Gerken v. Sherman, WD 72601.

• Decision Date: 28 June 2011
• Docket Number: No. WD 72601.,WD 72601.
• Citation: 351 S.W.3d 1
• Parties: Linda GERKEN, et al., Respondents, v. Gary SHERMAN, et al., Appellants.
• Court: Missouri Court of Appeals

351 S.W.3d 1

Linda GERKEN, et al., Respondents,

v.Gary SHERMAN, et al., Appellants.

No. WD 72601.

Missouri Court of Appeals, Western District.

June 28, 2011.Motion for Rehearing and/or Transfer to

Supreme Court Denied Aug. 2, 2011.

Mark E. Long, Bradford R. Jones, Jefferson City, MO, for Appellants.

Deborah S. Greider, Clayton, MO, Barbara J. Gilchrist, John J. Ammann, Amy N. Sanders, St. Louis, MO, for Respondents

Before: MARK D. PFEIFFER, P.J., THOMAS H. NEWTON, and ALOK AHUJA, JJ.

THOMAS H. NEWTON, Judge.

The Missouri Family Support Division ¹ and the Director of the Department of Social Services (collectively “Division”) appeal from the trial court's judgment in favor of a class composed of pensioners of Missouri's blind pension fund (Pensioners). They contend the trial court erred in its rulings as to the statute of limitations and its awards of damages, prejudgment interest, and attorney's fees. We affirm in part, reverse in part, and remand.

Factual and Procedural Background

The Missouri Constitution requires the General Assembly to levy an annual property tax for the blind pension fund in order to pay pensions to “the deserving blind.” Mo. Const. art. III, § 38(b); ² Gerken v. Sherman, 276 S.W.3d 844, 846 (Mo.App. W.D.2009) ( Gerken I ). On February 16, 2006, Pensioners sought, inter alia, a declaratory judgment that the pension amounts were improperly calculated, and requested an accounting of the fund. See Gerken I, 276 S.W.3d at 847.³ They contended that pursuant to subsection 209.040.4, which sets out the formula for calculating increases to the pensions, (1) monthly pensions to the blind should have been higher before fiscal year 1999 and (2) the Division incorrectly calculated increases after fiscal year 1999. The parties filed a joint stipulation of facts and exhibits relevant to the claims. The trial court denied Pensioners' requests, and Pensioners appealed. Id.

In Gerken I, we affirmed the trial court in part, reversed in part, and remanded.⁴ Id. We determined that the Division's method of calculation was incorrect because, contrary to the relevant statutes and the Missouri constitution, the Division erroneously tied increases in pension payments to growth in the fund's balance (the balance method) rather than growth in the fund's revenue (the revenue method). Id. at 852. Consequently, we reversed the trial court's finding that the Division's methodology was correct. Id. at 856. We further found that the trial court had erred in finding that the three-year statute of limitations in section 516.130 applied to Pensioners' claims and reversed that determination. Id. at 855. We remanded for the circuit court to determine if Pensioners had proven the elements for an accounting, to order an accounting if such was the case, and to “reissue a judgment in accord with [our] opinion concerning those issues.” Id. at 855–56. We otherwise affirmed the judgment. Id. at 856.

On remand, the trial court denied the Division's request to apply a five-year statute of limitations and ordered an accounting. It suggested the appointment of Dr. James LePage as the special master for the accounting. The Division and Pensioners consented to Dr. LePage's appointment, although the Division objected to the need for an accounting. Dr. LePage prepared a report calculating a historic underpayment of $23.6 million, which the Division raised issues with during a hearing on December 17, 2009. Dr. LePage submitted a revised report to the court on March 20, 2010; it calculated the aggregate amount of underpayment to the Pensioners from 1992 to 2009 to be $18,832,188. A hearing was held to receive the report on March 22, 2010.

On March 31, 2010, the trial court adopted Dr. LePage's findings and conclusions as its own accounting and entered an aggregate judgment for $18,832,188 as actual damages “representing the total of the historic underpayment of Blind Pension benefits due Plaintiff Class for the years 1992 through the present.” ⁵ The trial court further found that Pensioners' class was entitled to prejudgment interest in the amount of $11,297,500, pursuant to section 408.020. It ruled that individual pensioners were “entitled to their portion of the unpaid benefits and interest depending on the number of months, and which months, they were underpaid benefits” and ordered the Division to immediately calculate and pay the damages due to each class member. It further awarded twenty-five percent of the common fund, $7,532,422, as attorneys' fees, and ordered the parties to submit either a stipulated claims process or separate proposed claims processes if no stipulation could be reached. It then denominated its findings and orders as a judgment “final for the purposes of appeal under Missouri Rule 74.01(b).” The Division moved to stay judgment pending appeal, which the trial court granted. The Division appeals, raising five points.

Standard of Review

We review a court-tried case under the standard articulated in Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). Midwest Div.–OPRMC, LLC v. Dep't of Soc. Servs., Div. of Med. Servs., 241 S.W.3d 371, 376–77 (Mo.App. W.D.2007). We affirm the trial court's decision unless it lacks substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law. Murphy, 536 S.W.2d at 32. Where the facts before the court are stipulated, our concern is whether the trial court drew the correct legal conclusions from the facts. Midwest Div.–OPRMC, 241 S.W.3d at 377. Despite the stipulation, we view all evidence and inferences in favor of the prevailing party and disregard contrary evidence. Id. Questions of law we review de novo. Id.

Legal Analysis

Scope of Authority to Consider Five–Year Statute of Limitations

In its first point, the Division argues the trial court erred in concluding it was without authority to apply the five-year statute of limitations period in section 516.120(2) because of our mandate in Gerken I. The Division asserted the five-year limitation within section 516.120 in its answer. However, because the trial court determined the three-year limitations period of section 516.130 applied in Gerken I, it did not address the Division's affirmative defense of section 516.120.

In Gerken I, we held that the three-year statute of limitations in section 516.130 ⁶ was not applicable to plaintiff's claim because the “gravamen” of the complaint showed that their suit concerned actions taken by the Division, not the Director in his official capacity. 276 S.W.3d at 854–55. We did not address the applicability of section 516.120, as it was not at issue.

In its judgment in the present case, the trial court determined that it could not consider the Division's continued statute of limitations argument under 516.120(2) because it had jurisdiction only to address the issues in our mandate. The Division argues that because Gerken I only addressed the limitations period in section 516.130, the trial court erred in concluding our mandate prohibited it from considering the limitations period in section 516.120(2).

The scope of the trial court's authority on remand is defined by our mandate. Guidry v. Charter Commc'ns, Inc., 308 S.W.3d 765, 768 (Mo.App. E.D.2010). The trial court must render judgment in accord with our mandate and opinion. Id. Whether the trial court followed the mandate is a question we review de novo. Id. A remand may be one of two types: “(1) a general remand, which does not provide specific direction and leaves all issues open to consideration in the new trial; and (2) a remand with directions, which requires the trial court to enter a judgment in conformity with the mandate.” Id. If the mandate gives express instructions on a specific course of action, the trial court may not diverge from those instructions, or its act is void. Id. at 768–69.

In Gerken I, we instructed the trial court on remand to “determine whether or not the appellants proved the requisite elements for an accounting,” and to order an accounting if it determined the elements were shown. Gerken I, 276 S.W.3d at 855. An action for an accounting requires the requesting party to show a right to an accounting: the party must show “a need for discovery, complicated accounts, a fiduciary or trust relationship between the parties, and lack of an adequate legal remedy.” Id. In accord with the remand, the trial court found that Pensioners' need for discovery was demonstrated throughout the action in that thousands of pages of records were in the exclusive possession and control of the Division; determining the underpayment was a “daunting” task; the Division held a position of trust as they were responsible for administering the Blind Pension Fund; and that Pensioners had no remedy absent an accounting for determining the underpayment.

However, if Pensioners' accounting action was barred by the statute of limitations, they necessarily could not show a legal right to an accounting. See, e.g., Lane v. Non–Teacher Sch. Emp. Ret. Sys. of Mo., 174 S.W.3d 626, 633 (Mo.App. W.D.2005). Further, if the statute of limitations limited Pensioners' damages, this was necessarily integral to the accounting. Consequently, the determination of whether section 516.120 barred or limited Pensioners' action was within the scope of our mandate.⁷ The trial court therefore erred in finding it was without authority to address the Division's affirmative defense of the statute of limitations. The Division's first point is granted.

Applicability of Five–Year Statute of Limitations

In its second point, the Division contends the trial court erred by not applying the five-year statute of limitations in section 516.120(2). Section 516.120(2) ⁸ provides that “[a]n action upon a liability created by a statute other than a penalty or forfeiture” must be brought within five years. Pensioners' suit was filed on February 16, 2006. The Division argues that Pensioners' cause of action accrued...