Opinion ID: 2049393
Heading Depth: 1
Heading Rank: 3

Heading: the plaintiff's cross appeal

Text: In his cross appeal, the plaintiff claims that the trial court improperly dismissed his constructive trust and resulting trust claims [22] on the ground that they were barred by the doctrine of sovereign immunity. The plaintiff contends that the claims come within the exception to that doctrine for claims of injunctive relief. [23] The state counters that this exception applies only when the plaintiff has alleged that the government has acted in excess of its statutory authority or pursuant to an unconstitutional statute. In turn, the plaintiff disputes the state's claim and also claims that, even if the exception is limited in this way, the state acted in excess of its statutory authority when it accepted the Anthem, Inc., stock. Because we agree with the state that the exception to the doctrine of sovereign immunity is limited to actions by the state in excess of its statutory authority or pursuant to an unconstitutional statute and disagree with the plaintiff that the state acted in excess of its statutory authority when it accepted the stock, we conclude that the trial court properly dismissed these claims. We begin with the standard of review. Sovereign immunity relates to a court's subject matter jurisdiction over a case, and therefore presents a question of law over which we exercise de novo review.... In so doing, we must decide whether [the trial court's] conclusions are legally and logically correct and find support in the facts that appear in the record.... The principle that the state cannot be sued without its consent, or sovereign immunity, is well established under our case law.... It has deep roots in this state and our legal system in general, finding its origin in ancient common law. (Internal quotation marks omitted.) DaimlerChrysler Corp. v. Law, 284 Conn. 701, 711, 937 A.2d 675 (2007). Exceptions to this doctrine are few and narrowly construed under our jurisprudence. (Internal quotation marks omitted.) Id. In support of his claim on cross appeal, the plaintiff cites this court's statement in Bloom v. Gershon, 271 Conn. 96, 107, 856 A.2d 335 (2004), that the state cannot use sovereign immunity as a defense in an action for declaratory or injunctive relief. (Internal quotation marks omitted.) See also Pamela B. v. Ment, 244 Conn. 296, 328, 709 A.2d 1089 (1998) ([t]he state is subject to suit without consent ... in a suit for injunctive relief when the action does not defeat the purpose of the doctrine of sovereign immunity by undue interference with governmental functions [internal quotation marks omitted]); Krozser v. New Haven, 212 Conn. 415, 421, 562 A.2d 1080 (1989) (Sovereign immunity does not bar suits against state officials acting in excess of their statutory authority or pursuant to an unconstitutional statute.... In addition, the state cannot use sovereign immunity as a defense in an action for declaratory or injunctive relief. [Citations omitted; internal quotation marks omitted.]), cert. denied, 493 U.S. 1036, 110 S.Ct. 757, 107 L.Ed.2d 774 (1990). The state counters that the trial court properly concluded that, under Doe v. Heintz, 204 Conn. 17, 31, 526 A.2d 1318 (1987), actions for declaratory and injunctive relief may be brought without the consent of the state only when the plaintiff alleges that the state officials had acted in excess of their statutory authority or pursuant to an unconstitutional statute. See id. ([s]overeign immunity does not bar suits against state officials acting in excess of their statutory authority or pursuant to an unconstitutional statute); see also Miller v. Egan, 265 Conn. 301, 314, 828 A.2d 549 (2003) (a plaintiff seeking to circumvent the doctrine of sovereign immunity must show that ... in an action for declaratory or injunctive relief, the state officer or officers against whom such relief is sought acted in excess of statutory authority, or pursuant to an unconstitutional statute [internal quotation marks omitted]). We agree with the state. This court previously has stated that [t]he practical and logical basis of the doctrine [of sovereign immunity] is today recognized to rest ... on the hazard that the subjection of the state and federal governments to private litigation might constitute a serious interference with the performance of their functions and with their control over their respective instrumentalities, funds, and property.... [A]dherence to the doctrine of sovereign immunity does not mean [however] that all suits against government officers, since they are in effect suits against the government, must be barred.... In those cases in which it is alleged that the defendant officer is proceeding under an unconstitutional statute or in excess of his statutory authority, the interest in the protection of the plaintiff's right to be free from the consequences of such action outweighs the interest served by the sovereign immunity doctrine. Moreover, the government cannot justifiably claim interference with its functions when the acts complained of are unconstitutional or unauthorized by statute. On the other hand, where no substantial claim is made that the defendant officer is acting pursuant to an unconstitutional enactment or in excess of his statutory authority, the purpose of the sovereign immunity doctrine requires dismissal of the suit for want of jurisdiction. (Citations omitted; internal quotation marks omitted.) Horton v. Meskill, 172 Conn. 615, 624, 376 A.2d 359 (1977). This court also has stated that, as a general matter, a court may tailor declaratory and injunctive relief so as to minimize... interference [with the state's performance of its functions], and ... to afford an opportunity for voluntary compliance with the judgment.... (Internal quotation marks omitted.) Miller v. Egan, supra, 265 Conn. at 314, 828 A.2d 549. The plaintiff has not cited, however, and our research has not revealed, any case in which this court has concluded that a claim for injunctive relief that did not involve conduct by the state in excess of its statutory authority or pursuant to an unconstitutional statute was not barred by sovereign immunity. Indeed, the cases are to the contrary. See, e.g., C.R. Klewin Northeast, LLC v. Fleming, 284 Conn. 250, 259-67, 932 A.2d 1053 (2007) (mandamus action in which plaintiff sought order requiring state to pay plaintiff pursuant to settlement agreement did not come within in excess of statutory authority exception to sovereign immunity in absence of statute requiring state to implement settlement agreements); Alter & Associates, LLC v. Lantz, 90 Conn.App. 15, 22-23, 876 A.2d 1204 (2005) (alleged failure of state to honor regulation concerning obligations to contract bidders, without more, did not meet in excess of statutory authority exception to sovereign immunity doctrine for equitable claims). Accordingly, in light of the language in Horton v. Meskill, supra, 172 Conn. at 624, 376 A.2d 359, indicating that the exception to the doctrine of sovereign immunity for claims of declaratory or injunctive relief is premised on the notion that a plaintiff has an important interest in being protected from government action in excess of its statutory authority or pursuant to an unconstitutional statute, while the government has no legitimate interest in being free from interference with such conduct, and pursuant to the principle that exceptions to the doctrine of sovereign immunity must be narrowly construed; see DaimlerChrysler Corp. v. Law, supra, 284 Conn. at 711, 937 A.2d 675; we must reject the plaintiff's invitation to adopt the dictum in Doe v. Heintz, supra, 204 Conn. at 31-32, 526 A.2d 1318, Pamela B. v. Ment, supra, 244 Conn. at 328, 709 A.2d 1089, and Krozser v. New Haven, supra, 212 Conn. at 421, 562 A.2d 1080, suggesting that the exception may be applied to all claims of injunctive relief, regardless of whether the state has acted in excess of its statutory authority or pursuant to an unconstitutional statute. The plaintiff also claims, however, that, even if there is no broad exception to the doctrine of sovereign immunity for all claims for injunctive relief, there is an exception for claims to property held by the state in an account that is separate from the general fund. See Fernandez v. Chardon, 681 F.2d 42, 59 (1st Cir.1982) (where state funds are held in a separate account ... and an award limited to those funds will not affect the state's budgetary decisions ... its consent to suit and waiver of sovereign immunity seem unnecessary [citation omitted]), aff'd sub nom. Chardon v. Soto, 462 U.S. 650, 103 S.Ct. 2611, 77 L.Ed.2d 74 (1983); see also Schiff v. Williams, 519 F.2d 257, 262 (5th Cir.1975) (when fund was not property of state, but only had been entrusted to state pending outcome of appeal, claim against fund was not barred by eleventh amendment to federal constitution); Conrad v. Perales, 92 F. Sup.2d 175, 185 (W.D.N.Y.2000) (burden was on state to prove affirmative defense of sovereign immunity by establishing that it had transferred money into general fund); Morrow v. Sudler, 502 F.Supp. 1200, 1204 (D.Colo.1980) (eleventh amendment did not bar claim to money obtained from private donors and held by state in separate fund for sole use of state historical society). The plaintiff contends that, because the proceeds from the sale of the stock are segregated from the state's general treasury, judgment for the plaintiff on the constructive and resulting trust counts ... will not, in any way, result in the `disruption of government' that the doctrine of sovereign immunity is designed to prevent. We agree with the general principle that where the state will be unaffected by [a judgment in favor of the plaintiff], its consent to suit and waiver of sovereign immunity seem unnecessary. (Emphasis added.) Fernandez v. Chardon, supra, 681 F.2d at 59. That principle, however, does not apply in the present case. The trial court entered the interim order to sequester the proceeds from the sale of the stock pending resolution of the plaintiff's motion for order compelling the state and the insurance company defendants to deposit the proceeds from the sale of the stock into the court. In turn, the resolution of that motion with respect to the state was contingent on the resolution of the state's motion to dismiss. If the court were to grant the state's motion to dismiss all of the plaintiff's claims against it, it would be required to deny the motion for order compelling the state and the insurance company defendants to deposit the proceeds into the court with respect to the state because it would have no jurisdiction to order the state to do anything. See Graham v. Zimmerman, 181 Conn. 367, 373, 435 A.2d 996 (1980) (court lacks jurisdiction over nonparty). For the same reason, the court also would be required to vacate the interim order. Thus, the interim order was analogous to a temporary restraining order, the sole purpose of which was to preserve the status quo until the court could determine whether the plaintiff's claims against the state would survive the motion to dismiss and, therefore, could provide the basis for an interlocutory judgment of interpleader. [24] If the substantive claims underlying the plaintiff's interpleader action were dismissed, the interpleader action would not lie and the state would be entitled to use the proceeds in the fund immediately. [25] On the other hand, if the interpleader action were to survive the motion to dismiss, the trial court presumably would grant the motion to compel the state to deposit the proceeds subject to the interim order into court pending resolution of the merits of the plaintiff's substantive claims. Ultimately, however, the trial court vacated the interim order when the parties entered into the stipulation providing that the state could use the funds and that doing so would not affect any party's rights. The plaintiff now contends that the trial court's order and the subsequent stipulation preserving the parties' rights manifested an agreement by the state that the proceeds of the sale of the Anthem, Inc., stock would be available for distribution to the plaintiff if he prevailed before the trial court. Similarly, the insurance company defendants claim that the state covenanted to make [the proceeds from the sale of the stock subject to the interim order] available to the plaintiff should the court ... find in the plaintiff's favor in his action against them. Thus, the plaintiff and the insurance company defendants appear to contend that the stipulation was the functional equivalent of an interlocutory judgment of inter-pleader and that, by entering into it, the state effectively waived its sovereign immunity to the substantive claims underlying the interpleader action and agreed to pay the plaintiff should he prevail on those claims. The stipulation merely provided, however, that the state's use of the proceeds would not affect any existing or future rights of the parties, including the right, created by the interim order, to have the proceeds available to satisfy a future judgment in favor of the plaintiff should the substantive claims against the state survive the motion to dismiss. [26] Nothing in the stipulation suggests that it was intended to create new rights. To the extent that the plaintiff claims that the state's initial creation of the fiduciary agency fund somehow conferred on him and the other state employees a conditional property interest in the fund that will exist until his claim that he is entitled to the proceeds of the stock is judicially resolved, we disagree. The plaintiff has made no claim that the state was legally obligated to create the fund instead of placing the proceeds immediately in the general treasury, [27] and we cannot perceive how the state's voluntary and unilateral creation of the fund could confer any rights on any individual or group. Thus, even if, as a matter of internal accounting, the state chooses to maintain a separate account for the proceeds from the sale of the stock until the merits of all claims against the proceeds are resolved, neither the plaintiff nor the insurance company defendants will have any property interest in that account in the absence of any pending claims against the state. In the cases relied on by the plaintiff in support of his claim that sovereign immunity does not bar his resulting trust and constructive trust claims because a judgment that he is entitled to the proceeds from the sale of the stock cannot affect the state, the government would have been barred from using the money in the separate fund for general government purposes regardless of the outcome of the case. [28] Because that is not the case here, and it is clear that a judgment against the state would affect the state's treasury, we reject the plaintiff's claim. Finally, we address the plaintiff's alternate argument that his claims of a resulting trust and a constructive trust fall into the exception to the doctrine of sovereign immunity for claims for injunctive relief because the state acted in excess of its statutory authority when it accepted the Anthem, Inc., stock. Specifically, the plaintiff contends that the state violated General Statutes § 5-259 [29] because the plain language of that statute suggests that each individual employee, and not the state, is a covered individual under the plan. He argues that this interpretation is bolstered by the language of General Statutes § 5-257(c), which authorizes the state comptroller to procure life insurance for state employees and expressly provides that [a]ny dividends or other refunds or rate credits shall inure to the benefit of the state and shall be applied to the cost of such insurance. The fact that § 5-259 contains no such express language, the plaintiff argues, evinces a contrary legislative intent. See State v. Nixon, 231 Conn. 545, 563, 651 A.2d 1264 (1995) (when legislature uses language in one statute, absence of language in similar statute shows that legislature intended different result). It is unclear to us whether the plaintiff is claiming that § 5-259 bolsters his claim that he and others similarly situated were entitled to receive the Anthem, Inc., stock under the plan of conversion, or whether he is claiming that, regardless of whether he and the other similarly situated state employees were entitled to receive the stock under the plan of conversion, § 5-259 required the state to deliver the stock to them. To the extent that the plaintiff is making the former claim, he has not provided any authority for the proposition that the in excess of statutory authority exception to the doctrine of sovereign immunity applies in situations where a particular statute may shed light on an issue that is not directly governed by the statute, but resolution of the issue in a way that is inconsistent with the statute would not undermine the purpose of the statute in any way. To the extent that he is claiming that the state actually violated § 5-259 when it failed to deliver the proceeds to him, the plaintiff raised no such claim in his complaint. Practice Book § 10-3(a) provides that, [w]hen any claim made in a complaint, cross complaint, special defense, or other pleading is grounded on a statute, the statute shall be specifically identified by its number. The plaintiff has not explained why his statutory claim should not be barred under this rule of practice. Cf. Mazurek v. Great American Ins. Co., 284 Conn. 16, 28, 930 A.2d 682 (2007) ([a]s long as the defendant is sufficiently apprised of the nature of the action... the failure to comply with the directive of Practice Book § 10-3[a] will not bar recovery [internal quotation marks omitted]); see also Moore v. Sergi, 38 Conn.App. 829, 841-42, 664 A.2d 795 (1995) ([a] plaintiff may not allege one cause of action and recover on another [internal quotation marks omitted]). We conclude, therefore, that this claim is barred. Moreover, even if the plaintiff's claim that the state violated § 5-259 was not barred by Practice Book § 10-3(a), we agree with the trial court's alternate determination that it is meritless. The plaintiff concedes that nothing in § 5-259 sets forth the manner in which proceeds from the demutualization of an insurance company should be distributed. As the trial court recognized, the fact that, unlike § 5-257, § 5-259 does not provide that demutualization proceeds shall inure to the benefit of the state and shall be applied to the cost of [health] insurance does not imply that the legislature had a specific intent that the proceeds would be distributed to individual employees. Rather, it implies only that the legislature intended that the entitlement to such proceeds would be governed by the provisions of the insurance contracts and relevant law and that the legislature did not have any specific intent as to how any proceeds to which the state was contractually entitled should be used. The plaintiff also claims that, even if the state did not violate any statute, in the absence of a statute specifically authorizing it to receive and retain the Anthem, Inc., stock, the state exceeded its statutory authority when it did so. As the plaintiff recognizes, however, the state is specifically authorized to enter into contracts to procure health insurance for state employees. See General Statutes § 5-259. Thus, the state is implicitly authorized to receive any benefits to which it is entitled under those contracts, including any demutualization proceeds. To the extent that the plaintiff claims that the state acted in excess of its statutory authority when it received and retained the demutualization proceeds because it is not entitled to them under the plan of conversion, we conclude that this claim does not fall within the in excess of statutory authority exception to the doctrine of sovereign immunity. As we have explained, the entitlement to the Anthem, Inc., stock is governed by the plan of conversion, not by statute. In C.R. Klewin Northeast, LLC v. Fleming, supra, 284 Conn. at 257-67, 932 A.2d 1053, this court concluded that a mandamus action in which the plaintiff sought an order requiring the state to pay the plaintiff pursuant to a settlement agreement that the state had executed did not come within the in excess of statutory authority exception to sovereign immunity in the absence of any statute imposing on the state a mandatory duty to implement settlement agreements, even though the state plainly is not statutorily authorized to breach settlement agreements. [30] See also Alter & Associates, LLC v. Lantz, supra, 90 Conn.App. at 22-23, 876 A.2d 1204 (alleged failure of state to honor regulation concerning obligations to contract bidders, without more, did not meet in excess of statutory authority exception to sovereign immunity doctrine for equitable claims); cf. Unisys Corp. v. Dept. of Labor, 220 Conn. 689, 697-98, 600 A.2d 1019 (1991) (sovereign immunity did not bar plaintiff's claim that state was barred from entering into contract because state failed to comply with statute requiring competitive bidding). Similarly, we conclude that, in the absence of any statute governing the entitlement to demutualization proceeds, the plaintiff's claim that the state wrongfully has received and retained those proceeds under the plan of conversion does not fall within the exception. As we have indicated, the trial court concluded, and the plaintiff conceded, that if none of the plaintiff's substantive claims survived the state's motion to dismiss, then his interpleader action should also be dismissed. We have concluded that the trial court should have dismissed the plaintiff's claim of an unconstitutional taking under his group as a whole theory and that the court properly dismissed the plaintiff's constructive trust and resulting trust claims. Because there are no surviving substantive claims against the state, the interpleader action must be dismissed. [31] The insurance company defendants' cross appeal is dismissed. The judgment of the trial court denying the state's motion to dismiss the plaintiff's claims under the state constitution and his interpleader action is reversed and the case is remanded to the trial court with direction to dismiss those claims and for further proceedings on the plaintiff's claims against the insurance company defendants. The judgment is affirmed in all other respects.