Adam R. MAYHUGH, Plaintiff-Appellant-Petitioner, v. STATE of Wisconsin, Wisconsin Department of Corrections and Redgranite Correctional Institution, Defendants-Respondents, Gary HAMBLIN, Michael A. Dittmann, John A. Doe, John B. Doe, ABC Engineering Company, DEF Construction Company, GHI Insurance Company, JKL Insurance Company, MNO Insurance Company and PQR Insurance Company, Defendants.
No. 2013AP1023
Supreme Court of Wisconsin
Decided July 10, 2015
2015 WI 77 | 867 N.W.2d 754
Oral argument March 10,
For the plaintiff-appellant-petitioner, there were briefs by Nicholas Andrew Wagener and Bollenbeck Fyfe SC, Appleton, and oral argument by Nicholas Andrew Wagener.
For the defendants-respondents, the cause was argued by Karla Z. Keckhaver, assistant attorney general, with whom on the brief was Brad Schimel, attorney general.
¶ 1. ANN WALSH BRADLEY, J. Petitioner, Adam R. Mayhugh, seeks review of an unpublished decision of the court of appeals affirming an order of the circuit court that dismissed his tort action against the State and the Department of Corrections (DOC).1 The court of appeals agreed with the circuit court that recovery was barred by the doctrine of sovereign immunity.
¶ 2. Mayhugh contends that sovereign immunity does not apply to the DOC. He maintains that by granting the DOC broad powers, the legislature established the DOC as an independent going concern. Based on his determination that the DOC is independent from the state, Mayhugh concludes that the DOC is not entitled to the sovereign immunity accorded to the state. In the alternative, Mayhugh asserts that the statutory grant of power to the DOC to sue and be sued should be interpreted as an express waiver of sovereign immunity.
¶ 3. We conclude that the DOC is entitled to sovereign immunity. The DOC lacks sufficient attributes to render it an independent going concern. Despite the breadth of its statutory powers, the character of those powers reveals that the legislature did not intend the DOC to be anything other than an arm of the state.
¶ 4. We further conclude that the legislature has not expressly waived the DOC‘s sovereign immunity.
I
¶ 5. In 2011 Mayhugh, then an inmate at Redgranite Correctional Institution (Redgranite), attended a baseball game in Redgranite‘s recreational yard. Staff directed him to sit in the bleachers to watch the game. While he was sitting there, one of the players hit a foul ball, which flew into the bleachers and hit Mayhugh in the head. As a result, Mayhugh suffered a fracture to his right temporal lobe and a severed artery that led to a blood clot, strokes, and acute respiratory failure.
¶ 6. Mayhugh subsequently filed a complaint against the state of Wisconsin, the DOC, Redgranite, unnamed construction
¶ 7. The DOC moved for dismissal, arguing that as a state agency it was entitled to sovereign immunity. It explained that the state had not consented to suit and therefore the court lacked personal jurisdiction.
¶ 8. After Mayhugh amended the complaint to include the Secretary of the DOC, the warden of Redgranite, and two unnamed officers as defendants, the DOC submitted another motion to dismiss. It again claimed sovereign immunity. Additionally, it asserted that Mayhugh had failed to comply with the notice requirements for suits against state employees and therefore failed to state a claim against them.
¶ 9. The circuit court granted the DOC‘s motion. The court agreed with the DOC that it was entitled to sovereign immunity under the
¶ 10. Mayhugh appealed the portion of the decision relating to sovereign immunity. He contended that the defense of sovereign immunity is unavailable because the DOC is an independent going concern and not an arm of the state. In the alternative, he advanced that the legislature waived sovereign immunity for the DOC by enacting
¶ 11. The court of appeals summarily affirmed the circuit court. Mayhugh v. State, No. 2013AP1023, unpublished slip op. (Wis. Ct. App. June 3, 2014). It observed that in Lindas v. Cady, 142 Wis. 2d 857, 861–63, 419 N.W.2d 345 (Ct. App. 1987), aff‘d in part, rev‘d in part, 150 Wis. 2d 421, 441 N.W.2d 705 (1989),
it determined that the phrase “sue and be sued” was not consent for suit against the DOC‘s predecessor agency, the Department of Health and Human Services. Id. at 2. Given that holding, it concluded that the language in
II
¶ 12. We are asked to determine whether the circumstances of this case fall within either of the two asserted scenarios rendering sovereign immunity inapplicable to a state entity. Specifically, whether the legislature created the DOC in a manner that renders it an independent going concern, which acts neither as the state‘s arm nor its agent, and whether the legislature has expressly waived the DOC‘s sovereign immunity. Both of these issues present questions of law which we review independently of the decisions rendered by the circuit court and court of appeals. Canadian Nat‘l R.R. v. Noel, 2007 WI App 179, ¶ 5, 304 Wis. 2d 218, 736 N.W.2d 900.
III
¶ 13. We begin with the first scenario rendering sovereign immunity inapplicable:
¶ 14. This court first referred to independent going concerns in Sullivan v. Bd. of Regents, 209 Wis. 242, 244 N.W. 563 (1932). There, the plaintiff brought suit against the Board of Regents, asserting that the State had waived sovereign immunity by creating the Board as a body corporate. The court disagreed, stating that although the Board was a body corporate, it was merely an arm of the state. Id. at 244.
¶ 15. To explain its conclusion, the court observed that the Board lacked the following attributes: it had “no power to raise money by taxation“; it could “not incur any liability beyond the amount appropriated to it by act of the legislature“; “the title to all property acquired by [the Board] is held by it in trust for the state“; the Board “may not dispose of real property without express authority from the state“; “[the Board‘s] power to dispose of personalty is limited“; and “[a]ll funds belonging to the institution, whether derived from appropriations or from the sale
of property, are in the custody of the state treasurer and can only be disbursed on a warrant drawn by the secretary of state.” Id. at 244.
¶ 16. The absence of these attributes indicated that if the plaintiff were to recover a judgment against the Board, “there would be no property out of which execution could be satisfied.” In other words, if the Board created liability, “it is a liability of the state and must be enforced as other liabilities against the state are enforced.” Id. at 245. Accordingly, the court determined that nothing in the statutes indicated any intention that the Board be an independent going concern, and sovereign immunity applied. Id. at 244.
¶ 17. As Sullivan suggests, the determination that a state entity is an independent going concern is a narrow exception to sovereign immunity. Canadian Nat‘l R.R., 304 Wis. 2d 218, ¶ 7. To date, our case law has identified only three entities that fall into this category: the State Armory Board, the State Housing Finance Authority, and the State Investment Board. Majerus, 39 Wis. 2d 311; State ex rel. Warren v. Nusbaum, 59 Wis. 2d 391, 208 N.W.2d 780 (1973); Bahr, 186 Wis. 2d 379.
¶ 18. In Majerus, 39 Wis. 2d 311, the court considered whether the State Armory Board was an independent going concern. The legislature had designated the Armory Board as “a body politic and corporate” with the power “to sue and be sued.” Id. at 315. It had also granted the Board the powers to convey real estate, dispose of personal property, hold and disburse its own funds independent of state warrants,
all of the powers enumerated in Sullivan in order to be independent. Id. at 315. It determined that the designation of the Board as a body politic and corporate, combined with the Board‘s broad proprietary powers, rendered it an independent going concern, outside the scope of sovereign immunity. Id.
¶ 19. The court conducted a similar inquiry with regard to the State Housing Finance Authority in Nusbaum, 59 Wis. 2d 391. It noted that although the legislature had stated that the Authority was “a public body corporate and politic,” the court must look beyond that denomination and independently consider “the powers and structure conferred upon the entity in order to determine its nature.” Id. at 424.
¶ 20. The court reviewed the broad proprietary powers the legislature granted to the Authority:
The Authority, pursuant to
sec. 234.03 , is granted all the powers “necessary or convenient” to implement its public purpose, including but not limited to the power to sue and be sued; to have perpetual existence; to make and execute contracts; to incur debt; to acquire and dispose of mortgages or security interests; to acquire leaseholds, real or personal property or any interest therein; and, under certain conditions, to own, hold, clear, improve and rehabilitate and to sell, assign, exchange, transfer, convey, lease, mortgage or otherwise dispose of or encumber the same.
Id. at 424. Turning its attention to the fiscal powers, the court continued:
The Authority has the power to hold and disburse its own funds independent of state warrants. It has the power to borrow money and issue and sell bonds and other evidences of indebtedness to accomplish its purposes. Its debts thus created are satisfied out of rents
and interest the Authority receives from the property the Authority acquires and the investments it makes.
Id. Acknowledging that the proprietary and fiscal powers supported the legislature‘s declaration that the Authority was an independent entity, the court determined that the Authority “is neither an arm nor agent of the state.” Id. at 425.
¶ 21. Likewise, the State Investment Board was declared an independent going concern in Bahr, 186 Wis. 2d 379. To support this determination, the court identified the following statutory features of the Board: its broad authority to manage and invest, sell, reinvest, and collect income and rents, to employ outside counsel and contractors, and to acquire, manage, and sell real estate without Department of Administration (DOA) participation; the power to sue and be sued; the legislature designated it as a body corporate, and the legislature‘s stated intent that the Board be an independent agency of the state. Id. at 396, 399. Thus, the court determined that the Board was “ineligible to raise the defense of sovereign immunity.” Id. at 399.
¶ 22. Majerus, Nusbaum, and Bahr demonstrate that in determining whether a state entity is an independent going concern, courts should consider both the character and breadth of the statutory powers granted to the entity. We observe that the entities at issue in those cases shared some common features: they were authorized to sue and be sued, they were created
bility for sovereign immunity, we caution that it is a totality of the circumstances analysis and no one factor is determinative.
¶ 23. Applying these factors to the DOC, we conclude that it is not an independent going concern. The DOC has only one of the attributes identified in Majerus, Nusbaum, and Bahr: the ability to sue and be sued. The DOC was not established as a body politic or body corporate. Additionally, it lacks budgetary autonomy as it is funded by general state revenue, has a budget controlled by the appropriation process and the DOA, and cannot incur any liability beyond the amount appropriated to it.
¶ 24. The various statutory powers identified by Mayhugh do not support his assertion that the DOC is an independent going concern. Specifically, Mayhugh points to a number of the DOC‘s statutory powers relating to managing finances3; the DOC‘s limited
contracting power4; the DOC‘s limited powers with respect to real estate5; and the DOC‘s general purpose, right to govern and a number of powers relating to the care, custody, and control of inmates.6 We address each in turn.
¶ 25. First, the financial powers referred to by Mayhugh must be considered in light
the DOA.
¶ 26. Likewise, the contracting powers identified by Mayhugh do not convince us that the DOC is independent. These powers are limited to contracts with specific parties and contracts for specific purposes. Notably, the DOC‘s ability to contract for youth programs is limited to available revenues and subject to the review and approval of the legislature‘s joint committee on finance.
¶ 27. Additionally, contrary to Mayhugh‘s assertion, the real estate powers he identifies reveal that the DOC is not independent from the state. The DOC cannot sell land on its own, but must first seek approval of the Building Commission or the Joint Committee on Finance.
¶ 28. Considering the DOC‘s general purpose and the powers granted to it to fulfill that purpose, we fail to see how they support a conclusion that the DOC
is an independent going concern. Rather than suggesting independence, the statutory statement of purpose reveals that the legislature intended the DOC to be intertwined with other state programs:
The purposes of this chapter and chs. 302 to 304 are to prevent delinquency and crime by an attack on their causes; to provide a just, humane and efficient program of rehabilitation of offenders; and to coordinate and integrate corrections programs with other social services. In creating the department of corrections, chs. 301 to 304, the legislature intends that the state continue to avoid sole reliance on incarceration of offenders and continue to develop, support and maintain professional community programs and placements.
¶ 29. The power to govern correctional institutions and the powers relating to the care, custody, and control of inmates do not weigh in favor of or against DOC independence. These powers are akin to those granted to other governmental entities to fulfill their purpose. The Board of Regents, for example, has similar powers to govern its system, determine the educational systems offered within that system, set admission policies, police authority, fix salaries, and hold hearings for its personnel.
dent going concerns and say little about whether an entity is independent from the state.
¶ 30. Finally, Mayhugh bases a significant portion of his arguments on the statutes permitting the DOC to set up and regulate the Prison Industries Board.
¶ 31. We acknowledge that the Prison Industries Board has some budgetary autonomy. See George v. SC Data Ctr., 884 F. Supp. 329, 330 (W.D. Wis. 1995) (explaining that revenues from the sale of goods and services produced are applied to service debt on any bonds issued under the authority of the state legislature to finance Prison Industries programs). However, there is no indication that the revenues produced by the prison industries are the primary source of funding for the DOC as a whole. To the contrary, the Prison Industries Board receives appropriations from the state for prison industries costs that are not covered by its revenues, suggesting that its revenues may not even cover its own operations.
¶ 32. In sum, the statutory powers granted to the DOC do not render it an independent going concern. Courts must consider both the character and breadth of the statutory powers granted to the entity when determining whether it is an independent going concern. Here, despite their breadth, the character of the DOC‘s powers reveals that the legislature did not intend for the DOC to be anything other than an arm of the state.
IV
¶ 33. Having established that the DOC is not exempt from sovereign immunity as an independent going concern, we turn to consider whether the state has expressly waived the DOC‘s sovereign immunity.
¶ 34.
¶ 35. “[C]onsent to suit may not be implied.” Bahr, 186 Wis. 2d at 387. It must be express. See German, 235 Wis. 2d 576, ¶ 17 (“It is axiomatic that the state cannot be sued without the express consent of the legislature.“); Metzger v. Wisconsin Dep‘t of Taxation, 35 Wis. 2d 119, 131, 150 N.W.2d 431 (1967) (“Well established in Wisconsin is the principle that in the absence of express legislative permission the state may not be subjected to suit.“); State ex rel. Martin v. Reis, 230 Wis. 683, 685, 284 N.W. 580 (1939) (“it is an established principle of law that no action will lie against a sovereign state in the absence of express legislative permission.“).
¶ 36. We can find no express waiver of the DOC‘s sovereign immunity. The court of appeals addressed this issue in Lindas, 142 Wis. 2d 857. In that case, the circuit court dismissed on sovereign immunity grounds the plaintiff‘s suit against the DOC‘s predecessor, the Department of Health and Social Services. On review, the court of appeals reiterated that “[i]n the absence of express legislative authorization, the State of Wiscon-
sin
¶ 37. The court reasoned that the “sue and be sued” statute was created “at a time when Wisconsin enjoyed governmental immunity from tort suits.” Id. It observed that governmental immunity was subsequently eliminated in Holytz, 17 Wis. 2d 26. It then determined that the fact that Holytz “removed the defense of tort immunity” did not permit it to put more meaning into the sue and be sued statute. Id. at 862 (quoting Townsend, 42 Wis. 2d at 420-21). Accordingly, the court concluded that there was no express consent for tort suit against the Department of Health and Social Services. Id. at 863.
¶ 38. The court of appeals subsequently clarified that Lindas did not set forth “a blanket rule that legislative consent for an agency to sue and be sued [could not] be considered a waiver of sovereign immunity.” Bahr, 186 Wis. 2d at 392-93. Rather, the holding in Lindas was limited to tort actions. Id.
¶ 39. Because we are considering a tort action against the DOC, we determine that Lindas governs. We acknowledge that unlike the statute at issue in Lindas, the statute permitting the DOC to sue and be sued was enacted after Holytz. However, the current DOC statute was based on the statute discussed in Lindas. It contains identical language. See
¶ 40. As our statutes recognize, not every entity has the capacity to sue and be sued.
¶ 41. Other jurisdictions have determined that “sue and be sued” can refer to the capacity to be named in a lawsuit. See Ransom v. St. Regis Mohawk Educ. & Community Fund, 658 N.E.2d 989, 995 (N.Y. 1995) (“statutory power to sue and be sued contained in the D.C. and New York nonprofit corporation laws did nothing more than recognize the Fund‘s status as an entity with the capacity to enter our courts“); Self v. Atlanta, 377 S.E.2d 674, 676 (Ga. 1989) (sue and be sued “should be read as providing an entity with the status and capacity to enter courts, and not as waiving sovereign immunity“); Town of Highland Park v. Iron Crow Constr., Inc., 168 S.W.3d 313, 318 (Tex. App. 2005) (sue and be sued speaks to an entity‘s “capacity to sue and its capacity to be sued when immunity has been waived“).7 We agree and conclude that in the
context of
¶ 42. We acknowledge that there is conflicting federal case law regarding the import of “sue and be sued” provisions. In Federal Deposit Insurance Corp. v. Meyer, 510 U.S. 471, 480 (1994), the United States Supreme Court determined that “sue and be sued” clauses are presumed to waive the sovereign immunity absent a showing that the clause was intended to have a more narrow purpose. However, Meyer was addressing sovereign immunity under federal common law and not the sovereign immunity derived from
¶ 43. Finally, Mayhugh advances that a determination that the DOC is immune from suit would violate
¶ 44. The argument that
V
¶ 45. In sum, we conclude that the DOC is entitled to sovereign immunity. The DOC lacks sufficient attributes to render it an independent going concern. Despite the breadth of its statutory powers, the char-
acter of those powers reveals that the legislature did not intend the DOC to be anything other than an arm of the state.
¶ 46. We further conclude that the state has not expressly waived the DOC‘s sovereign
By the Court.—The decision of the court of appeals is affirmed.
¶ 47. MICHAEL J. GABLEMAN, J. (concurring). At issue in this case is whether the legislature has waived sovereign, that is state immunity, in tort for injuries sustained by Mayhugh while, as an inmate, he attended a baseball game in Redgranite‘s recreational yard. I join the majority opinion affirming the court of appeals. The majority correctly determines that the Department of Corrections (“DOC“) is not an independent going concern, and that the legislature has not waived the state‘s sovereign immunity in tort actions.
¶ 48. I cannot, however, join the majority‘s reliance on Lindas v. Cady, 142 Wis. 2d 857, 419 N.W.2d 345 (Ct. App. 1987), aff‘d in part, rev‘d in part, 150 Wis. 2d 421, 441 N.W.2d 705 (1989). Majority Op., ¶¶ 36-39. Simply put, the majority‘s reliance on Lindas for its conclusion that “sue and be sued” is not a waiver of sovereign immunity is misplaced because Lindas examined the “sue and be sued” language in
the DOC‘s predecessor. Here, we examine
A.
¶ 49. The rule of governmental immunity, that is municipal immunity, is distinct from sovereign immunity, that is state immunity. Governmental immunity grew out of “English law” and “expanded to the point where the historical sovereignty of kings was relied upon to support a protective prerogative for municipalities.” Id. at 30. Governmental immunity was first adopted in Wisconsin in Hayes v. The City of Oshkosh, 33 Wis. 314, 318 (1873). However, applying the doctrine resulted in “some highly artificial judicial distinctions”2 which led this court to re-examine governmental immunity in 1962. Holytz, 17 Wis. 2d at 32. In Holytz we abrogated the doctrine of governmental immunity such that, for municipalities, “so far as governmental responsibility for torts is concerned, the rule is liability--the exception is immunity.” Id. at 39.
¶ 50. However, our decision in Holytz did not go so far when it came to the State and its agencies. Rather, we made a “careful distinction... between the abrogation of the [governmental] immunity doctrine and the right of a private party to sue the state.” Id. at
40. Thus, following our decision in Holytz, “there will be substantive liability on the part of the state, but the right to sue the state” can be waived only by the legislature
B.
¶ 51. In Lindas a former employee of DHSS, Lindas, sued the department for wrongful discharge and discrimination. Lindas, 142 Wis. 2d at 860. The circuit court dismissed Lindas‘s claim as barred by sovereign immunity. Id. Lindas appealed, arguing that by enacting
C.
¶ 52. However,
If it did, then the interpretation of statutory language would be frozen in time at the moment a court first interprets it.
¶ 53. This does not mean, however, that the majority‘s ultimate interpretation of “sue and be sued” in
¶ 54. The legislature has not implemented a procedure by which the DOC or the state may be sued in tort, as it has in contract, and therefore, the DOC may not be sued in tort. As a result, the “sue and
¶ 55. For the foregoing reasons, I respectfully concur.
Notes
Upon the refusal of the legislature to allow a claim against the state the claimant may commence an action against the state by service as provided in
s. 801.11 (3) and by filing with the clerk of court a bond, not exceeding $1,000, with 2 or more sureties, to be approved by the attorney general, to the effect that the claimant will indemnify the state against all costs that may accrue in such action and pay to the clerk of court all costs, in case the claimant fails to obtain judgment against the state.