Atu et al v. Link et al

Decision Date01 June 2000
Docket Number99-665
PartiesARKANSAS TECH UNIVERSITY; Mary Ann Salmon, Steve A. Sutton, Dale Brown, Dr. Dean McDougal, Individually and as Members of the Board of Trustees of Arkansas Tech University; Dr. Robert Brown, Individually and as President of Arkansas Tech University v. Michael A. LINK, Stanley Lombardo, Charles A. Mitchell, Steve A. Shry, William C. Titus, Margaret Wilkerson, Marilyn Bocksnick 99-665 ___ S.W.3d ___ Opinion delivered
CourtArkansas Supreme Court

Appeal from Pope Chancery Court; Ellen Bass Brantley, Chancellor; reversed and dismissed.

1. Motions -- motion to dismiss -- standard of review. -- In reviewing a trial court's decision on a motion to dismiss under Ark. R. Civ. P. 12(b)(6), the appellate court treats the facts alleged in the complaint as true and views them in the light most favorable to the party who filed the complaint; in testing the sufficiency of the complaint on a motion to dismiss, all reasonable inferences must be resolved in favor of the complaint, and the pleadings are to be liberally construed.

2. Pleading -- complaint -- fact pleading required. -- The Arkansas Rules of Civil Procedure require fact pleading; a complaint must state facts, nor mere conclusions, in order to entitle the pleader to relief.

3. Constitutional law -- sovereign immunity -- jurisdictional. -- Sovereign immunity is jurisdictional immunity from suit, and jurisdiction must be determined entirely from the pleadings.

4. Constitutional law -- sovereign immunity -- suits against State forbidden. -- Sovereign immunity for the State of Arkansas arises from express constitutional declaration; suits against the State are expressly forbidden by Ark. Const. art. 5, § 20, which provides that "[t]he State of Arkansas shall never be made a defendant in any of her courts"; a sovereign State cannot be sued except by its own consent, and such consent is expressly withheld by the Arkansas Constitution.

5. Constitutional law -- sovereign immunity -- can be waived. -- While sovereign immunity is jurisdictional immunity from suit, and the trial court acquires no jurisdiction where the pleadings show the action is one against the State, sovereign immunity, unlike subject-matter jurisdiction, can be waived.

6. Constitutional law -- sovereign immunity -- no distinction between law & equity. -- The doctrine of sovereign immunity makes no distinction between actions in equity and actions at law.

7. Constitutional law -- sovereign immunity -- suit against official's office. -- A suit against a state official in his or her official capacity is not a suit against that person, but rather is a suit against that official's office.

8. Constitutional law -- sovereign immunity -- suit against university board of trustees barred. -- A suit against the board of trustees of a state university is a suit against the State and is barred by the doctrine of sovereign immunity.

9. Appeal & error -- Claims Commission -- breach-of-contract claims. --Breach-of-contract claims by state employees must be heard by the Arkansas Claims Commission.

10. Constitutional law -- sovereign immunity -- when action barred by. -- If the State's financial obligations would increase if the plaintiffs prevail in their suit, the action is barred by the doctrine of sovereign immunity; stated otherwise, if a judgment for the plaintiff will operate to control the action of the State or subject it to liability, the suit is one against the State and is barred by the doctrine of sovereign immunity.

11. Constitutional law -- sovereign immunity -- exception for equity jurisdiction to enjoin arbitrary & capricious acts. -- Equity has jurisdiction to enjoin or restrain State officials or agencies from acts which are ultra vires, in bad faith, or arbitrary and capricious.

12. Constitutional law -- sovereign immunity -- complaint alleging illegal acts not exempt from fact-pleading requirement. -- A complaint alleging illegal and unconstitutional acts by the State as an exception to the sovereign-immunity doctrine is not exempt from complying with the rules requiring fact pleading; a complaint must state facts, not mere conclusions, in order to entitle the pleader to relief.

13. Constitutional law -- failure to plead facts on impairment of property right -- sovereign-immunity exception inapplicable -- reversed & dismissed. --Where appellees failed properly to plead facts sufficient to state a claim based on the unconstitutional impairment or deprivation of a vested property right, the exception to the sovereign-immunity doctrine regarding unconstitutional acts was not applicable, and the supreme court declared the suit by appellees against appellants barred by the doctrine of sovereign immunity as set forth in Article 5, section 20, of the Arkansas Constitution; the trial court erred when it held otherwise; reversed and dismissed.

Thomas W. Pennington; Mark Pryor, Att'y Gen., by: Dennis R. Hansen, Ass't Att'y Gen., and Sherri L. Robinson, Ass't Att'y Gen.; Timothy O. Dudley; and Streett & Coutts, by: Alex G. Streett, for appellants.

Richard C. Downing, P.A., by: Richard C. Downing; Pulliam & Wright, P.A., by: Janet L. Pulliam and Randall G. Wright; Dunham & Faught, by: James Dunham, for appellees.

Annabelle Clinton Imber, Justice.

The appellees, who are employees of Arkansas Tech University ("ATU"), filed this action in the Chancery Court of Pope County against ATU, the president of ATU, and the members of its Board of Trustees. At issue in this interlocutory appeal by ATU and the Board is the trial court's denial of their motion to dismiss appellees' second amended petition for declaratory judgment and injunction. Specifically, ATU and the Board argue on appeal that appellees are barred from filing this suit against the State by the doctrine of sovereign immunity; that appellees' claims against a state agency and state officials are solely for breach of contract and, therefore, should be brought before the Arkansas Claims Commission; and that appellees have not pled facts sufficient to state a claim under any recognized exception to the sovereign-immunity doctrine. We hold that the trial court should have dismissed appellees' second amended petition because it fails to state a claim upon which relief can be granted.

Beginning in the 1960s, ATU provided its employees who had reached the age of fifty-five and who had worked at the university for twenty years with the ability to retire and receive health insurance for the rest of their lives, with ATU bearing the full cost of that insurance. This unwritten policy was never adopted by the Board of Trustees; nor was it included in any written contract or state statute. When the cost of health insurance began to increase dramatically in 1993, ATU began to reconsider its policy of providing health insurance to its eligible retirees at no cost to them. A presidential task force was created to study the issue, and in June 1997, Dr. Robert Brown, ATU President, presented a report on health insurance to the Board of Trustees. He presented the Board with four possible options regarding post-retirement health-insurance benefits. The Board voted to (1) let existing eligible retirees maintain their lifetime health-insurance coverage, with ATU bearing the full cost; (2) give employees age fifty-five or older who have served ATU for at least twenty years the option of retiring by July 1, 1998, in order to receive the same health-insurance benefits as current retirees; and (3) give employees not yet meeting the fifty-five/twenty criteria the ability to retire upon reaching age sixty after they have served ATU for at least ten years, at which time the same health-insurance benefits given to current retirees would be provided by ATU until those retirees become eligible for Medicare. After the Board adopted these changes, this lawsuit was filed.

The original plaintiffs below, the appellees on appeal, were seven tenured ATU professors. Three of those plaintiffs satisfied the fifty-five/twenty requirement. The appellees filed a petition for declaratory judgment on December 29, 1997, in which they alleged that ATU had contractually obligated itself to provide the lifetime health-insurance benefit to those retirees meeting the fifty-five/twenty criteria at no cost to the retirees, and that the benefit was an essential term of the parties' employment agreement. Appellees also alleged that the health-insurance benefit was deferred compensation in which they had a "vested contract right"or a "contractual property right," and that the Board's action was "a taking of plaintiff's vested property rights and a breach of contract." In count one of the petition, the appellees asked the trial court to "determine the actions of Defendants constitute a breach of the parties' employment agreements[.]" In count two, the appellees asked the court to enter a preliminary injunction to protect a vested contract right. In count three, they asked the court to find ATU's actions actionable under 42 U.S.C. § 1983; and, in count four, they asked for attorney's fees and costs pursuant to 42 U.S.C. § 1988 and Ark. Code Ann. § 16-22-308.

ATU and the Board moved to dismiss, and argued that the trial court was without subject-matter jurisdiction because the appellees' claim is for breach of contract, which, under the doctrine of sovereign immunity, is cognizable solely in the Arkansas Claims Commission. The appellees responded by arguing that, regardless of the sovereign-immunity doctrine, the State could still be enjoined by a court of equity when the actions of the State are illegal, unconstitutional, ultra vires, in bad faith, or arbitrary. They also argued that 42 U.S.C. § 1983 authorizes the court to enjoin state agencies and officers from depriving people of their constitutional rights. Furthermore, appellees argued that their lawsuit was not for breach of contract, but sought declaratory judgment to determine the parties' contract rights and an...

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