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
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
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.