McLeod v. State ex rel. Dept. of Transp.

Decision Date14 April 2009
Docket NumberNo. DA 07-0754.,DA 07-0754.
Citation206 P.3d 956,350 Mont. 285,2009 MT 130
PartiesJack 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.
CourtMontana Supreme Court

For Appellee Sue Hoell: Marshal L. Mickelson, Corette Pohlman & Kebe, Butte, Montana.

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?"

¶ 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, 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 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.

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, 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...

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