Gerken v. Sherman
2011 Mo. App. LEXIS 880
Mo. Ct. App.2011Background
- Pensioners challenge Division's pension calculations funded by Missouri property tax under Mo. Const. art. III, §38(b).
- Gerken I concluded the Division's 'balance' method was incorrect and that 3-year limitations under §516.130 did not apply, remanding for accounting considerations.
- On remand, Dr. LePage prepared an accounting showing an underpayment of $18,832,188 (1992–2009); trial court adopted it as actual damages and awarded prejudgment interest and attorneys' fees.
- Division appealed, arguing §516.120(2)’s five-year statute should apply; trial court said it lacked authority to address §516.120 on remand per the mandate.
- Court holds the five-year statute applies and damages are capped to amounts accruing from February 16, 2001 forward; remands for recalculation and distribution.
- Attorney’s fees and prejudgment interest are to be revisited on remand in light of recalculated damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of remand authority on limitations | Division argues remand allowed §516.120(2). | Pensioners contend mandate limits addressing §516.120(2). | Division point granted; remand authority includes §516.120(2). |
| Applicability of five-year statute to damages | Damages accrue monthly; five-year limit should apply. | Damages accrue per accrual principles; five-year limit not applicable. | Yes, §516.120(2) applies; damages limited to 2/16/2001 onward. |
| Methodology for calculating aggregate damages | Use Division projections to set annual increases; average pensioner count acceptable. | Use preceding year growth and annual averages; projections improper. | Use of preceding-year growth is correct; aggregate damages upheld with remand for recalculation and potential surplus distribution. |
| Prejudgment interest and liquidated damages | Interest properly awarded; damages liquidated by accounting. | Sovereign immunity and non-liquidated damages bar prejudgment interest. | Sovereign immunity does not bar prejudgment interest; interest to be recalculated consistent with damages on remand. |
| Attorney's fees awarding from common fund | Fees permitted under common fund/common benefit doctrine; not paid from appropriation. | Fees draw from pension fund requiring appropriation. | Fees follow common fund doctrine; to be revisited after recalculation of damages; distribution plan to be determined on remand. |
Key Cases Cited
- Gerken v. Sherman, 276 S.W.3d 844 (Mo.App. W.D. 2009) (reverses balance-method and addresses limitations and accounting planning)
- Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976) (standard of review for bench trials)
- Lane v. Non-Teacher Sch. Emp. Ret. Sys. of Mo., 174 S.W.3d 626 (Mo.App. W.D. 2005) (law of the case and statute of limitations considerations)
- Bettis v. Potosi R-III School Dist., 51 S.W.3d 183 (Mo.App. W.D. 2001) (limitations tied to damages when back payments occur)
- Powel v. Chaminade College Preparatory, Inc., 197 S.W.3d 576 (Mo. banc 2006) (ascertainment of damages standard)
- Kubley v. Brooks, 141 S.W.3d 21 (Mo. banc 2004) (sovereign immunity and consent to sue)
- Palo v. Stangler, 943 S.W.2d 683 (Mo.App. E.D. 1997) (prejudgment interest in state claims)
- State ex rel. Edwards v. Donovan, 41 S.W.2d 842 (Mo.App. 1931) (pension-related damages and limitations precedent)
- Midwest Division-OPRMC, LLC v. Dep't of Soc. Servs., Div. of Med. Servs., 241 S.W.3d 371 (Mo.App. W.D. 2007) (prejudgment interest and government entity liability)