Court Opinion

ID: 889055
Source: CourtListenerOpinion
Date Created: 2013-06-05 05:33:26.879397+00
Date Added: 2024-06-11T11:19:14.881514
License: Public Domain

April 14 2009

                                           DA 07-0754

                      IN THE SUPREME COURT OF THE STATE OF MONTANA

                                           2009 MT 130

JACK McLEOD,

              Plaintiff and Appellant,

         v.

STATE OF MONTANA, acting by and
through the MONTANA DEPARTMENT
OF TRANSPORTATION, and SUE HOELL,
JOHN DOE and JANE DOE,

              Respondents and Appellees.

APPEAL FROM:            District Court of the First Judicial District,
                        In and For the County of Lewis and Clark, Cause No. CDV-2006-694
                        Honorable Thomas C. Honzel, Presiding Judge

COUNSEL OF RECORD:

                For Appellant:

                        Wade J. Dahood, Jeffrey W. Dahood, Knight, Dahood, Everett & Sievers,
                        Anaconda, Montana

                For Appellee State of Montana:

                        Rebekah J. French, Risk Management and Tort Defense Division, State of
                        Montana, Helena, Montana

                For Appellee Sue Hoell:

                        Marshal L. Mickelson, Corette Pohlman & Kebe, Butte, Montana

                                                    Submitted on Briefs: November 6, 2008

                                                               Decided: April 14, 2009

Filed:

                        __________________________________________
                                          Clerk
Justice James C. Nelson delivered the Opinion of the Court.

¶1    Jack McLeod appeals from the order of the First Judicial District Court, Lewis and

Clark County, granting summary judgment in favor of defendants Sue Hoell and the State

of Montana on McLeod’s libel, slander, and malicious prosecution claims. We affirm.

                                   BACKGROUND

¶2    McLeod is a certified real estate appraiser. He owns McLeod Realty in Butte,

Montana, and is frequently hired to conduct appraisals in condemnation litigation. Of

relevance to the present case, McLeod was hired by the landowners in State of Montana,

Dept. of Transp. v. The Lee Family Trust and State of Montana, Dept. of Transp. v.

Treweek Family Partnership to appraise their respective properties.

¶3    Hoell is a licensed real estate appraiser employed by the Montana Department of

Transportation. In August 2004, she filed two written complaints against McLeod with

the Montana Department of Labor and Industry (DOLI). She alleged that McLeod had

failed to comply with the Uniform Standards of Professional Appraisal Practice (USPAP)

when preparing the Lee and Treweek appraisals. 1 Each complaint was lodged on a

standardized complaint form provided by DOLI’s Business Standards Division. This

form contains blank spaces for the name and address of the person against whom the

complaint is being made, the name and address of the complainant, the nature of

complaint, and a list of witnesses and evidence.       Additionally, the form asks the

complainant: “What action are you requesting of the Board or Department?”

      1
         The Board of Real Estate Appraisers has adopted USPAP, which is published by
The Appraisal Foundation. See Admin. R. M. 24.207.402(1). A licensed or certified real
estate appraiser in Montana must comply with USPAP. Section 37-54-403(1), MCA.

                                            2
¶4     Hoell’s first complaint referenced the Lee appraisal. Hoell stated that she had

personally reviewed this appraisal and that “[t]he deficiencies are readily apparent” in the

appraisal, a copy of which she attached to the complaint. She requested that DOLI (more

specifically, the Board of Real Estate Appraisers) “determine whether or not Mr. McLeod

complied with USPAP, and if not, take appropriate action pursuant to Mont. Code Ann.

§ 37-54-105(9).”    Hoell’s second complaint referenced the Treweek appraisal and

contained the same request. In addition, she explained that while she had not personally

reviewed this appraisal, her deceased colleague, Jerry Bratlien, had done so. Hoell stated

that “[u]pon information and belief, the deficiencies are readily apparent” in the

appraisal, a copy of which she likewise attached to the complaint. On both complaints,

Hoell listed her address as “MT Dept of Transportation, PO Box 201001, Helena, MT

59620-1001.” Throughout this litigation, however, Hoell has maintained that she filed

the complaints in her “individual capacity,” not on behalf of her employer.

¶5     Based on Hoell’s complaints, the Board of Real Estate Appraisers requested a

review of the Lee and Treweek appraisals by an independent appraiser. A year later, the

appraiser notified the Board that he would not be able to complete the review due to time

constraints. The Board then contracted with David Lennhoff to review the appraisals. In

June 2006, the Board reviewed Lennhoff’s findings and found “reasonable cause” to

believe that McLeod had violated certain USPAP provisions. However, it was later

brought to the Board’s attention that Lennhoff had relied on the 2002 version of USPAP,

instead of the 2003 version. It is not clear from the record whether the Board asked

Lennhoff to reevaluate McLeod’s appraisals under the 2003 USPAP, but regardless,

                                             3
McLeod appeared before the Board in December 2006 and asked it to dismiss Hoell’s

complaints based on “the time passed since the complaints were filed.” The Board

granted his request and dismissed the complaints, but without prejudice. The Board

stated that it “may revisit and/or take action on the complaints in the future if a similar

complaint is received.”

¶6     Meanwhile, in September 2006, McLeod filed the instant action against Hoell and

the State in the District Court, alleging libel, slander, and malicious prosecution. He also

alleged that Hoell had been directed by her employer (the Department of Transportation)

to file the complaints regarding his Lee and Treweek appraisals. The State moved to

dismiss McLeod’s complaint for failure to state a claim upon which relief can be granted;

however, because matters outside the pleading were presented, the District Court decided

to treat the motion to dismiss as a motion for summary judgment.

¶7     Hoell and the State then filed formal summary judgment motions with

accompanying briefs. Hoell argued that McLeod’s defamation claims failed as a matter

of law because the statements she made in her complaints to DOLI were privileged

publications under § 27-1-804(2), MCA. Hoell also argued that the statements she made

were, as a matter of law, not defamatory. As for McLeod’s malicious prosecution claim,

Hoell argued that McLeod could not meet two of the required elements of this claim

because (1) Hoell had probable cause to file her complaints and (2) the proceedings on

those complaints were not terminated in McLeod’s favor.

¶8     The State, for its part, contended that Hoell was acting outside the course and

scope of her employment with the State when she asked DOLI to investigate McLeod’s

                                             4
Lee and Treweek appraisals. Alternatively, the State argued that her statements were

privileged, constitutionally protected, and not defamatory for purposes of the defamation

claim, and that McLeod could not establish any of the elements of a malicious

prosecution claim.

¶9    The District Court held a hearing and subsequently granted Hoell’s and the State’s

motions. Concerning McLeod’s defamation claims, the court held that under Skinner v.

Pistoria, 194 Mont. 257, 633 P.2d 672 (1981), and § 27-1-804(2), MCA, the statements

in Hoell’s complaints were privileged publications because they were made to the proper

authorities responsible for investigating complaints about appraisers and imposing any

necessary sanctions. With respect to McLeod’s malicious prosecution claim, the court

found a failure of two elements. First, regarding the probable cause element, the court

observed that Hoell is a licensed real estate appraiser and that she based her complaints

against McLeod on her personal review of the Lee appraisal and knowledge received

from a colleague regarding the Treweek appraisal. Moreover, the court noted that the

Board had ultimately found reasonable cause to believe that McLeod violated USPAP

provisions. Second, regarding the termination element, the court reasoned that because

the Board never adjudicated Hoell’s complaints on the merits and left open the

opportunity to revisit the complaints, the proceedings had not been terminated in

McLeod’s favor.

¶10   Given these conclusions, the District Court did not address whether Hoell was

acting within the scope of her employment with the State. The court entered judgment in

favor of both Hoell and the State on all of McLeod’s claims. McLeod now appeals.

                                           5
                                           ISSUES

¶11    The parties raise a number of issues on appeal; however, we conclude that the

following two questions are dispositive:

       1. Did the District Court err in granting summary judgment on McLeod’s

defamation claims based on § 27-1-804(2), MCA?

       2. Did the District Court err in granting summary judgment on McLeod’s

malicious prosecution claim based on the “probable cause” element of that claim?

                               STANDARD OF REVIEW

¶12    We review a district court’s ruling on a motion for summary judgment de novo,

applying the criteria set forth in M. R. Civ. P. 56. Corporate Air v. Edwards Jet Center,

2008 MT 283, ¶ 24, 345 Mont. 336, 190 P.3d 1111. Rule 56(c) states that the judgment

sought “shall be rendered forthwith if the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits, if any, show that

there is no genuine issue as to any material fact and that the moving party is entitled to a

judgment as a matter of law.” The party moving for summary judgment has the initial

burden of establishing both the absence of genuine issues of material fact and entitlement

to judgment as a matter of law. Corporate Air, ¶ 25. The evidence must be viewed in the

light most favorable to the nonmoving party, and all reasonable inferences are to be

drawn therefrom in favor of the party opposing summary judgment. Peterson v.

Eichhorn, 2008 MT 250, ¶ 12, 344 Mont. 540, 189 P.3d 615. If the moving party meets

its initial burden, then the burden shifts to the nonmoving party to establish with

substantial evidence, as opposed to mere denial, speculation, or conclusory statements,

                                             6
that a genuine issue of material fact does exist.      Peterson, ¶ 13; Klock v. Town of

Cascade, 284 Mont. 167, 174, 943 P.2d 1262, 1266 (1997). If no genuine issue of

material fact exists, then the court determines whether the moving party is entitled to

judgment as a matter of law. Corporate Air, ¶ 25. This determination is a conclusion of

law, which we review for correctness. Corporate Air, ¶ 25.

                                     DISCUSSION

¶13   Issue 1. Did the District Court err in granting summary judgment on McLeod’s
      defamation claims based on § 27-1-804(2), MCA?

¶14   Defamation is effected by libel or slander. Section 27-1-801, MCA. Libel and

slander are defined by statute. Libel is “a false and unprivileged publication by writing,

printing, picture, effigy, or other fixed representation to the eye which exposes any

person to hatred, contempt, ridicule, or obloquy or which causes him to be shunned or

avoided or which has a tendency to injure him in his occupation.” Section 27-1-802,

MCA (emphasis added). Slander is “a false and unprivileged publication other than libel

which,” for purposes of the present case,

      tends directly to injure [a person] in respect to his office, profession, trade,
      or business, either by imputing to him general disqualification in those
      respects which the office or other occupation peculiarly requires or by
      imputing something with reference to his office, profession, trade, or
      business that has a natural tendency to lessen its profit.

Section 27-1-803(3), MCA (emphasis added).

¶15   As emphasized in the statutory language quoted above, libel and slander exist only

with respect to “unprivileged” publications. See also Skinner v. Pistoria, 194 Mont. 257,

261, 633 P.2d 672, 675 (1981) (“One requisite of a defamation action is that the

                                             7
communication must be unprivileged.”). Thus, if Hoell’s statements in her complaints to

DOLI were privileged, then McLeod cannot state a claim for libel or slander.2 Section

27-1-804, MCA, in turn, defines what communications are privileged. Of relevance here,

a privileged publication is one made “in any legislative or judicial proceeding or in any

other official proceeding authorized by law.” Section 27-1-804(2), MCA.

¶16   We interpreted the language of § 27-1-804(2), MCA, in Skinner. Pistoria was a

“political gadfly” and outspoken critic of the Great Falls city government who made

statements at a meeting of the Great Falls City Commission during the time reserved for

public comment. His statements included an accusation that Skinner and other police

officers had misused police department funds. Skinner sued for defamation, claiming

that these statements were made with a malicious personal motive and that they exposed

him to hatred, contempt, ridicule, and obloquy, caused him to be shunned and avoided,

and injured him in his occupation. See Skinner, 194 Mont. at 259-61, 633 P.2d at 673-74.

This Court, however, held that § 27-1-804(2), MCA, confers an absolute privilege on

publications made in an “official proceeding authorized by law,” so long as the

publications are made “to the proper authorities responsible for the interest being

expressed.” Skinner, 194 Mont. at 262-63, 633 P.2d at 675-76. Thus, if Pistoria’s

statements about the conduct of certain police officers were made at a proper proceeding,

then the question of whether the statements were maliciously motivated was irrelevant.

      2
        “Publication of defamatory matter is its communication intentionally or by a
negligent act to one other than the person defamed.” Restatement (Second) of Torts
§ 577(1) (1977); cf. Skinner, 194 Mont. at 261, 633 P.2d at 675 (defining “publication” as
“to make public” (citing Black’s Law Dictionary 1105 (5th ed., 1979))). Hoell and the
State do not deny that her statements were communicated intentionally to a third person.

                                            8
Skinner, 194 Mont. at 263, 633 P.2d at 676. We concluded that the absolute privilege

applied to Pistoria’s statements for the following reasons: the meeting was an official

meeting authorized by law; it was proper for Pistoria to address the commission because

it was the governing body of the city; it was proper for him to address the city manager

because the manager supervises the police department; and it was proper for him to

address the chief of police because the police chief supervises all city police officers.

Skinner, 194 Mont. at 264, 633 P.2d at 676.

¶17    Hoell and the State maintain, and we agree, that under Skinner and § 27-1-804(2),

MCA, the District Court correctly concluded that McLeod’s defamation claims are based

on privileged publications and, as such, must fail. The first question is whether Hoell’s

statements were made in an official proceeding authorized by law. We conclude they

were. DOLI is authorized to “investigate complaints . . . of illegal or unethical conduct of

a member of the profession or occupation under the jurisdiction of a board within the

department.” Section 37-1-101(5), MCA.3 Each licensing board allocated to DOLI is

authorized to adopt rules specifying grounds for disciplinary action. Section 37-1-136(1),

MCA; see also § 2-15-1758(6), MCA (allocating the Board of Real Estate Appraisers to

DOLI); § 37-54-105(8), (9), MCA (authorizing the Board to adopt standards of

professional appraisal practice and to reprimand, suspend, revoke, or refuse to renew the

license or certificate of a person who has violated the standards). Any disciplinary action

by a board must be conducted as a contested case hearing under the provisions of the

Montana Administrative Procedure Act. Section 37-1-136(2), MCA.

       3
           This and the following statutory references are to the 2003 MCA.

                                              9
¶18    To facilitate this scheme, § 37-1-308(1), MCA, specifically authorizes a person,

government, or private entity to submit a written complaint to DOLI charging a licensee

with a violation of Title 37, chapter 1, part 3, MCA, and specifying the grounds for the

complaint—e.g., “conduct that does not meet the generally accepted standards of

practice” (§ 37-1-316(18), MCA). Here, Hoell filed complaints as she was authorized to

do by § 37-1-308(1), MCA. She used the standardized form provided by DOLI for

making such complaints. She provided the specific information requested on the form

and attached pertinent documentation. All of her statements pertained directly to her

allegation that McLeod had failed to comply with USPAP. She asked DOLI, through the

Board of Real Estate Appraisers, to determine whether her allegation was correct and, if

it was, to take appropriate action under § 37-54-105, MCA. A properly filed complaint

triggers and becomes an integral part of the investigative and disciplinary proceedings

described above. Sections 37-1-101(5), -308(2), MCA. We thus conclude that Hoell’s

statements were made in an official proceeding authorized by law.

¶19    The second question is whether her statements were made to the proper authorities

responsible for the interest being expressed. Again, we conclude they were. As just

noted, all of her statements pertained directly to her allegation that McLeod had engaged

in unprofessional conduct by failing to comply with USPAP. DOLI was the proper

authority for receiving this complaint. Section 37-1-308(1), MCA. And this is one of the

specific violations identified in the statutes. See § 37-1-316(18), MCA (“The following

is unprofessional conduct for a licensee or license applicant governed by this chapter: . . .

conduct that does not meet the generally accepted standards of practice.” (paragraph

                                             10
break omitted)).     Accordingly, we hold that Hoell’s statements were privileged

publications under § 27-1-804(2), MCA, and that McLeod, therefore, cannot state a claim

of libel or slander under §§ 27-1-802 and -803, MCA.

¶20    Before concluding, we address McLeod’s arguments that summary judgment is

inappropriate here. First, McLeod cites Article II, Section 7 of the Montana Constitution,

which states that “[i]n all suits and prosecutions for libel or slander the truth thereof may

be given in evidence; and the jury, under the direction of the court, shall determine the

law and the facts.” Mont. Const. art. II, § 7. He also cites Hale v. City of Billings, 1999
MT 213, 295 Mont. 495, 986 P.2d 413, where we held that “[u]nless the evidence is so

overwhelming that any other conclusion would be unreasonable, the issue of whether the

[defendant’s] statements were true or false is a determination for the jury alone to make.”

Hale, ¶ 18 (internal quotation marks omitted). McLeod interprets these authorities as

standing for the proposition that “the only way to take this case away from a jury is to be

able to say that a jury would be unreasonable in finding defamation in this case.” Here,

he argues, “a finding that Jack McLeod was not defamed would be unreasonable.”

¶21    As Hoell and the State correctly point out, however, the preliminary determination

of whether a publication is privileged is a question of law for the court. Hale, ¶ 35.

Moreover, this determination may be reached by the court when material facts are not in

dispute. Hale, ¶ 35. Here, McLeod has not shown the existence of any genuine issues of

material fact related to whether Hoell’s statements were made in an official proceeding

authorized by law and to the proper authorities responsible for the interest being

expressed. Skinner, 194 Mont. at 263, 633 P.2d at 676.

                                             11
¶22    Second, notwithstanding § 27-1-804(2), MCA, McLeod focuses on § 37-1-308(3),

MCA, which states that “[a] person or private entity, but not a government entity, filing a

complaint under this section in good faith is immune from suit in a civil action related to

the filing or contents of the complaint.” According to McLeod, there are genuine issues

of material fact which preclude Hoell and the State from prevailing under this statute—

specifically, whether Hoell was acting as an agent of a government entity, and whether

she acted in good faith. Yet, in their summary judgment briefing, Hoell and the State

both state explicitly that they are relying on § 27-1-804(2), MCA, and are not relying on

§ 37-1-308(3), MCA, and they reiterate this position on appeal. Thus, it appears that

McLeod has simply identified a defense Hoell and the State could have raised and is

arguing that summary judgment on that defense is inappropriate.

¶23    Regardless, we conclude that § 37-1-308(3), MCA, is not applicable here. Since

libel or slander claims exist only with respect to “unprivileged publications,” claims

premised on “privileged publications” (as defined in § 27-1-804, MCA) necessarily fail at

their inception. Thus, § 37-1-308(3), MCA, simply does not apply to libel and slander

claims where the communications at issue are privileged under § 27-1-804, MCA. It

does apply, however, to civil actions that are not premised on privileged communications.

Here, as explained above, McLeod’s claims are premised on privileged communications;

therefore, § 37-1-308(3), MCA, is inapplicable.

¶24    In sum, Hoell and the State met their burden of establishing both the absence of

genuine issues of material fact and entitlement to judgment as a matter of law on

McLeod’s libel and slander claims. McLeod has not established that a genuine issue of

                                            12
material fact exists. We accordingly hold that the District Court did not err in granting

summary judgment on McLeod’s defamation claims based on § 27-1-804(2), MCA.

¶25   Issue 2. Did the District Court err in granting summary judgment on McLeod’s
      malicious prosecution claim based on the “probable cause” element of that
      claim?

¶26   In a civil action for malicious prosecution, the plaintiff’s burden at trial is to

introduce proof sufficient to allow reasonable jurors to find each of the following six

elements: (1) a judicial proceeding was commenced and prosecuted against the plaintiff;

(2) the defendant was responsible for instigating, prosecuting, or continuing such

proceeding; (3) there was a lack of probable cause for the defendant’s acts; (4) the

defendant was actuated by malice; (5) the judicial proceeding terminated favorably for

the plaintiff; and (6) the plaintiff suffered damage. Hughes v. Lynch, 2007 MT 177, ¶ 12,

338 Mont. 214, 164 P.3d 913. If one of these elements is not proven by prima facie

evidence, judgment as a matter of law may be entered for the defendant. Hughes, ¶ 12.

¶27   We focus here on the third element: whether there was a lack of probable cause

for Hoell’s acts of filing her complaints with DOLI.       In Hughes, we adopted the

following definition of “probable cause” for purposes of a malicious prosecution claim:

             One who takes an active part in the initiation, continuation or
      procurement of civil proceedings against another has probable cause for
      doing so if he reasonably believes in the existence of the facts upon which
      the claim is based, and either
             (a) correctly or reasonably believes that under those facts the claim
      may be valid under the applicable law, or
             (b) believes to this effect in reliance upon the advice of counsel,
      sought in good faith and given after full disclosure of all relevant facts
      within his knowledge and information.

Hughes, ¶ 16 (citing Restatement (Second) of Torts § 675 (1977)).

                                           13
¶28   In the present case, Hoell and the State point out that the Board of Real Estate

Appraisers ultimately found “reasonable cause” to believe that McLeod had violated

certain USPAP provisions, while McLeod contends that Lennhoff’s analysis (on which

the Board relied) was flawed in numerous respects. However, as we indicated in Plouffe

v. Dept. of Public Health and Human Services, 2002 MT 64, 309 Mont. 184, 45 P.3d 10,

probable cause is determined based on the facts known to the party at the time she

initiated the proceedings. Plouffe, ¶ 18; accord Seltzer v. Morton, 2007 MT 62, ¶ 72, 336
Mont. 225, 154 P.3d 561. We also note here that the issue of probable cause must be

submitted to a jury for resolution when direct and circumstantial evidence related to the

defendant’s knowledge is susceptible to different conclusions by reasonable persons, but

the issue of probable cause is a question of law when no evidentiary conflict exists and

uncontroverted evidence admits only one conclusion. Plouffe, ¶ 18.

¶29   Here, § 37-1-308(1), MCA, authorizes a written complaint to be filed with DOLI

charging a licensee with unprofessional conduct and specifying the grounds for the

complaint. Hoell and the State point out that she filed two such complaints, using the

standardized form provided for this purpose and providing the specific information

requested on the form. The nature of each complaint was that McLeod had failed to

comply with the generally accepted standards of professional appraisal practice (i.e.,

USPAP). See §§ 37-1-316(18), 37-54-403(1), MCA. Hoell stated on one complaint that

she had personally reviewed the Lee appraisal and that the deficiencies were readily

apparent on the attached copy of that appraisal. On the other complaint, she stated upon

information and belief that the deficiencies were readily apparent on the Treweek

                                           14
appraisal, a copy of which was likewise attached to the complaint.           She signed a

statement on each complaint that “[t]he facts and matters contained herein are true,

accurate and correct to the best of my knowledge.”

¶30    Hoell and the State have presented substantial evidence that Hoell reasonably

believed in the existence of the facts upon which her complaints were based and

reasonably believed that under those facts the complaints may be valid under the

applicable law. Hughes, ¶ 16. Their evidence is uncontroverted. Although McLeod

opines that Hoell’s motives were sinister, McLeod’s speculation does not create a

genuine issue of material fact as to whether Hoell had a reasonable belief in the validity

of her complaints and the existence of the underlying facts. Peterson, ¶ 13. In addition,

McLeod points to the supposed “problems with the investigation conducted by the Board

of Real Estate Appraisers.” But, again, our focus here is on the facts known to Hoell at

the time she filed her complaints. Plouffe, ¶ 18.

¶31    In sum, Hoell and the State met their burden of establishing both the absence of

genuine issues of material fact and entitlement to judgment as a matter of law on

McLeod’s malicious prosecution claim. McLeod has not established that a genuine issue

of material fact exists. We accordingly hold that the District Court did not err in granting

summary judgment on McLeod’s malicious prosecution claim based on the “probable

cause” element of that claim.

¶32    Affirmed.

                                                    /S/ JAMES C. NELSON

                                            15
We Concur:

/S/ PATRICIA COTTER
/S/ W. WILLIAM LEAPHART
/S/ JOHN WARNER
/S/ JIM RICE

                          16