Walker v. Board of Trustees
| Decision Date | 21 July 2003 |
| Docket Number | No. 02-1173.,02-1173. |
| Parties | ELLSWORTH WALKER; ESTATE OF VIRGIL SALAZAR; MARY LOU SALAZAR, in her capacity as executor of Virgil Salazar's Estate, Plaintiffs-Appellees, v. BOARD OF TRUSTEES, REGIONAL TRANSPORTATION DISTRICT AND AMALGAMATED TRANSIT UNION DIVISION 1001 PENSION FUND TRUST; REGIONAL TRANSPORTATION DISTRICT AND AMALGAMATED TRANSIT UNION DIVISION 1001 PENSION FUND TRUST; ROSEMARIE SNYDER, MICHAEL RUCKER, GREGG FISHER, LLOYD MACK, LARRY SORGET, and EARL NICHOL, Trustees, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Tenth Circuit |
(D. Colo.), (D.Ct. No. 98-B-2585).
Robert Lawrence Liebross (J. Mark Baird with him on the brief), Denver, Colorado, for Plaintiffs-Appellees.
Dean C. Heizer, II (David B. Seserman and Miranda K. Hawkins with him on the briefs) of Gorsuch Kirgis LLP, Denver, Colorado, for Defendants-Appellants.
Before EBEL, Circuit Judge, BRORBY, Senior Circuit Judge, and MURPHY, Circuit Judge.
A Board of Trustees of a pension plan adopted an amendment and applied it to existing retirees, reducing their pension benefits. Two of the retirees sued in state court after the Board denied their appeals. The Board removed the action to federal district court. The district court held the Board willfully and wantonly breached its contract with the retirees and breached its fiduciary duties. The Board appeals. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.
The Denver Regional Transportation District and the Amalgamated Transit Union entered a collective bargaining agreement. As part of the agreement, they created a pension plan for Union employees. The District and the Union appointed an independent Board of Trustees to administer the plan.
Exercising its authority under the plan, the Board of Trustees amended the plan definition of "final average earnings" in 1991. In relevant part, the new definition allowed employees who transferred from covered Union positions to non-covered management positions to receive Union pension benefits based on the employee's highest sixty months of earnings, including any earnings made in non-covered management positions. The Board adopted this amendment in order to facilitate, and to avoid discouraging, the transfer of employees between covered Union positions and non-covered management positions.
Ellsworth Walker and Virgil Salazar were employees of the Regional Transportation District and participants in the pension plan. After working for a number of years in covered Union positions, both Messrs. Walker and Salazar transferred to non-covered management positions. Both eventually retired and began receiving pension benefits. At the time of their respective retirements, the definition of "final average earnings" that the Board adopted in 1991 was in effect.
A few years after their retirements, the Board again amended the plan definition of "final average earnings" because it believed the definition it adopted in 1991 was "inconsistent" with other provisions of the plan and the plan's purpose. The amendment, adopted in 1998, revised the definition of "final average earnings" to exclude from the benefit calculation employees' earnings from any non-covered management positions. The Board applied the 1998 amendment to Messrs. Walker and Salazar, among others, significantly reducing their pension benefits.
Messrs. Walker and Salazar appealed the Board's decision, but the Board denied the appeals. They then sued the Board in the district court for the City and County of Denver. The Board removed the action to the United States District Court for the District of Colorado based on Messrs. Walker and Salazar's claims under 42 U.S.C. § 1983. 28 U.S.C. § 1441. The Board moved to dismiss, arguing (among other things) it was immune from suit under the Colorado Governmental Immunity Act for Messrs. Walker and Salazar's breach of fiduciary duty claims. The district court denied the motion in relevant part.
The Board and Messrs. Walker and Salazar subsequently filed cross-motions for summary judgment. The court granted the Board's motion only on Messrs. Walker and Salazar's 42 U.S.C. § 1983 claims because they did not include the claims in the pretrial order. The court granted Messrs. Walker and Salazar's motion on their claims for breach of contract and breach of fiduciary duties.
While this case was pending in the district court, Mr. Salazar died. The district court substituted Mr. Salazar's wife, Mrs. Salazar, as a plaintiff in the case in her capacity as executor of Mr. Salazar's estate.
The case went to trial on the issues of whether the Board's conduct was willful and wanton, whether Messrs. Walker and Salazar suffered emotional distress as a result of the Board's conduct, and attorney's fees. The court found the Board acted willfully and wantonly in breaching its contract with Messrs. Walker and Salazar. In addition, the court found both Messrs. Walker and Salazar suffered emotional distress as a result of the Board's breach. The court awarded Mr. Walker and Mr. Salazar's estate compensatory damages, including emotional distress damages, and attorney's fees. The court also awarded Mr. Walker consequential damages. The Board appeals.
The Board raises five claims of error on appeal: (1) the district court incorrectly determined the Board was not immune from suit under the Colorado Governmental Immunity Act for Messrs. Walker and Salazar's breach of fiduciary duty claims; (2) the district court erred in granting summary judgment against the Board on Messrs. Walker and Salazar's claims for breach of contract and breach of fiduciary duties; (3) the district court incorrectly allowed Mr. Salazar's breach of fiduciary duty claims to survive his death in violation of Colorado's survival statute; (4) the district court erred in allowing Mr. Salazar's wife to testify about his emotional distress in violation of Colorado's dead man's statute; and (5) the district court erroneously admitted hearsay evidence and concluded the Board's breach of contract was willful and wanton. We address each argument in turn.(1)
Before trial, the Board moved the district court to dismiss (in relevant part) Messrs. Walker and Salazar's claims for breach of fiduciary duty under Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. The district court denied the motion. The Board argues on appeal the district court should have dismissed the claims because it is "immune from liability for tort-based claims under the Colorado Governmental Immunity Act."
We review de novo the district court's denial of a motion to dismiss under Fed. R. Civ. P. 12(b)(6) and 12(b)(1). See Ashley Creek Phosphate Co. v. Chevron USA, Inc., 315 F.3d 1245, 1267 (10th Cir. 2003), petition for cert. filed, 71 U.S.L.W. 3760 (U.S. Apr. 21, 2003) (No. 02-1758); Holt v. United States, 46 F.3d 1000, 1003 (10th Cir. 1995). We review for clear error the district court's findings of jurisdictional facts. See Holt, 46 F.3d at 1003.
Under the Colorado Governmental Immunity Act, "[n]o public entity shall be liable for [actions which lie in tort or could lie in tort] except as provided in this article." Colo. Rev. Stat. § 24-10-105 (2001). The Act defines a "public entity" as "the state, county, city and county, municipality, school district, special improvement district, and every other kind of district, agency, instrumentality, or political subdivision thereof organized pursuant to law and any separate entity created by intergovernmental contract or cooperation only between or among [public entities]." Colo. Rev. Stat. § 24-10-103(5) (2001) (amended 2002).
The Act also grants immunity to public employees "for injuries arising out of an act or omission occurring during the performance of his duties and within the scope of his employment, unless such act or omission was willful and wanton." Id. § 24-10-105. In relevant part, the Act defines a public employee as "an officer, employee, servant, or authorized volunteer of the public entity." Id. § 24-10-103(4)(a). Since the Act is "in derogation of the common law," we must strictly construe it. See Bertrand v. Bd. of County Comm'rs, 872 P.2d 223, 225 (Colo. 1994).
Under the definition above, the Board does not qualify as a "public entity." It is not a "state, county, city and county, municipality, school district, special improvement district, [or any] other kind of district, agency, instrumentality, or political subdivision." See Colo. Rev. Stat. § 24-10-103(5). Nor was it "created by intergovernmental contract or cooperation between or among [public entities]." Id. (emphasis added). The Board was created through a collective bargaining agreement between the Regional Transportation District (a public entity), see Brock v. Nyland, 955 P.2d 1037, 1040 (Colo. 1998), and the Union (a non-public entity).
The Board argues it is an "instrumentality" of the Regional Transportation District and therefore "entitled to immunity" under the Act. Although the District may appoint some Board members, the pension plan specifically states "the Board and not the [District] shall have the responsibility for and the authority to manage the operation and administration of the Plan." Furthermore, Board members are obligated to act only in the interest of the plan and not the District. As a result of these considerations, we conclude the Board is not an "instrumentality" of the District.
The Board also argues Board members are "public employees." Since the Board is not a public entity, however, its members cannot be public employees in their capacity as Board members. Without record support, the Board argues some of the Board members are public employees because they also work for the Regional Transportation District. Even assuming some of the Board members also work for the District, their conduct as Board members does...
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