AGI-Bluff Manor, Inc. v. Reagen

• Citation: 713 F. Supp. 1535
• Decision Date: 18 April 1989
• Docket Number: No. 85-4015-CV-C-5.,85-4015-CV-C-5.
• Parties: AGI-BLUFF MANOR, INC., et al., Plaintiffs, v. Michael V. REAGEN, Director, Missouri Department of Social Services, et al., Defendants.
• Court: U.S. District Court — Western District of Missouri

713 F. Supp. 1535

AGI-BLUFF MANOR, INC., et al., Plaintiffs, v. Michael V. REAGEN, Director, Missouri Department of Social Services, et al., Defendants.

No. 85-4015-CV-C-5.

United States District Court, W.D. Missouri, C.D.

April 18, 1989.

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Rexford H. Caruthers, Peter W. Herzog, St. Louis, Mo., Joseph E. Casson, Washington, D.C., for plaintiffs.

William R. Rapps, Asst. General Counsel, Michael Boicourt, William Cornwell, Asst. Attys. Gen., Jefferson City, Mo., for defendants.

ORDER

SCOTT O. WRIGHT, Chief Judge.

Pending before the Court is defendants' motion to dismiss. This motion and the responses thereto are very lengthy. In order to rule on these motions, the Court finds it expedient to follow the briefing method chosen by the defendants. Therefore, the Court shall proceed count by count, considering the claims against the defendants in their individual capacities first. A factual background shall be omitted from this order, because a factual background has previously been included in virtually every filing in this case; setting out the facts again would simply be redundant.

Motion to Dismiss

In considering a motion to dismiss, the Eighth Circuit has held that the complaint should be liberally construed in the light most favorable to the plaintiff. Fusco v. Xerox Corp., 676 F.2d 332, 334 (8th Cir. 1982). All inferences which may be drawn from the facts alleged should be drawn in favor of the plaintiff. Parkview Heights Corp. v. City of Black Jack, 467 F.2d 1208, 1212 n. 3 (8th Cir.1972). The complaint should not be dismissed unless it appears beyond doubt that the plaintiff can prove no set of facts thereunder which would entitle him to relief. Price v. Moody, 677 F.2d 676, 677 (8th Cir.1982).

Analysis

Counts Against Individual Defendants

I. Count Three—Tortious Interference with Contract.

In Count Three, the plaintiffs assert that defendants Reagen and Rapps, both officers of Department of Social Services (DOSS), tortiously induced breach of the settlement agreement by acting to promulgate the Emergency Amendment. The plaintiffs seek actual and punitive damages for this alleged tort from Reagen and Rapps in their individual capacities. The defendants have moved to dismiss this count on the grounds that the plaintiffs have failed to state a claim for tortious inducement of breach of contract and because the defendants Reagen and Rapps are absolutely immune from this tort claim due to the immunity which arises out of the discretionary actions which they took within the scope of their official duties. Because the Court agrees that Reagen and Rapps are absolutely immune from this tort, this order shall not reach the issue of failure to state a claim for tortious inducement.

In Missouri, public officers are not liable for injuries arising from discretionary acts or omissions performed within the scope of their authority. Kanagawa v. State by and through Freeman, 685 S.W.2d 831, 835 (Mo.1985) (en banc). Public officers may be held liable only for torts committed when acting in a ministerial capacity. Id. A discretionary act is any act that requires the exercise of reason and judgment, and the determination of whether an act is discretionary does not entail an inquiry into the powers held by the officer. Id. at 836. A ministerial act, on the other hand, is one that is "of a clerical nature which a public officer is required to perform upon a given state of facts, in a prescribed manner, in obedience to the mandate of legal authority, without regard to his own judgment or opinion concerning the propriety of the act to be performed." Rustici v. Weidemeyer, 673 S.W.2d 762, 769 (Mo.1984) (en banc) (quoting Yelton v. Becker, 248 S.W.2d 86, 89 (Mo.Ct.App.1952)).

The definition of a discretionary act for immunity purposes must remain extremely broad in order to promote the important policy of "relieving public servants of the threat of burdensome litigations." Kanagawa, 685 S.W.2d at 836 (quoting Sherrill v. Wilson, 653 S.W.2d 661, 667 (Mo.1983) (en banc)). It is necessary for the conduct of effective government that public officers make their decisions and perform their duties free of liability and the threat of liability. Jackson v. Wilson, 581 S.W.2d 39, 42 (Mo.Ct.App.1979). For this reason, the Missouri doctrine of official immunity provides an absolute immunity from suit, not just immunity from liability after trial. State ex rel. Missouri Dept. of Agriculture v. McHenry, 687 S.W.2d 178, 181 (Mo. 1985) (en banc).

The plaintiffs argue that defendants Reagen and Rapps are not entitled to absolute official immunity under Missouri law. They argue that the defendants' acts are ministerial acts. This argument is unfounded, however, because under Missouri law ministerial acts are clerical in nature, while the definition of discretionary acts is extremely broad. The plaintiffs' reliance on Nika Corp. v. Kansas City, 582 F.Supp. 343 (W.D.Mo.1983), is misplaced. In that case the court held that compliance with the terms of a contract regarding the return of certain materials to plaintiff imposed a ministerial duty on a city official who refused to return the materials. Id. at 356. By contrast, the complaint in this case alleges a policy decision to repudiate the settlement agreement rather than a simple failure to perform some mechanical aspect of it.

Defendants Reagen and Rapps are entitled to absolute official immunity for liability arising from their roles in promulgating the Emergency Amendment. Their actions with respect to the development of the Amendment were discretionary. They clearly exercised reason and judgment in deciding as administrators and legal counsel in an unprecedented situation to undertake an Amendment to the state plan. They determined that the Amendment was an appropriate solution to the problems created by the Health Care Financing Administration's (HCFA) deferral and imminent disallowance of the rates that were being paid to the plaintiff nursing homes. This decision by Reagen and Rapps was obviously made within the scope of their authority as administrators of the Medicaid program.

The plaintiffs further argue that even if the acts of Reagen and Rapps were discretionary, they are not entitled to official immunity because official immunity does not apply to discretionary acts done in bad faith or with malice. State ex rel. Twiehaus v. Adolph, 706 S.W.2d 443, 446 (Mo.1986) (en banc). The plaintiffs' statements made in their complaint which assert that defendants Reagen and Rapps acted "willfully, wantonly and maliciously" do not affect the defendants' entitlement to immunity. In general, the motivations behind official acts are not relevant to whether the official is entitled to immunity under common law so long as the official was acting within his authority. See Barr v. Matteo, 360 U.S. 564, 569-74, 79 S.Ct. 1335, 1338-41, 3 L.Ed.2d 1434 (1959). It is true that Missouri has recognized an exception to official immunity for the discretionary acts of public officials who are "guilty of willful wrong in relation thereto." State ex rel. Funk v. Turner, 328 Mo. 604, 42 S.W.2d 594, 598 (1931) (quoted in Jackson v. Wilson, 581 S.W.2d 39, 42-43 (Mo.Ct. App.1979)). But this exception requires a showing of "actual intent to cause injury." State ex rel. Twiehaus, 706 S.W.2d at 447. If the allegations in a complaint fail to state facts from which it could reasonably be inferred that the official acted with such malice, the complaint will be dismissed. As the Supreme Court has held with respect to the federal law of official immunity, "bare allegations of malice should not suffice to subject government officials either to the costs of trial or to the burdens of broad-reaching discovery." Harlow v. Fitzgerald, 457 U.S. 800, 817-18, 102 S.Ct. 2727, 2737-38, 73 L.Ed.2d 396 (1982). Similarly, the Eighth Circuit has recently refused to sustain a claim requiring malice where the plaintiff made only conclusory allegations, as the plaintiffs have done here. Reese v. Kennedy, 865 F.2d 186, 188 (8th Cir.1989).

In contrast to the purely conclusory allegations of malice, the plaintiffs concede that the Emergency Amendment was adopted to insure the continuation of federal participation in the Medicaid rates paid to plaintiffs. Indeed, as this Court has already found, the Emergency Amendment was filed to preserve as much of the previously established rate as would be accepted by the federal government. (Order of October 27, 1988, at 5, denying motion for preliminary injunction). This is not a purpose from which malice can be inferred. Therefore, there is no support for the plaintiffs' conclusory allegations that defendants Reagen and Rapps acted maliciously toward the plaintiffs. Thus, in Count Three, the plaintiffs have failed to adequately plead the malice required to defeat the defendants' immunity defense. Therefore, Count Three shall be dismissed with prejudice.

II. Count Six—Taking

In Count Six, the plaintiffs claim that the actions of defendants Reagen and Rapps in causing the promulgation of the Emergency Amendment effected a taking of the plaintiffs' property interest in the alleged settlement agreement without just compensation in violation of the Fifth and Fourteenth Amendments. The plaintiffs bring this Constitutional claim under § 1983, seeking money damages from the defendants Reagen and Rapps in their individual capacities.

Count Six shall be dismissed with prejudice on the ground that it fails to state a claim for unconstitutional taking. First, the Emergency Amendment did not effect the taking of any property interest the plaintiffs may have had in the alleged contract with DOSS. The amendment was a valid exercise of the state's police power to regulate health care benefits and did not have a substantial economic impact on the plaintiffs or significantly interfere with any reasonable investment-backed expectations. Second, the...