By: Chris Mincher
Contracting with the State has a whole different set of rules than contracting with anyone else, and that remains true when a dispute arises. Because the State would otherwise have sovereign immunity, there are a bunch of limitations in the Maryland Code on the ability to sue it, as laid out in §§ 12-201 to 204 of the State Government Article and § 5-522 of the Court and Judicial Proceedings Article. Perhaps the most basic one is how long a person has to file a lawsuit.
Most lawyers know the standard statute of limitations of three years, which perhaps explains how so many plaintiffs get routinely derailed by SG § 12-202 — a contract claim against the State “is barred unless the claimant files suit within 1 year after the later of: (1) the date on which the claim arose; or (2) the completion of the contract that gives rise to the claim.” (See the four-page per curiam Appellate Court opinion in Thomas v. Maryland Dep’t of Health & Mental Hygiene as one recent example of a case getting tossed on this basis.)
Technically, this isn’t considered a separate statute of limitations, but a “condition precedent” that must be fulfilled before a contract action can be filed. This matters for a bunch of reasons.
First, a statute of limitations can be waived — for example, by failing to raise it as a defense — but the one-year condition of SG § 12-202 can’t be waived, even if a State agency wanted to waive it.
Second, some other laws provide for a tolling of statutes of limitation, but they wouldn’t apply to SG § 12-202. One big one to note here is Maryland Rule 2-101(b), which tolls a statute of limitations in State court if the case was timely filed in federal court and later (in specific circumstances) dismissed. Again, that’s not going to work for a contract action against the State in State court — it has to be filed within the one-year period, or else sovereign immunity will kick back in to preclude it.
In the end, all this means is that a party with a contract dispute with the State needs to move quickly and fulfill the statutory conditions if it wants its day in court. Reliance on general contract law, without a full understanding of the immunity issues in play, could result in a contractor’s claims never getting off the ground.