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Larimore Public School District No. 44 v. Aamodt

Supreme Court of North Dakota

March 19, 2018

Larimore Public School District No. 44, a political subdivision of the State of North Dakota; and the North Dakota Insurance Reserve Fund, Plaintiffs and Appellees
v.
John Aamodt and Jennifer Aamodt, individually and as the parents and guardians and on behalf of minor children CLA, KHA, and SMA; Michael Schwab and Carrie Schwab, individually and as the parents and guardians on behalf of minor child CJS; Melissa Erickson, individually and as the parent and guardian, and on behalf of minor child CRS; Carrie Schwab, individually and as the parent and guardian on behalf of minor children DMB and EXB; Paul Sandstrom and Judy Sandstrom, individually and as the parents and guardians on behalf of minor children CBS and MBS, Defendants and Appellants and Michael Schwab, individually and as the parent and guardian, and on behalf of minor child CRS; Doug Sullivan, individually and as the noncustodial biological father and on behalf of minor child EXB; Juan Carrera and Martha Carrera, individually and as the parents and custodial guardians and on behalf of minor children CMC and VC; Rita Corona, individually and as the noncustodial biological mother and on behalf of minor children CMC and VC; Juan Carrera Jr., individually and as the noncustodial biological father and on behalf of minor children CMC and VC; Jeff Fuqua and Odella Fuqua, individually and as the parents and guardians and on behalf of minor children JMF and JMF; BNSF Railway Company, a Delaware corporation; Altru Health System, a North Dakota nonprofit corporation; Children's Health Care, a Minnesota nonprofit corporation; Essentia Health, a Minnesota nonprofit corporation; Sanford Medical Center Fargo, d/b/a Sanford, a North Dakota non-profit corporation; Sanford, d/b/a Sanford Health, a North Dakota nonprofit corporation; Face and Jaw Surgeons, P.C. d/b/a Face and Jaw Center and Face and Jaw Surgery Clinic; Larimore Ambulance Service; the State of North Dakota by and through the North Dakota Department of Human Services, an agency of the State of North Dakota; and Matthew J. Volk, DDS, PC, Defendants

         Appeal from the District Court of Grand Forks County, Northeast Central Judicial District, the Honorable Gary H. Lee, Judge.

         AFFIRMED.

          Daniel L. Gaustad (argued), Grand Forks, ND, Joseph E. Quinn (on brief) and Ronald F. Fischer (on brief), Fargo, ND, for plaintiffs and appellees Larimore Public School District No. 44, a political subdivision of the State of North Dakota; and the North Dakota Insurance Reserve Fund.

          Robert S. Peck (argued), New York, NY, for defendants and appellants John Aamodt and Jennifer Aamodt, individually and as the parents and guardians and on behalf of minor children CLA, KHA, and SMA; Michael Schwab and Carrie Schwab, individually and as the parents and guardians on behalf of minor child CJS; Melissa Erickson, individually and as the parent and guardian, and on behalf of minor child CRS; Carrie Schwab, individually and as the parent and guardian on behalf of minor children DMB and EXB; and Paul Sandstrom and Judy Sandstrom, individually and as the parents and guardians on behalf of minor children CBS and MBS.

          H. Patrick Weir, Jr. (appeared) and Andrew D. Smith (on brief), Fargo, ND, for defendants and appellants John Aamodt and Jennifer Aamodt, individually and as the parents and guardians and on behalf of minor children CLA, KHA, and SMA.

          Michael J. Williams (appeared) and Duane A. Lillehaug (on brief), Fargo, ND, for defendants and appellants Michael Schwab and Carrie Schwab, individually and as the parents and guardians on behalf of minor child CJS; and Carrie Schwab, individually and as the parent and guardian on behalf of minor children DMB and EXB.

          Kim E. Brust (appeared), Fargo, ND, for defendants and appellants Paul Sandstrom and Judy Sandstrom, individually and as the parents and guardians on behalf of minor children CBS and MBS.

          Timothy M. O'Keeffe (on brief) and Tatum O'Brien Lindbo (on brief), Fargo, ND, for defendant and appellant Melissa Erickson, individually and as the parent and guardian, and on behalf of minor child CRS.

          Matthew A. Sagsveen, Solicitor General, Bismarck, ND, for amicus curiae State of North Dakota.

          Timothy Q. Purdon, Bismarck, ND, and Nicole S. Frank, Minneapolis, MN, for amicus curiae North Dakota Association for Justice.

          Stephanie E. Dassinger, Bismarck, ND, for amicus curiae North Dakota League of Cities and North Dakota Recreation & Park Association.

          Amy L. De Kok, Bismarck, ND, for amicus curiae North Dakota School Boards Association.

          Aaron G. Birst, Bismarck, ND, for amicus North Dakota Association of Counties.

          OPINION

          MCEVERS, JUSTICE.

         [¶ 1] The parents of nine minor children, individually and as guardians of the children, appeal from a district court judgment determining the statutory damage cap for tort claims against a political subdivision is constitutional. The parents argue the damage cap violates the open court, jury trial, equal protection, and special law provisions of the state constitution. We conclude the damage cap does not violate those constitutional provisions, and we affirm the judgment.

         I

         [¶ 2] The Larimore Public School District serves a rural area in northeast North Dakota with an enrollment of about 400 children and a total population base of 2, 571 people. According to Superintendent Roger Abbe, the School District provides required core curriculum and special education services, elective courses, and extra-curricular activities for its students and ranks in the top twenty percent in the State for property tax mill levies. According to Abbe, the School District's anticipated revenues for the 2015-2016 and 2016-2017 school years ranged between five million five hundred thousand dollars and five million six hundred thousand dollars and the School District's expenses for those years exceeded its revenues, requiring use of interim funds to pay the excess expenses.

         [¶ 3] In January 2015, a collision occurred between a School District bus and a BNSF Railway train. At the time, there were thirteen School District students riding home from school on the bus. One child died as a result of injuries sustained in the accident and the other children suffered serious injuries. The accident resulted in the potential for multiple damage claims in excess of the School District's aggregate statutory cap on liability under the codification of N.D.C.C. § 32-12.1-03(2) in effect at the time of the accident, which limited the liability of political subdivisions "to a total of two hundred fifty thousand dollars per person and five hundred thousand dollars for injury to three or more persons during any single occurrence regardless of the number of political subdivisions, or employees of such political subdivisions, which are involved in that occurrence." See 2015 N.D. Sess. Laws ch. 242, § 1 (amending statute to increase the limit of liability for political subdivisions to a total of two hundred fifty thousand dollars per person and one million dollars for any number of claims arising from any single occurrence).

         [¶ 4] The School District and its government self-insurance pool, the North Dakota Insurance Reserve Fund, brought this interpleader action and deposited five hundred thousand dollars with the district court to satisfy the damage cap for claims arising from the accident under the applicable language of N.D.C.C. § 32-12.1-03(2). The parents and guardians for some of the children answered and counterclaimed, asserting the damage cap was unconstitutional. The parties stipulated to certain facts for purposes of a motion for summary judgment on the constitutional claims, including that at the time of the accident, the bus driver was a School District employee acting within the scope of his employment, that the bus driver's negligence was the sole proximate cause of the accident and the injuries, and that the total damages from the accident would exceed three million dollars. The parties also stipulated that the Insurance Reserve Fund provided the School District with a memorandum of coverage authorizing additional liability coverage in the amount of two million dollars for any one accident or loss "in the event of a judicial determination that the statutory limit of liability is not applicable to a specific occurrence."

         [¶ 5] The district court ruled the damage cap did not violate the open court, jury trial, equal protection, or special law provisions of the North Dakota Constitution. The court confirmed the five hundred thousand dollar deposit and discharged the School District and the Insurance Reserve Fund from any further liability for damages from the accident.

         II

         [¶ 6] The parents argue the damage cap for tort claims against political subdivisions in N.D.C.C. § 32-12.1-03(2) violates the open court, jury trial, equal protection, and special law provisions of the North Dakota Constitution.

         [¶ 7] In considering the parents' constitutional arguments, our inquiry is guided by several well-established rules:

Whether a statute is unconstitutional is a question of law, which is fully reviewable on appeal. "'All regularly enacted statutes carry a strong presumption of constitutionality, which is conclusive unless the party challenging the statute clearly demonstrates that it contravenes the state or federal constitution.'" "'The justice, wisdom, necessity, utility and expediency of legislation are questions for legislative, and not for judicial determination.'" This Court exercises the power to declare legislation unconstitutional with great restraint. Under N.D. Const. art. VI, § 4, this Court "shall not declare a legislative enactment unconstitutional unless at least four of the members of the court so decide."

Teigen v. State, 2008 ND 88, ¶ 7, 749 N.W.2d 505 (citations omitted).

         [¶ 8] In assessing the parents' constitutional arguments, we also recognize other courts have generally held that statutory damage caps for tort claims against governmental entities do not violate similar constitutional provisions. See James L. Isham, Annot., Validity and Construction of Statute or Ordinance Limiting the Kinds or Amount of Actual Damages Recoverable in Tort Action Against Governmental Unit, 43 A.L.R. 4th 19, § 2 (1986).

         III

         [¶ 9] Before addressing the parties' specific arguments, we describe the historical background for governmental immunity in North Dakota. In Kitto v. Minot Park Dist., 224 N.W.2d 795, 797 (N.D. 1974), this Court judicially abolished the doctrine of governmental immunity from tort liability and held governmental bodies, other than the state government, were subject to suit for damages by individuals injured by the negligent or wrongful acts or omissions of their agents and employees. This Court traced the historical origin of governmental immunity from England and said the generally recognized source of the doctrine was Russell v. Men of Devon, 2 T.R. 667, 100 Eng. Rep. 359 (1788), an English decision refusing recovery against an unincorporated county. Kitto, at 798. We said that in Russell there was not an established legal entity to bring the action against and it was brought against the "citizenry." Id. We explained the English court was "fearful of an 'infinity of actions' and concerned with the absence of a fund out of which to pay any judgment, " and gave priority to the government over the individual. Id. We discussed the development of governmental immunity in the United States and said a Massachusetts court relied on Russell and held an incorporated county was immune from liability for the tortious acts of its employees. Kitto, at 798 (citing Mower v. The Inhabitants of Leicester, 9 Mass. 247 (1812)). We said that although political subdivisions now had corporate powers, funds, taxing authority, and substantial obligations and activities, Mower became the common law of the various states with few exceptions. Kitto, at 798.

         [¶ 10] This Court then discussed the development of governmental immunity and liability in the Dakota Territory and in North Dakota, stating two early cases upheld damage claims against municipal corporations for lack of reasonable care in maintaining streets and highways, and a subsequent case denied liability for a claim against a quasi-municipal corporation for injuries allegedly caused by the failure to maintain a bridge. Kitto, 224 N.W.2d at 798-99 (citing Larson v. City of Grand Forks, 3 Dak. 307, 313-14, 19 N.W. 414, 415-16 (1884) (affirming personal injury verdict against municipal corporation for negligent failure to keep streets in safe condition where legislature conferred power on municipal corporation to keep sidewalks clear and free from all obstructions); Ludlow v. City of Fargo, 3 N.D. 485, 489-92, 57 N.W. 506, 507-09 (1893) (holding municipal corporation organized under state law liable for damages for personal injury sustained as result of municipality's maintenance of obstruction in street; stating that where corporate authority has duty and means to keep streets in repair, the corporation is liable without express statute declaring liability); Vail v. Town of Amenia, 4 N.D. 239, 243-50, 59 N.W. 1092, 1093-96 (1894) (holding quasi-municipal corporation was not liable in tort for personal injuries allegedly caused by failure to repair and maintain highways and bridges)). In Kitto, at 799 (quoting Vail, 4 N.D. at 245, 59 N.W. at 1094), we discussed the distinction between incorporated and unincorporated governmental entities:

It may be true, and we think is true, that the case of Russell v. Men of Devon, 2 Term R. 667, so often cited as the source of the doctrine of nonliability of quasi municipal corporations for injuries resulting from defective bridges or highways, never was intended to be authoritative further than that the inhabitants of a certain territory designated as a county, but not incorporated, and having no corporate purse, could not be held liable for such injuries, and that the case is not an authority for nonliability of counties in this country, where counties are incorporated and have a corporate purse.

         The Kitto court explained the Vail decision nevertheless recognized townships in North Dakota were then in the process of settlement and said a substantial judgment against a sparsely populated town or township could cause financial distress and slow development. Kitto, at 799. We said the Vail court held the Town of Amenia was not liable for damages under circumstances where it was appropriate for the individual to suffer rather than the public. Id.

         [¶ 11] In Kitto, 224 N.W.2d at 799-801, our analysis thereafter recognized the doctrine of governmental immunity in North Dakota had judicial origins, had been judicially modified on some occasions, and was not constitutionally mandated under language now found in N.D. Const. art. I, § 9. Our decision overruled prior decisions supporting the doctrine of governmental immunity and judicially abrogated that doctrine, but recognized the legislature could modify or shape governmental liability within its constitutional authority. Kitto, at 797, 803. We applied our decision judicially abrogating governmental immunity to the parties to that action and to causes of action arising fifteen days after adjournment of the Forty-Fourth Legislative Assembly, stating:

There are two principal objects to be sought by prospective application of this decision. One object is to allow those governmental bodies which have relied upon our previous decisions adequate time to arrange liability insurance coverage for their acts or omissions. The second object is to allow the legislature opportunity to adopt such legislation as it deems advisable to mitigate any hardships arising from this decision.

Id. at 804.

         [¶ 12] After Kitto, the Forty-Fourth Legislative Assembly enacted legislation addressing tort liability for political subdivisions and initially limited a political subdivision's liability to twenty thousand dollars per person and one hundred thousand dollars for any single occurrence, effective through June 30, 1977. See 1975 N.D. Sess. Laws ch. 295, §§ 2, 13, 15. After an interim study and report by the Legislative Council, the Forty-Fifth Legislative Assembly enacted legislation limiting liability of political subdivisions to two hundred and fifty thousand dollars per person and five hundred thousand dollars for injury to three or more persons during any single occurrence. 1977 N.D. Sess. Laws ch. 303, § 3. Those limits were ...


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