they should be. The section 1983
claim, not seriously developed on appeal, is that McNamara was
coerced into the settlement; the fraudulent inducement claim is that
when settling he was orally promised his full pension by a City
attorney.
Under New Hampshire law, the statute of limitations for
both personal tort and contract actions is three years. N.H. Rev.
Stat. Ann. § 508:4(I) (2010); Coyle v. Battles, 782 A.2d 902, 905
(N.H. 2001) (three-year period applies to contract claims). The
state three-year statute also governs the section 1983 claim, Owens
v. Okure, 488 U.S. 235, 250 (1989); Harrington v. City of Nashua,
610 F.3d 24, 28 (1st Cir. 2010); although federal law governs the
time of accrual, Wallace v. Kato, 549 U.S. 384, 388 (2007), McNamara
makes nothing of this. McNamara's central problem, of course, is
that he got his first pension check in August 2001 but did not
commence suit until more than seven years later.
Ordinarily, a breach of contract, or of a covenant of
good faith and fair dealing, will be apparent when it occurs and the
statute of limitations begins to run at that time. However, New
Hampshire follows the discovery rule and the time for a claim not
apparent on its face begins to run only when "the plaintiff
discovers, or in the exercise of reasonable diligence should have
discovered, the injury and its causal relationship to the act or

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Compare Singer Asset Fin. Co., LLC v. Wyner, 937 A.2d 303, 2
313 (N.H. 2007) (plaintiff was apprised of injury when bank
purchased right to income from future periodic payments for 29
percent of payments' total value), and Perez v. Pike Indus., Inc.,
889 A.2d 27, 30-31 (N.H. 2005) (reasonably diligent plaintiff would
have investigated and discovered that the source of his injury was
a particular subcontractor), with Kelleher v. Marvin Lumber & Cedar
Co., 891 A.2d 477, 487-89 (N.H. 2005) (plaintiff could not discover
that rot in window was due to ineffective preservative), Big League
Entm't, Inc. v. Brox Indus., Inc., 821 A.2d 1054, 1058 (N.H. 2003)
(plaintiff raised a triable issue as to when it should have known
that sewage damage was caused by defendants' negligent installation
of septic system), and Black Bear, 620 A.2d at 428-30 (plaintiff
adequately pleaded reasonable diligence in investigating leaks
caused by negligent installment of felt underlayment).
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omission complained of." N.H. Rev. Stat. Ann. § 508:4(I); see Black
Bear Lodge v. Trillium Corp., 620 A.2d 428, 430 (N.H. 1993)
(discovery rule applies to contract claims).
When McNamara received his first pension payment in
August 2001, he saw the amount being paid and he could easily have
investigated and pursued a claim resting on underpayment. Nor was
the alleged discrepancy so small as to escape notice: McNamara
claims now that his damages exceed $100,000 for roughly nine years
of underpayment. New Hampshire courts have been insistent on
reasonable diligence, applying the discovery rule only in cases far
more favorable to the claimant.2
In financial affairs, many citizens take a good deal on
faith: not everyone zealously checks his bank statement every month,
carefully updates insurance policies to account for new conditions,
or scrutinizes the apartment lease to ascertain rights and
obligations. But concern about stale claims lies on the other side

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of the balance, see Perez, 889 A.2d at 30, and the discovery rule
only protects those who do exercise reasonable diligence.
Tellingly, McNamara's brief hardly acknowledges this obligation or
explains how it was satisfied.
The discovery rule also applies to McNamara's claims
based on due process and fraudulent inducement. Any "coercion"
occurred at or before the time that McNamara released the City; and
fraudulent inducement in the settlement and release also occurred
then. Although the adverse consequences manifested themselves only
when McNamara was underpaid, due diligence would have revealed this
around August 2001. Once his lawyer examined his NHRS file,
McNamara did object; but this was in 2006.
McNamara's more substantial response to the limitations
bar, to which his brief is mainly devoted, is that his pension
represents an "installment contract"; if so, a claim based on
underpayment could arise separately with each alleged pension
payment. New Hampshire law agrees that "when an obligation is to
be paid in installments the statute of limitations runs only against
each installment as it becomes due." Gen. Theraphyiscal, Inc. v.
Dupuis, 385 A.2d 227, 228 (N.H. 1978); see 10 A. Corbin, Corbin on
Contracts § 951, at 16-17 (interim ed. 2007).
New Hampshire courts may not have a case directly on
point; but conceivably if the City had to make periodic payments to
McNamara and successively underpaid him, a claim might arise each

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time a payment was made and a suit could be brought within the
limitations period on any underpayment. E.g., Berezin v. Regency
Sav. Bank, 234 F.3d 68, 70, 73 (1st Cir. 2000) (defendant charged
plaintiff improper interest on some monthly payments called for by
promissory note). Failure to pay entirely, by contrast, has led to
disagreement among courts. Compare Pierce v. Metro. Life Ins. Co.,
307 F. Supp. 2d 325, 328-33 (D.N.H. 2004), with Barney v. City of
Lincoln, 13 N.W.2d 870, 871-72 (Neb. 1944).
But all this is beside the point. McNamara is not suing
NHRS for individual underpayments; he is suing the City for harm
done in inducing the settlement and for whatever misreporting may
have accompanied it when the City reported matters to the NHRS.
Although neither side has cited a New Hampshire case directly on
point, a somewhat analogous claim was persuasively dispatched in a
New York case, holding that the installment contract rule
does not apply to a claim based on a single
distinct event which has ill effects that
continue to accumulate over time. . . . [T]he
plaintiff's miscalculation claims are a direct
result of the defendants' single alleged
miscalculation [of pension payments]; as a
result, the court does not find plaintiff's
monthly checks to be independent and distinct
wrongs, but rather mere ill effects of the
one-time calculation.
Miele v. Pension Plan of N.Y. State Teamsters Conference Pension &
Ret. Fund, 72 F. Supp. 2d 88, 102 (E.D.N.Y. 1999).
Finally, McNamara's brief asserts, without developing the
point, that the City had a "continuing obligation" to McNamara, the

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apparent intended inference being that the statute of limitations
runs indefinitely. There are few areas in limitations law more
confusing than the permutations on the phrase "continuing
violation," e.g., Jensen v. Frank, 912 F.2d 517, 522-23 (1st Cir.
1990), although sometimes the concept makes sense as, for example,
where a succession of individual acts is revealed as a wrong only
when taken as a whole.
However, in this case, any inducement or coercion of
McNamara to settle and sign the release occurred at or before he did
so; and any misreporting of McNamara's creditable service occurred
prior to his first pension payment. General references in the
settlement agreement to "making him whole"--apparently referring to
salary payments never contested--or "coordinating" to help with his
pension hardly establish that any actions by the City after August
2001 constituted a new violation of any obligation owed to McNamara.
Whether the City misreported anything to NHRS is unclear;
but, if there was misreporting, it occurred long ago and was
discoverable, in the exercise of due diligence, within a reasonable
period after August 2001. That the wrong (if any) had consequences
that endure to the present does not make the violation a continuing
one. Jensen, 912 F.2d at 523; accord Ariadne Fin. Servs. Pty. Ltd.
v. United States, 133 F.3d 874, 879 (Fed. Cir. 1998).
Affirmed.

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