No. 90-228 IN THE SUPREME COURT OF THE STATE OF MONTANA 1991

STATE OF MONTANA, BOARD OF DENTISTRY, Plaintiff, Respondent and Cross-Appellant,

VS. R. BRENT KANDARIAN, Defendant and Appellant.

APPEAL FROM: District Court of the Eleventh Judicial District, In and For the County of Flathead, The Honorable Michael H. Keedy, Judge presiding.

COUNSEL OF RECORD: For Appellant: James C. Bartlett, Hash, O'Brien & Bartlett, Kalispell, Montana For Respondent: I. James Heckathorn, Murphy, Robinson, Heckathorn & Phillips, Kalispell, Montana John H. Maynard, Department of Administration, Helena, Montana

Filed: Submitted: March 7, 1991 Decided: June 4, 1991Justice William E. Hunt, Sr. delivered the opinion of the Court. TheEleventhJudicial~istrict Court,FlatheadCounty,granted the State of Montana, Board of Dentistry's, motion for summary judgment on the issue of immunity,and denied its motion tovacate a previous ordergranting summary judgment against it on the issue of injunctive relief. Both parties appeal. We reverse on the issue of immunity and affirm on the issue of injunctive relief. We will address two issues on appeal: 1. Is the State of Montana, Board of Dentistry, immune from suit because it is a quasi-judicial body? 2. Did the District Court err in granting summary judgment to the defendant Kandarian on the issue of injunctive relief? TMJ, or temporomandibular joint dysfunction, is a medical/ dental problem. R. Brent Kandarian, a denturist and head of the State Board of Denturitry, advertised in a local paper that he would perform "TMJ evaluations," On August 26, 1986, a dentist wrote totheBoard of Dentistry (Board)requesting an investigation into the alleged illegal practice of dentistry by Kandarian. He stated in his letter that evaluating TMJ was the practice of dentistry, and that he had personal knowledge of an offer by Kandarian to treat a patientwith TMJ disordervia construction of

a partial denture.The Board wrote to Kandarian on September 22, 1986, informing him of the complaint. On the sameday, the Board of Denturitrywas informed of the complaint against Kandarian. Kandarian responded that the Board had no power to regulatehis denturitry practice. The Boardmet onNovember 12,1986,and without investigation, decided to ask Flathead County to file criminal charges against Kandarian. While Flathead County was deciding that issue, the Board's counsel released the contents of the complaint against Kandarian to thepress. Flathead County refused toprosecute,and

on February 2, 1987, the Board filed for an injunction against Kandarian. The Board identified James Stobie, D.D.S., as the expert witness whowould testifyastowhetherTMJ evaluations werewithin thepractice of denturitry. His deposition stated that as long as

a denturist is practicing denturitry, it would be misfeasance or malfeasancenottodo aTMJ evaluationwhile fitting for "partials1'

or Itfulls. Kandarian counterclaimed and moved for summary judgment. The Board asked for Itfollowup discoveryI1and represented that it had witnesses who would be contacted and who would produce,by way of affidavit, evidence that Kandarian had done nondenture work on them.On January 8, 1988,the court dismissed the complaint against Kandarian because the Board had failed to produce affidavitsshowing that Kandarian had performed work on the natural teeth of two individualspreviously named by the Board. On February 25, 1988, the Board filed an amended response to Kandarianls counterclaim, claiming immunity for damages on the basis of its quasi-judicial status. In a January 1989 order denying immunity for the Board, the court found that lack of substantial investigation into the allegations against Kandarian raised questions of material fact as to whether the Board was performing itsofficial duties. On March 13,1989,Kandarian filed

an amended answer and counterclaim, alleging breach of right of privacy, wrongful injunction, intentional interference with business and patients, slander and libel, wrongful civil litigation, abuse of process, outrage and intentional infliction of emotional distress, and negligence. On February 8, 1990, the court issued a two-part order: first, the order denied the Board's motion to vacate the previous order granting summary judgment to Kandarian. Second, it vacated the January 1989 order and found immunity for the Board on the grounds that in the absence of rules for investigations, the statuteprovided that the Board could seek injunction under 5 37- 4-328(3), MCA. The court denied Kandarianlsmotion for attorney fees on March 15, 1990. Judgment was filed on March 15, 1990, and Kandarian and the Board appealed.Is the Board immune from suit because it is a quasi-judicial body?The District Court's finding that the Board is immune from suit on the basis of quasi-judicial immunity is erroneous. We extended quasi-judicial immunitytoadministrative boards inKoppen

v. Board ofMedical Examiners, 233 Mont. 214, 759 P.2d 173 (1988). In that case,we stated that the discretionvested in the Board of Medical Examiners to determine whether or not to adjudicate an alleged violation by a licensee rendered it a quasi-judicial body. We referred to the notice and hearing requirements of the Montana Administrative Procedures Act (MAPA), and the fact that the decision is subject to judicial review,to support ourholding that the Board of Medical Examiners is quasi-judicial and absolutely immune in the exercise of that authority. Koppen, 233 Mont. at 219, 759 P.2d at 176. InKoppenwe cite Butz v. Economou, 438 U.S.

We think that adjudication within a federal administrative agency shares enough of the characteristics of the judicial process that those who participate in such adjudication should also be immune from suits for damages. In this case, the Board was proceeding against a nonlicensee under 37-4-328(3), MCA. That section does not require an administrative hearing before the Board under MAPA,but allows the attorney general, county attorney, or board to seek injunctive relief.When the Board sought an injunction in the ~istrict Court, it put itself in the role of litigant or advocate, not adjudicator. Once it invoked the jurisdiction of the court under 5 37-4-328, MCA, it acted as a litigant and was not immune from suit. The Board also claims immunity similar to that enjoyed by prosecutors. While it is true that Koppen, citing Butz, states that "agency officials performing certain functions analogous to those of a prosecutor should be able to claim absolute immunity with respect to such actsl1l it does not say that all board actions

are immune. Koppen, 233 Mont. at 219, 759 P.2d at 176. In State

ex. rel. Dept. of Justicev. District Court, 172 Mont. 88, 92, 560 P.2d 1328, 1330,we affirmed prosecutorial immunity for the State of Montana and the Department of Justice,noting that: When a prosecutor actswithin the scope of his duties by filing andmaintaining criminal charges he is absolutely immune from civil liability, regardless of negligence, or lack of probable cause. In Dept. of Justice, we explain that concern over harassment by unfounded litigation could cause a prosecutor to shade decisions and affect the independence of judgment necessary to the administration of the criminal justice system. The prosecutorlsindependence is checked by procedural safeguards inherent in the system, such as probable cause investigation, swearingunder oath,etc. However,herewe are not presented with a similar situation. The Board proceeded against Kandarian without any investigation of the allegations against him. It didnot interview Kandarian himself. It released sensitive material to the press about a possible criminal action without notice to Kandarian. The Board was not bound by and did not adhere to a process that provided any safeguards for Kandarian. It therefore does not enjoy the immunity afforded the prosecutor. We reached the issue of state liability in Lima School District No. 12 v. Simonsen, 210 Mont. 100, 683 P.2d 471 (1984). In Lima, the school district claimed sovereign immunity on a counterclaim for damages arising from a suit it instigated. We denied immunity, stating: The School District itself initiated this lawsuit. It would be especially inequitable to allow the state to bring an action forpayment bymistake and vest themwith immunity from suit in related matters. The better rule is to recognize that whenever the state brinqs an equitableaction it waives anyapplicablesovereiqntyand opens the door to a defense or counterclaim qermane to the matter in controversv. Lima, 210 Mont. at 772, 683 P.2d at 477 (emphasis added). Here the action for injunction was an equitable action, and we adhere to the "betterrule" that the state does not enjoy immunity for its actionswhen it seeks injunctive relief in district court. Did the District Court err ingranting summary judgment to the defendant Kandarian on the issue of injunctive relief? The District Court granted summary judgmentto Kandarian when the Board sought to enjoin his practice. The only fact before the DistrictCourtwas the expert'stestimony thatTMJ evaluations were indeed a part of thepractice of denturitry. We thus find no abuseof discretion by the ~istrictCourt in the grant of summary judgment in favor of Kandarian. Reversed in part and affirmed in part. /

We Concur:

Chief Justice

JusticesJustice Terry N. Trieweiler concurring in part and dissenting in part:Iconcur inpart, and dissent inpart, from the opinion of the majority. I concurwith thatpart of themajority's opinion which holds that the Board of Dentistry did not have immunity from suit under the circumstances in this case. I also concur with that part of the majorityl s opinion which affirmed the District Court s award of summary judgment on the issue of injunctive relief. However, 

### I dissent from the majority's failure to award attorney fees to Kandarian pursuant to Rule 11,M.R.Civ.P. That rulewas designed todiscourage the filing of claims which have no merit and to compensate people like Kandarian who have to expend substantial sums to defend against nonmeritorious claims. The key to invocation of the rule iswhether an adequate investigationhas been done by the complaining party before putting his opponent to the expense of litigation. The rule provides: The signature of an attorney or party constitutes a certificateby him thathehas read thepleading,motion, or other papers; that to the best of his knowledge, information,and belief formed after reasonable inquiry it iswell grounded in fact and iswarranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass orto causeunnecessary delay or needless increase in the cost of litigation.

If a pleading, motion, or other paper is signed in violation of this rule, the court, upon motion or uponits own initiative, shall impose upon the person who signed it, a represented party, or both, an appropriate sanction,which may include an order topay to the other party or parties the amount of the reasonable expenses incurred because of the filing of the pleading,motion, or other paper, including a reasonable attorney's fee. (Emphasisadded.) In this case, the Board of Dentistry made no reasonable inquiryprior to filing its claim for injunctive relief and naming Kandarian as a defendant. A member of theAssociation had sent it

a copy of an ad, indicating that Brent Kandarian,a denturist,was available for "TMJ evaluations. However, none of Kandarianlspatients were interviewed; no investigationwas done;and no experts were consulted prior to the filing of suit. After suit was filed, the Board finally retained James L. Stobie,D.D.S. Hewas identified in court documentsas the Board's expert for the purpose of establishing that it was a violation of theDental PracticeAct foradenturist toperformTMJ evaluations. When he was deposed, however, his testimony was to the contrary. Dr. Stobie testified that he was the only prosthodontist in Montana. A prosthodontist has threeyears of specialized training after dental school. That training is related to the treatment of patients who have prosthetic devices. He testified that in the

course fitting patient for dentures not only permissible, but mandatory for a denturist to perform a TMJevaluation and that, in fact,Kandarian would have been negligent if he had failed to do so. Subsequentto Dr. Stobie's testimony,thedefendantmoved for summary judgment. At the time of that hearing, the Board's attorney offered to provide the testimony of two witnesses who would say that Kandarian had worked on their teeth, even though it was not for thepurpose of fitting dentures. The Board was given ten days to provide such information, but failed to do so. In fact, one of the witnesses was subsequently offered as a witness by Kandarian and testified contrary to the representations of the Board's attorney. After all of these court proceedings, and expense to the defendant, summary judgment was entered for the defendant dismissing the Board's complaint for injunctive relief. Under these circumstances no "reasonable inquiry1' was conducted prior to the commencement of this lawsuit, and the defendant is entitled to an award of reasonable attorney fees and costs to compensatehim forhaving tounnecessarilyparticipate 

### in and defend against this action.Justice Fred J. Weber dissents as follows: Thekey factsuponwhich themajority concluded that theBoard of Dentistry, does not enjoy quasi-judicial immunity as described in Koppenv. Board of Medical Examiners (1988), 233 Mont. 214, 759 P.2d 173, are stated as follows: The prosecutorls independence is checked by procedural safeguards inherent in the system, such as probable cause investigation, swearing under oath, etc. However, here we are not presented with a similar situation. TheBoardproceededagainst Kandarian without any investigation of theallegationsagainsthim. Itdid not interview Kandarian himself. It released sensitive material to the press about a possible criminal action without notice toKandarian. The Board was not bound by and did not adhere to a process that provided any safeguards for Kandarian. It therefore does not enjoy the immunity afforded theprosecutor. The essence of the foregoing holding appears to be that because the Board did not adhere to a process which provided safeguards for Kandarian, it had forfeited any immunity afforded

a prosecutor, which apparently would also include the quasijudicial immunity described in We do not have a controversy here which required a Board hearing in order todeterminethe contentions of theparties. Here

a Kalispell dentist forwardedhis letter to the Board of Dentistry complaining thatMr. Kandarianwas engaged in the illegal practice of dentistry as appeared from the enclosed copy of an ad which showed Mr. Kandarian was advertising for dentures, partials, realigns, fast repairs, and "TMJ 

### evaluation^.^^ That Kalispell dentist stated he had personal knowledge of Mr. Kandarianlsoffer to treatpatients forTMJ disorders. By letterdated September 22, 1986,the Board of Dentistry furnishedMr. Kandarian a copy of thecomplaint as filed. The Board requested a response and asked that if factshad been misstated Mr. Kandarian should so stateand refer to documents or witnesses. By letter dated October 31, 1986, the attorney for the Board of Dentistry again wrote to Mr. Kandarian with regard to the same complaint. In that letter the attorney pointed out that the complaint alleged unlicensed practice of dentistry and referred to the civil and criminal sanctions. It again asked Mr. Kandarian to advise if the fact allegations were incorrect. If he felt there was legal justification he should provide such information. It also invited Mr. Kandarian to stop the advertising and the attorney would then recommend the closing of the files. By letter dated November 6, 1986 addressed to the Board of Dentistry attorney,Mr. Kandarian clearly indicated his position and stated: In regards to your letter of October 31, 1986, 

### I must confess toyouthat Ididn't think itnecessary toanswer a complaint of the dental board, when in fact it has nothing to do with me 

# - nor me with it. If I have committed a crime, I will answer to the board of denturitry. I am not now, nor have I ever practiced dentistry! I am licensed as a denturist and practice as such. T.M.J. evaluations certainly fallwithin my scope of practice, resardless of what the board of dentistry thinks,and I will continue to practice accordinsly. If the board of dentistry would tend to itst own complaints instead of going on witch-hunts, it would probably accomplish a whole lotmore for the protection of the people of the state of Montana. (Emphasis supplied)

# . At its November 12, 1986 meeting the Board of Dentistry, which consists of licenseddentistspracticing inMontana, considered the complaint againstMr. Kandarian. The Board of Dentistry concludedthat it would request the filing of a complaint against Mr. Kandarian and if the county attorney did not soact, an injunction should be sought for the unlicensed practice of dentistry. Such a request was made to the county attorney of Flathead County. Byhis letterdated December 30, 1986,the countyattorney demonstrated that he understood the issues and chose not to act, stating: I now havehad the opportunity to review thesematerials together with what I perceive to be applicable Montana law. It appears to me that the relevant issue is not whether Mr. Kandarian is engaging in a particular activity (TMJ evaluations)

## , but rather whether that activity (which he does not deny) is prohibited to a denturist by Section 37-29-402(3) and, if so,what the proper remedy would be. Although 

### Imay question whether such conduct is in fact a violation of that statute, I have little doubt that, regardless, a criminal prosecution is not the proper forum in which to seek a resolution. I therefore respectfully decline to prosecute the complaint. If either the Board of Dentistry or the Board of Denturity feels that Mr. Kandarianfsconduct is actionable, it seemstome that theproper remedywould be an injunctive action brought by the Board pursuant to either Section 37-4-328 or Section [37-29-4111,M.C.A., respectively. The county attorney therefore recommended that if the Board of Dentistry felt that Mr. Kandarianfsconduct was actionable, the proper remedy would be an injunctive action, which was the procedure followed by the Board. The holding of the majority indicates that because of the failure tomake an investigationand a failure to followa process which provided safeguards for Mr. Kandarian, there had been a forfeiture of immunity. I do not understand that conclusion. The issues as between theparties are quite clear

## - the Boardof Dentistry believes that the actions taken by Mr. Kandarian constitute theunlawful practice of dentistry

## - and Mr. Kandarian, incidentallythe Chairman of the Board of Denturity,believes that it is not the unlawful practice of dentistry, but the lawful practice of denturity. A hearing would not have more clearly establishedtheopposing positions of thetwoparties. Under those circumstances,was it improper for the Board of Dentistry to seek an injunction without a due process hearing? Thespecific statutes coveringtheBoard of Dentistry indicate that their procedure was provided under 

### 5 37-4-328,MCA, which in pertinent part states as follows: (3) If a person, firm, or corporation engages in the practice of dentistry without possessing a valid license or violates this chapter, the attorney general, a county attorney, or the board may maintain an action in the name of this state to enioin theperson, firm or corporation from engaging in the practice of dentistry Clearly the Board is given both the responsibility to enforce the statuteswith regard to the profession of dentistry and where it deems advisable, to secure an injunction. This is directly comparable to the statutory authority of the Board of Medical Examiners which was involved in the Koppen case. Section 37-3- 326,MCA, states in part as follows: Notwithstandinganyotherprovision inthischapter, the board [Board of Medical Examiners] may maintain an action to enjoin a person from engaging in the practice of medicine until a license to practice medicine is procured. The statutory provisions are directly comparable. There is a statutory procedure for the Board of Dentistry to conducthearingsaftervariousnoticeand dueprocessrights are considered. Again, these are directly comparable to the provisions for the Board of ~edical Examiners. I conclude that forourpurposes, the statutory provisions and purposes of the Board of Dentistryand the Board of Medical Examiners are directlycomparable. That leadsme toreview Koppen. In Komenwe stated the following: The action or inactionby theBoard under attack in this case is its decision not to strip Dr. Kauffman of his license when faced with complaints concerning his professional conduct. The Board's decision whether to initiate administrative proceedings against a doctor is analogous to aprosecutor's decision whether to initiate courtproceedings againstanalleged 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,theBoard isentitledtotheabsolute immunity afforded executive officials under the rule in the Butz decision. 

# ... Koppen, 233 Mont. at 219-20, 759 P.2d at 176. InKoppen this Court concluded that the inaction of the Board of Medical Examiners in any claimed failure to investigate the activities of a medical doctor were subject to the protection of quasi-judicial immunity. In the present case, the majority has concluded that the action of the Board of Dentistry in commencing an injunction proceeding, one of the options expressly given to that Board by the statutes controlling the Board, somehow causes the Board to lose its immunity. I fail to understand the rationale. I believe the holding in Kop~en is directly on point. In fact we have a much stronger case for quasi-judicial immunity here because the Board in fact was attempting to exercise its obligation to protect thepractice of dentistry, whereas the Board

### in Koppen had failed to do anything with regard to protecting the public fromtheallegedunprofessional actions of a medical doctor. The majority further concludes that under Lima School Dist. No. 12 v. Simonsen (1984), 210 Mont. 100, 683 P.2d 471,when the Board sought an injunction, the state does not enjoy immunity. A 

### more complete analysis is required of the Lima case. The Lima School District had filed suit against the defendants to recover money paid under a transportation contract for the transportation of school children. The defendants counterclaimed, alleging damagesandwere awarded $5,000 ontheircounterclaim. With regard to the issue of sovereisn immunity, the Court stated as follows: The School District argues before this Court that the counterclaim isbarred by the doctrine of sovereign immunity. This issuewasnot raised in thepleadings or otherwise at trial. It need not be considered by the SupremeCourt. TheSchool Districtitself initiatedthis lawsuit. Itwould be especially inequitabletoallowthe state tobring an action forpaymentbymistake andvest them with immunity from suit in related matters. The better rule is to recognize that whenever the state brings an equitable action it waives any applicable sovereignty and opens the door to a defense or counterclaim germane to the matter in controversy.

(Citationsomitted.) Lima, 210 Mont. at 112, 683 P.2d at 477. The case concludes that the issue of sovereisn immunityneed not be addressed because itwas not raised in the lower court. It is true the issuewent on to discuss the aspect of inequitability. I would only point out that thiswas a proceeding brought for the recovery of monies paid on a contract theory, to which the defendantshad counterclaimed. Under that fact situation,it seems entirely appropriate to hold that when the state commenced theaction, it could not defend by stating it was immune. 

### I don't believe thataffordsany proper authority forthepresent decision. While this presently is an action for an injunction, it is certainly not comparable to the Lima action. As a result, 

### I disagree with the conclusion of the majority that when theBoard sought an injunction,it put itself in the role of the litigant or advocate rather than adjudicator. The Board only acted in the role assigned to it by the statutes, that being the attempted prohibition of a non-dentist practicing dentistry. I fail to see how such conduct could be classed as a giving up of any quasi-judicial immunity. I further emphasize that the conclusion in the present case contradicts our holding in Kowwen. There we concluded that the Board's decision whether to initiate administrative proceedings is analogous to a prosecutor's decision. I find no distinction between that and the Board's decision in the present case to initiate proceedings requesting an injunction. In addition, there is the inference that coming to court for injunctive purposes may have denied due process in some manner. I fail tounderstand such a theory. Thepurpose of coming to court is to allow the Board of Dentistry and Mr. Kandarian to set forth their opposing views in court with due process protections under court rules. Based on Koppen, 

### Iconcludethat theBoard of Dentistry should have been granted immunity in this proceeding.

\I concur in the dissent of Justice Fred J. Weber.