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298 Nebraska Report

AMEND v. NEBRASKA PUB. SERV. COMM.

Cite as 298 Neb. 617

Karen Amend et al., appellants, v. Neb

Public Service Commission, appe

___ N.W.2d ___

Filed January 12, 2018. No. S-16-948.

1. Motions to Dismiss: Pleadings: Appeal and Error. A district court’s 

grant of a motion to dismiss on the pleadings is reviewed de novo, 

accepting the allegations in the complaint as true and drawing all reasonable inferences in favor of the nonmoving party.

2. Statutes: Appeal and Error. Statutory interpretation presents a question of law, for which an appellate court has an obligation to reach 

an independent conclusion irrespective of the decision made by the 

court below.

3. Tort Claims Act: Appeal and Error. Whether the allegations made 

by a plaintiff constitute a cause of action under the State Tort Claims 

Act or whether the allegations set forth claims which are precluded by 

the exemptions set forth in the act is a question of law, for which an 

appellate court has a duty to reach its conclusions independent of the 

conclusions reached by the district court.

4. Tort Claims Act: Immunity: Waiver: Appeal and Error. An exception to the State’s waiver of immunity under the State Tort Claims Act 

is an issue that the State may raise for the first time on appeal and that 

a court may consider sua sponte.

5. Jurisdiction: Appeal and Error. An appellate court has an independent 

duty to decide jurisdictional issues on appeal, even if the parties have 

not raised the issue.

6. Constitutional Law: Immunity: Waiver. Under the 11th Amendment, 

a nonconsenting state is generally immune from suit unless the state has 

waived its immunity.

7. Tort Claims Act: Immunity: Waiver. The State Tort Claims Act allows 

a limited waiver of the State’s sovereign immunity, subject to statutory exceptions.

8. Statutes: Appeal and Error. Appellate courts give statutory language 

its plain and ordinary meaning and will not resort to interpretation 

Nebraska Supreme Court Online Library

www.nebraska.gov/apps-courts-epub/

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to ascertain the meaning of statutory words which are plain, direct, 

and unambiguous.

9. Statutes: Immunity: Waiver. Statutes that purport to waive the State’s 

protection of sovereign immunity are strictly construed in favor of the 

sovereign and against the waiver.

10. Immunity: Waiver. In order to strictly construe against a waiver of 

sovereign immunity, courts broadly read exemptions from a waiver of 

sovereign immunity.

11. Statutes: Immunity: Waiver. A waiver of sovereign immunity is found 

only where stated by the most express language of a statute or by such 

overwhelming implication from the text as will allow no other reasonable construction.

12. Political Subdivisions Tort Claims Act: Tort Claims Act. The discretionary function exception is expressed in nearly identical language in 

the State Tort Claims Act and the Political Subdivisions Tort Claims Act; 

thus, cases construing the state exception apply as well to the exception 

granted to political subdivisions.

13. Tort Claims Act: Immunity: Appeal and Error. An appellate court 

must determine whether sovereign immunity lies from the nature of the 

underlying dispute. Where the facts are undisputed, whether an exception to immunity under the State Tort Claims Act precludes suit is a 

question of law.

14. Public Service Commission: Constitutional Law: Administrative 

Law. The Public Service Commission’s authority to regulate public 

grain warehouses is purely statutory, in contrast to its plenary authority 

to regulate common carriers under Neb. Const. art. IV, § 20.

15. Public Service Commission: Tort Claims Act. The Public Service 

Commission is a state agency for purposes of the State Tort Claims 

Act, and as a result, the provisions of the act are applicable in tort suits 

against the commission.

16. Tort Claims Act: Licenses and Permits. State agencies may not be 

sued under the State Tort Claims Act for claims based upon the failure 

to suspend or revoke a license.

17. Appeal and Error. An appellate court is not obligated to engage in an 

analysis that is not necessary to adjudicate the case and controversy 

before it.

Appeal from the District Court for Lancaster County: Sus

I. Strong, Judge. Affirm

Shawn D. Renner and Andre R. Barry, of Cline, Williams, 

Wright, Johnson & Oldfather, L.L.P., for appellants.
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Cite as 298 Neb. 617

Douglas J. Peterson, Attorney General, and Timothy R. Ertz 

for appellee.

Heavican, C.J., Miller-Lerman, Cassel, Stacy, 

Funke, JJ

Funke, J

This appeal concerns the dismissal of a complaint filed in 

the district court for Lancaster County under Nebraska’s State 

Tort Claims Act (STCA)1 which alleged the Nebraska Public 

Service Commission (PSC), the appellee, negligently failed to 

enforce Nebraska statutes and regulations against Pierce Grain 

Elevator, Inc. (PEI). The district court ruled appellants’ claims 

were grounded in exceptions to the STCA’s limited waiver of 

sovereign immunity and granted the PSC’s motion to dismiss. 

We affirm.

I. BACKGROUND

The following statement of facts is taken from allegations in 

appellants’ complaint, which we accept as true for purposes of 

reviewing the district court’s dismissal of the complaint.

Appellants are a group of over 30 farmers and farm management customers of PEI, a grain warehouse in northeast 

Nebraska, which failed and closed in March 2014. Throughout the fall of 2013 and spring of 2014, each appellant 

conducted business with PEI, unaware that PEI was financially unstable.

On July 15, 2013, the PSC performed a compliance review 

of PEI which showed outstanding checks written by PEI 

exceeded PEI’s account balance by more than $603,000. PEI’s 

owner equity was over $5.8 million in the negative, and its 

working capital ratio was $7.2 million in the negative. The 

PSC found PEI had over a half-million-dollar working capital 

deficiency dating back to at least December 31, 2012. The 

1 Neb. Rev. Stat. §§ 81-8,209 to 81-8,235 (Reissue 2014).
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PSC contacted PEI’s bank and expressed concern but took no 

further action. Until its closure, PEI’s net worth and working capital ratio remained negative by millions of dollars. 

Nevertheless, PEI continued to contract with appellants and 

take possession of their grain.

On March 5, 2014, the PSC terminated PEI’s grain warehouse and grain dealer licenses. Appellants were in large part 

unpaid for their grain. Appellants suffered a cumulative financial loss of over $2.56 million.

In June 2016, appellants filed a complaint against the PSC 

under the STCA which alleged their losses resulted from 

the PSC’s negligent failure to perform its obligations under 

Nebraska law. Appellants’ lawsuit claims the PSC failed 

to enforce several Nebraska statutes and regulations which 

impose minimum financial requirements for grain dealers. In 

particular, appellants highlight a regulatory procedure which 

they contend, based on the facts of this case, imposed a mandatory duty on the grain warehouse director for the PSC to file 

a complaint before the PSC concerning PEI’s law violations, 

obtain a hearing on the matter, and notify PEI and its security 

provider. Appellants contend, due to the PSC’s failure to fulfill 

its legal duties, PEI continued to conduct business with appellants, which caused appellants’ financial losses.

The PSC responded to appellants’ complaint by moving to 

dismiss under Neb. Ct. R. Pldg. § 6-1112(b)(1). Following 

a hearing, the district court granted the PSC’s motion. The 

court found appellants’ suit was barred by sovereign immunity, 

because the substance of appellants’ claims fell within the “failure to suspend or revoke a license” exception to the STCA’s 

limited waiver of immunity provided in § 81-8,219(8). The 

court further found appellants’ suit was barred by the STCA’s 

discretionary function exception provided in § 81-8,219(1). 

The court dismissed appellants’ claims with prejudice for 

lack of subject matter jurisdiction. Appellants filed an appeal, 

and we granted their motion to bypass the Nebraska Court 

of Appeals.
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II. ASSIGNMENTS OF ERROR

Appellants assign, restated and reordered, the district court 

erred in (1) dismissing appellants’ claims for lack of subject 

matter jurisdiction under § 6-1112(b)(1) based on exceptions 

to the STCA, (2) concluding that appellants’ claims are barred 

by the license revocation exception in § 81-8,219(8), (3) concluding that appellants’ claims are barred by the discretionary 

function exception in § 81-8,219(1), and (4) dismissing appellants’ complaint without leave to amend.

III. STANDARD OF REVIEW

[1] A district court’s grant of a motion to dismiss on the 

pleadings is reviewed de novo, accepting the allegations in 

the complaint as true and drawing all reasonable inferences in 

favor of the nonmoving party.2

[2] Statutory interpretation presents a question of law, for 

which an appellate court has an obligation to reach an independent conclusion irrespective of the decision made by the 

court below.3

[3] Whether the allegations made by a plaintiff constitute a 

cause of action under the STCA or whether the allegations set 

forth claims which are precluded by the exemptions set forth 

in the act is a question of law, for which an appellate court has 

a duty to reach its conclusions independent of the conclusions 

reached by the district court.4

IV. ANALYSIS

We first address whether exceptions to STCA’s limited 

waiver of immunity, enumerated in § 81-8,219, are affirmative defenses which the State must plead and prove. We then 

2 Salem Grain Co. v. Consolidated Grain & Barge Co., 297 Neb. 682, 900 

N.W.2d 909 (2017).

3 In re Estate of Radford, 297 Neb. 748, 901 N.W.2d 261 (2017).

4 See, Bartunek v. State, 266 Neb. 454, 666 N.W.2d 435 (2003); Hammond 

v. Nemaha Cty., 7 Neb. App. 124, 581 N.W.2d 82 (1998).
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address whether the State has waived its sovereign immunity 

with respect to appellants’ claims.

1. Exception to STCA’s Waiver of

Is Not Affirmative Defen

State Must Plead and 

Appellants argue that the district court erred by considering application of exceptions to the STCA, because the PSC’s 

motion to dismiss under § 6-1112(b)(1) did not raise affirmative defenses. Appellants contend that exceptions to the 

STCA are affirmative defenses which the State must plead 

and prove.

The PSC argues that even if consideration of exceptions to 

the STCA was improper, the district court reached the correct 

result. Alternatively, the PSC argues that we should revise 

Nebraska’s affirmative defense rule.

[4,5] During the pendency of this appeal, we decided Davis 

v. State.

5

 In Davis, we overruled our prior line of cases which 

held that exceptions to the limited waivers of sovereign immunity provided by the STCA and the Political Subdivisions 

Tort Claims Act (PSTCA)6 are affirmative defenses which 

the State must plead and prove. We held that an exception to 

the State’s waiver of immunity under the STCA is an issue 

that the State may raise for the first time on appeal and that 

a court may consider sua sponte.7 We recognized this rule is 

more consistent with the settled principle that the lack of subject matter jurisdiction may be raised at any time by any party 

5 Davis v. State, 297 Neb. 955, 902 N.W.2d 165 (2017) (overruling Hall 

v. County of Lancaster, 287 Neb. 969, 846 N.W.2d 107 (2014); Doe v. 

Board of Regents, 280 Neb. 492, 788 N.W.2d 264 (2010); Reimers-Hild v. 

State, 274 Neb. 438, 741 N.W.2d 155 (2007); Lawry v. County of Sarpy, 

254 Neb. 193, 575 N.W.2d 605 (1998); Sherrod v. State, 251 Neb. 355, 

557 N.W.2d 634 (1997); Maresh v. State, 241 Neb. 496, 489 N.W.2d 298 

(1992); and D.M. v. State, 23 Neb. App. 17, 867 N.W.2d 622 (2015)).

6 Neb. Rev. Stat. §§ 13-901 to 13-928 (Reissue 2012).

7 Davis, supra note 5.
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or by the court sua sponte.8 We explained that an appellate 

court has an independent duty to decide jurisdictional issues 

on appeal, even if the parties have not raised the issue.9 In 

light of this duty, a rule which treats exceptions to waivers of 

immunity as waivable affirmative defenses places courts in 

an unworkable position when a jurisdictional defect is apparent on the face of a plaintiff’s complaint. Consequently, even 

where a party has not raised the issue, an appellate court has 

the power to determine whether a plaintiff’s allegations, taken 

as true, show that a tort claim is facially barred by an STCA 

exception under § 81-8,219.

At argument, appellants acknowledged this recent change in 

the law and that their prior position that the PSC was required 

to plead and prove exceptions to the STCA as affirmative 

defenses is foreclosed by our recent decision.

2. State Has Not Waived Sovereign Immun

Claims Based on State Agency’s F

to Suspend or Revoke L

(a) Conclusions of Law Regarding 

Claims Under STCA

[6-8] Under the 11th Amendment,10 a nonconsenting state 

is generally immune from suit unless the state has waived 

its immunity.11 Neb. Const. art. V, § 22, provides: “The state 

may sue and be sued, and the Legislature shall provide by law 

in what manner and in what courts suits shall be brought.” 

The Legislature has provided limited waivers of the State’s 

sovereign immunity through the STCA, subject to statutory 

8 J.S. v. Grand Island Public Schools, 297 Neb. 347, 899 N.W.2d 893 

(2017).

9 Davis, supra note 5.

10 U.S. Const. amend. XI.

11 Edelman v. Jordan, 415 U.S. 651, 94 S. Ct. 1347, 39 L. Ed. 2d 662 (1974); 

Hans v. Louisiana, 134 U.S. 1, 10 S. Ct. 504, 33 L. Ed. 842 (1890); Lamb 

v. Fraternal Order of Police Lodge No. 36, 293 Neb. 138, 876 N.W.2d 388 

(2016).
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exceptions.12 Appellate courts give statutory language its plain 

and ordinary meaning and will not resort to interpretation 

to ascertain the meaning of statutory words which are plain, 

direct, and unambiguous.13

[9-11] It is well settled that statutes that purport to waive the 

State’s protection of sovereign immunity are strictly construed 

in favor of the sovereign and against the waiver.14 In order to 

strictly construe against a waiver of sovereign immunity, we 

broadly read exemptions from a waiver of sovereign immunity.15 A waiver of sovereign immunity is found only where 

stated by the most express language of a statute or by such 

overwhelming implication from the text as will allow no other 

reasonable construction.16

[12] The discretionary function exception under the STCA 

and PSTCA is expressed in nearly identical language; thus, 

cases construing the state exception apply as well to the PSTCA 

exception.17 In analyzing § 13-910(4), the PSTCA equivalent to 

the STCA’s “failure to suspend or revoke a license” exception 

under § 81-8,219(8), we have stated the language of the exception is clear and unambiguous.18

[13] An appellate court must determine whether sovereign 

immunity lies from the nature of the underlying dispute.19

12 § 81-8,219; Shipley v. Department of Roads, 283 Neb. 832, 813 N.W.2d 

455 (2012).

13 Lindsay Internat. Sales & Serv. v. Wegener, 297 Neb. 788, 901 N.W.2d 

278 (2017).

14 Zawaideh v. Nebraska Dept. of Health & Human Servs., 285 Neb. 48, 825 

N.W.2d 204 (2013).

15 Stick v. City of Omaha, 289 Neb. 752, 857 N.W.2d 561 (2015).

16 Jill B. & Travis B. v. State, 297 Neb. 57, 899 N.W.2d 241 (2017).

17 Shipley, supra note 12; Lawry, supra note 5, overruled on other grounds, 

Davis, supra note 5; Jasa v. Douglas County, 244 Neb. 944, 510 N.W.2d 

281 (1994).

18 Rohde v. City of Ogallala, 273 Neb. 689, 731 N.W.2d 898 (2007).

19 See, County of Lancaster v. State, 247 Neb. 723, 529 N.W.2d 791 (1995); 

Hoiengs v. County of Adams, 245 Neb. 877, 516 N.W.2d 223 (1994).
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Where the facts are undisputed, whether an exception 

to immunity under the STCA precludes suit is a question 

of law.20

(b) Provisions of STCA Apply to PSC

[14] The PSC is an independent regulatory body created 

by the Nebraska Constitution in article IV, § 20.21 The PSC’s 

authority to regulate public grain warehouses is purely statutory, in contrast to its plenary authority to regulate common 

carriers under Neb. Const. art. IV, § 20.22 Under Neb. Rev. 

Stat. § 75-109.01(2) (Reissue 2009 & Cum. Supp. 2014), the 

PSC is vested with jurisdiction over grain pursuant to the Grain 

Warehouse Act23 and the Grain Dealer Act.24 Chapter 88, article 

5, of the Nebraska Revised Statutes grants the PSC broad 

regulatory powers, including licensing authority, over all public 

grain warehouses.25 A public warehouse cannot be considered 

a “common carrier.”26 As a result, the authority of the PSC 

to regulate public grain warehouses springs from legislative 

enactment, and nothing else.

Section 88-545 grants the PSC authority to enforce the 

Grain Warehouse Act and to adopt and promulgate rules and 

regulations to aid in the administration of the act. Section 

75-903.01 permits the PSC to, upon the filing of a complaint 

and after a hearing, suspend or revoke the license of any 

grain dealer for failure to comply with the requirements of 

20 See D.K. Buskirk & Sons v. State, 252 Neb. 84, 560 N.W.2d 462 (1997).

21 Thompson v. Heineman, 289 Neb. 798, 857 N.W.2d 731 (2015).

22 In re Claims Against Pierce Elevator, 291 Neb. 798, 868 N.W.2d 781 

(2015); In re Complaint of Fecht, 224 Neb. 752, 401 N.W.2d 470 (1987).

23 See Neb. Rev. Stat. §§ 88-525 to 88-552 (Reissue 2014 & Cum. Supp. 

2016).

24 See Neb. Rev. Stat. §§ 75-901 to 75-910 (Reissue 2009 & Cum. Supp. 

2016).

25 In re Complaint of Fecht, 216 Neb. 535, 344 N.W.2d 636 (1984).

26 Id.
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the Grain Dealer Act or any rule or regulation adopted and 

promulgated pursuant to such act.

[15] The STCA defines “[s]tate agency” to include all “commissions of the State of Nebraska . . . the primary function 

of which is to act as, and while acting as, instrumentalities or 

agencies of the State of Nebraska.”27 The PSC’s broad statutory authority over the business of grain dealing, as well as 

its jurisdiction over several other matters of public concern 

enumerated in § 75-109.01, demonstrates that the PSC is an 

instrumentality of the State and part of the sovereign power 

of the State. Further, in at least one other matter, we have 

applied the STCA to actions of the PSC.28 Therefore, under the 

circumstance of the instant case, the PSC is a state agency for 

purposes of the STCA, and as a result, the provisions of the 

STCA are applicable here.29

(c) Appellants’ Claims Are Grounded in 

License Revocation Exception to 

STCA’s Waiver of Immunity

As noted, if a statutory exception to the STCA’s limited 

waiver of immunity applies to appellants’ claims, the claims 

are barred. Here, we first address whether the “failure to suspend or revoke a license” exception precludes appellants’ suit. 

The STCA provides that the State’s waiver of sovereign immunity shall not apply to “[a]ny claim based upon the issuance, 

denial, suspension, or revocation of or failure or refusal to 

issue, deny, suspend, or revoke any permit, license, certificate, 

or order.”30

[16] Section 81-8,219(8) is clear and unambiguous. State 

agencies may not be sued under the STCA for claims based 

upon the failure to suspend or revoke a license.

27 § 81-8,210(1).

28 D.K. Buskirk & Sons, supra note 20.

29 See, § 81-8,209; Zimmerman v. Douglas Cty. Hosp., 252 Neb. 583, 563 

N.W.2d 349 (1997).

30 § 81-8,219(8).
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We have referred to the principle that an appellate court must 

determine whether sovereign immunity lies from the underlying substance of a dispute as the “gravamen of the complaint 

test.”31 Under this test, parties cannot defeat the Legislature’s 

intent to preserve exceptions to the State’s sovereign immunity 

by attempting to plead around statutory exceptions through a 

“semantic recasting of events.”32

Appellants argue, as a result of the PSC’s negligent failure 

to perform its obligations in the months leading up to PEI’s 

closure, appellants lost a total of over $2.56 million. Appellants 

allege the PSC had reviewed PEI’s records and knew PEI was 

out of compliance with its legal financial requirements, but 

failed to enforce the law to ensure compliance. Specifically, 

appellants allege the PSC knew PEI had violated rules and regulations which required grain dealers to maintain a minimum 

net worth of $10,00033 and maintain a working capital ratio of 

not less than 1 to 1.34 Appellants argue the PSC’s knowledge of 

PEI’s law violations gave rise to a ministerial duty on behalf of 

the PSC to institute complaint proceedings against PEI under 

291 Neb. Admin. Code, ch. 8, § 003.08, now codified as 291 

Neb. Admin. Code, ch. 8, § 003.07 (2016). Section 003.07 of 

the Grain Warehouse Rules and Regulations provides:

[I]f the Grain Warehouse Director or other Commission 

personnel have reasonable cause to believe that a grain 

dealer has violated the statutes or rules of the Commission, 

the Director or other Commission personnel will:

003.07A File a complaint before the Commission 

against the grain dealer setting forth the alleged violation.

31 Jill B., supra note 16, 297 Neb. at 89, 899 N.W.2d at 263 (citing Stonacek 

v. City of Lincoln, 279 Neb. 869, 782 N.W.2d 900 (2010)). 32 Britton v. City of Crawford, 282 Neb. 374, 386, 803 N.W.2d 508, 518 

(2011). Accord Johnson v. State, 270 Neb. 316, 700 N.W.2d 620 (2005) 

(quoting United States v. Shearer, 473 U.S. 52, 105 S. Ct. 3039, 87 L. Ed. 

2d 38 (1985)).

33 291 Neb. Admin. Code, ch. 8, § 003.03H (2016).

34 § 003.03I.
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003.07B Obtain a hearing date on the complaint.

003.07C Notify the grain dealer and its security provider of the complaint and hearing date on the complaint.

Appellants argue that if such complaint proceedings had 

occurred, they would not have sustained any losses. They 

assert that PEI would have ceased doing business sooner, that 

appellants would not have deposited grain with and marketed 

grain through PEI, or that PEI would have recapitalized and 

would not have failed.

Appellants argue their claims are not grounded in the “failure to suspend or revoke a license” exception, because the 

complaint does not specifically allege the PSC was obligated 

to suspend or revoke PEI’s license. Appellants argue the complaint alleges only that the grain warehouse director for the 

PSC was required to file a complaint and bring PEI’s law violations to the attention of the PSC.

Appellants’ arguments are flawed for two reasons. First, the 

natural outcome of the instituting of complaint proceedings 

under § 003.07 would have been the suspension or revocation of PEI’s license. Section 003.08, titled “Suspension or 

Revocation of License,” provides, upon the filing of a complaint, the PSC may temporarily suspend a grain dealer’s 

license without a hearing.35 If, following a hearing, the PSC 

finds the allegations in the complaint are true, then it may 

revoke the grain dealer’s license. Thus, as the district court 

found, the claim that the PSC negligently failed to institute 

complaint proceedings against PEI is “inextricably linked” to 

a claim that the PSC negligently failed to revoke or suspend 

PEI’s license.36

Second, appellants’ complaint allegations are broader than 

they argue. Appellants’ causation theory is not based only on 

the lack of notice of PEI’s law violations, but that by failing 

to enforce financial rules and regulations against PEI, the PSC 

35 291 Neb. Admin. Code, ch. 8, § 003.08 (2016).

36 Britton, supra note 32, 282 Neb. at 386, 803 N.W.2d at 518.
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allowed PEI to continue to conduct business while financially 

unstable, which ultimately led to PEI’s failure and appellants’ 

losses. As the PSC argues, appellants’ causation theory cannot 

rely on lack of notice alone. The procedure provided under 

§ 003.07 provides notice to the PSC, PEI, and PEI’s security 

provider, and not grain dealer customers such as appellants. 

Based on the complaint allegations, but for the PSC’s lack 

of enforcement of regulations during the months prior to 

PEI’s closure, there would be no claim. Therefore, reading 

§ 81-8,219(8) broadly, as we must, the gravamen of appellants’ allegations of negligence is the PSC’s failure to suspend 

or revoke PEI’s license. Appellants’ suit is thus barred under 

§ 81-8,219(8).

[17] An appellate court is not obligated to engage in an 

analysis that is not necessary to adjudicate the case and controversy before it.37 Because we find that the PSC is immune 

from appellants’ claims under the “failure to suspend or revoke 

a license” exception, we need not address whether appellants’ 

claims are barred under the discretionary function exception. 

Further, we do not address appellants’ assignment that the 

district court erred by dismissing the complaint without leave 

to amend, because the lack of subject matter jurisdiction for 

appellants’ claims renders amending futile.

V. CONCLUSION

For the foregoing reasons, we conclude that appellants’ negligence claims are grounded in a state agency’s alleged failure 

to suspend or revoke a license and that the Legislature has 

preserved sovereign immunity for such conduct. We affirm the 

district court’s determination that it lacked subject matter jurisdiction over the case and that the PSC is entitled to judgment 

as a matter of law.

Affirm

Wright, J., not participating.

37 Salem Grain Co., supra note 2.