CM Clark Insurance Agency, Inc. v. Maxwell

• Decision Date: 30 May 1973
• Docket Number: No. 71-1927,71-2010.,71-1927
• Citation: 156 US App. DC 240,479 F.2d 1223
• Parties: C. M. CLARK INSURANCE AGENCY, INC., Appellant, v. David O. MAXWELL, Appellee. SAFEGUARD MUTUAL INSURANCE COMPANY, Appellant, v. David O. MAXWELL, Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

156 US App. DC 240, 479 F.2d 1223 (1973)

C. M. CLARK INSURANCE AGENCY, INC., Appellant, v. David O. MAXWELL, Appellee.

SAFEGUARD MUTUAL INSURANCE COMPANY, Appellant, v. David O. MAXWELL, Appellee.

Nos. 71-1927, 71-2010.

United States Court of Appeals, District of Columbia Circuit.

Argued March 9, 1973.

Decided May 30, 1973.

James C. Eastman, Washington, D. C., for appellants. George P. Lamb, Jr., Washington, D. C., also entered an appearance for appellant.

Joseph A. Califano, Jr., Washington, D. C., with whom Charles H. Wilson, Jr., Washington, D. C., was on the brief, for appellee.

Before LEVENTHAL and ROBB, Circuit Judges, and WILLIAM J. JAMESON,^* Senior United States District Judge for the District of Montana.

JAMESON, District Judge:

This is a consolidated appeal from orders dismissing plaintiffs' complaints for failure to state a claim. The appellants, Standard Mutual Insurance Company and C. M. Clark Insurance Agency, Inc., asserting claims under the Civil Rights Act of 1871, 42 U.S.C. §§ 1983, 1985, and for malicious abuse of process, sought damages and injunctive relief from the appellee, David O. Maxwell, for actions taken by him while Insurance Commissioner of the Commonwealth of Pennsylvania.

The primary question presented on this appeal is whether the District Court erred in dismissing the complaints for failure to state a claim on the ground that the appellee was immune from suit. Since we conclude that appellee was entitled to the protection of official immunity, it is unnecessary to determine the procedural questions presented.¹

It appears from the complaints and exhibit thereto attached that on April 12, 1967 appellee in his capacity as Insurance Commissioner for the Commonwealth of Pennsylvania, "by authority of Section 502 of the Insurance Department Act of May 17, 1921, P.L. 789, as amended (40 Purdon's Statutes 202)," issued a suspension order declaring Safeguard Mutual Insurance Company "to be in such condition that its further transaction of business will be hazardous to its policyholders, to its creditors, and to the public" and prohibiting Safeguard from conducting further business "without prior written approval of the Insurance Commissioner of the Commonwealth of Pennsylvania." On the same day appellee filed in the Court of Common Pleas of Dauphin County, Pennsylvania a petition for liquidation of Safeguard.

Section 502 of the Insurance Department Act (40 P.S. § 202) provides in pertinent part:

"Whenever any domestic insurance company * * * is found, after an examination, to be in such condition that its further transaction of business will be hazardous to its policyholders, or to its creditors, or to the public * * * the Insurance Commissioner, after examination, shall suspend the entire business of any such domestic insurance company * * *. Upon suspension of any such organization by the Insurance Commissioner * * * he shall after approval of the Attorney General apply to the Court of Common Pleas of Dauphin County * * * for an order directing such company * * * to show cause why its business should not be closed, and the Insurance Commissioner should not take possession of its property and conduct its business, and for such other relief as the nature of the case and the interests of its policyholders, creditors, stockholders, or the public may require."

Following an extended hearing the Dauphin County Court denied the appellee's petition for the appointment of a liquidator and granted Safeguard's petition to vacate the suspension order. Commonwealth ex rel. Maxwell v. Safeguard Mutual Insurance Company, 91 Dauph. 305 (1969).

Thereafter Safeguard and its agent, appellant C. M. Clark Insurance Agency, Inc., filed separate suits in the Eastern District of Pennsylvania against appellee as Insurance Commissioner, various members of his staff, and deputy attorneys general of the Commonwealth. The actions were dismissed as to appellee for lack of personal jurisdiction.² Subsequently the actions were dismissed as to the remaining defendants under Rule 12(b)(6) Fed.R.Civ.P. on the ground of official immunity. Safeguard Mutual Ins. Co. v. Miller, 333 F.Supp. 822 (E.D.Pa.1971).³ The Court of Appeals reversed and remanded for further proceedings. 472 F.2d 732 (3 Cir. 1973).⁴

It is well established that judges are immune from liability for damages for official acts within their jurisdiction and that this immunity was not abolished by § 1983. Pierson v. Ray, 386 U.S. 547, 554, 87 S.Ct. 1213, 18 L.Ed.2d 288 (1967).⁵ The same is true of legislators for acts within the legislative role. Tenney v. Brandhove, 341 U. S. 367, 71 S.Ct. 783, 95 L.Ed. 1019 (1951).⁶ A like immunity extends to other public officials who are performing quasi-judicial functions or whose duties are related to the judicial process. Yaselli v. Goff, 12 F.2d 396 (2 Cir. 1926), aff'd per curiam, 275 U.S. 503, 48 S.Ct. 155, 72 L.Ed. 395, involving a Special Assistant to the Attorney General.⁷

Even where public officers are not engaged in performing quasi-judicial functions, they may be immune from liability for their discretionary acts performed pursuant to their lawful authority. This rule was early stated by this court in Cooper v. O'Connor, 69 U.S. App.D.C. 100, 99 F.2d 135, 142, 118 A. L.R. 1440 (1938), an action against the Comptroller of the Currency and other federal officials for allegedly procuring a false indictment of plaintiff, "falsely, maliciously and without probable cause". In holding the defendants immune from liability the court recognized that immunity "has been applied, not only to officials, judicial and quasi-judicial, but to executive officers generally" (listing various officers, boards and commissions), and concluded "that as the acts of appellees were performed in the discharge of their official duties, the motives with which those duties were performed are immaterial * * *."⁸

In Barr v. Matteo, 360 U.S. 564, 79 S. Ct. 1335, 3 L.Ed.2d 1434 (1959), an action for libel against the Acting Director of the Office of Rent Stabilization, the Court, after referring to the absolute immunity granted public officials whose duties are related to the judicial process, recognized that this privilege has not been "confined to officers of the legislative and judicial branches of the Government and executive officers of the kind involved in Yaselli." The Court quoted from its prior opinion in Spalding v. Vilas, 161 U.S. 483, 498-499, 16 S.Ct. 631, 40 L.Ed. 780 (1895), sustaining a plea by the Postmaster General of absolute privilege, where the Court said in part:

"In exercising the functions of his office, the head of an executive department, keeping within the limits of his authority, should not be under an apprehension that the motives that control his official conduct may, at any time, become the subject of inquiry in a civil suit for damages. It would seriously cripple the proper and effective administration of public affairs as entrusted to the executive branch of the government, if he were subjected to any such restraint. * * *" 360 U.S. at 570, 79 S.Ct. at 1339.⁹

Recognizing that "the occasions upon which the acts of the head of an executive department will be protected by the privilege are doubtless far broader than in the case of an officer with less sweeping functions," the Court stated that it was "not the title of his office but the duties with which the * * * officer * * * is entrusted" which must provide the guide in delineating the scope of his immunity. The Court concluded that the action of the petitioner was "an appropriate exercise of the discretion which an officer of (his) rank must possess if the public service is to function effectively." 360 U.S. at 573-575, 79 S. Ct. at 1340-1341.

Citing Barr v. Matteo, supra, this court in Carter v. Carlson, 144 U.S.App. D.C. 388, 447 F.2d 358, 362 (1971), rev'd on other grounds, 409 U.S. 418, 93 S.Ct. 602, 34 L.Ed.2d 613 (1973) recognized that in distinguishing "between discretionary and ministerial functions" and in "determining whether a particular governmental function falls within the scope of official immunity," the "proper approach is to consider the precise function at issue, and to determine whether the officer is likely to be unduly inhibited in the performance of that function by the threat of liability for tortious conduct."

It is true, as appellants argue, that the doctrine of official immunity should be applied sparingly and that to "hold all state officers immune from suit would very largely frustrate the salutary purpose" of § 1983. Jobson v. Henne, 355 F.2d 129, 133 (2 Cir. 1966).¹⁰ Rather it is necessary to balance "competing considerations" in determining whether particular officers are immune. Dale v. Hahn, 440 F.2d 633, 637 (2 Cir. 1971). This was clearly recognized in Barr v. Matteo, supra, the Court calling attention to the conflict between "two considerations of high importance" — the protection of the individual citizen against oppressive or malicious action by governmental officers and the "protection of the public interest" by shielding responsible governmental officers on "account of action taken in the exercise of their official responsibilities." 360 U.S. at 564-565, 79 S.Ct. at 1336. As in Barr v. Matteo, we conclude that the balance here must be resolved in favor of immunity.

Appellee was the chief executive officer of the Department of Insurance of the Commonwealth of Pennsylvania, "which is charged with the execution of the laws of this Commonwealth in relation to insurance."¹¹ The duties, responsibilities and function of the Insurance Commissioner are clearly defined by statute. Upon specified findings he was required "to suspend the entire business" of an insurance company and apply for an order to show cause why the business should not be closed and the Insurance Commissioner take possession of its property and conduct its business. He was required to engage in the fact finding and decision making...