Amend v. Neb. Pub. Serv. Comm'n
| Decision Date | 12 January 2018 |
| Docket Number | No. S-16-948.,S-16-948. |
| Parties | Karen AMEND et al., appellants, v. NEBRASKA PUBLIC SERVICE COMMISSION, appellee. |
| Court | Nebraska Supreme Court |
Shawn D. Renner and Andre R. Barry, of Cline, Williams, Wright, Johnson & Oldfather, L.L.P., Lincoln, for appellants.
Douglas J. Peterson, Attorney General, and Timothy R. Ertz, Lincoln, for appellee.
This appeal concerns the dismissal of a complaint filed in the district court for Lancaster County under Nebraska’s State Tort Claims Act (STCA)1 which alleged the Nebraska Public Service Commission (PSC), the appellee, negligently failed to enforce Nebraska statutes and regulations against Pierce Grain Elevator, Inc. (PEI). The district court ruled appellants’ claims were grounded in exceptions to the STCA’s limited waiver of sovereign immunity and granted the PSC’s motion to dismiss. We affirm.
The following statement of facts is taken from allegations in appellants’ complaint, which we accept as true for purposes of reviewing the district court’s dismissal of the complaint.
Appellants are a group of over 30 farmers and farm management customers of PEI, a grain warehouse in northeast Nebraska, which failed and closed in March 2014. Throughout the fall of 2013 and spring of 2014, each appellant conducted business with PEI, unaware that PEI was financially unstable.
On July 15, 2013, the PSC performed a compliance review of PEI which showed outstanding checks written by PEI exceeded PEI’s account balance by more than $603,000. PEI’s owner equity was over $5.8 million in the negative, and its working capital ratio was $7.2 million in the negative. The PSC found PEI had over a half-million-dollar working capital deficiency dating back to at least December 31, 2012. The
PSC contacted PEI’s bank and expressed concern but took no further action. Until its closure, PEI’s net worth and working capital ratio remained negative by millions of dollars. Nevertheless, PEI continued to contract with appellants and take possession of their grain.
On March 5, 2014, the PSC terminated PEI’s grain warehouse and grain dealer licenses. Appellants were in large part unpaid for their grain. Appellants suffered a cumulative financial loss of over $2.56 million.
In June 2016, appellants filed a complaint against the PSC under the STCA which alleged their losses resulted from the PSC’s negligent failure to perform its obligations under Nebraska law. Appellants’ lawsuit claims the PSC failed to enforce several Nebraska statutes and regulations which impose minimum financial requirements for grain dealers. In particular, appellants highlight a regulatory procedure which they contend, based on the facts of this case, imposed a mandatory duty on the grain warehouse director for the PSC to file a complaint before the PSC concerning PEI’s law violations, obtain a hearing on the matter, and notify PEI and its security provider. Appellants contend, due to the PSC’s failure to fulfill its legal duties, PEI continued to conduct business with appellants, which caused appellants’ financial losses.
The PSC responded to appellants’ complaint by moving to dismiss under Neb. Ct. R. Pldg. § 6-1112(b)(1). Following a hearing, the district court granted the PSC’s motion. The court found appellants’ suit was barred by sovereign immunity, because the substance of appellants’ claims fell within the "failure to suspend or revoke a license" exception to the STCA’s limited waiver of immunity provided in § 81-8,219(8). The court further found appellants’ suit was barred by the STCA’s discretionary function exception provided in § 81-8,219(1). The court dismissed appellants’ claims with prejudice for lack of subject matter jurisdiction. Appellants filed an appeal, and we granted their motion to bypass the Nebraska Court of Appeals.
Appellants assign, restated and reordered, the district court erred in (1) dismissing appellants’ claims for lack of subject matter jurisdiction under § 6-1112(b)(1) based on exceptions to the STCA, (2) concluding that appellants’ claims are barred by the license revocation exception in § 81-8,219(8), (3) concluding that appellants’ claims are barred by the discretionary function exception in § 81-8,219(1), and (4) dismissing appellants’ complaint without leave to amend.
A district court’s grant of a motion to dismiss on the pleadings is reviewed de novo, accepting the allegations in the complaint as true and drawing all reasonable inferences in favor of the nonmoving party.2
Statutory interpretation presents a question of law, for which an appellate court has an obligation to reach an independent conclusion irrespective of the decision made by the court below.3
Whether the allegations made by a plaintiff constitute a cause of action under the STCA or whether the allegations set forth claims which are precluded by the exemptions set forth in the act is a question of law, for which an appellate court has a duty to reach its conclusions independent of the conclusions reached by the district court.4
We first address whether exceptions to STCA’s limited waiver of immunity, enumerated in § 81-8,219, are affirmative defenses which the State must plead and prove. We then address whether the State has waived its sovereign immunity with respect to appellants’ claims.
Appellants argue that the district court erred by considering application of exceptions to the STCA, because the PSC’s motion to dismiss under § 6-1112(b)(1) did not raise affirmative defenses. Appellants contend that exceptions to the STCA are affirmative defenses which the State must plead and prove.
The PSC argues that even if consideration of exceptions to the STCA was improper, the district court reached the correct result. Alternatively, the PSC argues that we should revise Nebraska’s affirmative defense rule.
During the pendency of this appeal, we decided Davis v. State.5 In Davis, we overruled our prior line of cases which held that exceptions to the limited waivers of sovereign immunity provided by the STCA and the Political Subdivisions Tort Claims Act (PSTCA)6 are affirmative defenses which the State must plead and prove. We held that an exception to the State’s waiver of immunity under the STCA is an issue that the State may raise for the first time on appeal and that a court may consider sua sponte.7 We recognized this rule is more consistent with the settled principle that the lack of subject matter jurisdiction may be raised at any time by any party or by the court sua sponte.8 We explained that an appellate court has an independent duty to decide jurisdictional issues on appeal, even if the parties have not raised the issue.9 In light of this duty, a rule which treats exceptions to waivers of immunity as waivable affirmative defenses places courts in an unworkable position when a jurisdictional defect is apparent on the face of a plaintiff’s complaint. Consequently, even where a party has not raised the issue, an appellate court has the power to determine whether a plaintiff’s allegations, taken as true, show that a tort claim is facially barred by an STCA exception under § 81-8,219.
At argument, appellants acknowledged this recent change in the law and that their prior position that the PSC was required to plead and prove exceptions to the STCA as affirmative defenses is foreclosed by our recent decision.
Under the 11th Amendment,10 a nonconsenting state is generally immune from suit unless the state has waived its immunity.11 Neb. Const. art. V, § 22, provides: "The state may sue and be sued, and the Legislature shall provide by law in what manner and in what courts suits shall be brought." The Legislature has provided limited waivers of the State’s sovereign immunity through the STCA, subject to statutory exceptions.12 Appellate courts give statutory language its plain and ordinary meaning and will not resort to interpretation to ascertain the meaning of statutory words which are plain, direct, and unambiguous.13
It is well settled that statutes that purport to waive the State’s protection of sovereign immunity are strictly construed in favor of the sovereign and against the waiver.14 In order to strictly construe against a waiver of sovereign immunity, we broadly read exemptions from a waiver of sovereign immunity.15 A waiver of sovereign immunity is found only where stated by the most express language of a statute or by such overwhelming implication from the text as will allow no other reasonable construction.16
The discretionary function exception under the STCA and PSTCA is expressed in nearly identical language; thus, cases construing the state exception apply as well to the PSTCA exception.17 In analyzing § 13-910(4), the PSTCA equivalent to the STCA’s "failure to suspend or revoke a license" exception under § 81-8,219(8), we have stated the language of the exception is clear and unambiguous.18
An appellate court must determine whether sovereign immunity lies from the nature of the underlying dispute.19
Where the facts are undisputed, whether an exception to immunity under the STCA precludes suit is a question of law.20
The PSC is an independent regulatory body created by the Nebraska Constitution in article IV, § 20.21 The PSC’s authority to regulate public grain warehouses is purely statutory, in contrast to its plenary authority to regulate common carriers under Neb. Const. art. IV, § 20.22 Under Neb. Rev. Stat. § 75-109.01(2) (Reissue 2009 & Cum. Supp. 2014), the PSC is vested with jurisdiction over grain pursuant to the Grain Warehouse Act23 and...
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