Prager v. Kansas Dept. of Revenue, 83,714.

• Citation: 20 P.3d 39,271 Kan. 1
• Decision Date: 23 March 2001
• Docket Number: No. 83,714.,83,714.
• Parties: DAVID PRAGER, III, Plaintiff/Appellant, v. STATE OF KANSAS, DEPARTMENT OF REVENUE; KARLA PIERCE, Secretary of the Kansas Department of Revenue, In Her Official Capacity; and JOHN D. LAFAVER, former Secretary of Kansas Department of Revenue, In His Personal Capacity, Defendants/Appellees.
• Court: United States State Supreme Court of Kansas

271 Kan. 1

20 P.3d 39

DAVID PRAGER, III, Plaintiff/Appellant, v. STATE OF KANSAS, DEPARTMENT OF REVENUE; KARLA PIERCE, Secretary of the Kansas Department of Revenue, In Her Official Capacity; and JOHN D. LAFAVER, former Secretary of Kansas Department of Revenue, In His Personal Capacity, Defendants/Appellees.

No. 83,714.

Supreme Court of Kansas.

Opinion filed March 23, 2001.

Alan V. Johnson, of Sloan, Listrom, Eisenbarth, Sloan & Glassman, L.L.C., of Topeka, argued the cause, and Louis F. Eisenbarth, of the same firm, was with him on the briefs for appellant.

Thomas V. Murray, of Barber, Emerson, Springer, Zinn & Murray, L.C., of Lawrence, argued the cause, Terence E. Leibold and Terrence J. Campbell, of the same firm, were with him on the brief for appellees.

The opinion of the court was delivered by

LARSON, J.:

Plaintiff appeals the trial court's dismissal for failure to state a claim on which relief can be granted of his suit seeking (1) declaratory and injunctive relief under 42 U.S.C. ? 1983 (1994) for alleged violations of his rights of free speech and due process under the United States Constitution, (2) damages under the Kansas Tort Claims Act (KTCA), K.S.A. 75-6101 et seq., for (a) deprivation of his rights of free speech guaranteed by the Kansas and United States Constitutions, and (b) deprivation of his rights to due process guaranteed by the Kansas and United States Constitutions, (3) damages under the Kansas Civil Service Act (KCSA), K.S.A. 75-2925 et seq., for deprivation of his rights to due process guaranteed by the Kansas and United States Constitutions, and (4) damages for retaliatory discharge based on a common-law claim of whistleblowing.

Nature of the case

The plaintiff and appellant in this case, David Prager, III, was employed by the Kansas Department of Revenue (Department) as an Attorney III, a classified civil service position, from 1988 until his employment was terminated in May 1997. During this period his primary duties involved representation of the Department in corporate tax appeals.

In the fall of 1996, Prager precipitated a controversy within the Department in response to public criticism of the Department's actions by first delivering a memo to his supervisor and then sending a letter with a 12-page memo to Governor Bill Graves to defend his actions which had been criticized in the press. On January 8, 1997, Prager was suspended from his employment because his allegations and characterization of events compromised his ability to fairly represent the Department.

On February 6, 1997, Prager filed an appeal from his suspension with the Kansas Civil Service Board contending his suspension violated K.S.A. 75-2973, the Kansas "whistleblower" statute.

On March 17, 1997, Prager again sent a letter to Governor Graves in which he expressed concern about a possible illegal tax refund. On May 9, 1997, Prager's employment was proposed to be terminated for "lack of judgment, insubordination, violation of confidentiality. . . acting contrary to the interests of your client and exhibiting personal conduct detrimental to the state service.. . ." Prager was offered the opportunity to reply in writing, to appear, or to do both on the issue of his proposed dismissal. He failed to do either and his employment was terminated effective May 16, 1997.

On June 6, 1997, Prager filed an appeal with the Kansas Civil Service Board concerning his termination. His termination appeal was consolidated with his suspension appeal. We were informed by the parties that after a discovery dispute, the appeal has been heard and a ruling unfavorable to Prager on all issues raised has been appealed to and is now pending before the Shawnee County District Court.

The case before us was filed in January 1999 by Prager against the Kansas Department of Revenue; Karla Pierce, the then Secretary of Revenue in her official capacity; and John D. LaFaver, the former Secretary of Revenue in his personal capacity. The petition requests relief under the following five counts.

Count one prays for judgment under 42 U.S.C. ? 1983 against the Kansas Department of Revenue and Secretary Pierce in her official capacity for (a) deprivation of Prager's federal constitutional rights of free speech and due process under color of State law and (b) reinstatement of Prager to his former position, and prays for an award of attorney fees and litigation expenses pursuant to 42 U.S.C. ? 1988 (1994).

Count two prays for judgment under the KTCA against the Kansas Department of Revenue and LaFaver in his personal capacity for deprivation of Prager's United States and Kansas constitutional rights of free speech and prays for damages in excess of $75,000.

Count three prays for judgment under the KTCA and the KCSA against the Kansas Department of Revenue and LaFaver in his personal capacity for deprivation of Prager's United States and Kansas constitutional rights of due process and prays for damages in excess of $75,000.

Count four contends the termination of Prager's employment was in retaliation for his "whistleblowing" in his letters to Governor Graves and prays for damages in excess of $75,000 under the KTCA against the Kansas Department of Revenue and LaFaver in his personal capacity.

Count five, which was dismissed by the trial court, requested damages for false light publicity. That dismissal was not appealed by Prager and is not an issue in this appeal.

The trial court's ruling that granted the defendants' motion to dismiss for failure to state a claim upon which relief can be granted will be described in more detail later in this opinion but essentially held: (1) Prager must exhaust his administrative remedies before the Kansas Civil Service Board prior to pursuing his claim under 42 U.S.C. ? 1983, (2) as to counts two and three for violation of constitutional rights of free speech and due process, a common-law cause of action for violating a citizen's federal or state constitutional rights has not been recognized in Kansas and, therefore, the State and its agents are immune from liability, and (3) as to the claim for retaliatory discharge based on "whistleblowing" such claim is not viable because Prager disclosed confidential tax information in his communications to Governor Graves.

Prager appealed. Our jurisdiction is pursuant to K.S.A. 20-3018(c) (transfer on our motion).

Factual statement

Since no discovery had taken place when the motion to dismiss was filed, we must rely on the pleadings and exhibits attached thereto as the facts we must consider. Both parties agree the holding of GFF Corp. v. Associated Wholesale Grocers, Inc., 130 F.3d 1381 (10th Cir. 1997), was properly applied by the trial court and that the motion to dismiss was not converted into one for summary judgment.

The defendants attached to their motion to dismiss copies of Prager's letters to Governor Graves and Secretary LaFaver's letters of suspension and dismissal to Prager, all of which were referenced in Prager's petition, were considered by the trial court, and will be considered by us on appeal.

In ruling on the motion to dismiss, the trial court stated the following facts:

"1. Plaintiff ..., held the position of Attorney III with the Department of Revenue from 1988 until his termination on May 16, 1997.

"2. On October 31, 1996, ... Plaintiff delivered a memo to his supervisor, Richard Oxandale, general counsel for the Department of Revenue. At that time, Plaintiff was in charge of a corporate income tax appeal, hereinafter referred to as Tax Appeal A. In this memo, Plaintiff stated that the tax laws had been misinterpreted by Mr. Oxandale and the Secretary of the Department of Revenue, John D. LaFaver, in another tax appeal (hereinafter Tax Appeal B) which involved the same issue as Tax Appeal A, i.e. whether a federal agreement to extend the federal assessment limitation period extends the time period for a Kansas refund claim under K.S.A. 79-3230(e). He stated that little or no research had been done in arriving at this erroneous interpretation and that this erroneous interpretation resulted in an illegal tax refund of approximately $1.0 million to taxpayer B. Plaintiff's memo included three pages of legal analysis and included a request for a meeting with Mr. Oxandale and Secretary LaFaver. No meeting was ever scheduled.

"3. On December 18, 1996, Plaintiff Prager sent a letter and twelve-page memo to Governor Bill Graves. The letter provided in relevant part [bracketed portions were inserted by the trial court]:

`I am the senior state tax attorney who has been the subject of several personal attacks in the Topeka Capitol Journal. Although I have up to now endured this criticism without formal response, the December 8th editorial which said that my actions were an "outrage" causes me to step forward to personally explain to you what I know is the truth. Please consider and determine for yourself that La Siesta was not legally entitled to the pre-1995 credits and that the 1995 law should not have caused the abatement of La Siesta's pre-1995 liability. I am confident that when these articles and the issues they raise are examined ..., the distortions and false accusations in them will become apparent.

`La Siesta was not legally entitled to tax credits that it claimed. While the construction of its facility commenced in June of 1982, the enterprise zone was not designated until October of 1982. Because the facility was established well before the enterprise zone designation, La Siesta did not qualify for the enhanced enterprise zone credits. ... [The letter proceeds with a paragraph explaining the error in law applied to La Siesta's return.]

. ...

`It is evident that S. Lucky DeFries misled you and your staff to the erroneous conclusion that La Siesta's assessment should be abated. Many of the statements in the La Siesta's article are false, and I assume that Mr. DeFries made the same and other misstatements to you. ...

`There have

...