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Jill B. v. State

Supreme Court of Nebraska

June 30, 2017

Jill B. and Travis B., Individually and as Parents and Next Friends of B.B., a Minor Child. Appellants,
v.
State of Nebraska and the Nebraska Department of Health and Human Services, Appellees.

         1. Tort Claims Act: Appeal and Error. In actions brought pursuant to the State Tort Claims Act, the factual findings of the trial court will not be disturbed on appeal unless they are clearly wrong, and when determining the sufficiency of the evidence to sustain the verdict, it must be considered in the light most favorable to the successful party. Every controverted fact must be resolved in favor of such party, and it is entitled to the benefit of every inference that can reasonably be deduced from the evidence.

         2. Statutes: Appeal and Error. The meaning and interpretation of a statute are questions of law. An appellate court independently reviews questions of law decided by a lower court.

         3. Actions: Appeal and Error. The law-of-the-case doctrine reflects the principle that an issue that has been litigated and decided in one stage of a case should not be relitigated at a later stage.

         4. Summary Judgment. The overruling of a motion for summary judgment does not decide any issue of fact or proposition of law affecting the subject matter of the litigation, but merely indicates that the court was not convinced by the record that there was not a genuine issue as to any material fact or that the party offering the motion was entitled to judgment as a matter of law.

         5. Actions: Final Orders: Appeal and Error. The law-of-the-case doctrine requires a final order. A party is not bound by a court's findings in an order that it was not required to appeal.

         [297 Neb. 58] 6. Summary Judgment: Final Orders: Appeal and Error. A denial of a motion for summary judgment is an interlocutory order, not a final order, and therefore not appealable.

         7. Tort Claims Act: Immunity: Waiver: Pleadings: Proof. The exceptions found in Neb. Rev. Stat. § 81-8, 219 (Reissue 2014) to the general waiver of tort immunity are matters of defense which must be pled and proved by the State.

         8. Pleadings: Notice. The key to determining the sufficiency of pleading an affirmative defense is whether it gives the plaintiff fair notice of the defense.

         9. Pretrial Procedure: Pleadings. The issues set out in a pretrial order supplant those raised in the pleadings.

         10. Tort Claims Act: Legislature: Immunity: Waiver. Through the State Tort Claims Act, the Legislature has waived the State's immunity with respect to certain, but not all, types of tort actions.

         11. Tort Claims Act: Immunity: Waiver. Under the intentional torts exception, sovereign immunity is not waived for claims arising out of assault, battery, false imprisonment, false arrest, malicious prosecution, abuse of process, libel, slander, misrepresentation, deceit, or interference with contract rights.

         12. Statutes: Immunity: Waiver. Statutes that purport to waive the protection of sovereign immunity of the State or its subdivisions are strictly construed in favor of the sovereign and against the waiver. 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.

         13. Statutes: Appeal and Error. Statutory language is to be given its plain and ordinary meaning, and an appellate court will not resort to interpretation to ascertain the meaning of statutory words which are plain, direct, and unambiguous.

         14. Tort Claims Act: Immunity: Waiver. The misrepresentation exception to the waiver of sovereign immunity can apply to claims for personal injuries as well as economic injuries and to claims not involving business transactions.

         15. ___: ___: ___. The misrepresentation exception to the waiver of sovereign immunity must be strictly construed in favor of the government. 16. Tort Claims Act: Immunity: Waiver: Case Disapproved. Fuhrman v. State, 265 Neb. 176, 655 N.W.2d 866 (2003), is disapproved to the extent it holds that a complete failure to convey critical information, without an inference that this was deliberately done, falls outside the misrepresentation exception to the waiver of sovereign immunity.

         [297 Neb. 59] 17. Tort Claims Act: Pleadings. A plaintiff cannot circumvent the misrepresentation exception simply through artful pleading of its claims.

         Appeal from the District Court for Gage County: Paul W. Korslund, Judge. Affirmed.

          Ryan P. Watson and Jeffrey A. Wagner, of Schirber & Wagner, L.L.P, for appellants.

          Douglas J. Peterson, Attorney General, David A. Lopez, and Bijan Koohmaraie for appellees.

          Heavican, C.J., Wright, Miller-Lerman, Cassel, Stacy, Kelch, and Funke, JJ.

          CASSEL, J.

         I. INTRODUCTION

         A state employee falsely told the parents of a child that K.D.M., a potential adoptee, had no sexual abuse history. Upon placement in their home, K.D.M. sexually assaulted the parents' child. They sued for money damages under the State Tort Claims Act.[1] After a bench trial, [2] the district court found the State of Nebraska and the Nebraska Department of Health and Human Services (collectively the State) immune from suit under the exception for misrepresentation and deceit.[3] The parents appeal, and we affirm. Because the employee consciously deceived the parents, the exception applies. Our decision is driven by the highly deferential standard used to review the district court's factual findings and the strict construction we must give to waivers of sovereign immunity.

         II. BACKGROUND

         Because the State prevailed at trial, we summarize the facts in the light most favorable to it.

         [297 Neb. 60] 1. Events

         In May 2010, the parents, Jill B. and Travis B., became interested in adopting K.D.M. On at least three occasions, Jill asked Jodene Gall, a children and family services specialist with the State, whether K.D.M.'s background had anything "sexually" in it and Gall responded "no." Gall told Jill only that there had been concerns about "inappropriate" contact between K.D.M. and his brother. K.D.M. was placed in the parents' home in July.

         Gall, however, was aware of allegations that K.D.M. had been sexually abused. She learned this information by reviewing information contained in the computer database and the master case file, which is a paper file.

         Approximately 5 months after K.D.M. was placed in the parents' home, the parents learned that K.D.M. had sexually abused their child.

         2. Lawsuit

         The parents, individually and as parents and next friends of their minor child, brought a negligence claim against the State. They alleged failure to warn or disclose and failure to supervise. The State asserted the affirmative defense of immunity under § 81-8, 219(4), claiming that the case constituted a claim arising out of misrepresentation or deceit, because the withholding of information by Gall was intentional.

         The State filed a motion for summary judgment, which the district court overruled. The court stated that it was clear Gall intentionally concealed K.D.M.'s sexual history from the parents, but that there was evidence she did not read the reports which detailed the sexual history and was not aware of how serious it was. The court reasoned that it could not conclude Gall's intentional concealment of K.D.M.'s sexual history was the sole proximate cause of damages when there was evidence that the proximate cause was Gall's failure to be fully aware of the file and forensic reports. The matter proceeded to trial.

         [297 Neb. 61] During the bench trial, Gall testified about her awareness of K.D.M.'s background. When she first spoke with Jill, Gall knew that K.D.M. "had some inappropriate contact" with a relative. Gall believed that she told the parents there had been "inappropriate contact, " but she did not believe she elaborated. And Gall testified that she did not know the full extent of K.D.M.'s sexual abuse at that time.

         But there was evidence from which the district court could conclude that from the beginning of her contacts with the parents, Gall knew the full extent of K.D.M.'s sexual history. Gall admitted that when K.D.M. was placed with the parents, she was aware of allegations that he had been sexually abused and that he had a history of sexually acting out. She admitted that she was assigned to K.D.M.'s case in 2007 or 2008. She admitted that in 2007, she drafted a "private narrative" section of an adoption form regarding K.D.M. She admitted that the first sentence of the private narrative stated, '"[K.D.M.] would best fit in a family with two parents, preferably no other children.'" She admitted that this opinion "could have been" based on her knowledge of K.D.M.'s sexual history. In an email from Gall to other personnel of the State, Gall recalled the allegations of a particular intake. She admitted at trial that in the email, she was referring to the intake received as exhibit 35. And she admitted that exhibit 35 was the source of her information or knowledge regarding K.D.M.'s sexual history. One of the State's child and family services supervisors explained that the information from this intake form was derived from forensic interviews conducted by a child advocacy center. The supervisor also testified that Gall said "she didn't feel like she would have to call [K.D.M.] a perp for the rest of his life."

         3. District Court's Judgment The district court entered judgment in favor of the State. Ultimately, the court reasoned that the State's liability "rises and falls on whether [K.D.M.'s] sexual abuse history was disclosed, not on whether or not the information was available [297 Neb. 62] to [Gall] and whether [Gall] was negligently trained and supervised." The court also stated that "the information was available to [Gall, ] and she was not negligently trained and supervised."

         The district court made numerous factual findings, and we quote the findings bearing on Gall's intent as follows:

8. [Gall] was actually aware that [K.D.M.'s] background included some instances of sexual abuse and inappropriate sexual contact with a sibling at the time of the [parents'] inquiries.
9. During the preliminary meetings and evaluations, [Gall] also represented to ... a licensed mental health counselor who was assisting with the placement proc-ess[] that [K.D.M.] had no sexual abuse history as either a victim or perpetrator.
10. [Gall] was not authorized with discretion to withhold relevant information concerning the sexual abuse history of [K.D.M.]
11. Even while [Gall] knew that [K.D.M.'s] background included allegations of sexual abuse and inappropriate sexual contact and acting out, and despite her awareness that the [parents] were very concerned about whether [K.D.M.] had any history that included sexual activity, [K.D.M.] was placed in the [parents'] home in 2010.

         The district court concluded that the parents presented a case "rooted in and inextricably intertwined with multiple instances of misrepresentation" by Gall. Because the State Tort Claims Act "specifically excepts from its waiver of governmental immunity claims that are based on misrepresentation and deceit, " the court dismissed the complaint.

         The parents filed a timely appeal, and we granted their petition to bypass review by the Nebraska Court of Appeals.

         III. ASSIGNMENTS OF ERROR

         The parents assign four errors, which we have restated and reordered. We first address their assignments that the district [297 Neb. 63] court erred in not applying the law-of-the-case doctrine and in finding the misrepresentation exception had been properly asserted as an affirmative defense. We then consider the heart of the appeal, where they attack the court's determination that the State was immune under the exception for misrepresentation or deceit. Finally, we discuss the assignment of error regarding the court's finding that Gall was not negligently trained and supervised.

         IV. STANDARD OF REVIEW

         In actions brought pursuant to the State Tort Claims Act, the factual findings of the trial court will not be disturbed on appeal unless they are clearly wrong, and when determining the sufficiency of the evidence to sustain the verdict, it must be considered in the light most favorable to the successful party. Every controverted fact must be resolved in favor of such party, and it is entitled to the benefit of every inference that can reasonably be deduced from the evidence.[4]

         The meaning and interpretation of a statute are questions of law. An appellate court independently reviews questions of law decided by a lower court.[5]

         V. ANALYSIS

         We briefly dispose of two procedural issues.

         1. Law-of-the-Case Doctrine

         The parents argue that the district court erred in failing to apply the law-of-the-case doctrine. The law-of-the-case doctrine reflects the principle that an issue that has been litigated and decided in one stage of a case should not be reliti-gated at a later stage.[6]

         The parents reason that in overruling the State's motion for summary judgment, the district court determined that immunity did not apply. We disagree for two reasons.

[297 Neb. 64] First, the parents' premise is wrong. The overruling of a motion for summary judgment does not decide any issue of fact or proposition of law affecting the subject matter of the litigation, but merely indicates that the court was not convinced by the record that there was not a genuine issue as to any material fact or that the party offering the motion was entitled to judgment as a matter of law.[7] Here, the district court did not decide that immunity did not apply, it merely decided that there was a genuine issue of fact for trial.
Second, the law-of-the-case doctrine requires a final order. A party is not bound by a court's findings in an order that it was not required to appeal.[8] But here, neither party was permitted, much less required, to appeal. A denial of a motion for summary judgment is an interlocutory order, not a final order, and therefore not appealable.[9] Thus, the law-of-the-case doctrine did not preclude the district court from addressing immunity at trial.

         2. Affirmative Defense Asserted

         The exceptions found in § 81-8, 219 to the general waiver of tort immunity are matters of defense which must be pled and proved by the State.[10] The parents contend that the State failed to properly plead the misrepresentation exception as an affirmative defense. But we have recognized that the federal rules of pleading, which Nebraska has generally adopted, were designed to liberalize pleading requirements.[11] The key to determining the sufficiency of pleading an affirmative defense is whether it gives the plaintiff fair notice of the defense.[12]

         [297 Neb. 65] Although the State's operative answer was not perfect, the parents were afforded fair notice of the nature of the defense asserted by the State. Despite references to the "Amended Complaint" throughout the State's answer, the answer was clearly filed in response to the parents' second amended complaint. Indeed, the State's pleading was titled "Defendant's Answer to Second Amended Complaint." The parents also point out that the answer referred to intentional conduct and that their operative complaint alleged only negligent conduct. But the answer, by referring to "misrepresentation or deceit" and to § 81-8, 219(4), clearly placed the parents on notice of the State's intent to raise sovereign immunity as a defense. We reject their hypertechnical attempt to parse the State's pleading.

         Moreover, the district court's pretrial order cured any question whether the defense was raised. The issues set out in a pretrial order supplant those raised in the pleadings.[13] The court incorporated into its pretrial order an issue framed in the State's pretrial conference statement: "Whether the intentional torts exception to the Nebraska State Tort Claims Act operates as a complete bar to [the parents'] recovery from the State." (Emphasis supplied.) The State characterizes this as "shorthand"[14] and correctly notes that we have used this terminology regarding § 81-8, 219(4).[15] The parents do not argue that they were misled or surprised by the State's arguments regarding misrepresentation or deceit. This assignment of error lacks merit.

         3. Misrepresentation Exception The parents' principal assignment of error asserts that the district court erred in finding their claim fell within the "[misrepresentation [e]xception"[16] of the State Tort Claims

         [297 Neb. 66] Act. But the parties argue both misrepresentation and deceit. Both terms are specified in § 81-8, 219(4).

         Before recalling the historical development and basic principles of sovereign immunity and its waiver, a simple illustration is helpful. Imagine two automobiles being operated by employees in the course of performing tasks for their respective employers. If A, an employee of XYZ Corp., becomes distracted and negligently causes injury to another person, XYZ Corp. is liable. If B, an employee of the State, does so, the State is liable. But if A or B becomes enraged at another driver and intentionally collides with the other vehicle, thereby injuring the other driver (a battery), the results differ. XYZ Corp. would be liable for A's intentional act, [17]but the State would be immune from suit for B's similar act. Although this seems counterintuitive, there is a rationale supporting the distinction.

         (a) Sovereign Immunity Prior to State Tort Claims Act

         It had been long "laid down as a universal rule that a state is not liable to a person injured by the negligence of its employees, unless there is a statute or constitutional provision permitting recovery."[18] We explained that the constitutional provision[19] permitting the State to be sued is not self-executing and requires legislative action to make it effective.[20]

         The rule of sovereign immunity has been characterized as '"an ancient rule inherited from the days of absolute monarchy'"[21]or, less pejoratively, as an inheritance of 18th-century English law.[22] It rests upon a broad doctrine recognizing the right of [297 Neb. 67] sovereign authority to be free of such liability except to the extent that it is waived or abrogated by the Legislature.[23] The doctrine predated our state constitution, which was adopted with this rule in mind.[24]

         Although the rule had been challenged for decades, [25] our 1967 decision[26] by a divided court prompted legislative action. As a dissenting judge observed pungently, "logic dictates that a person run over by a state-owned truck should have the same right to recover as one run over by a privately owned truck."[27]Two members of the majority concurred and remarked that the "implications [of the majority opinion] suggest the desirability of legislative action."[28]

         (b) State Tort Claims Act

         In 1969, the Legislature responded to the call for action.[29]But it did not abolish the rule of sovereign immunity. Instead, it used the Federal Tort Claims Act (FTCA)[30] as a model.

         Through the State Tort Claims Act, the Legislature has waived the State's immunity with respect to certain, but not all, types of tort actions.[31] As pertinent here, the act waives the [297 Neb. 68] State's sovereign immunity for tort claims against the State on account of personal injury caused by the negligent or wrongful act or omission of any employee of the State, while acting within the scope of his or her office or employment, under circumstances in which the State, if a private person, would be liable to the claimant for such injury.[32]

         The Legislature included within the act specific exceptions to the waiver of sovereign immunity. Under the intentional torts exception, sovereign immunity is not waived for claims "arising out of assault, battery, false imprisonment, false arrest, malicious prosecution, abuse of process, libel, slander, misrepresentation, deceit, or interference with contract rights."[33] Our attention focuses on misrepresentation and deceit.

         (c) Strict Construction

         It is well settled that statutes that purport to waive the protection of sovereign immunity of the State or its subdivisions are strictly construed in favor of the sovereign and against the waiver. 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.[34] Statutory language is to be given its plain and ordinary meaning, and an appellate court will not resort to interpretation to ascertain the meaning of statutory words which are plain, direct, and unambiguous.[35]

         The principle of strict construction predated the State Tort Claims Act and has been consistently followed after its adoption. We had long said that statutes authorizing suit against [297 Neb. 69] the State are to be strictly construed, since they are in derogation of the State's sovereignty.[36] Following adoption of the State Tort Claims Act, we emphasized that statutes in derogation of sovereignty should be strictly construed in favor of the State, so that its sovereignty may be upheld and not narrowed or destroyed, and should not be permitted to divest the State or its government of any of its prerogatives, rights, or remedies, unless the intention of the Legislature to effect this object is clearly expressed.[37] We also said that because the State has given only conditional consent to be sued and there is no absolute waiver of immunity by the State, requirements of the State Tort Claims Act must be followed strictly[38]Our most recent pronouncements uphold these principles.[39]Because the rationale for the intentional torts exception, including the exceptions for misrepresentation and deceit, has not always been clearly expressed, the rule of strict construction becomes critically important.

         (d) Rationale of FTCA We have recognized that Nebraska's State Tort Claims Act is patterned after the FTCA.[40] The FTCA contains an intentional [297 Neb. 70] torts exception.[41] Prior to a 1974 amendment[42] not relevant here, the language was identical.

         A majority of the U.S. Supreme Court has not spoken to the rationale underlying the intentional torts exception, but a plurality has touched on it. And several commentators and lower federal courts have spoken more directly. We summarize them chronologically to illustrate the rationale's development.

         The first comment[43] came from the academy, soon after the FTCA was adopted. Referring to all of the exceptions, including § 2680(h), it argued that because the FTCA was "in itself a denial of the validity of conceptualistic sovereign immunity, " the exceptions must seek "justification in some practical necessity"[44] Turning to § 2680(h), its rationale was found in committee hearings of an earlier act and was the "difficulty of defending such suits and the probability of judgments against the Government in amounts out of proportion to the damages actually suffered by claimants."[45] The article recognized that "this sweeping exception imposes a hardship upon claimants and leaves open one fruitful source of private claim bills."[46] In other words, the only remedy in that situation was in Congress and not in the courts.

         In a 1954 decision regarding the "assault" and "battery" parts of the exception, the Second Circuit posited that "high standards of public service would be promoted by government employees knowing that they could not engage in such lawless activities at government expense."[47] Alternatively, the court suggested that the excepted activities were viewed as [297 Neb. 71] "practically, even though not legally, speaking [as] outside the scope of a government employee's proper official functions, or in any event unusually difficult for the Government to defend against."[48] Citing to the earlier hearings noted from what the court described as a "meagre legislative history, "[49] the court quoted a Department of Justice representative's testimony that these were '"torts which would be difficult to make a defense against, and which are easily exaggerated. For that reason it seemed to those who framed this bill that it would be safe to exclude those types of torts, and those should be settled on the basis of private acts.'"[50]

         The view from the academy in 1957 recognized that these torts were "not actionable under the [FTCA], "[51] and called for Congress to reassess the preservation of this immunity, opining that "the desirability of compensation seems to outweigh the fear of excessive damages."[52] But Congress has not reassessed the exception, except for the 1974 amendment having no application here. And when our Legislature adopted the State Tort Claims Act, it did not vary from the exceptions then existing in the FTCA.

         Addressing the assault and battery components of the exception in 1985, a plurality of the U.S. Supreme Court explained that "Congress passed the [FTCA] on the straightforward assurance that the United States would not be financially responsible for the assaults and batteries of its employees."[53]

         Two later contributions from the academy provide some guidance. A 2003 article concedes that the intentional torts [297 Neb. 72] exception was "intended to shield the government from unwieldy claims founded on intentional torts" and that "Congress' intent with regard to intentional torts proximately caused by governmental negligence largely remains a mystery."[54] The most recent article explains that the FTCA's exceptions "underscore the principle that the law does not provide a remedy for every wrong-particularly where the government is concerned."[55]According to the author:

         The FTCA was enacted as one part of a broader legislative "housekeeping" measure-the Legislative Reorganization Act of 1946-whereby Congress removed from itself (or at least greatly reduced) certain time-consuming administrative responsibilities. . . . One long-standing Congressional duty alleviated by the Reorganization Act was the consideration of "private bills, " which until that point had been essentially the only way for injured citizens to recover ... for tortious conduct by government employees . . . .[56]

         The author argues that by not using the term "intentional torts, " not including all intentional torts in the list of excluded causes of action, and excluding some torts that courts have held need not always be intentional, Congress "made clear its intent to exclude only a subset of intentional torts."[57]Addressing Congress' rationale, the author reprises one, that "exposing the public fisc to potential liability . . . would be 'dangerous, ' based on the notion that these torts are both easy for plaintiffs to exaggerate and difficult to defend against."[58] [297 Neb. 73] But the author also discerns two new rationales. He suggests that Congress "took a 'wait and see' or 'step by step:approach."[59] Finally, a "theme that emerges is the assumption that [excluded claims] could and would be 'settled on the basis of private acts.'"[60]

         From this exposition, a clear rationale emerges. Congress was willing to waive sovereign immunity where its employees acted negligently but not where they acted deliberately or recklessly-at least as to the specified torts. This is reminiscent of the intentional acts exclusion under a standard liability policy: an insurer is willing to insure against damages incurred in an accident, but it is against public policy to insure against liability for intentional actions.[61] Declining to waive immunity for the specified intentional torts promotes high standards of performance by a sovereign's employees and avoids "dangerous" exposure of the public treasury. This approach rejects relying solely on the claimant's perspective (having been run over by a truck). We have examined the legislative history of the State Tort Claims Act and find nothing addressing the exceptions to the general waiver of sovereign immunity.[62] Evidently, the Legislature was satisfied to rely upon Congress' example.

         Because waiver of sovereign immunity is a matter addressed solely to the Legislature and we are required to strictly construe the statute against a waiver, we would be acting beyond our power to do otherwise. Thus, in considering the arguments advanced by the parents, we must determine only whether [297 Neb. 74] immunity has clearly been waived. If there is any doubt, the State must prevail.

         (e) Misrepresentation in Law of Torts

         We concede that misrepresentation permeates the law of torts. It can be a separate tort or a ...


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