Zawaideh v. Nebraska Dept. of Health & Human Servs.
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Nebraska Advance Sheets
zawaideh v. nebraska dept. of health & human servs.
Cite as 280 Neb. 997
997
CONCLUSION
We conclude that the court erred in applying a rule of automatic dismissal when a plaintiff invokes his or her privilege
against self-incrimination during discovery. We determine that
in such circumstances, a trial court must balance the parties’
interests and consider whether a less drastic remedy would suffice. Under this rule, the court’s findings were insufficient to
support an order of dismissal. We reverse the order and remand
the cause for further proceedings.
R eversed and remanded for
further proceedings.
Wright, J., not participating.
Ziad L. Zawaideh, M.D., appellant, v. Nebraska Department
of H ealth and Human Services R egulation and Licensure
and State of Nebraska ex rel. Jon Bruning,
Attorney General, appellees.
___N.W.2d___
Filed January 7, 2011.
No. S-10-158.
1. Motions to Dismiss: Appeal and Error. An appellate court reviews a district
court’s order granting a motion to dismiss de novo.
2. Motions to Dismiss: Pleadings: Appeal and Error. When reviewing a dismissal
order, an appellate court accepts as true all the facts which are well pled and the
proper and reasonable inferences of law and fact which may be drawn therefrom,
but not the pleader’s conclusions.
3. Motions to Dismiss: Pleadings. To prevail against a motion to dismiss for failure
to state a claim, the pleader must allege sufficient facts, taken as true, to state a
claim to relief that is plausible on its face.
4. Actions: Evidence. In cases in which a plaintiff does not or cannot allege specific facts showing a necessary element, the factual allegations, taken as true, are
nonetheless plausible if they suggest the existence of the element and raise a reasonable expectation that discovery will reveal evidence of the element or claim.
5. Rules of the Supreme Court: Constitutional Law. Strict compliance with Neb.
Ct. R. App. P. § 2-109(E) is required for the Nebraska Supreme Court to address
a constitutional claim.
6. Due Process. Due process claims are generally subjected to a two-part analysis:
(1) Is the asserted interest protected by the Due Process Clause and (2) if so, what
process is due?
7. Due Process: Notice. Procedural due process limits the ability of the government
to deprive persons of interests which constitute “liberty” or “property” interests
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within the meaning of the Due Process Clause and requires that parties deprived
of such interests be provided adequate notice and an opportunity to be heard.
Due Process. The concept of due process embodies the notion of fundamental
fairness and defies precise definition.
Parties: Appeal and Error. Only a party aggrieved by an order or judgment
can appeal, and one who has been granted that which he or she sought has not
been aggrieved.
____: ____. A party is not entitled to prosecute error upon that which was made
with his or her consent.
Compromise and Settlement: Judgments. Where a doubt as to the law has
been settled by a compromise, a subsequent judicial decision upholding a
view favorable to one of the parties affords no basis for that party to upset the
c
ompromise.
Courts: Pleadings. Courts are not required to accept as true legal conclusions or
conclusory statements in a pleading—instead, while legal conclusions can provide
the framework of a complaint, they must be supported by factual allegations.
Fraud: Proof. To prove fraudulent concealment, a plaintiff must prove these elements: (1) The defendant had a duty to disclose a material fact; (2) the defendant,
with knowledge of the material fact, concealed the fact; (3) the material fact was
not within the plaintiff’s reasonably diligent attention, observation, and judgment;
(4) the defendant concealed the fact with the intention that the plaintiff act or
refrain from acting in response to the concealment or suppression; (5) the plaintiff, reasonably relying on the fact or facts as the plaintiff believed them to be as
the result of the concealment, acted or withheld action; and (6) the plaintiff was
damaged by the plaintiff’s action or inaction in response to the concealment.
Contracts: Fraud. One who fails to disclose to another a fact that he knows may
justifiably induce the other to act or refrain from acting in a business transaction
is subject to the same liability to the other as though he had represented the nonexistence of the matter that he has failed to disclose, if, but only if, he is under a
duty to the other to exercise reasonable care to disclose the matter in question.
Fraud. In fraudulent concealment cases, existence of a duty to disclose the fact
in question is a matter for the determination of the court, although, if there are
disputed facts bearing upon the existence of the duty, they are to be determined
by the trier of fact under appropriate instructions as to the existence of the duty.
Contracts. A fact basic to a transaction is a fact that goes to the basis, or essence,
of the transaction, and is an important part of the substance of what is bargained
for or dealt with. Other facts may serve as important and persuasive inducements
to enter into the transaction, and they may be material, but they are not basic.
Fraud. A statement that is true but partial or incomplete may be a misrepresentation, because it is misleading when it purports to tell the whole truth and
does not.
____. A statement that contains only favorable matters and omits all reference to
unfavorable matters is as much a false representation as if all the facts stated were
untrue. When such a statement is made, there is a duty to disclose the additional
information necessary to prevent it from misleading the recipient.
Fraud: Intent. Whether or not a partial disclosure of the facts is a fraudulent
misrepresentation depends upon whether the person making the statement knows
Nebraska Advance Sheets
zawaideh v. nebraska dept. of health & human servs.
Cite as 280 Neb. 997
999
or believes that the undisclosed facts might affect the recipient’s conduct in the
transaction in hand. The recipient is entitled to know the undisclosed facts insofar
as they are material and to form his or her own opinion of their effect.
Appeal from the District Court for Lancaster County: John
A. Colborn, Judge. Affirmed in part, and in part reversed and
remanded for further proceedings.
William M. Lamson, Jr., and Denise M. Destache, of Lamson,
Dugan & Murray, L.L.P., for appellant.
Jon Bruning, Attorney General, and Michael J. Rumbaugh
for appellees.
Heavican, C.J., Gerrard, Stephan, McCormack, and
Miller-Lerman, JJ., and Irwin and Carlson, Judges.
Gerrard, J.
Nebraska’s Uniform Credentialing Act (UCA) regulates
persons providing health and health-related services. The UCA
permits complaints against a credential holder to be resolved
by entry of an “assurance of compliance,” a voluntary agreement between the Attorney General and the credential holder
that the credential holder will not engage in specified conduct.
The appellant in this case, Ziad L. Zawaideh, M.D., entered
into such an assurance of compliance. He asserts that although
the assurance of compliance was not supposed to be a disciplinary sanction, it actually had the effect of one because of its
collateral consequences on his career.
The primary issue Zawaideh presents in this appeal is
whether the execution of the assurance of compliance, and
the Attorney General’s refusal to vacate it, deprived Zawaideh
of due process of law. We find no merit to Zawaideh’s due
process arguments. But we do find that Zawaideh has alleged
sufficient facts to at least state a claim for fraudulent concealment, and we reverse the district court’s order of dismissal to
that extent.
See Neb. Rev. Stat. §§ 38-101 to 38-1,140 (Reissue 2008 & Cum. Supp.
2010).
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background
Legal Context
The UCA provides for the credentialing of persons and businesses that provide health, health-related, and environmental
services, including physicians. We are aware that the UCA
has been substantially recodified since some of the underlying
events in this case took place; however, Zawaideh’s arguments
appear to be directed at the statutes as they currently exist,
and neither party has identified any relevant changes; so for
the sake of simplicity and convenience, we cite to the current
statutory scheme.
When a complaint is made against a credential holder
pursuant to the UCA, the Division of Public Health of the
Department of Health and Human Services (Department) is
responsible for the initial investigation. The Department is
required, for most professions or businesses, to provide the
Attorney General with a copy of all complaints it receives
and advise the Attorney General of any investigation that may
involve a credential holder’s violation of statutes, rules, or regulations. The Attorney General then determines what statutes,
rules, or regulations may have been violated and the appropriate legal response.
One of the Attorney General’s options is to refer the matter to the appropriate professional board for the opportunity
to resolve the matter by recommending that the Attorney
General enter into an assurance of compliance with the credential holder in lieu of filing a disciplinary petition. Upon the
board’s advice, the Attorney General may contact the credential
holder to agree to an assurance of compliance.
See
See
See
See
See
Id.
Id.
§ 38-103.
§ 38-101(19).
2007 Neb. Laws, L.B. 463.
§§ 38-114 and 38-1,124.
§ 38-1,107(1).
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zawaideh v. nebraska dept. of health & human servs. 1001
Cite as 280 Neb. 997
The assurance shall include a statement of the statute,
rule, or regulation in question, a description of the conduct
that would violate such statute, rule, or regulation, the
assurance of the credential holder that he or she will not
engage in such conduct, and acknowledgment by the credential holder that violation of the assurance constitutes
unprofessional conduct. Such assurance shall be signed
by the credential holder and shall become a part of the
public record of the credential holder. The credential
holder shall not be required to admit to any violation of
the law, and the assurance shall not be construed as such
an admission[.]
The UCA expressly provides that “[a]n assurance of compliance
shall not constitute discipline against a credential holder.”10
Plaintiff’s Allegations
The district court dismissed Zawaideh’s complaint in this
case pursuant to Neb. Ct. R. Pldg. § 6-1112(b)(6). As a result,
the following facts are taken from the allegations made in
the complaint11:
Zawaideh alleged that he is a physician, licensed by and
practicing in the State of Nebraska. In 2006, the Department
began an investigation into a case involving obstetrical care
Zawaideh provided to a patient in 2001. Terri Nutzman, an
assistant attorney general, sent Zawaideh a proposed petition
for disciplinary action and offered the option of an agreed
settlement that would have constituted a disciplinary action
against Zawaideh’s license. Zawaideh refused, denying any
unprofessional conduct. After another proposed disciplinary
settlement was refused, Nutzman offered Zawaideh an assurance of compliance, to provide that Zawaideh would no longer
provide obstetrical care. Nutzman emphasized that the assurance of compliance was not a disciplinary procedure. Zawaideh
had already given up obstetrical care, so he agreed.
10
11
§ 38-1,108(1).
§ 38-1,107(1).
See Central Neb. Pub. Power Dist. v. North Platte NRD, ante p. 533, 788
N.W.2d 252 (2010).
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Zawaideh alleges that he was not informed of any adverse
effects that might be caused by the assurance of compliance.
But, according to Zawaideh, the Attorney General’s office
knew or should have known that as a practical matter, assurances of compliance were causing professional difficulties for
many physicians who had signed them.
As provided by the UCA, Zawaideh’s assurance of compliance was made part of his public record.12 He alleges that it is
referenced on the Department’s Web site and is available to the
general public upon request.
Zawaideh is also licensed to practice medicine in the State of
Washington. Zawaideh alleges that the Washington Department
of Health learned “via public record” of the assurance of compliance and initiated a disciplinary action based solely on the
assurance of compliance. Washington entered a disciplinary
order that was reported to the National Practitioner Data
Bank.13 And Zawaideh alleges that the assurance of compliance has led to the termination of his professional board
certification and board eligibility which, in turn, has “created
difficulties” for him in recredentialing with hospitals and
insurance plans.
Zawaideh alleges that he would not have entered into the
assurance of compliance had he known about the potential
consequences, which he alleges were issues known to Nutzman
at the time she assured Zawaideh that the assurance of compliance was not disciplinary. According to Zawaideh, the incident
that formed the basis of the investigation into his conduct is no
longer subject to discipline under Nebraska law,14 and terminating the assurance of compliance would allow him to have the
Washington disciplinary order removed and restore his board
eligibility with the American Board of Family Medicine. So,
Zawaideh asked the Department and the Attorney General to
rescind the assurance of compliance and expunge the public
record. Each declined.
12
13
14
See § 38-1,108(1).
See 42 U.S.C. § 11101 et seq. (2006).
See Mahnke v. State, 276 Neb. 57, 751 N.W.2d 635 (2008).
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Cite as 280 Neb. 997
Based on these facts, Zawaideh’s complaint asserts four
claims for relief against the Department and the Attorney
General:
(1) The UCA is facially unconstitutional because it permits
discipline to be carried out without due process of law, as
assurances of compliance are not appealable.
(2) The UCA is unconstitutional as applied in this case
because Zawaideh no longer practices obstetrics, of his own
accord, and the underlying occurrence is no longer subject to
discipline under Nebraska law.
(3) The Attorney General carried out his statutory authority
in an arbitrary and capricious manner.
(4) The Attorney General committed fraudulent misrepresentation by concealing the material fact that the assurances of
compliance were having the effect of a disciplinary order on
other physicians.
Procedural History
The Department and the Attorney General filed a motion
to dismiss the complaint pursuant to § 6-1112(b)(6). After
a hearing, the district court granted the motion. The district
court found that Zawaideh had not alleged that the assurance
of compliance damaged any of Zawaideh’s liberty or property
interests. So, the court concluded that Zawaideh had not stated
a constitutional due process claim. The court found no merit
to Zawaideh’s assertion that the Attorney General had acted
in an arbitrary and capricious manner. And the court rejected
Zawaideh’s fraudulent misrepresentation claim, based on its
conclusion that the Attorney General had no duty to disclose
the possibility of collateral consequences to the assurance of
compliance. Zawaideh appeals.
Assignments of Error
Zawaideh assigns that the district court erred in finding (1)
that his complaint failed to state a claim with regard to the constitutionality of the UCA, on its face and as applied; (2) that
the Attorney General’s office did not act in an arbitrary and
capricious manner in carrying out its statutory duties; and (3)
that Nutzman’s conduct in negotiating the assurance of compliance did not constitute fraudulent misrepresentation.
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Standard of Review
[1-4] An appellate court reviews a district court’s order
granting a motion to dismiss de novo.15 When reviewing a dismissal order, we accept as true all the facts which are well pled
and the proper and reasonable inferences of law and fact which
may be drawn therefrom, but not the pleader’s conclusions.16
To prevail against a motion to dismiss for failure to state a
claim, the pleader must allege sufficient facts, taken as true, to
state a claim to relief that is plausible on its face.17 In cases in
which a plaintiff does not or cannot allege specific facts showing a necessary element, the factual allegations, taken as true,
are nonetheless plausible if they suggest the existence of the
element and raise a reasonable expectation that discovery will
reveal evidence of the element or claim.18
Analysis
Generally speaking, this case presents an instance of buyer’s
remorse. Zawaideh entered into a voluntary agreement with the
Attorney General, but later found he did not like the deal—at
least the deal as Zawaideh claims it was represented to him by
the Attorney General. But as explained in more detail below,
Zawaideh’s change of mind does not mean that the agreement was unlawful or that the Attorney General was obliged
to release Zawaideh from it. Instead, Zawaideh’s only viable
claim for relief rests on his allegation that the Attorney General
concealed the potential consequences of the agreement from
him before he entered into it.
Due Process Claims
[5] We begin with Zawaideh’s constitutional arguments,
which underlie his first and second assignments of error. We
first note that although Zawaideh is presenting a facial challenge to the constitutionality of a statute, he did not file a
15
16
17
18
Central Neb. Pub. Power Dist., supra note 11.
Id.
Id.
Id.
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notice of a constitutional question pursuant to Neb. Ct. R.
App. P. § 2-109(E) (rev. 2008), which requires that a party
challenging a statute’s constitutionality file and serve notice
with the Supreme Court Clerk at the time of filing the party’s
brief.19 And we have repeatedly held that strict compliance
with § 2-109(E) is required for the court to address a constitutional claim.20 Therefore, we do not address Zawaideh’s claims
regarding the constitutionality of various statutes. However, we
do consider his claims that the application of those statutes in
this instance violated his right to due process.
The district court, in concluding that Zawaideh had not
stated a claim for relief, relied upon the Eighth Circuit’s decision in Kloch v. Kohl.21 Because Kloch involved a similar argument against the predecessors to the same Nebraska statutes,
it is worth examining in some detail. At the time Kloch was
brought, the statutes at issue permitted the Attorney General
to refer a complaint to the appropriate professional board
for a recommendation of an assurance of compliance or “the
opportunity to resolve the matter by issuance of a letter of concern.”22 Like an assurance of compliance, a “letter of concern”
was not “discipline,” but was part of the public record.23 Unlike
an assurance of compliance, however, a letter of concern was
not the product of an agreement between the credential holder
and the Attorney General.24
The plaintiff in Kloch was a credentialed physician who
received a letter of concern arising out of an allegation that he
had failed to keep proper medical records.25 The plaintiff denied
the allegation and asked the Board of Medicine to reconsider,
but it refused, so he sued, alleging that his due process rights
19
See Parker v. State ex rel. Bruning, 276 Neb. 359, 753 N.W.2d 843
(2008).
20
See id.
21
Kloch v. Kohl, 545 F.3d 603 (8th Cir. 2008).
22
See Neb. Rev. Stat. § 71-171.01 (Reissue 2003).
23
See id.
24
See id.
25
Kloch, supra note 21.
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had been violated because he had been denied notice and an
opportunity to be heard.26
But the Eighth Circuit concluded that the plaintiff had not
alleged the deprivation of a protected liberty or property interest. The court explained that “[a] plaintiff is entitled to due
process only when a protected property or liberty interest is at
stake. . . . Abstract injuries, by themselves, do not implicate the
due process clause.”27 The court noted that a letter of concern
differed from a formal censure or other discipline, and found
that “the significance of a letter of concern to subsequent proceedings was minimal.”28 The court concluded that although
the public availability of letters of concern could be cause for
apprehension, “[a]s a constitutional matter, however, [the plaintiff] is not entitled to due process protection for damage to his
reputation alone; and he has failed to show that his medical
license was tangibly impaired.”29
Zawaideh argues that Kloch is distinguishable, because in
this case, he alleged practical consequences to the assurance
of compliance: the effects on his Washington license and his
board certification. We agree that Kloch is distinguishable in
those respects, although a good argument can be made that
Zawaideh’s complaint should be directed in part at the State
of Washington, not the State of Nebraska. But Kloch is also
distinguishable in a more fundamental way that demonstrates
the defect in Zawaideh’s due process claim: unlike a letter of
concern, an assurance of compliance is voluntary.
[6-8] Although Zawaideh is not perfectly clear on this point,
it is apparent that he is advancing a procedural due process
claim. Due process claims are generally subjected to a twopart analysis: (1) Is the asserted interest protected by the Due
26
See id.
Id. at 607 (citation omitted). See, also, Connecticut Dept. of Public Safety
v. Doe, 538 U.S. 1, 123 S. Ct. 1160, 155 L. Ed. 2d 98 (2003); Siegert v.
Gilley, 500 U.S. 226, 111 S. Ct. 1789, 114 L. Ed. 2d 277 (1991).
28
Kloch, supra note 21, 545 F.3d at 608.
29
Id. at 609.
27
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Process Clause and (2) if so, what process is due?30 Procedural
due process limits the ability of the government to deprive persons of interests which constitute “liberty” or “property” interests within the meaning of the Due Process Clause and requires
that parties deprived of such interests be provided adequate
notice and an opportunity to be heard.31 The concept of due
process embodies the notion of fundamental fairness and defies
precise definition.32
[9,10] It is difficult to see how Zawaideh was denied notice
and an opportunity to be heard when he negotiated with the
Attorney General and affirmatively agreed to the entry of the
assurance of compliance. Zawaideh’s argument seems to be
that due process requires some sort of review procedure for
the continuation of the assurance of compliance. But it is well
established that only a party aggrieved by an order or judgment can appeal, and one who has been granted that which he
or she sought has not been aggrieved.33 A party is not entitled
to prosecute error upon that which was made with his or her
consent.34 Zawaideh entered into the assurance of compliance voluntarily, and the fact that he is dissatisfied with his
choice does not mean his due process rights were violated by
the State.35
And Zawaideh does not dispute the fact that had he refused
the assurance of compliance, any discipline imposed upon him
would have required a hearing and permitted a judicial review
30
State v. Hess, 261 Neb. 368, 622 N.W.2d 891 (2001); Billups v. Nebraska
Dept. of Corr. Servs. Appeals Bd., 238 Neb. 39, 469 N.W.2d 120 (1991).
31
Hess, supra note 30; Bauers v. City of Lincoln, 255 Neb. 572, 586 N.W.2d
452 (1998).
32
Hess, supra note 30; In re Interest of Kelley D. & Heather D., 256 Neb.
465, 590 N.W.2d 392 (1999). See, also, Lassiter v. Department of Social
Services, 452 U.S. 18, 101 S. Ct. 2153, 68 L. Ed. 2d 640 (1981).
33
See, e.g., Smith v. Lincoln Meadows Homeowners Assn., 267 Neb. 849,
678 N.W.2d 726 (2004).
34
See id.
35
See, e.g., Lighton v. University of Utah, 209 F.3d 1213 (10th Cir. 2000);
Dorr v. Bd. of Cert. Public Accountants, 146 P.3d 943 (Wyo. 2006); Dodge
v. Detroit Trust Co., 300 Mich. 575, 2 N.W.2d 509 (1942).
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that would have satisfied the requirements of due process. That
process was available to him—he simply declined to pursue it,
and settled the complaint instead. In other words, the review
procedure to which Zawaideh claims he was entitled was available to him, but he waived it.36
Zawaideh contends that the Attorney General’s refusal to
discontinue the assurance of compliance is “arbitrary and capricious.” We read this argument as being part of Zawaideh’s due
process claim, because simply alleging an “arbitrary and capricious” action is not, in itself, a claim for relief.
Zawaideh argues the Attorney General’s action was arbitrary and capricious because, under our decision in Mahnke v.
State,37 entered after his assurance of compliance, he would no
longer be subject to disciplinary action because the investigation into his conduct “was based on a single incident.”38 But
we held in Mahnke that “a physician should not be subject to
discipline for a single act of ordinary negligence.”39 A physician is still subject to discipline for a “single incident” other
than ordinary negligence.40 And Zawaideh’s complaint alleges
none of the facts regarding the underlying incident, other than
that it “involv[ed] the provision of obstetrical care to a patient
. . . on December 14, 2001.” This provides us with no factual
basis to conclude that the underlying incident involved only
ordinary negligence.
[11,12] It is far from clear that Mahnke, even if it applied
to the incident underlying the investigation, would provide any
basis for relief. Generally speaking, where a doubt as to the law
has been settled by a compromise, a subsequent judicial decision upholding a view favorable to one of the parties affords no
36
See Garcia Financial Group v. Virginia Accelerators, 3 Fed. Appx. 86 (4th
Cir. 2001). See, also, Schwartz v. U.S., 976 F.2d 213 (4th Cir. 1992); Pitts
v. Bd. of Educ. of U.S.D. 305, Salina, Kansas, 869 F.2d 555 (10th Cir.
1989); Stewart v. Bailey, 556 F.2d 281 (5th Cir. 1977).
37
Mahnke, supra note 14.
38
Brief for appellant at 9.
39
Mahnke, supra note 14, 276 Neb. at 70, 751 N.W.2d at 645 (emphasis
s
upplied).
40
See, e.g., § 38-179.
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basis for that party to upset the compromise.41 But even if an
attack on the assurance of compliance was permitted, Zawaideh
has only alleged a legal conclusion regarding the applicability of Mahnke—not the facts supporting that conclusion. And
courts are not required to accept as true legal conclusions or
conclusory statements—instead, while legal conclusions can
provide the framework of a complaint, they must be supported
by factual allegations.42 On this particular issue, Zawaideh has
made no well-pleaded factual allegations.
In sum, we find no merit to the due process claims presented in Zawaideh’s first and second assignments of error.
Zawaideh voluntarily entered into the assurance of compliance,
and notions of “fundamental fairness”43 are not violated by the
State’s refusal to permit Zawaideh to withdraw it.
Fraudulent Misrepresentation or Concealment
[13] Zawaideh also argues he stated a claim for fraudulent
misrepresentation or concealment, based upon the allegedly
false impression given by the Attorney General’s failure to
inform Zawaideh of other cases involving collateral consequences to assurances of compliance. To prove fraudulent
concealment, a plaintiff must prove these elements: (1) The
defendant had a duty to disclose a material fact; (2) the defend
ant, with knowledge of the material fact, concealed the fact;
(3) the material fact was not within the plaintiff’s reasonably
diligent attention, observation, and judgment; (4) the defend
ant concealed the fact with the intention that the plaintiff act
or refrain from acting in response to the concealment or suppression; (5) the plaintiff, reasonably relying on the fact or
facts as the plaintiff believed them to be as the result of the
concealment, acted or withheld action; and (6) the plaintiff
was damaged by the plaintiff’s action or inaction in response
to the concealment.44 We note that the only issue presented in
41
See Dodge, supra note 35.
See Doe v. Board of Regents, ante p. 492, 788 N.W.2d 264 (2010).
43
See Hess, supra note 30, 261 Neb. at 374, 622 N.W.2d at 899.
44
Knights of Columbus Council 3152 v. KFS BD, Inc., ante p. 904, ___
N.W.2d ___ (2010).
42
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this appeal is whether Zawaideh has alleged facts supporting
the existence of a duty on the part of the Attorney General to
disclose the possible collateral consequences of the assurance
of compliance. Other aspects of Zawaideh’s fraudulent concealment claim, and possible defenses to that claim, are not at
issue here.
[14,15] Zawaideh’s argument relies upon the Restatement
(Second) of Torts § 551,45 under which one who fails to disclose to another a fact that he knows may justifiably induce
the other to act or refrain from acting in a business transaction
is subject to the same liability to the other as though he had
represented the nonexistence of the matter that he has failed
to disclose, if, but only if, he is under a duty to the other to
exercise reasonable care to disclose the matter in question.46
Existence of a duty to disclose the fact in question is a matter
for the determination of the court, although, if there are disputed facts bearing upon the existence of the duty, they are to
be determined by the trier of fact under appropriate instructions
as to the existence of the duty.47
Although the circumstances of each case typically determine
whether a duty to disclose exists, there are several situations
which have been consistently recognized as creating a duty
to disclose,48 and Zawaideh relies upon three in particular: (1)
matters known to the defendant that the plaintiff was entitled to
know because of a fiduciary or other similar relation of trust or
confidence between them; (2) matters known to the defendant
that he knows to be necessary to prevent his partial or ambig
uous statement of the facts from being misleading; and (3) facts
basic to the transaction, if the defendant knows that the plaintiff
is about to enter into it under a mistake as to them, and that the
other, because of the relationship between them, the customs of
the trade, or other objective circumstances, would reasonably
45
Restatement (Second) of Torts § 551 (1977).
Knights of Columbus Council 3152, supra note 44.
47
See, Restatement, supra note 45, comment m.; Streeks v. Diamond Hill
Farms, 258 Neb. 581, 605 N.W.2d 110 (2000), overruled in part on other
grounds, Knights of Columbus Council 3152, supra note 44.
48
See Streeks, supra note 47.
46
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expect a disclosure of those facts.49 But we note that, generally speaking, the adversarial context of settlement negotiations
weighs against a duty to disclose.50
First, Zawaideh argues that the Attorney General owed him a
fiduciary duty, based in the fiduciary relationship between public officers and the people they have been elected or appointed
to serve.51 But we have never held that a public officer’s duty
to act in the public interest extends to particular members of
the public, particularly those whose conduct is being investigated by the public officer. The Attorney General’s fiduciary
duties were owed to the public in general, not Zawaideh in
particular, and it would place the Attorney General in an untenable position to suggest that his duty to the public generally
requires him, in an adversarial proceeding, to act with the
adversary’s interests in mind. There is simply nothing in the
facts alleged in this case to imply that the Attorney General
had a confidential relationship to an opposing party in an
adversarial proceeding.
[16] Nor do we agree that the collateral consequences of an
assurance of compliance were facts basic to the transaction. A
“fact basic to the transaction” is a “fact that goes to the basis,
or essence, of the transaction, and is an important part of the
substance of what is bargained for or dealt with.”52 Other facts
may serve as important and persuasive inducements to enter
into the transaction, and they may be material, but they are
not basic.53 Nutzman was under no duty, generally speaking,
to inform Zawaideh of the consequences of the assurance of
compliance. As explained below, it was Nutzman’s decision
to discuss some but not all of those consequences that may
have triggered a duty of disclosure. In other words, any duty
49
50
51
52
53
See id.
See, e.g., Hardin v. KCS Intern., Inc., 682 S.E.2d 726 (N.C. App. 2009);
Kwiatkowski v. Drews, 142 Wash. App. 463, 176 P.3d 510 (2008); Poly
Trucking v. Concentra Health Services, 93 P.3d 561 (Colo. App. 2004).
See Nebraska Legislature on behalf of State v. Hergert, 271 Neb. 976, 720
N.W.2d 372 (2006).
See Restatement, supra note 45, comment j. at 123.
See id.
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to disclose arose as a result of Nutzman’s statement that the
assurance of compliance was not disciplinary—it did not exist
simply because of the nature of the transaction.
[17] But finally, Zawaideh argues that the Attorney General
was required to disclose the possibility of collateral consequences in order to prevent Zawaideh from being misled by
Nutzman’s representation that the assurance of compliance was
not disciplinary. Nutzman’s representation was literally true, at
least as far as Nebraska law is concerned.54 But literal truth is
not the standard. A statement that is true but partial or incomplete may be a misrepresentation, because it is misleading
when it purports to tell the whole truth and does not.55
[18,19] For instance, a statement that contains only favorable matters and omits all reference to unfavorable matters is
as much a false representation as if all the facts stated were
untrue.56 So when such a statement is made, there is a duty to
disclose the additional information necessary to prevent it from
misleading the recipient.57 And whether or not a partial disclosure of the facts is a fraudulent misrepresentation depends
upon whether the person making the statement knows or
believes that the undisclosed facts might affect the recipient’s
conduct in the transaction in hand.58 The recipient is entitled to
know the undisclosed facts insofar as they are material and to
form his or her own opinion of their effect.59
In this case, Zawaideh alleges that he was told that the assurance of compliance “was not a disciplinary procedure.” In law,
“discipline” usually refers to a sanction or penalty imposed after
an official finding of misconduct.60 But the word “discipline”
54
See § 38-1,107(1).
See Restatement, supra note 45, comment g. See, also, Knights of Columbus
Council 3152, supra note 44.
56
See Restatement, supra note 45, § 529, comment a.
57
See id., § 551, comment g. See, also, Knights of Columbus Council 3152,
supra note 44.
58
See Restatement, supra note 45, § 529, comment b.
59
See id.
60
Black’s Law Dictionary 531 (9th ed. 2009).
55
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can more generally denote punishing or rebuking someone
formally for an offense.61 Given Zawaideh’s allegations, the
procedural posture of this case, and our standard of review, we
find it at least plausible that Nutzman’s representation that the
assurance of compliance was not disciplinary led Zawaideh to
believe that the assurance of compliance would result in no
punishment or rebuke. And Zawaideh alleged that Nutzman
attended a meeting of the Nebraska Board of Medicine and
Surgery, at which meeting, the board discussed problems that
other physicians were having as a consequence of assurances
of compliance. So it is a plausible allegation Nutzman knew
that Zawaideh could also face such consequences and that
informing Zawaideh of that possibility might affect his decision to sign the assurance of compliance.
In other words, Zawaideh has alleged that the Attorney
General misled him by stating only favorable matters and
omitting unfavorable ones. Those facts could, if substantiated,
support a finding that Nutzman had a duty to inform Zawaideh
of the fact that other physicians had suffered “disciplinary”
consequences from assurances of compliance. Other issues,
such as whether the fact was within Zawaideh’s reasonably
diligent attention or whether Zawaideh reasonably relied on
Nutzman’s statement, or any potential affirmative defenses, are
not before us in this proceeding, and we make no comment on
them. Rather, those matters are left to further proceedings in
the district court following remand.
Conclusion
We affirm the district court’s order of dismissal with respect
to Zawaideh’s due process claims—his first, second, and third
claims for relief. However, we reverse the district court’s order
with respect to Zawaideh’s fraudulent concealment claim and
remand the cause for further proceedings on that claim.
Affirmed in part, and in part reversed and
remanded for further proceedings.
Wright and Connolly, JJ., not participating.
61
Concise Oxford American Dictionary 255 (2006).
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