Pers v. Harper ( 2016 )

IN THE SUPREME COURT OF THE STATE OF NEVADA
PUBLIC EMPLOYEES' RETIREMENT No. 64987
SYSTEM, A/K/A PERS, AN ENTITY;
AND CITY OF LAS VEGAS, AN
ENTITY,
Appellants/Cross-Respondents,
vs. FILED
TONI L. HARPER, AS REAL PARTY IN
INTEREST IN PLACE OF CURTIS JUN 1 0 2016
HARPER, AN INDIVIDUAL; STEVEN
BREEN, AN INDIVIDUAL; CHARLES
PULSIPHER, AN INDIVIDUAL; AND
MARK FLEISCHMANN, AN
INDIVIDUAL,
Respondents/Cross-Appellants.
ORDER AFFIRMING IN PART, REVERSING IN PART, AND
REMANDING
This is an appeal and cross-appeal from a district court
judgment in a tort action concerning public employee retirement benefits.
Eighth Judicial District Court, Clark County; Gloria Sturman, Judge.
Respondents were employed by the City of Las Vegas
Department of Fire and Rescue and are members of the Public Employees'
Retirement System of Nevada (PERS). PERS provides retirement
information and counseling to all PERS members. PERS also provides
calculations and estimates for various retirement scenarios based on the
amount of eligible compensation reported by public employers on behalf of
PERS members.
Statutorily, "call-back" pay is not compensable while overtime
pay is compensable. The City of Las Vegas (the City) and PERS
maintained differing definitions of "call-back" pay. As a result, the City
sent inaccurate compensation information to PERS and made excess
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contributions to PERS on behalf of respondents while they were employed
by the City.
PERS conducted an initial audit of the City, which revealed
the inaccurate reporting of "call-back" pay. PERS conducted a subsequent
audit directed at the Department of Fire and Rescue that revealed the
City's overpayments and misreporting of "call-back" time on behalf of
respondents. PERS instructed the City to make adjustments to the
compensation reports from July 2004 forward.
Prior to and during the audit, PERS counseled respondents
regarding their projected retirement benefits and provided written
retirement estimates to respondents. These estimates were based on the
inaccurate compensation information and overpayments provided by the
City. PERS did not inform respondents of the ongoing and pending audits.
As a result of the audits, PERS reduced respondents' retirement benefits
to compensate for the City's inaccurate compensation reporting.
Respondents initiated this action alleging breach of contract,
negligent misrepresentation, breach of fiduciary duty, and statutory
claims against PERS. Respondents also alleged negligent
misrepresentation claims and statutory claims against the City. As the
parties are familiar with the facts, we do not recount them further except
as necessary to our disposition.
The district court determined that PERS was liable under
NRS 286.288 and for negligent misrepresentation and breach of fiduciary
duty. Additionally, the district court concluded that the City was liable for
negligent misrepresentation. •The City and PERS timely appealed and
respondents cross-appealed the district court's judgment.
On appeal, PERS argues that the district court: (1) erred in
finding that PERS is liable to respondents under NRS 286.288, (2) erred in
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concluding that PERS is liable to respondents for negligent
misrepresentation, (3) erred in concluding that PERS is liable for breach of
fiduciary duty, and (4) abused its discretion by awarding speculative
future damages. Additionally, the City argues the district court erred in
finding that the City was liable for negligent misrepresentation. On cross-
appeal, respondents argue that the district court erred in determining that
NRS 286.460(7) cannot be applied retroactively to the City's inaccurate
reporting and overpayments on their behalf and that PERS is not liable
for breach of contract.
For the reasons stated below, we reverse the district court's
order as to PERS's liability and affirm it as to the City's liability. We
further conclude that the district court abused its discretion by awarding
speculative future damages.
The district court erred in concluding that PERS is liable under NRS
286.288
• PERS first argues the district court erred in finding PERS
liable under NRS 286.288. We agree. "We review questions of statutory
construction de novo, and we will not disturb the lower court's findings of
fact when those findings are supported by substantial evidence." Ransdell
v. Clark Cty., 124 Nev. 847, 854, 192 P.3d 756, 761 (2008).
NRS 286.288 states:
Each participating public employer or group of
such employers shall select an employee as liaison
officer to certify records and coordinate matters
pertaining to retirement between the System and
members or participating public employers. The
System is responsible for any inaccurate or
misleading information provided to any person or
agency by an officer or employee of the System but
is not responsible for inaccurate or misleading
information provided by an officer or employee of a
participating public employer or any other person.
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(Emphasis added.)
Here, the district court found that PERS failed to inform
respondents of the potential benefits decrease in counseling sessions and
in the benefits estimates. The district court determined that NRS 286.288
expressly holds PERS liable for its own misleading information and
omissions. Under the plain language of NRS 286.288, PERS is not
responsible for the inaccurate or misleading information provided by the
City or for failing to inform respondents of the pending audit. Thus, we
conclude that the district court erred in holding that PERS is liable for the
City's inaccurate reporting under NRS 286.288.
The district court erred in finding PERS liable for negligent
misrepresentation
PERS next argues that the district court erred in concluding
that PERS is liable for negligent misrepresentation. We agree. Whether
PERS made false misrepresentations and respondents justifiably relied on
them are questions of fact. See Epperson v. Roloff, 102 Nev. 206, 210-11,
719 P.2d 799, 802 (1986). "[T]he district court's findings of fact will not be
disturbed on appeal if they are supported by substantial evidence. The
district court's conclusions of law, however, are reviewed de novo." Bedore
v. Familian, 122 Nev. 5, 9-10, 125 P.3d 1168, 1171 (2006).
Here, the district court concluded that respondents justifiably
relied on the estimates and information PERS provided, that PERS's
estimates are factual in nature, and that employees may reasonably rely
on PERS's estimates under Nevada Public Employees Retirement Board v.
Byrne, 96 Nev. 276, 607 P.2d 1351 (1980).' We conclude that respondents
'The district court's reliance on Byrne is misplaced. First, the
district court attributes to this court the statement that reliance on
continued on next page . . .
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did not justifiably rely on PERS's estimates and that PERS had no duty to
inform respondents of ongoing or pending audits. Nelson v. Heer, 123 Nev.
217, 225, 163 P.3d 420, 426 (2007) C[T]he suppression or omission of a
material fact which a party is bound in good faith to disclose is equivalent
to a false representation." (internal quotation marks omitted)); see also
Collins v. Burns, 103 Nev. 394, 397, 741 P.2d 819, 821 (1987) (stating that
"[a] Mack of justifiable reliance bars recovery" for misrepresentation).
Therefore, we reverse the district court's conclusion that PERS was liable
for negligent misrepresentation.
The district court erred in concluding that PERS was liable for breach of
fiduciary duty
PERS argues that the district court erred in concluding that
PERS was liable for breach of fiduciary duty. We agree. This court will
not set aside a district court' factual findings unless they are clearly
erroneous or not supported by substantial evidence. Sowers v. Forest Hills
Subdivision, 129 Nev., Adv. Op. 9, 294 P.3d 427, 432 (2013). Substantial
evidence is evidence that a reasonable mind might accept as adequate to
. . . continued
PERS's representations is both detrimental and reasonable. However,
that statement was a mere recitation of the lower court's findings in
Byrne. 96 Nev. at 279, 607 P.2d at 1353. Further, in Byrne, PERS
mistakenly overestimated an employee's retirement benefit after
providing benefit estimates expressly to "enable [the employee] to plan
[his] future retirement." Id. at 278, 607 P.2d at 1352. Here, PERS
provided accurate estimates based on the inaccurate information provided
by the City. Additionally, in Byrne, this court merely rejected PERS's
argument that an employee could not reasonably rely on the PERS Board's
representations because they were estimates or opinions and because
PERS had inherent statutory authority to correct its mistakes. Id. at 279,
607 P.2d at 1353.
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support a conclusion. Mason-McDuffie Real Estate, Inc. v. Villa Fiore
Dev., LLC, 130 Nev., Adv. Op. 83, 335 P.3d 211, 214 (2014). However, this
court reviews a district court's conclusions of law de novo. Grosjean v.
Imperial Palace, Inc., 125 Nev. 349, 359, 212 P.3d 1068, 1075 (2009).
Here, PERS had no duty to disclose the active or pending
audits to respondents and took adequate steps to provide accurate
estimates. Byrne, 96 Nev. at 280, 607 P,2d at 1353 CIA] governmental
body, charged with as important a functionS as the administration of a
public employees retirement system, bears a most stringent duty to
abstain from giving inaccurate or misleading advice."). Additionally,
PERS did not commit tortious conduct such that it breached a fiduciary
duty to respondents. Stalk v. Mush/gin, 125 Nev. 21, 28, 199 P.3d 838, 843
(2009) ("[A] breach of fiduciary duty claim seeks damages for injuries that
result from the tortious conduct of one who owes a duty to another by
virtue of the fiduciary relationship."). Therefore, we reverse the district
court's determination that PERS was liable for breach of fiduciary duty.
The district court did not err in finding the City liable for negligent
misrepresentation
The City argues that its overpayment of PERS contributions
and misreporting of "call-back" time are not sufficient to support
respondents' claim of negligent misrepresentation. We disagree.
The district court's finding that the City negligently
misrepresented information when it misreported "call-back" time and
made overpayments to PERS on behalf of respondents is supported by
substantial evidence. The district court did not find that the City made
any direct misrepresentation to the respondents. However, the district
court correctly determined that the relationship between the City and
PERS is sufficient to trigger liability for negligent misrepresentation for
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misreporting "call-back" time to PERS on behalf of respondents.
Epperson, 102 Nev. at 212, 719 P.2d at 803 (IA] party may be held liable
for misrepresentation where he communicates misinformation to his
agent, intending or having reason to believe •that the agent would
communicate the misinformation to a third party."). Additionally, the City
provided this information in the course of its business and had a pecuniary
interest in respondents' retirement and employment decisions sufficient to
trigger liability for negligent misrepresentation. See Restatement
(Second) of Torts § 552(1) (Am Law Inst. 1977) ("One who, in the course of
his business . . . or in any transaction in which he has a pecuniary
interest, supplies false information for the guidance of others in their
business transactions, is subject to liability for pecuniary loss caused to
them by their justifiable reliance upon the information, if he fails to
exercise reasonable care or competence in obtaining or communicating the
information."). Therefore, we affirm the district court's determination that
the City is liable for negligent misrepresentation.
The district court abused its discretion in awarding future damages
The City argues that the district court erred by awarding
future damages because respondents failed to provide the court with an
adequate evidentiary basis to properly determine the amount of damages.
The City contends that, because respondents failed to present evidence of
the present value of their lifetime benefits and their relative life
expectancies, there was insufficient evidence for the district court to make
its determination regarding future damages. We agree.
A district court is given wide discretion in calculating an
award of damages and an award will not be disturbed on appeal absent an
abuse of discretion. Flamingo Realty, Inc. v. Midwest Dev., Inc., 110 Nev.
984, 987, 879 P.2d 69, 71 (1994).
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The plaintiff has the burden to prove the amount of damages
it is seeking. Clark Cty. Sch. Din. v. Richardson Constr., Inc., 123 Nev.
382, 397, 168 P.3d 87, 97 (2007). The plaintiff must provide the court with
"an evidentiary basis for determining a reasonably accurate amount of
damages." Mort Wallin of Lake Tahoe, Inc. v. Commercial Cabinet Co.,
105 Nev. 855, 857, 784 P.2d 954, 955 (1989).
We conclude that the district court's determination of damages
is not supported by substantial evidence. We further conclude that the
district court abused its discretion by failing to consider mortality tables
when awarding damages based on the life expectancies of respondents. To
determine damages, the district court merely considered respondents'
alleged past damages and the monthly amount of future damages when
concluding that each of the respondents' damages "will exceed the
statutory cap of $75,000" under NRS 41.035. 2 It is important to note that
because the district court determined that each of the respondents is
entitled to receive the full $75,000 statutory cap from both PERS and the
City, the district court implicitly concluded that each respondent's
damages exceed $150,000. 3 Other than the birth dates listed on the PERS
2 The•version of NRS 41.035 in existence at the time of the
misreporting provided for a maximum damages award of $75,000 per
claimant. The current version provides for a maximum damages award of
$100,000 per claimant. 2007 Nev. Stat., ch. 512, §§ 3.3, 3.5 at 3024-25.
3 0nappeal PERS argued that the district court erred by awarding
damages in excess of the statutory cap under NRS 41.035 because the
statutory cap applies on a per person per claim basis, regardless of the
number of government actors involved. However, the statutory cap in
NRS 41.035 is no longer implicated against multiple government actors,
as we have reversed the district court's findings of liability as to PERS.
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estimates provided to respondents, there is nothing in the record
discussing the relative probability that each of the respondents will live
long enough to reach the statutory cap of $75,000 per claim. We therefore
conclude that the district court's award of future damages is not supported
by substantial evidence. 4
Accordingly, we
ORDER the judgment of the district court AFFIRMED IN
PART AND REVERSED IN PART AND REMAND this matter to the
district court for proceedings consistent with this order. 5
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4 0n remand, we instruct the district court to develop an adequate
evidentiary basis for the respondents' award of future damages consistent
with this order.
5 We have considered the parties' remaining arguments and conclude
that they are without merit.
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cc: Hon. Gloria Sturman, District Judge
Lansford W. Levitt, Settlement Judge
Las Vegas City Attorney
Woodburn & Wedge
Garman Turner Gordon
Eighth Judicial District Court Clerk
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