Nebraska Advance She

BOARD OF TRUSTEES v. CITY OF OMAHA 993

Cite as 289 Neb. 993

Board of Trustees of the City of Omaha P

and Fire Retirement System, appellee

City of Omaha, Nebraska, a munici

corporation, et al., appellant

___ N.W.2d ___

Filed January 30, 2015. No. S-13-956.

1. Summary Judgment. Summary judgment is proper when the pleadings and 

evidence admitted at the hearing disclose that there is no genuine issue as to any 

material fact or as to the ultimate inferences that may be drawn from those facts 

and that the moving party is entitled to judgment as a matter of law.

2. Summary Judgment: Appeal and Error. In reviewing a summary judgment, an 

appellate court views the evidence in a light most favorable to the party against 

whom the judgment is granted and gives such party the benefit of all reasonable 

inferences deducible from the evidence.

3. Declaratory Judgments: Appeal and Error. When a declaratory judgment 

action presents a question of law, an appellate court has an obligation to reach its 

conclusion independently of the conclusion reached by the trial court with regard 

to that question.

4. Declaratory Judgments: Justiciable Issues. Declaratory judgments are available when a present actual controversy exists, all interested persons are parties to 

the proceedings, and a justiciable issue exists for resolution.

5. Justiciable Issues. A justiciable issue requires a present, substantial controversy 

between parties having adverse legal interests susceptible to immediate resolution 

and capable of present judicial enforcement.

6. Declaratory Judgments: Justiciable Issues. A declaratory judgment action 

cannot be used to determine the legal effects of a set of facts which are future, 

contingent, or uncertain.

7. ____: ____. At the time that the declaration is sought, there must be an actual 

justiciable issue from which the court can declare law as it applies to a given set 

of facts.

8. Statutes: Appeal and Error. An appellate court does not consider a statute’s 

clauses and phrases as detached and isolated expressions. Instead, the whole 

and every part of the statute must be considered in fixing the meaning of any of 

its parts.

9. Trusts. Trustees are generally required to exercise reasonable effort and diligence 

in administering and monitoring a trust, with due attention to the trust’s objectives and the interests of the beneficiaries. This may include obtaining competent 

guidance and assistance, depending upon the circumstances.

10. Statutes: Words and Phrases. As a general rule, in the construction of statutes, the word “shall” is considered mandatory and inconsistent with the idea 

of discretion.

11. Statutes: Intent: Words and Phrases. While the word “shall” may render a 

particular provision mandatory in character, when the spirit and purpose of the 

legislation require that the word “shall” be construed as permissive rather than 

mandatory, such will be done.
Nebraska Advance She

994 289 NEBRASKA REPORTS

Appeal from the District Court for Douglas County: James

T. Gleason, Judge. Affirmed as modified in part, and in pa

reversed and vacated.

John P. Passarelli and Matthew S. Noren, of Kutak Rock, 

L.L.P., for appellants.

John R. Douglas and David A. Blagg, of Cassem, Tierney, 

Adams, Gotch & Douglas, for appellee.

Heavican, C.J., Connolly, Stephan, McCo

Cassel, JJ

Stephan, 

The City of Omaha’s home rule charter authorizes the city 

council to establish a “pension and retirement system or systems” for city employees.1

 The charter provides that the assets 

and reserves of any such system shall constitute a “separate 

and independent trust fund,” title to which shall be vested in 

a board of trustees to be created by ordinance.2 Pursuant to 

this authority, the Omaha City Council created the City of 

Omaha Police and Fire Retirement System (the System) which 

is administered by a board of trustees.3 The issues in this 

declaratory judgment action brought by the board against the 

City of Omaha and its mayor and city council (collectively the 

City) are whether the board has authority to retain an actuarial 

consultant and private legal counsel at city expense. The district court for Douglas County determined the board had such 

authority, and the City perfected this timely appeal and petitioned to bypass the Nebraska Court of Appeals. We granted 

the petition.

BACKGROUND

Pursuant to Omaha’s home rule charter,4 the Omaha City 

Council enacted an ordinance creating

1 Omaha City Charter, art. VI, § 6.09 (1994).

2 Id., § 6.10.

3 Omaha Mun. Code, ch. 22, art. III, §§ 22-61, 22-62, and 22-72 (2001).

4 Omaha City Charter, supra note 1, §§ 6.09 and 6.10.
Nebraska Advance She

BOARD OF TRUSTEES v. CITY OF OMAHA 995

Cite as 289 Neb. 993

a separate and independent trust fund to be known as the 

[S]ystem trust fund, title to which shall be vested in the 

board of trustees and into which shall be paid all contributions made under the [S]ystem by the members and the 

city after the date of establishment of such fund, and from 

which shall be paid all benefits provided by the [S]ystem, 

including benefits to retired members, widows or widowers, and children who began receiving benefits prior to 

establishment of such fund.5

The ordinance authorizes the board to maintain a portion of 

the fund in cash for the “payment of benefits and investment 

expenses” and requires it to “invest and reinvest” all remaining assets of the fund with “all investment income and losses 

being credited to such fund.”6 The ordinance further provides 

that the city finance director “shall make or approve all investments for the board.”7

The board consists of seven members. Three members 

are elected from Omaha’s police and firefighter unions; 

three members are representatives of the City, including the 

finance director, the human resources director, and a member 

of the city council; and the seventh member is not associated with the City or the unions and is elected by the other 

six members.

Under the Omaha home rule charter, the board “shall formulate policy for the [S]ystem and shall supervise its operation.”8

Also pertinent to the issues presented in this case is § 22-69 of 

the Omaha Municipal Code,9 which provides:

Subject to the board of trustees, the management of 

the [S]ystem shall be directed by the following officers, 

to whom shall be delegated the indicated responsibilities:

(a) The city finance director shall be the administrative 

head of the [S]ystem and shall approve all investments of 

the retirement fund.

5 Omaha Mun. Code, supra note 3, § 22-72.

6 Id.

7 Id.

8 Omaha City Charter, supra note 1, § 6.10.

9 Omaha Mun. Code, ch. 22, art. III, § 22-69 (2002).
Nebraska Advance She

996 289 NEBRASKA REPORTS

(b) The city attorney shall be the legal advisor to 

the board.

(c) The county treasurer shall be the treasurer of 

the [S]ystem.

(d) The board, subject to applicable personnel regulations, may employ an actuary. The actuary shall act 

as technical advisor to the board on matters regarding 

operation of the [S]ystem, and shall recommend mortality tables, interest rates, discontinuance tables, and any 

other tables necessary for any investigation or valuation 

to be made of the [S]ystem, which tables and interest 

rates shall be subject to the approval of the board. The 

actuary shall make such investigation and valuation at 

such times as may be requested by the board, but at least 

once in each five-year period. The actuary shall act at all 

times as technical advisor to the board in such matters as 

it may request.

(e) The board, in administering the [S]ystem, may 

utilize the services of existing city departments and 

personnel as are required for the proper operation of 

the [S]ystem.

In September 2011, the board voted to retain a private law 

firm to research whether the board had an “obligation to retain 

counsel separate from the Omaha City Attorney’s office for 

advice when the City or Unions are involved.” Subsequently, 

the city attorney sent a memorandum to the board, stating that 

because the city attorney is designated by § 22-69 as its legal 

advisor, the board lacked authority to retain outside counsel 

unless the city attorney had a conflict of interest. The city 

attorney further advised the board that in the absence of a conflict, any costs incurred in retaining outside counsel would not 

be considered an appropriate administrative expense payable 

from the City’s general fund.

At a June 2012 meeting, the board considered two law firms 

and selected one of them as “the Board’s potential outside 

counsel.” The city finance director was present at this meeting 

and opined that based upon the city attorney’s memorandum, 

no money from the City’s general fund could be used to pay 

outside legal counsel retained by the board.
Nebraska Advance She

BOARD OF TRUSTEES v. CITY OF OMAHA 997

Cite as 289 Neb. 993

At the same meeting, the board discussed hiring the board’s 

actuarial consultant to conduct a study of disability benefits 

paid by the System. The board believed this study was necessary because the System was “underfunded” and seemed to be 

paying out disproportionately higher disability benefits than 

other pension funds of comparable size. The board wanted the 

study to help determine whether it should “petition the [C]ity 

or the units to change the contract or the statutes.” One member noted the recommendation of the city finance director that 

the City would not pay for the study. Nevertheless, on a 4-to-2 

vote with one abstention, the board voted to hire its actuary “in 

order to conduct an investigation/best practices review of our 

disability benefits and component and the administration and 

policies to compare them to other comparable police and fire 

pension plans.”

The board then commenced a declaratory judgment action 

against the City in which it asked the district court to (1) construe Omaha’s home rule charter and applicable ordinances to 

authorize the board to retain consultants and independent legal 

counsel and (2) declare that the expenses associated with such 

retention would be administrative expenses payable from the 

City’s general fund. After the City filed an answer asserting 

various defenses, the board moved for summary judgment.

The district court sustained the board’s motion. It determined there was a justiciable controversy in that there was an 

actual dispute between the parties which could be resolved by 

construction of applicable city ordinances. The court determined the board was authorized under § 22-69 to hire outside 

consultants and independent legal counsel. It reasoned that to 

fulfill its fiduciary duties to the beneficiaries of the fund, the 

board had “the discretion to hire outside consultants to the 

extent that such consultants are necessary for the Board to 

effectively ‘formulate policy for’ and ‘supervise’ the ‘operation’ of the System.” The court qualified its holding by stating 

that in the exercise of this discretionary authority, the board 

“may not act in a manner that is unreasonable, arbitrary, capricious, or motivated by anything other than an obligation to 

faithfully perform its fiduciary duties to the beneficiaries of 

the System.”
Nebraska Advance She

998 289 NEBRASKA REPORTS

The court also determined the board was authorized to hire 

independent legal counsel to the extent such counsel is necessary to “formulate policy for” and “supervise” the “operation” 

of the System, so long as the board does not operate in a manner that “is unreasonable, arbitrary, capricious, or motivated 

by anything other than an obligation to faithfully perform its 

fiduciary duties.” The court based this determination on the 

board’s fiduciary duties to the beneficiaries of the System and 

concluded the language of § 22-69 did not limit the board’s 

discretionary authority to retain outside counsel.

Finally, the court determined the costs associated with 

hiring outside counsel and consultants were administrative 

expenses under § 22-71 of the Omaha Municipal Code.10 The 

district court reasoned the City had an obligation to pay for 

consultants and legal counsel retained by the board based on 

the plain and unambiguous language of the ordinance stating 

that “‘[a]ll costs and expenses incurred in the administration 

of the [S]ystem shall be paid by the [C]ity by appropriation 

from the general fund . . . .’”11 It reasoned that these would 

not be administrative expenses if the City showed that “the 

Board acted in a manner that was unreasonable, arbitrary, 

capricious, or motivated by anything other than an obligation 

to faithfully perform its fiduciary duties to the beneficiaries of 

the System.”

ASSIGNMENTS OF ERROR

The City assigns, restated and consolidated, that the district 

court erred in (1) finding that Omaha City Charter § 6.10 and 

Omaha Mun. Code §§ 22-69 and 22-72 grant the board discretion to hire outside consultants and independent legal counsel 

and (2) finding that Omaha Mun. Code § 22-71 requires the 

City to pay expenses incurred by the board in hiring outside 

consultants and independent legal counsel without the City’s 

prior authorization.

10 Omaha Mun. Code, ch. 22, art. III, § 22-71 (2001).

11 Id.
Nebraska Advance She

BOARD OF TRUSTEES v. CITY OF OMAHA 999

Cite as 289 Neb. 993

STANDARD OF REVIEW

[1,2] Summary judgment is proper when the pleadings and 

evidence admitted at the hearing disclose that there is no genuine issue as to any material fact or as to the ultimate inferences that may be drawn from those facts and that the moving 

party is entitled to judgment as a matter of law.12 In reviewing 

a summary judgment, an appellate court views the evidence in 

a light most favorable to the party against whom the judgment 

is granted and gives such party the benefit of all reasonable 

inferences deducible from the evidence.13

[3] When a declaratory judgment action presents a question 

of law, an appellate court has an obligation to reach its conclusion independently of the conclusion reached by the trial court 

with regard to that question.14

ANALYSIS

Justiciable Controver

[4-7] Declaratory judgments are available when a present 

actual controversy exists, all interested persons are parties to 

the proceedings, and a justiciable issue exists for resolution.15

A justiciable issue requires a present, substantial controversy 

between parties having adverse legal interests susceptible to 

immediate resolution and capable of present judicial enforcement.16 A declaratory judgment action cannot be used to determine the legal effects of a set of facts which are future, contingent, or uncertain.17 At the time that the declaration is sought, 

12 City of Omaha v. City of Elkhorn, 276 Neb. 70, 752 N.W.2d 137 (2008); 

Hofferber v. City of Hastings, 275 Neb. 503, 747 N.W.2d 389 (2008).

13 Id.

14 Davenport Ltd. Partnership v. 75th & Dodge I, L.P., 279 Neb. 615, 780 

N.W.2d 416 (2010); Berens & Tate v. Iron Mt. Info. Mgmt., 275 Neb. 425, 

747 N.W.2d 383 (2008).

15 See Boyles v. Hausmann, 246 Neb. 181, 517 N.W.2d 610 (1994).

16 Professional Firefighters Assn. v. City of Omaha, 282 Neb. 200, 803 

N.W.2d 17 (2011).

17 Boyles, supra note 15.
Nebraska Advance She

1000 289 NEBRASKA REPORTS

there must be an actual justiciable issue from which the court 

can declare law as it applies to a given set of facts.18

The parties do not dispute the determination of the district 

court that this case presents a justiciable controversy which is 

capable of judicial resolution in the form of a declaratory judgment. We agree that a justiciable controversy exists, but we 

view it as being narrower than characterized by the parties and 

the district court. The district court defined the legal issue as 

whether the board has authority “to hire outside consultants and 

independent legal counsel” at the City’s expense. The phrase 

“outside consultants” could encompass a wide variety of professional disciplines. But the actual dispute between the parties 

is more narrowly focused on (1) the authority of the board to 

retain an actuarial consultant to undertake a study of disability 

benefits paid by the System and retain independent legal counsel and (2) whether the costs of such actions are administrative 

expenses. We therefore address only those issues.

Nature of Enti

It is first necessary to determine the nature of the board 

as an entity. We agree with the City that the board is not a 

separate and distinct political subdivision. But we cannot agree 

with its argument that the board is “merely an administrative 

agent of the City.”19

The Omaha home rule charter provides that the assets and 

reserves of a pension and retirement system established by 

the City shall be a “separate and independent trust fund” and 

that the board “shall formulate policy for the [S]ystem and 

shall supervise its operation.”20 From this language, it is clear 

that the board serves as a trustee of the assets of the System. 

Its responsibility, fiduciary in nature, is owed to current and 

former city employees who are beneficiaries of the trust fund, 

not to the citizenry as a whole, as would be the case if it 

were an administrative agency.21 Yet the board is not entirely 

18 Id.

19 Reply brief for appellants at 4.

20 Omaha City Charter, supra note 1, § 6.10.

21 See, generally, Neb. Rev. Stat. § 30-3867(a) (Reissue 2008).
Nebraska Advance She

BOARD OF TRUSTEES v. CITY OF OMAHA 1001

Cite as 289 Neb. 993

independent of the City, because the scope of its responsibilities are defined by the City’s charter provisions and ordinances applicable to the System.

Authority to Ret

Actuarial Consul

Section 22-42(f) of the Omaha Municipal Code specifically 

authorizes the board to “employ an actuary” who “shall act as 

a technical advisor to the board on matters regarding the operation of the [S]ystem.” Section 22-42(f) describes specific functions to be performed by the actuary, and then states that “[t]he 

actuary shall act at all times as technical advisor to the board 

on such matters as it may request.”

[8] An appellate court does not consider a statute’s clauses 

and phrases as detached and isolated expressions. Instead, the 

whole and every part of the statute must be considered in fixing the meaning of any of its parts.22 Reading the ordinance 

based on these principles, we conclude it authorizes the board 

to seek technical assistance from an actuary on matters which 

are not specifically enumerated. But we agree with the district 

court that the board’s utilization of an actuary must be necessary for the board to effectively perform its duties under the 

Omaha home rule charter to “formulate policy for” and “supervise [the] operation” of the System.23 Likewise, we agree with 

the holding of the district court that in requesting technical 

assistance from an actuary, “the Board may not act in a manner 

that is unreasonable, arbitrary, capricious, or motivated by anything other than an obligation to faithfully perform its fiduciary 

duties to the beneficiaries of the System.”24

The record reflects that the System was underfunded and 

that the board perceived it was its duty as a fiduciary of the 

System to monitor unfunded liabilities. The board had information that unusually high disability payments, compared to 

other pension funds of similar size, could be contributing to the 

problem. As one board member explained,

22 Fisher v. PayFlex Systems USA, 285 Neb. 808, 829 N.W.2d 703 (2013).

23 Omaha City Charter, supra note 1, § 6.10.

24 See Bass v. County of Saline, 171 Neb. 538, 106 N.W.2d 860 (1960).
Nebraska Advance She

1002 289 NEBRASKA REPORTS

We had more officers and fire personnel out on disability pensions than other similarly-sized funds. We wanted 

to find out whether it was a problem with our statutory scheme or the contracts that were being negotiated 

between the city and the unions.

But we wanted to figure out why our disability payments were so high. Did we need to be doing something 

to see if officers or fire personnel could go back to work 

after they went out on a disability pension?

That’s why we wanted to retain our actuary, to do this 

analysis, and get back to us so that we could then as a 

board petition the city or the units to change the contract 

or the statutes. We don’t participate in those negotiations, 

except as an independent body. We could petition for 

a change.

[9] We conclude this proposed utilization of an actuarial 

consultant fell within the scope of the board’s obligation to 

formulate policy and supervise the operation of the fund. 

Certainly, the future financial viability of the fund was a matter of legitimate concern to the board, and it was reasonable 

for it to request an actuarial analysis of a specific aspect of the 

System’s operation which could affect such viability. It was 

also reasonable for the board to seek the assistance of an actuary in order to have an accurate and complete understanding 

of the potential problem before recommending any contractual 

or legislative solutions. Trustees are generally required “to 

exercise reasonable effort and diligence” in administering and 

monitoring a trust, with “due attention to the trust’s objectives and the interests of the beneficiaries.”25 This may include 

“obtaining competent guidance and assistance,” depending 

upon the circumstances.26

The City argues that if the board has authority to retain an 

actuarial consultant, the board must pay for the consultant, 

because the retention is an investment expense, not an administrative expense. The City relies on § 22-71, which states: 

“All costs and expenses incurred in the administration of the 

25 Restatement (Third) of Trusts § 77, comment b. at 82 (2007).

26 Id. at 83.
Nebraska Advance She

BOARD OF TRUSTEES v. CITY OF OMAHA 1003

Cite as 289 Neb. 993

[S]ystem shall be paid by the [C]ity by appropriation from the 

general fund; provided, however, that investment expenses 

may be charged to income or principal of the retirement fund 

in accordance with accepted general accounting princip[le]s 

for such funds.”

We agree with the district court that the cost associated with 

the actuarial study sought by the board is an administrative 

expense, not an investment expense. As we have noted, the 

study falls within the board’s responsibility under the home 

rule charter to “formulate policy for the [S]ystem” and “supervise its operation.”27 We agree with the district court that “the 

City cannot refuse to pay such expenses absent a showing that 

the Board acted in a manner that was unreasonable, arbitrary, 

capricious, or motivated by anything other than an obligation 

to faithfully perform its fiduciary duties to the beneficiaries of 

the System.”28

Authority to Retain Co

The question whether the board has discretionary authority 

to retain outside legal counsel turns on language in § 22-69, 

which provides that “[s]ubject to the board of trustees . . . 

[t]he city attorney shall be the legal advisor to the board.” 

(Emphasis supplied.) The district court found that “subject to” 

gave the board discretion to use the city attorney. The court 

reasoned that “shall” was a mandate requiring the city attorney 

to provide legal advice to the board, subject to the board’s discretion, not a mandate that the board use the city attorney as a 

legal advisor.

The City argues that “subject to” should not be construed 

to give the board absolute discretion to use the city attorney 

as a legal advisor. Instead, the City argues the more sensible 

construction of “subject to” in this case is that the city attorney 

shall provide legal advice to the board under the general direction and control of the board.

We have held that the expression “subject to” is a term of 

qualification which acquires its meaning from the context in 

27 Omaha City Charter, supra note 1, § 6.10.

28 See Bass, supra note 24.
Nebraska Advance She

1004 289 NEBRASKA REPORTS

which it appears.29 In State, ex rel. Johnson, v. Tilley,

30 we held 

that “subject to” in the context of approval of expenditures 

meant the attorney general had the discretionary power to 

approve the expenditure of the fund. We defined “subject to” as 

being “‘dependent upon; . . . limited by; . . . under the control, 

power, or dominion of.’”31

[10,11] As a general rule, in the construction of statutes, the 

word “shall” is considered mandatory and inconsistent with 

the idea of discretion.32 While the word “shall” may render a 

particular provision mandatory in character, when the spirit 

and purpose of the legislation require that the word “shall” 

be construed as permissive rather than mandatory, such will 

be done.33

An Illinois appellate court construed a similar provision in 

People ex rel. Todd v. Board of Education.

34 There, a school 

board and its attorney disputed the meaning of a statute which 

provided that the school board shall appoint “‘an attorney, who 

shall have general charge and control, subject to the approval of 

the board, of the law department and the employees therein.’”35

The court rejected the school board’s argument that the phrase 

“‘subject to’” gave the board absolute and uncontrolled power 

to manage the law department over the objections of the attorney.36 The court concluded the attorney’s authority to manage 

the law department in accordance with the general policies of 

the board was not subject to the absolute control and direction 

of the board.

29 Bulger v. McCourt, 179 Neb. 316, 138 N.W.2d 18 (1965).

30 State, ex rel. Johnson, v. Tilley, 137 Neb. 173, 288 N.W. 521 (1939).

31 Id. at 178, 288 N.W.2d at 523.

32 Spradlin v. Dairyland Ins. Co., 263 Neb. 688, 641 N.W.2d 634 (2002); 

State on behalf of Minter v. Jensen, 259 Neb. 275, 609 N.W.2d 362 (2000).

33 State ex rel. Parks v. Council of City of Omaha, 277 Neb. 919, 766 N.W.2d 

134 (2009); Troshynski v. Nebraska State Bd. of Pub. Accountancy, 270 

Neb. 347, 701 N.W.2d 379 (2005); State on behalf of Minter, supra

note 32.

34 People ex rel. Todd v. Board of Education, 258 Ill. App. 271 (1930).

35 Id. at 276.

36 Id. at 279.
Nebraska Advance She

BOARD OF TRUSTEES v. CITY OF OMAHA 1005

Cite as 289 Neb. 993

Although this case presents a different context, we reach 

a similar result. Section 22-69 is a clear legislative statement 

that the city attorney shall be the legal advisor to the board. 

The fact that the city attorney is required to perform this 

function “[s]ubject to the board of trustees” simply delineates 

the attorney-client relationship and requires that the city 

attorney work under the general direction and control of the 

board. We construe the ordinance to mean the board must 

utilize the city attorney as its legal advisor under its general 

direction unless there is a conflict of interest which prevents 

the city attorney from serving in that capacity. We deem the 

record is insufficient to determine whether such a conflict 

exists in the circumstances of this case. We therefore do not 

address that issue, which was likewise not addressed by the 

district court.

CONCLUSION

We conclude that the district court was without jurisdiction to determine the authority of the board to retain outside 

consultants other than an actuary, given the absence of a justiciable controversy as to the broader issue. But we conclude 

that the district court did not err in determining that the board 

had legal authority to retain an actuary to undertake a study of 

disability benefits paid from the System’s trust fund and that 

the cost of such study is an administrative expense payable 

by appropriation from the City’s general fund. Thus, as to the 

issue of the board’s authority to retain consultants, we affirm 

the judgment as modified. We reverse and vacate that portion 

of the judgment of the district court declaring that the board 

has discretion to hire independent legal counsel whenever it 

deems such retention to be necessary.

 Affirmed as modified in part,

in part reversed and vacate

Wright and Miller-Lerman, JJ., not participat