No. 87-472

INTHE SUPREME COURT OF THE STATE OF MONTANA
1988

WILLIAM KOPPEN and KIMBERLY KOPPEN, Individually;andWILLIAM KOPPEN,as PersonalRepresentative of the Estate of CALLY JANEKOPPEN, Deceased;and ALAN R. BUCK and SUSANK. BUCK, Individually;andALAN R. BUCK, as PersonalRepresentative of the Estate ofMELISA SUE BUCK,Deceased, PlaintiffsandAppellants,

BOARD OF MEDICAL EXAMINERS and STATE OF MONTANA, Defendantsand Respondents.

APPEAL FROM: District Court of the Eleventh JudicialDistrict, Inand for the County of Flathead, TheHonorable Leif Erickson, Judgepresiding.
COUNSELOF RECORD:
ForAppellant: Trieweiler Law Firm;TerryN. Trieweiler argued, Whitefish,Montana
ForRespondent: Harrison,Loendorf & Poston;John Poston and Stephen McCue argued,Helena,Montana JohnH. Maynard,Dept. ofAdministration, Helena, Montana

Submitted: April 2811988 Decided: August 11, 1988
Filed: 

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ClerkMr. Justice R. C. McDonough delivered the Opinion of the Court.

Plaintiffs William and Kimberly Koppen (Koppens) and Alan and Susan Buck (Bucks) appeal from the order of the District Court of the Eleventh Judicial District, Flathead County, dismissing their complaint against defendants Board ofMedical Examiners (Board)and State ofMontana. We affirm. The appellants present one issue on appeal: "Does Section 2-9-112, M.C.A., which provides fox judicial immunity,extend to executive agencies, such as the Montana Board of Medical Examiners, for negligent failure to perform their statutory duties?" Plaintiffs Kimberly Koppen and Susan Buck both became pregnant during the summer of 1983 and contracted with Dr. David V. Kauffman for assistance with the delivery of their babies, expected during March of 1984. The baby born to the Koppens died after a shortperiod of survival. The baby born to theBucksdied at the age of 84months. The Koppens and the Bucks filed suit against the Board and the State on February 18, 1987, alleging the Board was negligent in failing to limit or revokeDr. Kaufman's license to practice medicine, or otherwise prevent him from practicing obstetrics. According to the complaint,the Board had received complaints about Dr. Kaufman's fitness to practice medicine but failed to respond to them. The complaint characterized this as a failure by the Board to discharge its duty under 

### 5 37-3-202,MCA, to ensure that all physicians licensed in Montana maintain standards of conduct in the greatest public interest. The complaint alleged that because of the Board's failure,Dr. Kauffman's treatmentwas below the level of care and skill required of physicians inMontana, which caused avoidable complications in the two pregnancies and resulted in the deaths ofboth infants. OnApril 1,1987,the Board and the State filed amotion to dismiss based on the contention that the Board performs a quasi-judicial function,thereby entitling both defendants to absolute immunity from suit. The District Court granted the motion by its order of September 28, 1987, and thereafter entered judgment in favorof the Board and the State. The rationale in the District Court's Order began by quotingportions of 5 2-9-112,MCA:

(1) The State and other governmental units are immune from suit for acts or omissions of the judiciary. (2)

# ... (3)The Judiciary includes those courtsestablished in accordance with Article 

### VII of the Constitut-ion of the State ofMontana.
The court pointed out that the term "includes" in subparagraph 3 of the statute is not a "limiting term." According to the court, if the legislature had wanted to limit the immunity, it could have drafted the provision to

mean specifically only those courts established under Article VII. Because the word used was "includes," the court determined that the legislature's grant of immunity extended to admini-strative agencies exercising "quasi-judicial" authority. The court cited Butzv. Economou,438U.S. 478, 98 S.Ct. 2894 (1978), as stating the correct rationale for quasi-judicial immunity. In Rutz

## , the TJ.S. Supreme Court began its analysis of quasi-judicial immunityby stating the rationale for judicial immunity: [Clontroversies sufficiently intense to erupt in litigation are not easily capped by a judicial decree. The loser in one forumwill frequently seekanother, charging the participants in the first with unconstitutional animus. [citation omitted.] Absolute immunity is thus necessary to assure that judges, advocates, and witnesses can perform their respective functions without harassment or intimidation.
Butz, 98 S.Ct. at 2913. The court then examined the nature of administrative proceedings and the controversies involved, and concluded:

We think that adjudication within a federal administrative agency shares enough of the characteristics of the judicial process that those whoparticipate in such adjudication should alsobe immune from suits for damages.
Butz, 98 S.Ct. at 2914. In this case, the District Court applied the rule inButz to the Board,a state administrative agency, and concluded that the Board's adjudicatory function would warrant quasi-judicial immunity, which the court found tobe affordedby 

### 5 2-9-112,MCA. The appellants argue that the District Court's reading of S 2-9-112,MCA, is too liberal.Appellants' brief outlines general rules of statutory construction stating that any statute in derogation of rights otherwise guaranteed by a constitutionmust be strictly construed. The right involved in this case, according to appellants, is the right to sue state government entities in tort, whi.ch they assert is conferred by Article 11, Section 18 of the Montana Constitution: The state, counties, cities, towns, and all other local governmental entities, shall have no immunity from suit for injury to a person or property, except as may be specificallyprovided by law by a 2/3vote of each house of the legislature. Appellants argue that the grant of judicial immunity in § 2-9-112, MCA, is in derogation of this right, and musttherefore be construed strictly. The brief notes that the Board is an executive agency created pursuant to Art. VI of the constitution rather than Art. VII, which in appellants' view places the Board outside the scope of the judicial immunity found in § 2-9-112,MCA. The conclusion drawn from this by appellants is that they have the right to sue the Board and the State for negligence, and the District Court

was in error when itdismissed their suit. The decision of the District Court was rendered on a motion to dismiss. The judge satwithout a jury,no testimony

was taken and the facts are relatively uncontested. In cases such as this, our scope of review is much broader, andwe are free to make our own examinationof the entire case andmake

a determination in accordance with our findings. Shimsky v. Valley Credit Union (1984), 208 Mont. 186, 189-90, 676 P.2d 1308,1310. However,wewill affirm the result reachedby the District Court if it is correct, even if the reasons given for that result are incorrect. Shimsky, 676 P.2d at 1310. The District Court was correct in concluding that the Board is entitled to quasi-judicial immunity from suit. However,we do not need to read § 2-9-112,MCA, as providing for quasi-judicial immunity. The Board's quasi-judicial immunity is derived from the common law, whichwe hold to be controllinghere. Article 11, Section 18 of the Montana Constitution abolished sovereign immunity in Montana. The Bill of Rights Committee of the 1972Constitutional Convention stated in its Comments accompanying the proposed text of Section 18 that itspurpose was to abolish "the archaic doctrineof sovereign immunity." 2 Mt. Leg. Council, Montana Constitutional Convention,1971-72, 637. Inreporting Section 18 to the full convention for approval, Delegate Murray of the Bill of Rights Committee stated, "We feel that the doctrine ofsovereign immunity, which we are attempting to do away with by this particular provision, reallymeans that the king can do whatever he wants but he doesn't have to pay for it; and we'd like to do awaywith thatdoctrine." 5Mt. Leg. Council, Montana Constitutional Convention, 1971-72, 1760. This Court duly recognized the demise of sovereign immunity when the question first came before us in No11 v. City of Bozeman

(1975),166Mont. 504, 534 P.2d 880. However,sovereign immunity is not at issuehere. We are insteaddealing with the doctrine of quasi-judicial immunity. As we have previously held, there were and are immunities separate and distinct from sovereign immunity, unaffectedby the language ofArt. 11, Sec. 18. As a particularly relevant example, in State ex rel. Dept. of Justicev. DistrictCourt

(1977), 172 Mont. 88, 560 P.2d 1328, and more recently in Ronek v. Gallatin County (Mont. 1987), 740 P.2d 1115, 44 St.Rep. 1275, this Court held thatArt. 11, Sec. 18 did not abolish the common-law doctrine of prosecutorial immunity. As with prosecutorial immunity, quasi-judicial immunity is not a subject of Montana statutory law. Section 1-1-108, MCA, provides where the law is not declared by statute, the common law shall be the rule of a decision. The common law rule of quasi-judicial immunity was reviewed by the U.S. Supreme Court in the Butz decision, which in turn was cited by theDistrictCourt. The opinion inButz squarely addressed the issue raised by appellants that executive officials or agencies are not judicialbodies and should not be immunized

as such. Expanding on its statement quoted above that administrative adjudications have enough in common with judicialprocess to warrant immunity, the U.S. Supreme Court said, Judges have absolute immunity not because of their particular location within the Government butbecause of the special nature of their responsibilities. This point is underlined by the fact that prosecutors--themselves members of the Executive Branch--are also absolutely immune.

We also believe that agency officials performing certain functions analogous to those of a prosecutor should be able to claim absolute immunitywith respect to such acts. Thedecision to initiate administrative proceedings against an individual or corporation is very much like the prosecutor's decision to initiate or move forward with a criminalprosecution.

The discretion which executive officials exercise with respect to the initiation of administrative proceedings might be distorted if their immunity from damages arising from that decision was less than complete.
Butz, 98 S.Ct. at 2913, 2915. The Butz court thus characterized quasi-judicial immunity as the logical descendant of prosecutorial immunity, which this Court recognized in Dept. 

### - of Justice and Ronek. Both are founded upon the nature of the functions carried out by agencies or officials. SeeRonek, 740 P.2d at 1116. The discretion vested in the Board to weigh the information relative to Dr. Kauffman rendered it a quasi-judicialbody. This is also evident from the statutes dictating the procedures to be followed. The Board cannot revoke or suspend a license to practice medicine without giving notice and opportunity forhearing, ahearing at which the doctor concernedmay be representedby counsel and offer evidence. Section 37-3-323,MCA. Such a hearing is governed by theMontanaAdministrative ProcedureAct, and the decision reached is subject to judicial review. Sections 2-4-702 and 2-4-631, MCA. The task performed by the Board thus comeswithin the statutory definition of "quasi-judicial function" found at B 2-15-102(10),MCA. The action or inactionby the Board under attack in this

case is its decision not to stripDr. Kauffman ofhis license when faced with complaints concerning his professional conduct. The Board's decision whether to initiate administrative proceedings against a doctor isanalogous to a prosecutor's decision whether to initiate court proceedings against an alleged criminal. We concur with the reasoning in Butz that the Board's discretion might be distorted if it is not immune from suit for damages arising from such a decision. We hold, therefore, that in the exercise of its quasi-judicial authority, the Board is entitled to the absolute immunity afforded executive officials under the rule in the Butz decision. We also hold that the quasi-judicial immunity afforded the Board must encompass the State. The Board's discretion would be equally subject to distortionby considerations of possible litigation against the State arising from its actions. See Ronek, 740 P.2d at 1116-17; Dept.

## ofJustice, 560 P.2d at 1330. The opinions in Ronek, Dept. Justice and Butz stand for the proposition that entities called upon to function judicially should be immunized in order to facilitate the proper execution of their duties. However, the basis for these decisions,as discussed above, is the common law. We affirm the decision of the DistrictCourt.

We Concur:

Chief JusticeJustices

### Mr. Justice John C. 

### Sheehy,concurring in part and dissenting inpart:

I

### concur with the result in this case. The complaint in this case should have been dismissed by the District Court, not for the reasons utilized by the District Court in assuming that quasi judicial functions of state boards were encompassed in statutory judicial immunity, but rather that the complaint fails to show that the unfortunate deaths and resulting damages to the plaintiffs were proximately caused by the State of Montana, through its Board of Medical Examiners. The inaction of the Board of Examiners in failing to lift the license of Dr. Kauffman because of complaints made about him cannot be equated as a proximate cause with the direct acts of Dr. Kauffman in attending to thepregnant mothers, which, as the complaint alleges, were the proximate

cause of their injuries. The theory of plaintiff's counsel to establish liability on thepart of the state has toomany "ifsW--if the Board had initiated proceedings against the doctor to lift his license to practice medicine; if the subsequent hearing and proceedings against the doctor unqualifiedly showed his incompetence to practice; if the evidence generated under the complaints against him stood up to show such incompetence; if the proceedings against the doctor would withstand judicial review. In my view, proximate cause cannotbe attenuated to that extent. Thus, the District Court properly granted a motion to dismiss the complaint,but not upon the grounds utilized by the District Court--that of judicial immunity, but rather because of lack ofproximate cause.Nonetheless, 

### I cannot agree with the majority of this Court that the stateas an entity is free from liability here

on some ground of official immunity applying to government agents. 

### I eschew especially the notion that the discretion of the Board of Examiners would be "equally subject to distortion by consideration of possible litigation against the State arising from its actions." That reason for immunity has been expressly waived by this state in its constitutionand in its statutes. The first factor to remember here is that the State of Montana in itsgovernmental capacity is the defendant in this
case, for acting through its governmental arm, the Board of Medical Examiners. The persons who are members of the Board.

are not defendants. No question is presented in this case that relates to the personal liability of the Board members who allegedly failed to act to lift Dr. Kauffman's license. When there is no risk of personal liability for damages to the government officials involved, the reason for common law official liability evaporates. When the reason for a rule
ceases, so should the rule itself. Section 1-3-201, MCA. It is from the viewpoint of the personal liability of governmental agents that Butz v. Economou (19781, 438 U.S. 478,at 480, 98 S.Ct. 2894,at 2897, 57 L.Ed.2d 895,at 899, should be examined. The first sentence of that opinion begins: This case concerns thepersonal immunity of federal officials in the Executive Branch from claims for damages arising from their violations of citizens' constitutional rights

# . . . The vicarious liability of the United States government for its agents was not involved in Butz. The federal government may not be sued to redress the wrongs of its agents unless the government has specifically waived itsimmunity from suit as for example, in the Federal TortClaims Act,where itapplies. Moreover, the majority draw more fulsomely on the opinion in Butz than the opinion itself warrants. In discussing the functions of agency officials analogous to those of a prosecutor in deciding whether to initiate administrative proceedings against an individual, the court

saw little chance of personal liability arising out of inaction. The Butz opinion states: The discretion which executive officials exercise with respect to the initiation of administrative proceedings might be distorted if their immunity from damages arising from that decision was less than complete. (Citingauthority.) While there is not likely tobe anyone willing and legally able to seek damages from the officials if they do - not authorize the administrative proceeding (refering to authority), there is serious danger that the decision to authorize proceedings will provoke a retaliatory response

# ... (Emphasisin original.)
438 U.S. at 515, 98 S.Ct. at 2915, 57 L.Ed.2d at 921-922. The point is,however, that the Butz courtwas deciding the personal liability of the government agents involved. That is not true in this case where the state alone is the defendant. The purpose of common 

### law official immunity is to allow government officialstobe Free to exercise their duties unembarrassedby the fear of damage suits in respect to acts done in the course of those duties--suits which would consume time and energies which would otherwise be devoted to governmental service and the threat of which might appreciably inhibit the fearless, vigorous and effective administration of policies of government. Davis v. Knud-Hansen Memorial Hospital (3d Cir. 1980), 635 F.2d 179, 186, 203 n. 20 quoting from Ferri v. Ackerman

(1979), 444 U.S. 193, 100 S.Ct. 402, 409, 62 ~.Ed.2d355,363. The threat of personal liability was enough to lead JudgeLearnedHand to comedown in favor of official immunity in balancing between eliminating the constant dread of retaliation for their discretionary functions and the rights of the injured fromdishonest officialacts. Judge Hand said that unless immunity was granted, it would "dampen the ardor of all but the most resolute,or themost irresponsible, in the unflinching discharge of their duties." Greqoire 

### v. Biddle (9thCir. 1949), 177F.2d 579, 581. The State ofMontana, through its 1972Constitution,and by statutes enacted under its Constitution, has removed the

reasons for common law immunity for state governmental agents. The public policy of Montana is that the state itself is subject to suit for the torts of its officials and employees. The statutes enacted by the legislature have immunized governmental agents from any personal liabilitys fordamages, including court costs and attorney fees,arising out of the governmental torts. The State Constitution provides inArt. 11, § 18,as follows: State subjectto suit. The state, counties, cities, towns and all local governmental entities shall have no immunity from suit for injury to a 

### -- person or property, except as may be specifically provided by lawby a 2/3 vote of each house of the legislature. (Emphasisadded.)
The statutes of this state declare our public policy that public officers and employees such as the individual members of theBoard of Medical Examiners shallbe immunized, defended and indemnified when civilly sued for their actions taken within the course and scope of their employment. Section 2-9-305(11, MCA. The term "employee" means an officer or employee, an elected or appointed official and persons acting on behalf of a governmental entity in any official capacity. Section 2-9-101(2)

## , MCA. When such

### government officials or employees are acting within the

course and scope of their duties,they may require the state to defend a noncriminal action against them, may require indemnification for any money judgment or legal expenses, including attorney fees and costs, and any recovery against the governmental entity is a complete bar to any further action for recovery of damages by claimants against the officers or employees. Sections 2-9-305(2)

## ,

## -(3)

## ,-(4),

### and



### -(51, MCA. 

### Thus,under our constitutionaland statutory scheme,the public policy of this state to remove all possibility of 

### personal damages against governmental officials for their torts in office serves to eliminate the need for any application of common law official immunity in the case at bar. Apparently the plaintiffs recognize this,because they sue only the State ofMontana and not the individual members of the Board of Examiners in their personal capacities. Thus, the liability of the state here should be decided on principles other than cases applying only to personal liability. Here, the state,by constitutionand by statute, is not immune from suit. The state is liable topersons who suffer injuries proximately caused by state governmental torts as a matter of public policy and as a constitutional right. It is, therefore, quite illogical for the majority to hold that the state is exempt from suit in this case because of the possibility that the Board's discretion would be subject to distortion by considerations of possible litigation against the state arising from the actions of the Board ofMedical Examiners. The state,withoutquestion, has accepted that risk 

### in assuming liability,and in subjecting itself to suit.State immunity from suit,arising from the alleged torts of its agents should not be an issue in this case at all. That issue is removed by the public policy of this state. The only question we should decide here is whether the complaint,onwell-settled tort rules can surviveamotion to dismiss. As I said earlier, imate cause is missing.

Justice

,

Mr. JusticeWilliam

### E. Hunt, Sr., joins in the foregoing

concurrenceand dissent of Mr. JusticeJohnC. Sheehy. /

Justice