No. 12932 INTHE SUPREME COURT OF THE STATE OF MONTANA 1975

SEYMOUR L. STORCH, Plaintiff and Appellant,

BOARD OF DIRECTORS OF THE EASTERN MONTANA REGION

### FIVE MENTAL HEALTH CENTER, eta

### 1.

# , Defendants and Respondent.

Appeal from: District Court of the Sixteenth Judicial District, A. B. Martin, Judge presiding. Counsel of Record: ForAppellant: Robert L. Stephens, 

### Jr. argued, Billings, Montana For Respondent 

### : Lucas, Jardine & Monaghan, Miles City, Montana James P. Lucas argued, Miles City, Montana Habedank, Cumming & Best, Sidney, Montana Jacque

### W. Best argued, Sidney, Montana

- - Submitted: December 

### 11, 1975 Decided: 

## JArj

## 217976 Filed: 

## T;c;,iA; "1

. ',14r. Justice Gene B. Daly delivered the Opinion of the Court.

Plaintiff Seymour L. Storchbrings this appeal from

a judgment of the district court, Custer County, theHon. A.B. Martin presiding, dismissing plaintiff's complaint for failure to statea claim upon which relief may be granted. The individually named defendants in this action are members of theBoard of Directors of the Eastern Montana Regional Mental Health Center, Region 

### 5. On December 

### 4, 1972, plaintiff Storchwas employed on a probationary basisby the tfental Health Center as a drug abuse consultant. During plaintiff's probationary period, board member Ethel Eond made a written recommendation to Rod L. Newman, Program Director for the Center, that 

### torch's employment be terminated. Upon review of this recommendation and other complaints received, theEoard of Directors sought the termination of 

### torch's employment with the Center for thesereasons: 

### "I. His physical appearance and body cleanliness arenot acceptable for a professional person in our community. "2. While we recognize that his personal life

### is a private matter, the Board feelswe cannot condone the open illicitcohabitation. This does not set a good example forpeople with problems or our young people. 

### "3. The medical community has been consulted. The response by the doctors except one has been they would not referpatients to thisman and feelthe Center has deteriora-tedsince the addition of this man to the staff. 

### "4. Hisbehavior and actions reflect upon the Center adversely. We realize that there are some people who have benefited from his service. But for the good of the Center and the continued support from the communities, we have asked for f4r, 

### torch's resignation. f1 On May 16, 1973, Rod L. Newman, Program Director, asked Storch for his resignation. Upon 

### torch's request for an explanation, Newman sent him a letter listing 

### the reasons citedby the Center's Board of Directors and advising Storch that a.s a probationary employee, he had no right to appeal or hearing. WhenStorchrefused toresign, his employment was terminated, effective June 15, 1973. With the termination of his employment, Storch, through legal counsel, filed a complaint in Custer County district court seeking special damages of $250,000, punitive damages of $50,000, and $50,000 for injury toplaintiff's reputation. The three counts of the complaint went basically tothe contention that the

reasons given by theBoard inthe letterrequesting plaintiff's resignation were libelous reflections on his professional ability and improper invasions of his constitutional right to privacy. In answer to plaintiff's complaint, defendants filed a motion todismiss for failure to statea claimupon which relief may be granted. The motion to dismiss stated two basic reasons: 

### 1. That the acts complained of were discharged by an agency of stategovernment asa governmental function and were therefore subject to the defense of sovereign immunity. 

### 2. That the acts complained of were within the proper discharge of an officialduty and were therefore subject to the defense of absolute privilege. The complaint being dismissed with prejudice the district court's judgment operated as a final determination upon the merits and was therefore resjudicata forpurposes of plaintiff's

cause. Thereafter, plaintiff appealed to this Court. The sole issuebefore this Court 

### iswhether the district court erred in granting defendants' motion to dismiss. Plaintiff contends that section 83-701, R.C.I.I. 1947, the specific statutory provision then in effect, waived any sovereign immunity (1889 Constitution in effect attime cause of action accrued) to the extent that the stateor its instrumentalities

were insured. This contention erroneously presupposes that liability insurance 

### is the only limitation on waiver of statutory immunity.It isan established general principle that any statutory waiver of a state's immunity from suit is tobe strictlyconstrued. 72 Am Jur 2d, States,Etc., $121. This Court recognized the continuing validity of this principle in Kish v. Montana State Prison, 161Hont. 297, 301, 505 P.2d 891, when it quoted from Kaldahl v. StateHighway Commission, 158 ?*font.219, 221, 490 P.2d

"'AS to legal actions against the state, the 1959 legislature passed Chapter 7, Title 83f1

### R.C.M. 1947

# - "~ort Actions Against the State 

## , and in Even sections, sections 83-701 through 83-707, carefully determined how, why, and when the state couldbe sued in a tort action. These legislative enactments recognized tort liabilityand establish immunity of the state in excess of a collectible insurance. Thus, these statutoryprovisions provide a remedy against the stateunder-certaincircumstances. The legislature has spoken and we arebound by its 1I1 enactments. (Emphasis supplied.) See also: Valley County v. Thomas, 109Mont. 345, 97 P.2d 345; State ex rel. LaPoint v. District Court, 69 Mont. 29, 220 P. 88. The statute, section 83-701, R.C.M. 1947, provided in pertinent part: "The district courts of the stateof Montana shall have exclusivejurisdiction tohear, determine, and renderjudgment to the extent of the insurance coverage carriedby the stateof Montana on any claim against the stateof Montana formoney only, accruing on or after the passage and approval of this act, on account of damage toor loss of property, or on account of personal injuries or death caused by thenegligence or wrongful act or omission of any employee of the state of Montana. >'i 9: >'i" The statuteexpressly restrictswaiver of tort immunity to the common tort actions forrecovery of damages forpersonal injury or death or damage toproperty. Applying the rule of strict construction, the plaintiff's two basic claims of libeland invation of privacy do not fitinto the tort categories specified in the statute. It thus becomes unnecessary todiscuss the effect of any liabilityin'surance because the failureof the "certain circunstances" test of Kaldahl constitutes an absolutebar towaiver of sovereign immunity.Plaintiff alsocontends that defendants' reliance on the privileged communication defense toa libelclaim ismisplaced because Montana law requires the absence of malice for such a defense. In this case, plaintiff claims the alleged libelous communication involved malice and therefore the defense could not stand. We findno merit inthis contention. A privileged communication 

### is one which, except for the circumstances under which it 

### ismade, may be defamatory and actionable. Section 

### 64-208, R.C.M. 1947, provides:

11

What communications areprivileged. A privileged publication 

### is one made: 

### "1. In the proper discharge of a.n officialduty; "2, In any legislative orjudicial proceeding, or in any other official proceeding authorized by law; "3. In a communication, without malice, toa person interested therein, by one who is also interested, orby one who stands in such relation to the person interested as to afford 

### a reasonable ground for supposing themotive for the communication innocent, orwho 

### is requested by the person interested to give the information; "4. By 

### a fairand truereport, without malice of ajudicial, legislative, or other public official proceeding, or of anything said in the course thereof. " While some of the quoted subsections do mention malice the pertinent subsection 

### 1, says nothing about qualified privilege. Rather it constitutes an absolute privilegewith the only requirement being that the intradepartment communication be one rendered while engaged in an "official duty". There ca.nbe no doubt that the hiring and firing of employees ispart of the "official duty" of Montana Regional Health Centers. The titleof Chapter 246, Laws of 1967, reads: "An Act Expanding Duties and Services of the Dit~i.sion

of Mental Hygiene of the StateBoard of Public Institutionsby Establishing and Conducting Mental Health Clinics and Community Comprehensive Mental Health Centers; Creating Regional Mental Health Boards; Providing for the Organization Thereof 9~ ik 72. " (Emphasis supplied.)Thus it becomes obvious the legislative intent was tomake the mental health center an arm of the stateand hiring and firinga function of that agency. Whether statements made by such public officers in relation to the hiring and firing of employees nay be subject to absolute privilege has been answered in the affirmative many times. Under facts similar to the instant case, the United States Supreme Court inBarr v. >$atteo,360 U.S. 564, 571, 79 S.Ct. 1335, 3L ed 2d 1434.,1441, stated that insofar 

### as a public officerwas acting within the scope of his authorityhis communication was absolutely privileged. See also: Newbury v. Love, 242 F.2d 372; ?.$organv. Willingham, 424 F.2d 200; Preble v. Johnson, 275 F.2d 275. The Court went on to saywhy an absolute privilegewas essential in such a circumstance, quoting approvingly from Judge Learned Hand's decision in Gregoire v: Biddle, 177 F.2d 579, 581:

1I 1 ; J; 9: it 

### is impossible toknow whether the claim iswell founded until the case has been tried, and that to submit allofficials, the innocent aswell asthe guilty, totheburden of a trialand to the inevitable danger of itsoutcome, would dampen the ardor of all. but the most resolute, or the most irresponsible, intheunflinchingdbscharge of theeirdutiies

# .***"' Since the internal communication was it it shin the proper discharge of an officialduty, it enjoyed an absolute privilege and could thereforenot be the subject of libelaction. Finally, the facts stipulate that plaintiff 

### wa.s on probationary status. The purpose of such status is toprovide a brief period inwhich tomeasure the employee's abilityto perform hisjob before granting him a degree of job security. If the appropriate state employer feels that the employee isnot measuring up during this probationary period it can dismiss that employee without procedural due process. M.A.C. 2-3.34 (26)-S34160. Plaintiff places heavy reliance on Perry v. Sindermann, 408 U.S. 593, 597, 92 S.Ct. 2694, 33 L ed 2d 570,577, forhis claim that the exercise of theright of privacy constitutes substantive due process and as such 

### is controlling on the constitut.ionalissue in this case, even though his employee statuswas probationary. In Perry the Court stated: 

# "*** even though a person has no 'rightf to a valuable governmental benefit and even though the government may deny him the benefit for any number of reasons, there are some reasons upon which the government may not rely. It may not deny a benefit toa person on a basis that infringes his

8, constitutionally protected interests 

# * -L. II So the issuebecomes whether the dismissal of plaintiff infringed upon his substantive due process right of privacy. Atthe outset, it should be remembered that the exercise of constitutional rights 

### isnot absolute. InWeber v. Highway Commission of Stateof Montana, 

### 333 F.Supp. 561, 

### 564, Judge Russell E. Smith said: 

# "* 9: +:His exercise of his [employee's] rights to freedom of speech 9: 

# * ;? did not furnishhim with

4. a form of job insurance. 'k 9~ 

### "
Ye

# * that the motive for the firingwas generated by plaintiff's exercise of his firstamendment rights does not inmy opinion prevent the Highway Department from dismissing him ifa valid cause for dismissal is shown ik Ji J<" Thus where an overriding government interest can be shown, the employee's exercise of substantive constitutional rights 

### isnot controlling in the disposition of the case, Here, the letter from the Chairman of the Personnel Committee to the Director of the Eastern Montana Regional Mental Health Board, which forms the core of 

## lai in tiff's complaint, gave several reasons forrequesting plaintiff's dismissal but the main ingredient was thebelief by the Board of Directors that the plaintiff's personal life style was adversely affecting his ability toadequately dischargehis professional duties. Specifically the Board feltthat because plaintiff was engaged in counseling people with personal problems, his own personal philosophies became relevant tohisjob performance. Since those personal philosophies conflictedwithwhat the Board saw as the goals of theMental Health Board, itutilized itsauthority as overseer of employeeperformance torecommend plaintiff's dismissal. That when an employee's conduct affects his abilityto adequately perform his duties he can be discharged iswell established. In Bruns 

### v. Pomerleau, 319 F.Supp. 

### 58, 67, it is stated:

"ik

# * J~IiThat he does inhis private life, aswith other public employees, should not be his employer's concern unless it canbe shown to affect in some degree his efficiency in the performance of his duties. ;k ;? ;k" (Emphasis supplied.) See also: Pickering v. Board of Education, 391

### U.S. 563, 

### 88 S. Ct. 1731, 20 L ed 2d 811; Battle 

### v. Mulholland, 439 F.2d 321; Pred 

### v. Board of Public Instruction, 415 F.2d 851. Accordingly, thejudgment of the district court 

### is affirmed

# .

Justice

A7eConcur: 

# I