Jill B. & Travis B. v. State ( 2017 )

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
07/07/2017 09:10 AM CDT
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Nebraska Supreme Court A dvance Sheets
297 Nebraska R eports
JILL B. & TRAVIS B. v. STATE
Cite as 297 Neb. 57
Jill B. and Travis B., individually and as parents
and next friends ofB.B., a minor child,
appellants, v.
State of Nebraska and
the Nebraska Department of H ealth
and Human Services, appellees.
___ N.W.2d ___
Filed June 30, 2017. No. S-15-778.
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 stat-
ute are questions of law. An appellate court independently reviews ques-
tions 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 judg-
ment 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 doc-
trine requires a final order. A party is not bound by a court’s findings in
an order that it was not required to appeal.
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Nebraska Supreme Court A dvance Sheets
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JILL B. & TRAVIS B. v. STATE
Cite as 297 Neb. 57
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 excep-
tions 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 excep-
tion, 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 protec-
tion 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 lan-
guage 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 inter-
pretation 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 busi-
ness 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.
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Nebraska Supreme Court A dvance Sheets
297 Nebraska R eports
JILL B. & TRAVIS B. v. STATE
Cite as 297 Neb. 57
17. Tort Claims Act: Pleadings. A plaintiff cannot circumvent the misrep-
resentation 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,
K elch, 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 par-
ents 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.
1
Neb. Rev. Stat. §§ 81-8,209 to 81-8,235 (Reissue 2014).
2
See § 81-8,214 (district court, sitting without jury, has exclusive original
jurisdiction).
3
See § 81-8,219(4).
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Nebraska Supreme Court A dvance Sheets
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JILL B. & TRAVIS B. v. STATE
Cite as 297 Neb. 57
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 review-
ing 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 super-
vise. 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 with-
holding 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.
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JILL B. & TRAVIS B. v. STATE
Cite as 297 Neb. 57
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” sec-
tion 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 supervi-
sors explained that the information from this intake form was
derived from forensic interviews conducted by a child advo-
cacy 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 dis-
closed, not on whether or not the information was available
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JILL B. & TRAVIS B. v. STATE
Cite as 297 Neb. 57
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] back-
ground included some instances of sexual abuse and inap-
propriate 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 with-
hold relevant information concerning the sexual abuse
history of [K.D.M.]
11. Even while [Gall] knew that [K.D.M.’s] back-
ground included allegations of sexual abuse and inap-
propriate 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 govern-
mental immunity claims that are based on misrepresentation
and deceit,” the court dismissed the complaint.
The parents filed a timely appeal, and we granted their peti-
tion 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
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JILL B. & TRAVIS B. v. STATE
Cite as 297 Neb. 57
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 misrepresen-
tation 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
[1] 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
[2] 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
[3] The parents argue that the district court erred in fail-
ing to apply the law-of-the-case doctrine. The law-of-the-case
doctrine reflects the principle that an issue that has been liti-
gated 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 immu-
nity did not apply. We disagree for two reasons.
4
Fuhrman v. State, 265 Neb. 176, 655 N.W.2d 866 (2003).
5
Hopkins v. Hopkins, 294 Neb. 417, 883 N.W.2d 363 (2016).
6
Sickler v. Sickler, 293 Neb. 521, 878 N.W.2d 549 (2016).
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JILL B. & TRAVIS B. v. STATE
Cite as 297 Neb. 57
[4] 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 mate-
rial 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.
[5,6] 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. A ffirmative Defense Asserted
[7,8] 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 fed-
eral 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
7
Big River Constr. Co. v. L & H Properties, 268 Neb. 207, 681 N.W.2d 751
(2004).
8
In re 2007 Appropriations of Niobrara River Waters, 283 Neb. 629, 820
N.W.2d 44 (2012).
9
Breci v. St. Paul Mercury Ins. Co., 288 Neb. 626, 849 N.W.2d 523 (2014).
10
See Sherrod v. State, 251 Neb. 355, 557 N.W.2d 634 (1997).
11
SFI Ltd. Partnership 8 v. Carroll, 288 Neb. 698, 851 N.W.2d 82 (2014).
12
Linscott v. Shasteen, 288 Neb. 276, 847 N.W.2d 283 (2014).
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JILL B. & TRAVIS B. v. STATE
Cite as 297 Neb. 57
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 com-
plaint. 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 con-
duct. 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.
[9] 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 inten-
tional 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 ter-
minology 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
“[m]isrepresentation [e]xception”16 of the State Tort Claims
13
Cotton v. Ostroski, 250 Neb. 911, 554 N.W.2d 130 (1996).
14
Brief for appellees at 12.
15
See Johnson v. State, 270 Neb. 316, 700 N.W.2d 620 (2005).
16
Brief for appellants at 20.
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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 prin-
ciples of sovereign immunity and its waiver, a simple illustra-
tion is helpful. Imagine two automobiles being operated by
employees in the course of performing tasks for their respec-
tive 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 vehi-
cle, 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 sup-
porting 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 employ-
ees, unless there is a statute or constitutional provision permit-
ting recovery.”18 We explained that the constitutional provi-
sion19 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
17
See Rich v. Dugan, 135 Neb. 63, 280 N.W. 225 (1938).
18
Shear v. State, 117 Neb. 865, 866, 223 N.W. 130, 130 (1929).
19
Neb. Const. art. V, § 22.
20
See Shear v. State, supra note 18.
21
See Stadler v. Curtis Gas, Inc., 182 Neb. 6, 9, 151 N.W.2d 915, 918 (1967)
(Newton, J., dissenting; White, C.J., and Carter, J., concurring in dissent).
22
See Comment, The Federal Tort Claims Act, 56 Yale L.J. 534 (1947).
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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 decision26 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.
[10] 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
23
See Stadler v. Curtis Gas, Inc., supra note 21 (Carter, J., dissenting;
White, C.J., and Newton, J., join).
24
See id. (Newton, J., dissenting; White, C.J., and Carter, J., concurring in
dissent).
25
See id. (McCown, J., concurring; Spencer, J., joins).
26
See id.
27
Id. at 9, 151 N.W.2d at 918 (Newton, J., dissenting; White, C.J., and
Carter, J., concurring in dissent).
28
Id. at 22, 151 N.W.2d at 924 (McCown, J., concurring; Spencer, J., joins).
29
See 1969 Neb. Laws, L.B. 154. See, also, Minutes of Committee on
Judiciary, L.B. 154, 80th Leg., 1st Sess. (Feb. 3, 1969); Committee
Statement, L.B. 154, Judiciary Committee, 80th Leg., 1st Sess. (Feb. 6,
1969); Floor Debate, L.B. 154, 80th Leg., 1st Sess. 841 (Mar. 26, 1969).
30
28 U.S.C. §§ 1346(b) and 2671 to 2680 (1964 & Supp. III).
31
See, Lamb v. Fraternal Order of Police Lodge No. 36, 293 Neb. 138, 876
N.W.2d 388 (2016); Johnson v. State, supra note 15.
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State’s sovereign immunity for tort claims against the State on
account of personal injury caused by the negligent or wrong-
ful 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
[11] The Legislature included within the act specific excep-
tions to the waiver of sovereign immunity. Under the inten-
tional 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 con-
tract rights.”33 Our attention focuses on misrepresentation
and deceit.
(c) Strict Construction
[12,13] 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 adop-
tion. We had long said that statutes authorizing suit against
32
See § 81-8,210(4).
33
§ 81-8,219(4).
34
Lamb v. Fraternal Order of Police Lodge No. 36, supra note 31.
35
Stew. v. Nebraska Dept. of Rev., 294 Neb. 1010, 885 N.W.2d 723
(2016).
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the State are to be strictly construed, since they are in dero-
gation of the State’s sovereignty.36 Following adoption of the
State Tort Claims Act, we emphasized that statutes in dero-
gation 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, require-
ments 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 construc-
tion 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
36
See Anstine v. State, 137 Neb. 148, 288 N.W. 525 (1939), overruled on
other grounds, Beatrice Manor v. Department of Health, 219 Neb. 141,
362 N.W.2d 45 (1985), and Pointer v. State, 219 Neb. 315, 363 N.W.2d
164 (1985).
37
Catania v. The University of Nebraska, 204 Neb. 304, 282 N.W.2d 27
(1979), overruled on other grounds, Blitzkie v. State, 228 Neb. 409, 422
N.W.2d 773 (1988).
38
Wickersham v. State, 218 Neb. 175, 354 N.W.2d 134 (1984), disapproved
on other grounds, D.K. Buskirk & Sons v. State, 252 Neb. 84, 560 N.W.2d
462 (1997).
39
See, e.g., Dean v. State, 288 Neb. 530, 849 N.W.2d 138 (2014); Zawaideh
v. Nebraska Dept. of Health & Human Servs., 285 Neb. 48, 825 N.W.2d
204 (2013); Cotton v. State, 281 Neb. 789, 810 N.W.2d 132 (2011);
Johnson v. State, supra note 15.
40
Johnson v. State, supra note 15.
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torts exception.41 Prior to a 1974 amendment42 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 plu-
rality 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 comment43 came from the academy, soon after the
FTCA was adopted. Referring to all of the exceptions, includ-
ing § 2680(h), it argued that because the FTCA was “in itself
a denial of the validity of conceptualistic sovereign immu-
nity,” 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 govern-
ment 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
41
See 28 U.S.C. § 2680(h) (2012).
42
See Pub. L. 93-253, § 2, 88 Stat. 50.
43
See Comment, supra note 22.
44
Id. at 543.
45
Id. at 547.
46
Id.
47
Panella v. United States, 216 F.2d 622, 625 (1954).
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“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 appli-
cation 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 excep-
tion in 1985, a plurality of the U.S. Supreme Court explained
that “Congress passed the [FTCA] on the straightforward assur-
ance 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
48
Id.
49
Id.
50
Id. at 626.
51
Developments in the Law - Remedies Against the United States and Its
Officials, 70 Harv. L. Rev. 827, 891 (1957).
52
Id.
53
United States v. Shearer, 473 U.S. 52, 55, 105 S. Ct. 3039, 87 L. Ed. 2d 38
(1985).
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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 gov-
ernmental 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 con-
duct 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
54
Rebecca L. Andrews, So the Army Hired an Ax-Murderer: The Assault and
Battery Exception to the Federal Tort Claims Act Does Not Bar Suits for
Negligent Hiring, Retention and Supervision, 78 Wash. L. Rev. 161, 170
(2003).
55
David W. Fuller, Intentional Torts and Other Exceptions to the Federal
Tort Claims Act, 8 U. St. Thomas L.J. 375, 377 (2011).
56
Id. at 378.
57
Id. at 379.
58
Id. at 384.
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But the author also discerns two new rationales. He sug-
gests 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 employ-
ees acted negligently but not where they acted deliberately
or recklessly—at least as to the specified torts. This is remi-
niscent of the intentional acts exclusion under a standard
liability policy: an insurer is willing to insure against dam-
ages 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 leg-
islative 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 con-
strue 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
59
Id.
60
Id. at 385.
61
See Austin v. State Farm Mut. Auto. Ins. Co., 261 Neb. 697, 625 N.W.2d
213 (2001).
62
See, Introducer’s Statement of Purpose, L.B. 154, Judiciary Committee,
80th Leg., 1st Sess. (Feb. 3, 1969); Minutes of Committee on Judiciary,
L.B. 154, 80th Leg., 1st Sess. (Feb. 3, 1969); Committee Statement, L.B.
154, Judiciary Committee, 80th Leg., 1st Sess. (Feb. 6, 1969); Floor
Debate, L.B. 154, 80th Leg., 1st Sess. 840-43 (Mar. 26, 1969).
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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 method of accomplishing
other torts.
Recognizing that misrepresentation can be a broad topic, a
treatise limited the scope of its discussion. Its chapter on mis-
representation related to “the extent to which tort actions are
available to protect intangible economic interests of those who
are induced by mistake to enter into bargaining transactions as
a consequence of a fraud of misrepresentation of others.”63 The
treatise touched on the narrower tort of deceit:
The tort action of deceit is sometimes used as the name
of the tort for covering all kinds of actions now avail-
able for all kinds of so-called actionable misrepresenta-
tions or nondisclosure. Sometimes that term is more
narrowly used to cover the tort remedy that was avail-
able under the common law and prior to recent develop-
ments. But the more important question relates to the
extent of liability on any theory for misrepresentations
and nondisclosures. The reasons for the separate devel-
opment of this action, and for its peculiar limitations,
are in part historical, and in part connected with the
fact that in the great majority of the cases which have
come before the courts the misrepresentations have been
made in the course of a bargaining transaction between
the parties. Consequently, the action has been colored
to a considerable extent by the ethics of bargaining
between distrustful adversaries. Its separate recognition
has been confined in practice very largely to the inva-
sion of interests of a financial or commercial character,
63
See W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 105
at 726 (5th ed. 1984).
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in the course of business dealings. There is no essential
reason to prevent a deceit action from being maintained,
for intentional misstatements at least, where other types
of interests are invaded; and there are a few cases in
which it has been held to lie for personal injuries, for
tricking the plaintiff into an invalid marriage or mar-
riage with one who is physically unfit, or for inducing
the plaintiff to leave a husband, or to incur criminal
penalties. In general, however, other theories of action
have been sufficient to deal with non-pecuniary damage,
and the somewhat narrower theory of deceit is not called
into question.64
Case law has made clear that the misrepresentation excep-
tion applies to negligent misrepresentation as well as will-
ful misrepresentation. Two U.S. Supreme Court cases, United
States v. Neustadt 65 and Block v. Neal,66 so held under the
FTCA. The Neustadt Court reasoned:
To say . . . that a claim arises out of “negligence,”
rather than “misrepresentation,” when the loss suffered
by the injured party is caused by the breach of a “specific
duty” owed by the Government to him, i. e., the duty to
use due care in obtaining and communicating information
upon which that party may reasonably be expected to rely
in the conduct of his economic affairs, is only to state
the traditional and commonly understood legal definition
of the tort of “negligent misrepresentation,” as is clearly,
if not conclusively, shown by the authorities set forth in
the margin, and which there is every reason to believe
Congress had in mind when it placed the word “mis-
representation” before the word “deceit” in § 2680(h).
As the Second Circuit observed . . . , “deceit” alone
64
Id. (emphasis supplied).
65
United States v. Neustadt, 366 U.S. 696, 81 S. Ct. 1294, 6 L. Ed. 2d 614
(1961).
66
Block v. Neal, 460 U.S. 289, 103 S. Ct. 1089, 75 L. Ed. 2d 67 (1983).
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would have been sufficient had Congress intended only to
except deliberately false representations. Certainly there
is no warrant for assuming that Congress was unaware
of established tort definitions when it enacted the Tort
Claims Act in 1946, after spending “some twenty-eight
years of congressional drafting and redrafting, amend-
ment and counter-amendment.” . . . Moreover, as we have
said in considering other aspects of the Act: “There is
nothing in the Tort Claims Act which shows that Congress
intended to draw distinctions so finespun and capricious
as to be almost incapable of being held in the mind for
adequate formulation.”67
The Block Court declared that “the essence of an action
for misrepresentation, whether negligent or intentional, is
the communication of misinformation on which the recipi-
ent relies.”68
We have similarly held in a case construing the misrep-
resentation exception under the Political Subdivisions Tort
Claims Act.69 In Stonacek v. City of Lincoln, homeowners
built in an area near a tributary of a stream. After they experi-
enced flooding in their new homes, they sued the city. Among
other things, the complaint alleged that the city was negligent
in failing to advise the homeowners of the Department of
Natural Resources’ study which showed the flood elevation of
the property was different from the elevation disclosed by the
city. The city alleged that this was a claim for misrepresenta-
tion and that it had sovereign immunity because the Political
Subdivisions Tort Claims Act excepted such a claim from
the waiver of immunity.70 We employed the reasoning from
Neustadt and explained:
67
United States v. Neustadt, supra note 65, 366 U.S. at 706-08 (citations
omitted).
68
Block v. Neal, supra note 66, 460 U.S. at 296.
69
See Stonacek v. City of Lincoln, 279 Neb. 869, 782 N.W.2d 900 (2010).
70
See Neb. Rev. Stat. § 13-910(7) (Reissue 2012).
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In addressing the claims in Neustadt, the U.S. Supreme
Court observed that the federal misrepresentation excep-
tion insulates the government against liability for con-
veying false or inaccurate information, whether that
information was conveyed based on willfull or negli-
gent misrepresentation. In determining that the [FTCA]
excepts acts of misrepresentation, the Supreme Court
defined negligent misrepresentation as the breach of “the
duty to use due care in obtaining and communicating
information upon which that party may reasonably be
expected to rely in the conduct of his economic affairs.”
. . . It has been observed that the “prophylaxis of
the misrepresentation exception extends to failures of
communication.”71
We determined that the homeowners’ claim was based on
misrepresentation. We noted that the homeowners alleged the
city had “failed to properly advise them of information.”72 But
we held that the gravamen of the claim “involves the improper
communicating of the flood plan information” and that, thus,
“the claim [was] based on a misrepresentation.”73 Because
the claim fell within the misrepresentation exception, we con-
cluded that the claim was barred because sovereign immunity
was not waived.
The reasoning of Stonacek is equally applicable to a claim
implicating the misrepresentation exception under the State
Tort Claims Act. The misrepresentation exception under
§ 13-910(7) is identical to the misrepresentation exception
contained in § 81-8,219(4).
Having provided a brief background concerning misrepre-
sentation, we turn to the parents’ arguments.
71
Stonacek v. City of Lincoln, supra note 69, 279 Neb. at 883-84, 782
N.W.2d at 911 (emphasis supplied).
72
Id. at 885, 782 N.W.2d at 912.
73
Id.
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(f) Parents’ Arguments
The parents assert that the district court erred in applying the
misrepresentation exception for several reasons. We address
each in turn.
(i) Application to Misrepresentation
Involving Physical Injury
First, the parents claim that the traditional tort of misrep-
resentation requires some form of pecuniary loss and that the
exception was designed to cover only that form of tort. The
parents argue that because they did not plead any element of
pecuniary loss, it was error to find their claim barred under
the exception for misrepresentation or deceit. In essence, their
argument is that Nebraska would not recognize a cause of
action in tort for a conscious misrepresentation involving a risk
of physical harm. We disagree.
Whether the misrepresentation exception applies where there
is no commercial misrepresentation and the loss suffered is
physical harm is a question of first impression in Nebraska.
Our previous cases dealing with the exception all involved
compensation for an economic loss.74 In Tolliver v. Visiting
Nurse Assn.,75 we stated: “[T]he distinct tort of fraud or mis-
representation is generally an economic tort against financial
interests, asserted to recover pecuniary loss. One who makes a
fraudulent or negligent misrepresentation in a business trans-
action is normally liable only for the recipient’s pecuniary
losses.” Tolliver involved a claim for nonpecuniary and non-
economic loss (pain and suffering), but it did not concern the
misrepresentation exception.
74
See, Zawaideh v. Nebraska Dept. of Health & Human Servs., supra note
39; Doe v. Board of Regents, 280 Neb. 492, 788 N.W.2d 264 (2010);
Stonacek v. City of Lincoln, supra note 69; Wickersham v. State, supra
note 38.
75
Tolliver v. Visiting Nurse Assn., 278 Neb. 532, 539, 771 N.W.2d 908, 914-
15 (2009) (emphasis supplied).
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Tolliver does not foreclose the possibility of noneconomic
damages in a tort action for misrepresentation. We note that
our language, quoted above with our emphasis supplied, spoke
in terms of generalities and not absolutes. And we provided
two reasons why we did not believe permitting damages for
pain and suffering was appropriate under a misrepresentation
theory in that case. First, we recognized that all of the dam-
ages that the plaintiffs sought under their misrepresentation
claims were alleged under its negligence claim. We cited a
treatise to the effect that it was usually unnecessary to resort
to a theory of deceit, because other theories of action were
sufficient to deal with nonpecuniary loss.76 Second, we stated
that a party may not have double recovery for a single injury.
Although the plaintiffs did not specifically allege pain and suf-
fering damages for their misrepresentation claims, we stated
that such damages would have duplicated the pain and suf-
fering damages claimed under the negligence cause of action.
Thus, under the facts of Tolliver, it was not necessary for us to
decide whether noneconomic damages would be available for
a misrepresentation claim.
In Tolliver, we focused on two sections of the Restatement.77
Section 525 involves fraudulent misrepresentation that causes
economic harm, and it is found in a chapter of the Restatement
“concerned only with the liability for pecuniary loss resulting
from misrepresentation or nondisclosure.”78 But the Restatement
sets forth another type of fraudulent misrepresentation—one
that causes physical harm.79 Tolliver did not mention § 310. We
will discuss § 310 in more detail later in the analysis.
Because, as we have already explained, our State Tort
Claims Act was modeled on the FTCA, we look to federal law
76
See Keeton et al., supra note 63.
77
Restatement (Second) of Torts §§ 525 and 557A (1977).
78
Id., ch. 22, scope note at 55.
79
See Restatement (Second) of Torts § 310 (1965).
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for guidance. The federal courts, however, are not uniform in
their application of the misrepresentation exception.
The two key U.S. Supreme Court cases dealing with the
misrepresentation exception to the FTCA do not directly
answer the question. Both Neustadt 80 and Block 81 involved
economic damages in connection with the purchase of residen-
tial property.
Footnotes contained in the Neustadt and Block opinions
have perhaps created confusion about the applicability of the
misrepresentation exception to noncommercial situations. A
footnote in Neustadt stated:
Our conclusion neither conflicts with nor impairs the
authority of Indian Towing Co. v. United States, 350
U.S. 61[, 76 S. Ct. 122, 100 L. Ed. 48 (1955)], which
held cognizable a Torts Act claim for property damages
suffered when a vessel ran aground as a result of the
Coast Guard’s allegedly negligent failure to maintain
the beacon lamp in a lighthouse. Such a claim does not
“arise out of . . . misrepresentation,” any more than does
one based upon a motor vehicle operator’s negligence
in giving a misleading turn signal. As Dean Prosser has
observed, many familiar forms of negligent conduct may
be said to involve an element of “misrepresentation,” in
the generic sense of that word, but “(s)o far as misrepre-
sentation has been treated as giving rise in and of itself
to a distinct cause of action in tort, it has been identified
with the common law action of deceit,” and has been
confined “very largely to the invasion of interests of a
financial or commercial character, in the course of busi-
ness dealings.”82
The Block Court, in discussing the above footnote from
Neustadt, said the following in a footnote:
80
United States v. Neustadt, supra note 65.
81
Block v. Neal, supra note 66.
82
United States v. Neustadt, supra note 65, 366 U.S. at 711 n.26.
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The Court distinguished negligent misrepresentation
from the “many familiar forms of negligent misconduct
[which] may be said to involve an element of ‘misrep-
resentation,’ [only] in the generic sense of that word.”
. . . The “misrepresentation” exception applies only when
the action itself falls within the commonly understood
definition of a misrepresentation claim, which “‘has
been identified with the common law action of deceit,’
and has been confined ‘very largely to the invasion of
interests of a financial or commercial character, in the
course of business dealings.’” . . . Thus, the claim in
Indian Towing Co. v. United States, 350 U.S. 61[, 76
S. Ct. 122, 100 L. Ed. 48] (1955), for damages to a ves-
sel which ran aground due to the Coast Guard’s alleged
negligence in maintaining a lighthouse, did not “aris[e]
out of . . . misrepresentation” within the meaning of
§ 2680(h).83
These footnotes referencing Indian Towing Co. v. United
States84 may have been an attempt to distinguish misrepresen-
tation from operational negligence.
The lower federal courts have inconsistent results.
Two federal circuit courts have limited application of the
misrepresentation exception to pecuniary or commercial mis-
representations. The 10th Circuit concluded that the mis-
representation exception to the FTCA did not apply to bar
emotional distress claims.85 The court observed that pecuniary
loss, which it called an “essential component[] of negligent
misrepresentation,”86 was not present. The 11th Circuit deter-
mined that the misrepresentation exception applied in a case
where the injury suffered “was the loss of . . . investment
83
Block v. Neal, supra note 66, 460 U.S. at 296 n.5.
84
Indian Towing Co. v. United States, 350 U.S. 61, 76 S. Ct. 122, 100 L. Ed.
48 (1955).
85
Estate of Trentadue ex rel. Aguilar v. U.S., 397 F.3d 840 (10th Cir. 2005).
86
Id. at 855.
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money, which is an economic injury arising from a com-
mercial decision.”87 And some federal district courts noted
the presence or absence of a commercial misrepresentation in
either applying or declining to apply the exception.88
But two other circuit courts have contradictory aspects.
In Kohn v. United States,89 an action involving the claims
of parents of a soldier who was killed by a fellow soldier,
the Second Circuit briefly addressed the misrepresentation
and deceit exceptions. The court stated: “[T]hese exceptions
have generally been applied only to actions for damages due
to commercial decisions that were predicated on incorrect
or incomplete information. . . . Because the context here is
hardly commercial in nature, we do not believe that appel-
lants’ claims are necessarily barred as an action for misrepre-
sentation or deceit.”90 But the Second Circuit later observed
a limitation of Kohn: “Kohn stopped well short of holding
that the United States had waived sovereign immunity for
non-commercial torts arising from its suppression of informa-
tion or its release of information that was fraudulent. Indeed,
the panel in Kohn had no occasion to decide that question,”91
because the Second Circuit reversed and remanded to permit
the appellants to amend their remaining cause of action to
include new allegations. The Ninth Circuit first stated that
87
Zelaya v. U.S., 781 F.3d 1315, 1338 (11th Cir. 2015).
88
See, e.g., Ard v. F.D.I.C., 770 F. Supp. 2d 1029 (C.D. Cal. 2011) (stating
government is not liable for injuries resulting from commercial decisions
made in reliance on government misrepresentations); Mill Creek Group,
Inc. v. F.D.I.C., 136 F. Supp. 2d 36 (D. Conn. 2001) (observing that
plaintiff sought to redress economic injury incurred in commercial setting);
Salter v. U.S., 853 F. Supp. 389, 394 (M.D. Ala. 1994) (stating exception
did not apply because plaintiff’s claim “is for personal injury, not for
injury of a commercial or financial nature”).
89
Kohn v. United States, 680 F.2d 922 (2d Cir. 1982).
90
Id. at 926.
91
See Cabiri v. Government of Republic of Ghana, 165 F.3d 193, 201 (2d
Cir. 1999).
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“the misrepresentation exception precludes liability where the
plaintiff suffers economic loss as a result of a commercial
decision which was based on a misrepresentation.”92 But it
later stated, without any analysis, that the misrepresentation
exception barred a claim by a juvenile who was sexually
abused by a felon working at a foster home.93
Several federal district courts have explicitly stated that the
exception is not limited to financial or commercial loss.94 In
Najbar v. U.S.,95 a Minnesota federal court addressed the foot-
note from Block that we quoted above:
Taken out of context, the quoted portions of Block and
Neustadt could be read to support [plaintiff’s] assertion
that, because she does not seek to recover for commercial
injury, her claim is not barred by the FTCA’s misrepresen-
tation exception even if it is a claim for misrepresentation.
But the context makes clear that Block and Neustadt were
simply describing, in elliptical fashion, the most-common
types of misrepresentation claims. Indeed, the very lan-
guage from Prosser’s treatise quoted in Neustadt and then
in Block spoke of misrepresentation claims being “‘very
largely’”—but not exclusively—limited to claims seek-
ing recovery for commercial injury. . . . And Block itself
said that “the essence of an action for misrepresentation,
92
Green v. United States, 629 F.2d 581, 584 (9th Cir. 1980). See, also, Mt.
Homes, Inc. v. U.S., 912 F.2d 352, 356 (9th Cir. 1990) (stating conclusion
that misrepresentation exception precluded recovery was “buttressed by
the fact that [plaintiff] suffered an economic injury in a commercial
setting”).
93
See Lawrence v. U.S., 340 F.3d 952 (9th Cir. 2003).
94
See, e.g., Najbar v. U.S., 723 F. Supp. 2d 1132 (D. Minn. 2010), affirmed
on other grounds 649 F.3d 868 (8th Cir. 2011); Russ v. U.S., 129 F. Supp.
2d 905 (M.D.N.C. 2001); Mullens v. U.S., 785 F. Supp. 216 (D. Maine
1992); Wells v. U.S., 655 F. Supp. 715 (D.D.C. 1987); Diaz Castro v.
United States, 451 F. Supp. 959 (D. Puerto Rico 1978); Lloyd v. Cessna
Aircraft Co., 429 F. Supp. 181 (E.D. Tenn. 1977).
95
Najbar v. U.S., supra note 94, 723 F. Supp. 2d at 1137.
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whether negligent or intentional, is the communication of
misinformation on which the recipient relies.” . . . This
formulation of the “essence” of misrepresentation is not
limited to commercial misrepresentations. Finally, neither
Neustadt nor Block involved a claim for noncommercial
misrepresentation, and thus neither case could have held
that such claims were outside the scope of the FTCA’s
misrepresentation exception.
The Minnesota federal court remarked that “Congress used
the word ‘misrepresentation,’ and that word is broad enough
to reach all types of claims for misrepresentation, whether
those claims seek recovery for commercial injury, physical
injury, or emotional injury.”96 A different court looked to a
few cases that had applied the misrepresentation exception and
concluded that “[c]learly the exception is just as applicable to
actions involving personal injury and wrongful death as it is
to those involving only financial or commercial loss, absent
any indication that Congress intended such exception to apply
only to the latter type of lawsuits.”97 Another court rejected the
plaintiff’s argument that the misrepresentation exception had
been limited to transactions of a commercial nature, observ-
ing that the Neustadt Court relied upon cases which were
noncommercial.98
Some federal courts have applied the misrepresentation
exception to claims involving nonpecuniary losses with-
out elaboration. At least one federal court excluded a claim
seeking damages for wrongful death.99 We observe that
in some cases in which claims for personal injuries were
barred, the claims appeared to arise out of a commercial
96
Id.
97
Diaz Castro v. United States, supra note 94, 451 F. Supp. at 963.
98
Vaughn v. United States, 259 F. Supp. 286 (N.D. Miss. 1966).
99
See, e.g., Bartie v. United States, 216 F. Supp. 10 (W.D. La. 1963) (alleging
government failed to give adequate warning concerning hurricane).
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transaction.100 And we note that the Seventh Circuit has stated
that “[t]he test is not whether the injury was economic, but
whether it resulted from a commercial decision based on a
governmental misrepresentation.”101
Decisions from courts of two states deserve attention.
First, California courts have found that its statutes102 do not
insulate the government from liability when the suit did not
involve commercial misrepresentations. In Johnson v. State
of California,103 foster parents sued after a child, who the
state was aware had homicidal tendencies, was placed in their
home without notice of any dangerous propensities. The court
reasoned that “it would be at best anomalous, and at worst
an inversion of accepted priorities, to allow the state immu-
nity only upon a finding that the parole officer actually lied
to plaintiff.”104
But this decision provides little guidance for several rea-
sons, in increasing order of importance. Most of the decision
focused on the discretionary function exception. California’s
statute is considerably different from ours. California expan-
sively shields state employees from individual liability, but
100
See, e.g., Schneider v. USA, 936 F.2d 956 (7th Cir. 1991) (purchasers
of defective prefabricated homes sued for personal injuries and property
damages); Hamre v. United States, 799 F.2d 455 (8th Cir. 1986) (purchasers
of home discovered to be infested with bats sued for personal injuries and
property damages).
101
Preston v. United States, 596 F.2d 232, 239 (7th Cir. 1979).
102
See Cal. Gov’t Code §§ 818.8 (“public entity is not liable for an injury
caused by misrepresentation by an employee of the public entity, whether
or not such misrepresentation be negligent or intentional”) and 822.2
(“public employee acting in the scope of his employment is not liable
for an injury caused by his misrepresentation, whether or not such
misrepresentation be negligent or intentional, unless he is guilty of actual
fraud, corruption or actual malice”) (West 2012).
103
Johnson v. State of California, 69 Cal. 2d 782, 447 P.2d 352, 73 Cal. Rptr.
240 (1968).
104
Id. at 800, 447 P.2d at 364, 73 Cal. Rptr. at 252.
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our statute does so only where suit is permitted under the State
Tort Claims Act.105 The California court relied heavily on state
legislative history demonstrating a concern with misrepresen-
tation in the area of state contracts. But, most important, the
court does not follow a rule construing waivers of sovereign
immunity strictly against waiver and in favor of the sovereign.
The phrase “strict construction” does not appear anywhere
in the decision. The court’s concern with an “inversion of
accepted priorities” attacks the central premise of an intentional
torts exception. From a moral standpoint, intentional torts are
more egregious than mere negligence. But the Legislature, and
not the courts, is empowered to determine where immunity
should be waived. We might not agree with the rationale for its
distinction, but we must not usurp its role in drawing the line
between liability and immunity. Because a California Court of
Appeals decision106 is driven by the Johnson opinion, the same
reasons dictate giving it little attention.
A decision of the Supreme Court of Alaska107 deserves more
attention, because Alaska’s statute, like ours, was modeled on
the FTCA. In the Alaska case, parents sued the state, alleg-
ing negligent failure to disclose information that would have
alerted them to the risks of accepting into their home a foster
child who ultimately physically and sexually assaulted their
two children. The Supreme Court of Alaska reversed a sum-
mary judgment in favor of the state.
But despite the similarity of statutes, we do not find
the Alaska decision to be persuasive. Most of the decision
focused on foreseeability in the context of summary judg-
ment. The court’s examination of federal cases was limited
to the Neustadt footnote.108 The court relied heavily upon
105
See § 81-8,217.
106
Michael J. v. L.A. Cty. D. of Adoptions, 201 Cal. App. 3d 859, 247 Cal.
Rptr. 504 (1988).
107
P.G. v. DFYS, 4 P.3d 326 (Alaska 2000).
108
United States v. Neustadt, supra note 65.
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the California court’s reasoning in Johnson. Likewise, the
Alaska court does not discuss “strict construction” and fails
to discern the rationale that could induce a state legislature
to retain sovereign immunity for some torts while waiving it
for others.
Although we have not expressly adopted § 310 of the
Restatement,109 it is persuasive authority that a cause of action
would lie for a conscious misrepresentation involving risk of
physical harm. It states:
An actor who makes a misrepresentation is subject to
liability to another for physical harm which results from
an act done by the other or a third person in reliance upon
the truth of the representation, if the actor
(a) intends his statement to induce or should realize
that it is likely to induce action by the other, or a third
person, which involves an unreasonable risk of physical
harm to the other, and
(b) knows
(i) that the statement is false, or
(ii) that he has not the knowledge which he professes.110
This section fits the facts determined by the district court. Gall
was the “actor who ma[de] a misrepresentation.” The parents
were the “third person[s].” Their child was the “other.” Thus,
Gall is subject to liability to the parents’ child which resulted
from the act done by the parents (taking K.D.M. into their
home) in reliance upon the truth of the representation, because
Gall intended to induce the parents, or should have realized
that her misrepresentation was likely to induce action by the
parents, which involved an unreasonable risk of physical harm
to the parents’ child, and Gall knew that the statement was
false. This section is found in a division of the Restatement
on negligence, so it is no surprise a comment stated that the
liability in § 310 “is negligence liability and is enforced in an
109
Restatement, supra note 79.
110
Id. at 103.
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ordinary negligence action.”111 What is important is that § 310
is located in a section of the Restatement that is not limited to
commercial or business transactions and expressly extends to
liability for physical harm.
[14] We agree with those courts finding that the misrepre-
sentation exception can apply to claims for personal injuries as
well as economic injuries and to claims not involving business
transactions. We are persuaded by the reasoning of Najbar v.
U.S.112 As that court observed, while the U.S. Supreme Court
has explicitly recognized that the misrepresentation exception
would arise most often in the course of business transactions,113
the Court has not declared that the exception is applicable only
in the commercial context. And § 310 of the Restatement pro-
vides persuasive authority that conscious misrepresentation
can be the basis for liability for physical harm.
[15] The doctrine of strict construction supports our con-
clusion that the misrepresentation exception applies in a case
such as this one. As we explained earlier, statutes purporting
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, and 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.114 Thus, the
misrepresentation exception must be strictly construed in favor
of the government.115 In doing so, we cannot eliminate its
application to a claim—the “essence” of which “is the commu-
nication of misinformation on which the recipient relies”116—
merely because the claim does not involve pecuniary loss or
111
Restatement, supra note 77, § 557A, comment a. at 149.
112
Najbar v. U.S., supra note 94.
113
See United States v. Neustadt, supra note 65.
114
See Lamb v. Fraternal Order of Police Lodge No. 36, supra note 31.
115
See Zelaya v. U.S., supra note 87.
116
Block v. Neal, supra note 66, 460 U.S. at 296.
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a financial transaction. If the Legislature wishes to expand
the scope of the State’s liability by limiting application of the
misrepresentation exception to claims arising from commercial
transactions or which involve only pecuniary losses, it has the
power to amend the statute accordingly.
(ii) Gravamen of Complaint Test
Next, the parents contend that the gravamen of the complaint
test is inapplicable. In arguing that the test is not appropriate
in a case for personal injury, the parents repeat their contention
that misrepresentation as a tort involves pecuniary or commer-
cial loss only. Again, we disagree.
The gravamen of the parents’ allegations of negligence was
the communication of misinformation. Had the State, through
Gall, not provided the parents with false information, the
parents’ child would not have been harmed (because either
they would not have accepted K.D.M. in their home or they
would have implemented appropriate safeguards). Under the
reasoning of Stonacek,117 it is immaterial whether Gall negli-
gently failed to disclose or warn of K.D.M.’s sexual history
or whether Gall intentionally concealed that sexual history. In
Stonacek, we held that a claim for failure to communicate rel-
evant information was barred by the misrepresentation excep-
tion. Here, the parents’ allegations of “failure to warn” and
“failure to disclose” essentially assert a failure to communicate
critical information. And as in Stonacek, those claims, no mat-
ter how pled, are claims of misrepresentation. This is not a
case where the cause of action only collaterally involves a
misrepresentation; rather, the cause of action arises out of and
is grounded on misrepresentation.
(iii) Independent Operational
Duty to Disclose
The parents argue that it was error to find their claim barred
by the misrepresentation exception, because they assert that
117
Stonacek v. City of Lincoln, supra note 69.
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the State had an independent operational duty to disclose
K.D.M.’s sexual history. A governmental entity “‘is liable for
injuries resulting from negligence in performance of opera-
tional tasks even though misrepresentations are collaterally
involved.’”118 But again, we look to Stonacek and the grava-
men of the complaint.
In Stonacek, we addressed whether the failure to disclose
could fall outside the misrepresentation exception because it
alleged negligent performance of operational tasks. In doing
so, we cited and discussed the decisions in Neustadt and
Block. In Neustadt, the plaintiff claimed it suffered money
damages as a result of an erroneous appraisal conducted by a
government agency. The U.S. Supreme Court found the erro-
neous appraisal was a misrepresentation, and thus, the claim
was barred by sovereign immunity. In Block, the plaintiff
alleged it suffered money damages when a government agency
breached a duty to supervise construction of a new home. The
Block Court noted that although part of the theory was that the
government agency failed to communicate information about
the construction, the plaintiff also alleged the agency had a
separate duty to act by supervising the construction. Because
it was the failure to supervise that caused the harm, the Block
Court concluded the claim was not barred by the misrepresen-
tation exception.
Where the gravamen of the complaint is negligent per-
formance of operational tasks rather than misrepresentation,
the State cannot rely upon the misrepresentation exception
in the State Tort Claims Act.119 The misrepresentation excep-
tion “does not bar negligence actions which focus not on the
Government’s failure to use due care in communicating infor-
mation, but rather on the Government’s breach of a different
duty.”120 But to avoid dismissal based on the misrepresentation
118
Zelaya v. U.S., supra note 87, 781 F.3d at 1336.
119
Stonacek v. City of Lincoln, supra note 69.
120
Block v. Neal, supra note 66, 460 U.S. at 297.
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exception, a plaintiff must allege injury independent of that
caused by the erroneous information.121
Even though the State had a duty to warn of K.D.M.’s
sexual history, the facts of this case fall within the misrepre-
sentation exception. As Neustadt, Block, and Stonacek make
clear, to fall outside the scope of the misrepresentation excep-
tion, the question is not whether the government had an inde-
pendent duty to take action; rather, the question is whether
the duty on which a plaintiff bases his or her claim is a duty
separate and apart from the duty to disclose information. Here,
the complaint alleged that Jill “inquired whether there was
anything sexual in [K.D.M.’s] record, [and] Gall stated ‘no.’”
The parents claim that Gall “knew or should have known
of [K.D.M.’s record of sexual abuse] but refused to disclose
such information.” Their complaint focuses on the failure to
disclose the information, but the essence of the claim is the
breach of a duty not to miscommunicate. And they have not
alleged injury independent of that caused by the erroneous
information. Any operational duty to disclose information or
to warn the parents about K.D.M.’s sexual history is subsumed
by the misrepresentation exception.
The parents rely upon our decision in Fuhrman v. State,122
arguing that both cases rest on the complete failure to con-
vey information. In Fuhrman, the Department of Health and
Human Services was aware that one of its wards had a history
of physical violence against his caregivers and others. But a
department employee did not tell anyone at the hospital where
the ward was taken about the ward’s violent history or that
the ward was likely to target female staff members. At the
hospital, the ward attacked a female psychiatric technician.
The technician sued, claiming that appellants were negligent in
failing to disclose to the hospital and its employees informa-
tion regarding the ward’s assaultive behavior. Near the close
121
See Stonacek v. City of Lincoln, supra note 69.
122
Fuhrman v. State, supra note 4.
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of trial, appellants moved for leave to amend their answer to
include affirmative defenses of sovereign and qualified immu-
nity, based on their understanding that the technician was
asserting that appellants had misrepresented the ward’s medical
history. The district court denied the motion, and we found no
abuse of discretion.
Fuhrman is distinguishable. The affirmative defense of sov-
ereign immunity was not pled in an answer prior to trial.
We considered it only in the context of whether the trial
court abused its discretion in denying a motion to amend the
answer—made near the end of trial—to include the defense.
Here, the State asserted the defense in its operative answer.
[16] Further, Fuhrman contains language that is irrecon-
cilable with Stonacek. In Fuhrman, we stated that “neither
[the technician’s] theory of the case nor her evidence was
based on misrepresentation, but, rather, on a complete failure
to convey the critical information, without an inference that
this was deliberately done.”123 We noted that the trial court’s
decision was “based on failure to disclose information.”124
However, Stonacek clearly holds that an allegation of failure
to advise was a claim based on misrepresentation. Our opinion
in Stonacek did not discuss or cite Fuhrman, but the two cases
are in conflict. Because we are persuaded by the reasoning of
Stonacek, we expressly disapprove of Fuhrman to the extent it
holds that “a complete failure to convey the critical informa-
tion, without an inference that this was deliberately done,”125
falls outside the misrepresentation exception.
[17] No matter how the parents try to frame their com-
plaint, their claim arises out of a misrepresentation. As the
11th Circuit has stated: “‘It is the substance of the claim and
not the language used in stating it which controls’ whether the
claim is barred by an FTCA exception. . . . Thus, a plaintiff
123
Id. at 183, 655 N.W.2d at 873.
124
Id.
125
Id.
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cannot circumvent the misrepresentation exception simply
through artful pleading of its claims.”126 Gall’s misstatement
is essential to the parents’ claim. Although they frame their
claim as a negligence action, the basis for it is Gall’s underly-
ing misrepresentation.
(iv) Public Policy
The parents assert that the State should not be immune
from liability for failing to properly disclose the history of an
adoptee to potential parents as a matter of public policy. But
such policy judgments are properly within the province of
the Legislature, not this court.
4. Negligent Supervision
The parents argue that the district court erred in failing to
find the State liable for negligent supervision. They contend
that the evidence clearly established that Gall was over-
worked and that her supervisor was responsible for Gall’s
workload.
Recasting an excepted tort claim as a negligence claim
does not avoid the bar of immunity. In Johnson v. State,127 we
determined that a negligence claim asserting failure to super-
vise, hire, and discipline was barred because it arose out of
assault and battery. In that case, we adopted the reasoning of
four of the eight participating justices in a U.S. Supreme Court
case,128 who stated:
“[The plaintiff] cannot avoid the reach of § 2680(h)
by framing her complaint in terms of negligent failure
to prevent the assault and battery. Section 2680(h) does
not merely bar claims for assault or battery; in sweeping
language it excludes any claim arising out of assault or
battery. We read this provision to cover claims like [the
126
JBP Acquistions, LP v. U.S. ex rel. F.D.I.C., 224 F.3d 1260, 1264 (11th Cir.
2000).
127
Johnson v. State, supra note 15.
128
United States v. Shearer, supra note 53.
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plaintiff’s] that sound in negligence but stem from a bat-
tery committed by a Government employee.”129
We also agreed with a justice’s concurrence in a different U.S.
Supreme Court case:
“To determine whether a claim arises from an intentional
assault or battery and is therefore barred by the exception,
a court must ascertain whether the alleged negligence was
the breach of a duty to select or supervise the employee-
tortfeasor or the breach of some separate duty indepen-
dent from the employment relation. . . . If the allegation
is that the Government was negligent in the supervision
or selection of the employee and that the intentional tort
occurred as a result, the intentional tort exception . . .
bars the claim. Otherwise, litigants could avoid the sub-
stance of the exception because it is likely that many, if
not all, intentional torts of Government employees plausi-
bly could be ascribed to the negligence of the tortfeasor’s
supervisors. To allow such claims would frustrate the
purposes of the exception.”130
The same principle applies here. The parents’ negligent
supervision claim is barred, because it arises out of misrepre-
sentation. Any alleged negligence was inextricably linked to
the misrepresentation. The district court did not err by failing
to find the State liable for negligent supervision, because this
claim was also barred by the State Tort Claims Act.
VI. CONCLUSION
The Legislature may wish to consider whether the rationale
underlying the intentional torts exception, at least as to mis-
representation and deceit, continues to justify preservation of
the State’s sovereign immunity. From the perspective of the
129
Johnson v. State, supra note 15, 270 Neb. at 320, 700 N.W.2d at 624
(emphasis in original).
130
Id. at 322, 700 N.W.2d at 625, quoting Sheridan v. United States, 487 U.S.
392, 108 S. Ct. 2449, 101 L. Ed. 2d 352 (1988) (Kennedy, J., concurring
in judgment).
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parents, immunity “adds insult to injury.” Their child was the
one, so to speak, “run over by the truck.” And it may well
be that time has demonstrated that Congress’ fears—of the
difficulty of defending such suits and the probability of judg-
ments against the government in amounts out of proportion
to the damages actually suffered by claimants—have proved
unfounded. It may be time for the “next step” envisioned by
the commentator. But it is absolutely clear that those questions
are properly addressed to the Legislature and not to us. And
we express no opinion whether the parents have any avenue to
compensation through legislative action.
We must strictly construe the misrepresentation exception
to the waiver of sovereign immunity in favor of the State and
conclude that so construed, it cannot be definitively limited to
claims involving pecuniary losses.
Because the parents’ claims arise out of Gall’s misrepre-
sentation, they are barred. We affirm the judgment of the dis-
trict court.
A ffirmed.