Title: KENNETH MADSEN, M.D. v. BOARD OF TRUSTEES OF MEMORIAL HOSPITAL OF SWEETWATER COUNTY, WYOMING

State: wyoming

Issuer: Wyoming Supreme Court

Document:

KENNETH MADSEN, M.D. v. BOARD OF TRUSTEES OF MEMORIAL HOSPITAL OF SWEETWATER COUNTY, WYOMING2011 WY 36Case Number: No. S-10-0067Decided: 03/01/2011NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third. Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne, Wyoming 82002, of any typographical or other formal errors so correction may be made before final publication in the permanent volume.
OCTOBER 
TERM, A.D. 2010

 
 
KENNETH 
MADSEN, M.D.,Petitioner,v.BOARD OF TRUSTEES OF MEMORIAL 
HOSPITAL 

OF 
SWEETWATER COUNTY, WYOMING,Respondent.

 
 
Original 
Proceeding

Petition 
for Writ of Review

District 
Court of Laramie County

The 
Honorable Peter G. Arnold, Judge

 
 
Representing 
Petitioner:

Patrick 
J. Murphy of Williams, Porter, Day & Neville, P.C., Casper, 
Wyoming.

 
 
Representing 
Respondent:

Paul 
D. Schierer, M. Greg Weisz and Antonio E. Bendezu of Pence and MacMillan, LLC, 
Laramie, Wyoming.  Argument by Mr. 
Schierer.

 
 
Before 
KITE, C.J., and GOLDEN, HILL, VOIGT, and BURKE, JJ.

 
 
KITE, 
C.J., delivers the opinion of the Court; VOIGT, J., files an opinion concurring 
in part and dissenting in part.

 
 
KITE, 
Chief Justice.

 
 
[¶1]  After the Board of Trustees of Memorial 
Hospital of Sweetwater County, Wyoming (Hospital) filed a complaint against him, 
Kenneth Madsen, M.D. filed a counterclaim against the Hospital.  On the Hospital's motion, the district 
court dismissed the counterclaim finding that it did not adequately allege 
compliance with the signature and certification requirements for notices of 
claim contained in the Wyoming Constitution.  We reverse.

 
 
 
 
ISSUES

 
 
[¶2]   The issues for this Court's 
determination are:

 
 
            
1.         
Whether the allegation contained in Dr. Madsen's counterclaim complies 
with the Wyoming Constitution, Art. 16, § 7 and Wyo. Stat. Ann. § 1-39-113 
(LexisNexis 2009).  

 
 
            
2.         
Whether the itemization of damages contained in Dr. Madsen's notice of 
claim is sufficient under Art. 16, § 7 and § 1-39-113.   

 
 
 
 
FACTS

 
 
[¶3]  The facts underlying this dispute are 
not relevant to the issues presented for our determination.  Suffice it to say, the Hospital and Dr. 
Madsen entered into an agreement in 2004.  
In 2007, Dr. Madsen left the Hospital and moved his practice to 
Cheyenne.  He presented a Notice of 
Claim dated November 8, 2007, to the Hospital asserting it had breached the 
agreement and caused him damages.  

 
 
[¶4]  On December 10, 2007, the Hospital filed 
a complaint against Dr. Madsen in the district court claiming he had breached 
the agreement.  Dr. Madsen answered 
the complaint and filed a counterclaim against the Hospital for breach of 
contract.  The counterclaim 
contained the following allegation, which is the focus of one of the issues 
before us in this appeal:

 
 
43.  Pursuant to Wyo. Stat. Ann. § 1-39-113 
as well as Article 16, § 7 of the Wyoming Constitution, Dr. Madsen's Notice of Claims was delivered to  [the 
Hospital]'s chief financial officer, on or about November 9, 2005.  A copy of that notice is attached as Exhibit A.  

 
 
[¶5]  Exhibit A attached to the answer is 
captioned "Notice of Claim Pursuant to Wyo. Stat. Ann. § 1-39-113."  The opening sentence states in relevant 
part:  " this letter serves as Dr. 
Madsen's NOTICE OF CLAIMS pursuant to Wyo. Stat. Ann. § 1-39-113 as well as 
Article 16, § 7 of the Wyoming Constitution."  In addition to detailing the facts 
underlying Dr. Madsen's claim against the Hospital, the notice of claim set 
forth the following itemized statement of the relief 
sought:

 
 
            
Direct contractual damages                       
$450,000

            
Consequential damages                
$175,000

            
Lost income                                      
$120,000

            
Relocation                                         
$  15,000

                                    
TOTAL                        
$750,000

 
 
The 
notice of claim was certified under penalty of perjury by Dr. Madsen.  

 
 
[¶6]  The Hospital filed a reply to the 
counterclaim in which it asserted as an affirmative defense that Dr. Madsen had 
failed to comply with the Wyoming Governmental Claims Act (WGCA) and Wyoming 
Constitution.  On that basis the 
Hospital also filed a motion to dismiss, asserting specifically that the 
district court lacked subject matter jurisdiction because Dr. Madsen had not 
alleged in his complaint that his notice of claim complied with the 
constitution.  The Hospital also 
contended the notice of claim did not contain a sufficiently detailed itemized 
statement of damages as required by the constitution.

 
 
[¶7]  Following a hearing, the district court 
granted the motion, concluding that Dr. Madsen failed to adequately allege in 
his complaint that he had complied with the constitutional signature and 
certification requirements.  While 
acknowledging that the allegation contained in Dr. Madsen's complaint was 
different from the allegations considered in other governmental claims cases in 
that it referenced both § 1-39-113 and Article 16, § 7, the district court 
concluded from language in Gose v. City 
of Douglas, 2008 WY 126, ¶ 18, 193 P.3d 1159, 1164 (Wyo. 2008), that the 
complaint must specifically allege compliance with the constitutional signature 
and certification requirements.  
Addressing the itemization of damages in the notice of claim, the 
district court concluded it did not contain the degree of detail the 
constitution requires.  On these 
grounds, the district court dismissed Dr. Madsen's counterclaim against the 
Hospital.  

 
 
 
 
[¶8]  The district court scheduled the 
Hospital's claim against Dr. Madsen for trial.  However, Dr. Madsen filed a petition for 
writ of review in this Court.  He 
also filed a motion in district court for continuance of the trial until this 
Court ruled on his petition.  The 
district court stayed the trial pending resolution of the petition in this 
Court.  We granted Dr. Madsen's 
petition for review. 

 
 
 
 
STANDARD 
OF REVIEW

 
 
[¶9]  The district court ruled as a matter of 
law that Dr. Madsen's complaint must be dismissed for lack of subject matter 
jurisdiction.  The existence of 
subject matter jurisdiction is a question of law that we review de novo.  Cantrell v. Sweetwater County School Dist. 
No. 2, 2006 WY 57, ¶ 6, 133 P.3d 983, 985 (Wyo. 2006).

 
 
 
 
DISCUSSION

 
 
[¶10]  In dismissing Dr. Madsen's counterclaim, 
the district court concluded in part that he did not adequately allege 
compliance with the statutory and constitutional requirements for presenting a 
notice of claim to a governmental entity.  
We conclude the allegation was sufficient under our prior case law and 
hold that the district court erred in dismissing the counterclaim based upon the 
conclusion that the allegation was insufficient.  For the reasons stated in Brown v. City of Casper, 2011 WY 35, ___ 
P.3d ___ (Wyo. 2011), we also hold that the district court had subject matter 
jurisdiction of Dr. Madsen's claims upon the filing of the counterclaim alleging 
claims against a governmental entity. 

 
 
[¶11]  In its order, citing Gose, 2008 WY 126, 193 P.3d 1159; McCann v. City of Cody, 2009 WY 86, 210 P.3d 1078 (Wyo. 2009); and Motley v. 
Platte County, 2009 WY 147, 220 P.3d 518 (Wyo. 2009), the district court 
concluded:  "precedent is clear that 
a party must allege compliance with the constitutional signature and 
certification requirements."  
Because Dr. Madsen did not allege in his counterclaim that his notice of 
claim complied "with the constitutional signature and certification 
requirements," but alleged only that he presented a notice of claim "pursuant to 
 § 1-39-113 as well as Article 16, § 7," the district court concluded he had 
not complied with case precedent.  
In reaching this conclusion, the district court acknowledged that none of 
this Court's previous decisions involved an allegation like that contained in 
Dr. Madsen's counterclaim.  

 
 
[¶12]  The district court was correct that our 
previous decisions did not address allegations like those contained in Dr. 
Madsen's counterclaim.  In Gose, ¶ 18, 193 P.3d  at 1164, this Court 
considered the sufficiency of a complaint that alleged compliance with § 
1-39-113 but made no reference to the constitutional requirements.  In McCann, ¶ 3, 210 P.3d  at 1079, the 
allegation in the complaint referenced neither the statute nor the 
constitution.  In Motley, ¶ 3, 220 P.3d  at 519, only the 
statute was referenced in the complaint.  
In contrast to those cases, Dr. Madsen alleged that he presented a notice 
of claim "pursuant to § 1-39-113 and Art. 16, § 7."  We conclude the allegation was 
sufficient even under the cases cited by the district 
court.

 
 

[¶13]  Also in reliance on this Court's recent 
decisions in governmental claims cases, the district court concluded that 
because the allegation was insufficient it had no choice but to find that it 
lacked subject matter jurisdiction.  
For the reasons set forth in Brown 
v. City of Casper, 2011 WY 35, ___ P.3d at ____, we hold that the district 
court obtained subject matter jurisdiction of Dr. Madsen's claim upon the filing 
of the counterclaim alleging a claim against the Hospital.  To 
avoid dismissal of his counterclaim, it was incumbent upon Dr. Madsen to show 
that he had satisfied the condition precedent to maintaining an action against 
the Hospital.  That is, he had to 
show that within two years of the conduct giving rise to his claim he presented 
to the Hospital an itemized statement in writing certified under penalty of 
perjury.  Dr. Madsen met that 
showing by alleging in his complaint that he had presented a notice of claim 
pursuant to § 1-39-113 and Art. 16, § 7 of the Wyoming Constitution and by 
attaching the notice of claim he had presented to the Hospital which satisfied 
the requirements of those provisions.

 
 
[¶14]  In dismissing the counterclaim, the 
district court also concluded the notice of claim did not comply with Wyoming 
Constitution Art. 16, § 7 in that it did not contain a sufficiently detailed 
itemization of Dr. Madsen's losses.  
Art. 16, § 7 requires in relevant part that a claimant must present "a 
full itemized statement in writing . . . ."  to the officer charged with auditing the 
same.  In its order, the district 
court stated:

 
 
[A] 
claim which categorizes the claimant's losses does not provide the degree 
of detailed itemization required by the Constitution.  This Court believes the purpose of a 
full itemization is to give the person receiving and reviewing the claim enough 
information to investigate the claim and then make a decision as to whether to 
grant the claim.  Secondly, if the 
person reviewing the claim had paid the claim, this Court doubts any citizen 
reviewing the payment of the claim would be provided enough information on which 
to determine whether the claim was properly paid.  Admittedly, this analysis seems to be 
novel as there was no precedent discovered which would support the Court's 
findings.

 
 
(emphasis 
in original).

 
 
[¶15]  In Houtz v. Board of Comm'rs of Uinta 
County, 11 Wyo. 152, 168, 70 P. 840, 842 (Wyo. 1902), this Court said in 
essence that the purposes of requiring a full itemized statement were 
twofold:  to give governmental 
entities the information they need to intelligently consider claims made against 
them and to provide taxpayers a means of assessing governmental 
expenditures.  In Hochalter v. City of Gillette, 2005 WY 
125, ¶ 21, 120 P.3d 674, 680 (Wyo. 2005), we said the primary purpose of the 
requirement was to provide governmental entities with notice to assist them in 
budgeting and financial decision making.  

 
 
[¶16]  With the purposes of the full 
itemization requirement in mind, the Court in Board of Comm'rs of Sheridan County v. 
Denebrink, 15 Wyo. 342, 89 P. 7 (Wyo. 1907), considered  itemizations contained in two 
physicians' notices of claim to the board of county commissioners.  The physicians sought to be paid for 
medical services they rendered on the county's behalf to an indigent 
person.  In their notices of claim, 
the physicians itemized the relief sought as $50 and $25 respectively.  This Court found that the itemizations 
were all that was "necessary . . . to satisfy the law requiring accounts against 
the county to be fully itemized," even though the physicians each presented only 
the total cost of their services without itemizing the individual services 
comprising  the total.  Id., 15 Wyo. at 352, 89 P.  at 
10.

 
 
[¶17]  In City of Gillette v. Hladky Constr., 
Inc., 2008 WY 134, ¶ 23, 196 P.3d 184, 195 (Wyo. 2008), a construction 
contract case, we were asked to consider whether a notice of claim complied with 
§ 1-39-113, which, like Art. 16, § 7, requires an itemized statement in 
writing.  Section 1-39-113 provides: 

 
 
(b)  The claim shall 
state:

(i)  The time, place and circumstances of the 
alleged loss or injury including the name of the public employee involved, if 
known;

(ii)  The name, address and residence of the 
claimant and his representative or attorney, if any; and

(iii) 
The amount of compensation or other relief demanded.

 
 
[¶18]  The City contended the itemization only 
generically described the conduct giving rise to the claim and the resulting 
damages.  Hladky, ¶ 22, 196 P.3d  at 194.  With respect to the damages sought, the 
notice of claim identified them simply as the difference between the claimant's 
bid price and the actual cost incurred in completing the contract.    Id., ¶ 25, 196 P.3d  at 195.  An attached exhibit set forth the total 
damages as $1,300,016.57 and separated that total into five categories, two of 
which were further broken down into subcategories.  We concluded the notice of claim clearly 
set forth the damages the claimant alleged resulted from the City's conduct and 
fully complied with § 1-39-113.  Id., ¶ 26, 196 P.3d  at 195.  

 
 
[¶19]  As shown in paragraph 5 above, Dr. 
Madsen's notice of claim alleged total damages in the amount of $750,000 and 
separated that total into four categories:  
direct contractual damages, consequential damages, lost income and 
relocation.  Like the itemization of 
damages in Hladky, we conclude Dr. 
Madsen's itemization met the requirements of § 1-39-113(b)(iii).  We further conclude it constituted a 
"full itemized statement in writing" sufficient to apprise the Hospital as to 
the nature and extent of the damages claimed as contemplated by Art. 16, § 
7.  

 
 
 
 
CONCLUSION

 
 
[¶20]  The notice of claim presented in this 
case sufficiently alleged compliance with the statutory and constitutional 
requirements for notices of governmental claims.  The district court had subject matter 
jurisdiction upon the filing of the counterclaim alleging a claim against a 
governmental entity.  The 
itemization of damages in the notice of claim satisfied the constitutional 
requirements.

 
 
[¶21]  Reversed and remanded.        

  
 
 

VOIGT, 
Justice, 
concurring in part and dissenting in part.

 
 
[¶22]   I agree with the majority that 
Madsen's counterclaim, which alleged "delivery" of the notice of claim pursuant 
to both Wyo. Stat. Ann. § 1-39-113 and article 16, section 7 of the Wyoming 
Constitution, coupled with attachment of the notice of claim, showing such 
compliance, was sufficient to give the district court subject matter 
jurisdiction over the counterclaim under our existing precedent.  I do not agree with the majority's 
suggestion, in citing Brown v. City of 
Casper, 2011 WY 35, __ P.3d __ (Wyo. 2011), that the mere filing of a 
complaint or counterclaim alleging a claim against a governmental entity gives 
the district court subject matter jurisdiction over that claim.  Id. at ¶ 58, at __ (Voigt, J., 
dissenting).