author: JUSTICE NELSON JUSTICE TRIEWEILER

text:
    JOHNATHAN B. SPRINKLE and ROGER GOLDEN, Plaintiffs and Respondents, vs. JAMES BURTON, M.D., Defendant and Appellant.
    No. 96-225.
    Submitted on Briefs October 10, 1996.
    Decided December 27, 1996.
    53 St.Rep. 1441.
    280 Mont. 358.
    935 P.2d 1094.

      See C.J.S. Venue §139.

      For Appellant: Randy J. Cox, Boone, Karlberg & Haddon, Missoula.
    For Respondent: Erik B. Thueson, John A. Kutzman, Thueson & Lamb, Helena.
   JUSTICE NELSON

delivered the Opinion of the Court.

James Burton, M.D. (Dr. Burton) appeals from an April 4, 1996 order of the Eighth Judicial District Court, Cascade County, denying his motion for change of venue. We reverse and remand.

Background

The record before us on appeal discloses that Plaintiffs Johnathan B. Sprinkle and Roger Golden, former employees of Burlington Northern Railroad, (BN), sued the railroad in separate actions under the Federal Employers’ Liability Act (FELA) in Great Falls, Cascade County, Montana. Plaintiffs claimed damages for back injuries which they sustained in the course of their employment.

Pursuant to Rule 35, M.R.Civ.P., BN hired Dr. Burton as an expert witness to conduct independent medical examinations of both Sprinkle and Golden. Those examinations were conducted in Missoula, Missoula County, Montana, the location of Dr. Burton’s professional office and residence. Dr. Burton charged BN $125.00 per hour for his services in this regard.

During the course of the litigation, by agreement of counsel, Plaintiffs’ counsel deposed Dr. Burton in Missoula, Montana. Dr. Burton charged Plaintiffs’ counsel $500.00 per hour for his time spent in the taking of his depositions. Believing that they had been overcharged by Dr. Burton, both Sprinkle and Golden filed motions in their respective cases seeking adjustment of his charges. It is undisputed that Dr. Burton never came to Cascade County in connection with either suit; all of his activities in connection with these lawsuits took place in Missoula.

Plaintiffs’ FELA actions were both settled before trial and, by stipulation and order, each case was dismissed with prejudice, Sprinkle’s on May 17, 1995 and Golden’s on January 2, 1996. Neither of Plaintiffs’ motions for adjustment of Dr. Burton’s charges were ruled upon by the trial court prior to the case being dismissed with prejudice.

Subsequently, on January 4,1996, Plaintiffs, by their counsel, filed suit against Dr. Burton in Cascade County seeking a ruling from the District Court that the doctor’s charges were unconscionable and unenforceable. Plaintiffs’ suit in Cascade County was premised on the court having continuing jurisdiction over Dr. Burton as an officer of the court or, alternatively, that Dr. Burton’s fees were not reasonable as required by Rule 26, M.R.Civ.P.

Dr. Burton moved to change venue from Cascade County to Missoula County, the county of his residence and the county where his depositions were taken. The District Court denied Dr. Burton’s motion for change of venue. This appeal followed.

Discussion

The issue on appeal is whether the District Court erred in denying Dr. Burton’s motion for change of venue on the facts of this case. We conclude that the court erred.

Whether a county is a proper place for trial is a question of law involving the application of the venue statutes to pleaded facts. State v. Pegasus Gold Corp. (1995), 270 Mont. 32, 35, 889 P.2d 1197, 1199 (citing Minervino v. University of Montana (1993), 258 Mont. 493, 497, 853 P.2d 1242,1245). Accordingly, our review of a district court’s grant or denial of a motion for change of venue is plenary; we simply determine whether the court’s ruling was legally correct. Pegasus, 889 P.2d at 1199 (citing Carter v. Nye (1994), 266 Mont. 226, 228, 879 P.2d 729, 730). See, also Emery v. Federated Foods, Inc. (1993), 262 Mont. 83, 87, 863 P.2d 426, 429.

In denying Dr. Burton’s motion for change of venue, the District Court ruled that under Rule 26(b)(4)(C), M.R.Civ.P., it was obligated to require the party seeking discovery pay the expert a reasonable fee for time spent in responding to discovery under subdivisions (b)(4)(A)(ii) and (b)(4)(B). Noting that the issue of Dr. Burton’s fees had been raised in the underlying cases but not resolved prior to dismissal and citing our decision in Schweigert v. Fowler (1990), 240 Mont. 424, 784 P.2d 405, the court concluded that, as it was the trial court in both cases, it implicitly had the duty to rule on issues of fees for expert witnesses, including Rule 35 examiners, for discovery which it ordered. On that basis the court determined that Cascade County was the proper county for the place for trial of Plaintiffs’ suit against Dr. Burton.

While the designation of a county as a proper place for trial is not jurisdictional, § 25-2-112, MCA, the trial court’s ruling on Dr. Burton’s motion for change of venue was to a great extent bound up with the. notion that the court retained or had continuing jurisdiction of Plaintiffs’ instant case because it had presided over the underlying lawsuits and because Plaintiffs’ motions for adjustment of Dr. Burton’s deposition charges were first raised in the underlying litigation and were then within the authority of the court to resolve under Rule 26(b)(4)(C), M.R.Civ.P. Accordingly, we address this aspect of the trial court’s decision first.

Clearly, as Dr. Burton concedes, during the pendency of the underlying cases the District Court would have had jurisdiction under Rule 26(b)(4)(C) to resolve the issue raised by Plaintiffs’ motions. Rule 26(b)(4)(C), M.R.Civ.P., provides:

Unless manifest injustice would result, (i) the court shall require that the party seeking discovery pay the expert a reasonable fee for time spent in responding to discovery under subdivisions (b)(4)(A)(ii) and (b)(4)(B) [pertaining to Rule 35 experts] of this rule; and (ii) with respect to discovery obtained under subdivision (b)(4)(A)(ii) of this rule the court may require, and with respect to discovery obtained under subdivision (b)(4)(B) of this rule the court shall require the party seeking discovery to pay the other party a fair portion of the fees and expenses reasonably incurred by the latter party in obtaining facts and opinions from the expert.

While Schweigert says nothing to the contrary, we conclude that case does not provide the authority for the trial court’s decision in the instant case. In Schweigert, the issue of the payment of expert witness’ fees was raised in a post-trial motion to alter or amend the judgment. The underlying litigation was still pending when the trial court denied the motion. In affirming the district court, we simply held that the rule does not require the court to order payment of expert witness deposition fees, unless the court had ordered this discovery, and even then the court may not order payment if manifest justice would result. Schweigert, 784 P.2d at 411-12.

Here, despite the District Court’s statement to the contrary, the court did not order Dr. Burton’s depositions to be taken. Rather, the depositions were taken by agreement of counsel. More importantly, however, the motions for adjustment of Dr. Burton’s deposition charges were not ruled upon during the pendency of the underlying litigation, contrary to what occurred in Schweigert. Rather, here, both cases were dismissed with prejudice leaving the motions concerning Dr. Burton’s deposition charges unresolved.

We have held, albeit in a criminal case, that when a case is dismissed “with prejudice” the trial court thereafter loses jurisdiction of the underlying litigation, other than to correct clerical errors. State, ex rel. Torres v. District Court (1994), 265 Mont. 445, 453, 877 P.2d 1008, 1012-13. Our decision in Torres was premised in part on the rule of finality of dismissals with prejudice set out in Schuster v. Northern Co. (1953), 127 Mont. 39, 45,257 P.2d 249,252, a civil case.

Accordingly, to the extent that it based its decision to deny Dr. Burton’s motion for change of venue on the basis that, having had the jurisdiction to decide the Rule 26(b)(4)(C) issue in the underlying lawsuits prior to their dismissal with prejudice, that jurisdiction simply continued into the new, instant litigation or was retained following such dismissal, the District Court was in error. To the contrary, having dismissed the underlying lawsuits with prejudice, any authority which the trial court derived from its jurisdiction in such cases ended with their dismissal.

In so ruling we neither explicitly nor implicitly decide any other issue as to the effect of the trial court’s dismissal with prejudice of the underlying litigation on the merits of Plaintiffs’ instant lawsuit. The only issue properly before us on appeal and, consequently, the only issue which we are deciding is the venue question.

That brings us to the central issue. On the facts of this case, independent of the underlying litigation, was Cascade County a proper venue for Plaintiffs’ present action against Dr. Burton?

It is axiomatic “that venue will be determined by the status of the parties and pleadings at the time of the complaint or at the time the moving party appears in the action.” ... Moreover, “[t]he averments of the complaint will be taken as true in considering the motion ....”

Pegasus, 889 P.2d at 119 (citations omitted). If an action is filed in a comity which is not designated as a proper place of trial, a defendant may move for a change of venue. Sections 25-2-114 and 115, MCA.

As the starting point for our analysis of venue questions we look to § 25-2-118, MCA, which provides, in pertinent part:

Unless otherwise specified in this part:

(1) except as provided in subsection (3) [not at issue here], the proper place of trial for all civil actions is the county in which the defendants or any of them may reside at the commencement of the action;

In this case it is not disputed that at the time Plaintiffs’ instant complaint was filed and at the time Dr. Burton first appeared in this action, he resided in Missoula County. Accordingly, without more, Dr. Burton was entitled to have venue of Plaintiffs’ suit transferred to Missoula County. Our analysis does not end there, however.

It is also black-letter law that when a suit is properly commenced in more than one county and the plaintiff files in one of the permissible counties, the defendant may not change the venue of the action to a different county, even if the county preferred by the defendant is also a proper place for trial. Section 25-2-115, MCA; Melroe v. Doyle (1989), 239 Mont. 524,525,781 P.2d 1134,1135 (citing Petersen v. Tucker (1987) 228 Mont. 393, 396, 742 P.2d 483, 484-85). It follows, then, that we must next address whether Cascade County is also a permissible county in which Plaintiffs could sue Dr. Burton.

On appeal, Plaintiffs maintain that Cascade County is a permissible county in which to sue Dr. Burton. First, Plaintiffs argue that because BN hired Dr. Burton to provide expert testimony in Cascade County, the Cascade County courts are the proper courts to rule on a challenge to the doctor’s fees for that testimony under Rule 26(b)(4)(C). Noting that this case does not involve any issue of what Dr. Burton has charged or would charge BN for his testimony at trial, assuming that he would be called to testify, but rather involves only the issue of what Dr. Burton charged Plaintiffs for the taking of his deposition in Missoula, we do not disagree that the district court sitting on a pending lawsuit is the appropriate court to resolve issues arising under Rule 26(b)(4)(C). Had the trial court ruled on Plaintiffs’ motions to adjust Dr. Burton’s charges during the pendency of their suits, there would be no argument that it was not the proper court to do so. As mentioned above, Dr. Burton concedes that.

However, as is also pointed out above, the District Court did not rule on Plaintiffs’ Rule 26(b)(4)(C) motions during the pendency of the underlying litigation, but, rather, left those motions unresolved at the time it dismissed the lawsuits with prejudice. Whatever power a trial court might have under this rule during the pendency of a lawsuit, we are not cited to any authority nor are we persuaded that Rule 26(b)(4)(C) is properly read to designate venue for an independent cause of action involving an issue of the propriety or amount of an expert witness’ deposition charges in litigation that is no longer pending. Furthermore, we decline to read into the rule any such a requirement. Section 1-2-101, MCA.

Next, Plaintiffs argue that venue is proper in Cascade County because Dr. Burton as a Rule 35 examining physician is an “officer of the court.” In support of this argument Plaintiffs cite several federal cases which have stated in dicta that a physician conducting a Rule 35 examination is an “officer of the court.” Because of this status as an officer of the court, Plaintiffs contend that Dr. Burton was subject to the court’s power to control the conduct of “... its ministerial officers and of all other persons in any manner connected with a judicial proceeding before it in every other matter appertaining thereto,” § 3-1-111(5), MCA, and regardless of the pendency of any particular action, § 3-1-113, MCA.

As Plaintiffs point out, various courts have, either equivocally or unequivocally, referred to Rule 35 examining physicians as “officers of the court.” For example, in Salvatore v. American Cyanamid Co. (D.R.1.1982), 94 F.R.D. 156, one of the cases relied upon by Plaintiffs, the court held that where the defendant had the plaintiff examined by a physician pursuant to Rule 35, Fed.R.Civ.P, but then decided not to call the physician as a witness, the court could require the examining physician, nonetheless, to provide plaintiff with a written report of his examination. In wrestling with the question of the court’s authority under Rule 35, Fed.R.Civ.P., it stated, “[u]nlike plaintiff’s own doctors, Dr. Schaumburg is, in some sense, ‘an‘officer of the court’ performing a non-adversary duty.’ ” Salvatore, 94 F.R.D. at 158. (Emphasis added.)

To the same effect is Warrick v. Brode (D.Del. 1969), 46 F.R.D. 427, cited as authority in Salvatore. In Warrick, the court held that plaintiff was not entitled to have her attorney present during a Rule 35 examination, although she could have her own physician present. Again, the court stated, “[t]he examining doctor is, in effect, an ‘officer of the court’ performing a non-adversary duty.” Warrick, 46 F.R.D. at 428. (Emphasis added.)

Similarly, in Pitcairn v. Perry (8th Cir. 1941), 122 F.2d 881, the court, in dicta, stated, “[i]t has been held that a physician making an examination pursuant to an order of the court becomes an officer of the court and he is available to either party as a witness.” Pitcairn, 122 F.2d at 886.

Likewise, in The Italia (E.D.N.Y. 1939), 27 F.Supp. 785, also relied upon by Plaintiffs, the court ruled that a defendant requesting a Rule 35 examination order had no absolute right to choose the physician to conduct the examination. The court stated that the choice of examiners, though generally best left to the defendant so as to allow the defendant to develop its evidence, was ultimately within the discretion of the court. Where plaintiff strenuously objected to the defendant’s choice, the court ruled that the parties should either select an alternate physician or leave the task of choosing a physician to the court. Italia, 27 F.Supp. at 786-87. In that context the court quoted with approval an advisory comment to the Rule that “the examining physician ... becomes essentially an officer of the court ordering the examination.” Italia, 27 F.Supp. at 786.

Finally, while neither party cited the case in their appellate briefs, the notion that a Rule 35 examining physician is an officer of the court has been previously referred to by this Court. In Mohr v. District Court of Fourth Jud. Dist. (1983), 202 Mont. 423,660 P.2d 88, we held that while a party’s attorney had the right to be present while the examining physician is taking the client’s history, the attorney had no right to be present during the physical examination itself. Mohr, 660 P.2d at 89. In ruling that an attorney’s presence adds nothing to the examination, we cited with approval the court’s statement in Dziwanoski v. Ocean Carriers Corporation (D.Md.1960), 26 F.R.D. 595, that a Rule 35 examining physician is an officer of the court. Mohr, 660 P.2d at 89.

As to the rule itself, Rule 35, M.R.Civ.P., provides a procedure by which a party can obtain a physical or mental examination of another party in connection with litigation where the other party’s physical or mental condition is at issue. The rule contemplates that the examination may be obtained either by order of the court on showing of good cause and upon notice, Rule 35(a), or by agreement of the parties, Rule 35(b)(3). In this case, Dr. Burton was retained by BN to examine Plaintiffs with the agreement of counsel.

In this regard, we note that, while the cases appear to deem a Rule 35 examining physician to be an officer of the court, the rule, by its terms, does not confer any special or particular status on the examiner regardless of the manner in which the examiner comes to examine a party.

Notwithstanding, assuming for purposes of this opinion that a Rule 35 examining physician is an “officer of the court,” we are not persuaded that § 3-1-111(5), MCA, is applicable on the facts presented here. Under this statute, the court has the power to control its “ministerial officers” and “persons in any manner connected with a judicial proceeding before it”

As to the first provision of this statute, even if Dr. Burton is an “officer of the court” it does not follow that he is thereby a ministerial officer for purposes of § 3-1-111(5), MCA. While the Montana code does not define the term “ministerial officer,” Black’s Law Dictionary 996 (6th ed. 1990), defines such a person as

[o]ne whose duties are purely ministerial, as distinguished from executive, legislative, or judicial functions, requiring obedience to the mandates of superiors and not involving the exercise of judgment or discretion.

Moreover, this Court has defined a ministerial act as one performed in obedience to a mandate of legal authority, without regard to the exercise of judgment, and we have indicated that ministerial officers are those called upon to perform ministerial acts. See, State v. District Court (1990), 246 Mont. 225, 229, 805 P.2d 1272, 1275.

Clearly, under these definitions, a Rule 35 examining physician is not a ministerial officer. While such a physician may be appointed by the court or agreed upon by the parties to conduct a physical or mental examination of a party, it cannot be argued that the doctor must obey the mandates of superiors or a legal mandate and not exercise judgment or discretion in the conduct of the examination.

As to that part of § 3-1-111(5), MCA, which gives the court control over “persons in any manner connected with a judicial proceeding before it,” as discussed earlier in this opinion, Plaintiffs’ lawsuits having been dismissed with prejudice, Dr. Burton was no longer before the original trial court.

Accordingly, even assuming Dr. Burton was an “officer of the court” we conclude that § 3-1-111(5), MCA, does not provide authority for the court’s control over the matter of his deposition charges in this case. Moreover, we do not read any provision of § 3-1-111(5), MCA, as establishing venue for an independent cause of action involving an issue that is not pending before the court. Section 1-2-101, MCA.

Plaintiffs’ also argue that if the venue statutes apply at all, § 25-2-125, MCA, is the appropriate statute. That statute provides that the proper place for the trial of an action against a person specially appointed to execute his duties is the county where the cause or some part thereof arose. The short answer to this contention is that Dr. Burton was not appointed by the court; he conducted his examination by agreement of counsel. Accordingly, we conclude that on the facts of this case § 25-2-125, MCA, does not make Cascade County a permissible place of trial for the instant action against Dr. Burton.

Finally, Dr. Burton argues that although Plaintiffs’ complaint is not premised on a contract theory, § 25-2-121, MCA, is nevertheless, applicable. He contends that there was an “oral contract” between himself and Plaintiffs’ counsel that he appear in Missoula and answer deposition questions and that, in return, he would be compensated therefor. Accordingly, as the place of performance of the oral contract, § 25-2-121(2)(b), MCA, dictated that venue was proper in Missoula County as the county where Dr. Burton’s labor or services were performed under the oral contract. See, also Schütz Foss Architects v. Campbell (1990), 243 Mont. 194, 793 P.2d 821. Thus, according to Dr. Burton, § 25-2-121(2)(b), MCA, presents an alternative authority to § 25-2-118(1), MCA, supporting his motion for change of venue.

In response to this argument, Plaintiffs maintain that there was no contract between them and Dr. Burton; that they did not retain him for any purpose; that, to the contrary, he was hired by BN to gather evidence and testify against them; and that as a consequence of his involvement in the underlying litigation, they were compelled to take his deposition in order to adequately prepare to meet his testimony at trial. Plaintiffs’ contend that, while they never expected to depose Dr. Burton for free, they were, nevertheless only compelled to pay a “reasonable” charge under Rule 26(b)(4)(C). Alternatively, Plaintiffs argue that even if there was a contract, since no place of performance was specified and since the principal activity under the contract was to take place in Cascade County when Dr. Burton testified, under § 25-2-121(l)(b)(ii), MCA, venue was proper there.

We do not find it necessary to resolve this argument one way or the other. Accepting at face value Plaintiffs’ contention that there was no contract between them and Dr. Burton, and having heretofore rejected Plaintiffs’ arguments for venue in Cascade County on the basis of Rule 26(b)(4)(C), § 3-1-111(5), MCA, and their “officer of the court” theory, § 25-2-118(1), MCA, remains the governing venue statute. Cascade County was not a permissible place for the trial of Plaintiffs’ suit against Dr. Burton, and he was, accordingly, entitled to have the case transferred to the county of his residence, Missoula County.

We hold that the District Court erred in denying Dr. Burton’s motion for change of venue on the facts here. We reverse and remand this case to the District Court in Cascade County for entry of an order granting Dr. Burton’s motion for change of venue.

CHIEF JUSTICE TURNAGE, JUSTICES GRAY and ERDMANN concur.

JUSTICE TRIEWEILER

dissenting.

I dissent from the majority opinion.

The Burlington Northern Railroad Company contracted with Dr. James Burton to perform a defense medical examination and testify regarding his observations in two actions pending before the District Court for the Eighth Judicial District in Cascade County. For that reason, pursuant to Rule 26, M.R.Civ.P, the plaintiffs in those actions had a right to discover Burton’s opinions by taking testimony in the form of a deposition, which would also be filed and used in Cascade County District Court.

Burton’s involvement in both the underlying action and this action arises from an agreement to provide services in Cascade County. In the first instance, his testimony on behalf of the Railroad would, presumably, have been presented in person. As a result, the opposing parties had a right to take testimony from him, by way of deposition, which would also be used in Cascade County. In both instances he agreed to perform his part of each contract by giving testimony in, or for use in, Cascade County.

I conclude, therefore, that there was, at least, an implied contract between the plaintiffs and Burton. Burton agreed to provide testimony by way of deposition. The plaintiffs agreed to pay him a reasonable fee, as is required by Rule 26(b)(4)(C), M.R.Civ.P., for his testimony.

Section 25-2-121, MCA, provides that:

(1) The proper place of trial for actions upon contracts is either:
(a) the county in which the defendants, or any of them, reside at the commencement of the action; or
(b) the county in which the contract was to be performed. The county in which the contract was to be performed is:
(ii) if no county is named in the contract as the place of performance, the county in which, by necessary implication from the terms of the contract, considering all of the obligations of all parties at the time of its execution, the principal activity was to take place.

In this case, all of Burton’s services for which he submitted his bill were related to the presentation of evidence in a personal injury suit pending in district court in Cascade County. Whether his services involved a personal appearance or the presentation of testimony by deposition makes no difference. The location from which he uttered the words which constituted the testimony to be presented in Cascade County makes no difference.

Burton contracted to perform services. The place of his performance was ultimately Cascade County. Therefore, venue is proper in Cascade County, regardless of the plaintiffs’ preferred theory for retaining it there.

For these reasons, I dissent from the majority opinion. I would affirm the District Court’s order denying Burton’s motion for change of venue.

JUSTICES HUNT and LEAPHART join in the foregoing dissenting opinion.


source: Caselaw Access Project

author: JUSTICE LEAPHART

license: Public Domain

text:
    ALEXANDRA ENGLER HAMMER, Petitioner and Appellant, v. UNINSURED EMPLOYERS’ FUND, Respondent and Insurer for ROBERT HELMS, d/b/a MOSTLY MONTANA CONSTRUCTION, Employer and Respondents.
    No. 96-365.
    Submitted on Briefs October 24, 1996.
    Decided December 27, 1996.
    53 St.Rep. 1447.
    280 Mont. 371.
    929 P.2d 883.

      See C.J.S. Workmen’s Compensation § 78.
    For Appellant: David W. Lauridsen, Laurie Wallace; Bothe & Lauridsen, Columbia Falls.
    For Respondent: Kevin M. Braun, Chief Legal Counsel, Department of Labor & Industry, Helena; Richard De Jana, Attorney at. Law, Kalispell.
   JUSTICE LEAPHART

delivered the Opinion of the Court.

Alexandra Engler Hammer (Hammer), appeals from the decision of the Workers’ Compensation Court, denying her request for benefits from the Uninsured Employers’ Fund (UEF). We affirm.

We restate the issue as follows:

Was Hammer’s employment exempted from workers’ compensation coverage under § 39-71-401, MCA?

BACKGROUND

At age 11, Hammer’s parents died and she went to live with her mother’s brother, Earl Gorin (Earl), and his wife, Mary Alexine (Mary). After Mary and Earl divorced, Hammer continued to live with Mary. In 1989, when Hammer was 15 years old, Mary married Robert Helms (Helms), the owner and sole proprietor of Mostly Montana Construction (MMC). Although Helms did not adopt Hammer, he treated her as a member of the family and supplied her with all necessities.

In 1992, Hammer turned 18 years old, dropped out of school, and moved in with her boyfriend. Later that year, Hammer was arrested and jailed for writing bad checks. While in jail, Hammer contacted Helms and asked him if she could live with him. Hammer was released on her own recognizance based on her agreement to abide by a list of conditions. The list of conditions included:

1. She [Hammer] shall live with Bob Helms at [Helms’Address],
Kalispell, Montana.
2. She shall follow the rules set for her by Bob Helms as a condition
of residing in his home including:
a. Curfew.
b. Household duties.
c. Who can be brought into his home.
d. Who [Hammer] associates with.
Dated Sept. 25,1992
/S/ [Hammer]

In addition to establishing the above rules, Helms spoke with Hammer about the necessity of finding a job in order for her to make restitution on her bad checks. Helms also contacted the state Job Service and arranged an appointment for Hammer to meet with an adviser. In the meantime, Helms insisted that Hammer go to work with him and pick up debris around various construction job sites so she could “earn her keep.” Helms explained that in past dealings with Hammer and his own children, he had used the phrase “earn your keep” to indicate that he would not be paying them.

Hammer had worked for Helms on two previous occasions. On the first occasion, Hammer was paid a lump sum amount to complete a painting project. On the second occasion, Hammer worked to pay off a debt she owed as a result of Helms having purchased a dress for her. Both times, the terms of the agreement between Helms and Hammer were predetermined and the arrangement was temporary.

Hammer testified that after she was released to live with Helms, she thought she would be paid between $4.00 and $5.00 per horn for work she performed for him. However, she conceded no discussion of an hourly rate occurred. During her second day of work for Helms, Hammer fell while she was caulking the eaves of a house. Hammer suffered serious injuries to her back including a C-7 burst fracture, Tll-12 burst fractures, and an L-4 burst fracture with 90% canal compromise. Following her release from the hospital, Hammer stayed at Helms’ house while she recovered.

While recovering from her injuries, Hammer was contacted by James A. Haynes (Haynes), an attorney for the Western Montana Mental Health Center (MHC). Mary was employed with MHC and claimed Hammer as a dependent daughter on her health insurance policy. The MHC had become involved in the case because Hammer had filed an insurance claim for $44,000 with MHC’s insurance company. After reviewing the case with Hammer, Haynes told her that he thought she was an employee of MMC and therefore qualified for workers’ compensation benefits. Haynes notified the Department of Labor & Industry of the accident, of the fact that MMC was an uninsured employer, and asked the Department of Labor & Industry to look into the matter.

In response to Haynes’ inquiry, the UEF sent separate letters to Helms and Hammer requesting that they return the enclosed forms. Fearing that he may be subject to a fine, Helms contacted his attorney who drafted letters for both Helms and Hammer explaining that Hammer was not an employee at the time of her accident. Helms informed Hammer that if she did not sign the letters he would be assessed a fine. Hammer eventually signed the letter. Based in part on Hammer’s letter, the UEF denied Hammer’s request for benefits on the grounds that she was not an employee.

Following the UEF’s denial of Hammer’s claim, Haynes wrote the UEF asking that it reconsider its decision. Since Hammer had not filed a written claim within the requisite 12 months, the UEF did not look into the matter. Hammer then retained counsel who instituted waiver proceedings before the Department of Labor & Industry, Employment Relations Division, Dispute Resolution Bureau. In those proceedings, Hammer requested an extension of time in which to file the claim alleging that Helms’ coercion of Hammer should estop him and the UEF from asserting a statute of limitations defense. This request was denied and the matter was appealed to a hearings officer. On appeal, the hearings officer found that Helms’ misrepresentation to Hammer that she was not an employee was the cause of her failure to timely file a claim and thus an extension of time was warranted. This decision was not appealed and Hammer filed a claim for workers’ compensation benefits.

Following a hearing on the merits of the case, the Workers’ Compensation Court held that although Hammer was an employee, the fact that she did not have a reasonable expectation that payment would exceed room and board exempted her employment from workers’ compensation coverage under § 39-71-402(2)(h), MCA. Hammer appeals the decision of the Workers’ Compensation Court.

DISCUSSION

Was Hammer’s employment exempted from workers’ compensa-, tion coverage under § 39-71-401, MCA?

This Court employs two standards of review for Workers’ Compensation Court decisions: We review the findings of fact to determine if they are supported by substantial, credible evidence, and we review conclusions of law to determine if they are correct. Turjan v. Valley View Estates (1995), 272 Mont. 386, 390, 901 P.2d 76, 79.

In the instant case, Hammer contends that she, like any other employee, had a reasonable expectation of payment. Helms, on the other hand, maintains that Hammer’s expectations of compensation were not reasonable and compensation for her work extended no further than room and board. In its findings of fact, the Workers’ Compensation Court found Helms’ testimony to be more consistent and more credible than Hammer’s. The Workers’ Compensation Court specifically noted that Hammer testified at a Department of Labor hearing, in her affidavit, in her deposition, and at trial; each time her story differed. The court contrasted these inconsistencies with Helms’ consistent testimony that he merely brought Hammer to work to “keep an eye on her” and so she could “earn her keep.”

When conflicting testimony exists, it is within the province of the trial court to determine the credibility of witnesses as well as the sufficiency of the evidence. Taylor v. State Compensation Insurance Fund (1996), 275 Mont. 432, 437, 913 P.2d 1242, 1246 (citing Wilson v. Liberty Mut. Fire Ins. Co. (1995), 273 Mont. 313, 317, 903 P.2d 785, 787-88). In this case, as in Taylor, the Workers’ Compensation Court was faced with conflicting testimony. In such cases, our standard is not whether the evidence supports findings different than those made by the Workers’ Compensation Court, but whether substantial credible evidence supports the court’s findings. Taylor, 913 P.2d at 1246. In the instant case, we find that the Workers’ Compensation Court’s determination that Hammer did not have a reasonable expectation of being paid is supported by credible evidence.

Section 39-71-401(2)(h), MCA, provides:

(2) Unless the employer elects coverage for these employments under this chapter and an insurer allows an election, the Workers’ Compensation Act does not apply to any of the following employments:
(h) employment of a person performing services in return for aid or sustenance only, except employment of a volunteer under 67-2-105 [.]

In arguing that she does not fit under this exception, Hammer cites to Carlson v. Cain (1983), 204 Mont. 311, 664 P.2d 913. In Carlson, Debra Carlson’s (Carlson) fiancé had entered into a contract with the Billings Gazette to deliver newspapers from Billings, Montana, to Fairview, Montana, and all drop points in between. While living with her fiancé, Carlson began making deliveries three or four times a week to assist him in his contractual obligations to the Gazette. Carlson, 664 P.2d at 914. When Carlson was unable to make the deliveries, her fiancé had to hire someone else, whom he paid $15 to $30. Carlson, 664 P.2d at 915. While delivering newspapers for her fiancé, Carlson was severely injured in an auto accident.

In Carlson, this Court upheld the following Workers’ Compensation Court findings: that Carlson was an employee of her fiancé; that Carlson’s employment was not excluded under statutory exceptions; and that there was sufficient evidence to sustain the Workers’ Compensation Court’s finding that Carlson’s fiancé was an employee of the newspaper despite language in the contract and the fact that the newspaper disclaimed having control. Carlson, 664 P.2d at 918-20.

In Carlson, this Court explained that employment status can be established by the existence of a contract for hire, and that such an employment contract may be “express or implied, oral or written.” Carlson, 664 P.2d at 916 (quoting § 39-71-118, MCA). This Court explained that Carlson was not just doing housework and cooking in exchange for room and board, rather she was working virtually full time outside the home and her reasonable expectations exceeded room and board. Carlson, 664 P.2d at 919. In Carlson, this Court held that an implicit agreement existed between Carlson and her fiancé because Carlson furnished valuable driving services to her fiancé and reasonably expected payment beyond those benefits which were just a part of her living arrangement.

In the instant case, Hammer argues that she, like Carlson, furnished valuable services to her employer and had a reasonable expectation she would be paid. However, the Workers’ Compensation Court found that Hammer’s expectations were limited to her obligation to offset room and board for herself. The Workers’ Compensation Court points to the consistent testimony of Helms that Hammer was merely “earning her keep” and thus any expectation of compensation was not reasonable. In contrast, Carlson and her fiancé had an implicit agreement that she would receive some benefit for her services above and beyond room and board. Carlson, 664 P.2d at 919.

At the time of her accident, Hammer was merely “earning her keep” for the room and board she received from Helms. Hammer’s work with Helms was a temporary arrangement which was to continue only until she was able to find a paying job through the Job Service. In contrast to previous work arrangements, Helms and Hammer had not specifically agreed to anything other than room and board. Indeed, Helms had made Hammer aware that she would be “earning her keep.” The Workers’ Compensation Court’s factual findings are supported by substantial credible evidence and they indicate that Hammer did not have a reasonable expectation of monetary compensation. Rather, she was performing services at the job site in return for aid and sustenance. We hold that Hammer’s employment falls under the exception set forth in § 39-71-401(2)(h), MCA, exempting her from coverage.

Accordingly, we affirm the decision of the Workers’ Compensation Court.

CHIEF JUSTICE TURNAGE, JUSTICES NELSON, HUNT and ERDMANN concur.


author: JUSTICE LEAPHART JUSTICE NELSON

text:
    KATHARINE S. BOREEN, formerly known as KATHARINE SELBY, Plaintiff and Appellant, v. GEORGE CHRISTENSEN, a/k/a GEORGE P. CHRISTENSEN, a/k/a “CHRIS” CHRISTENSEN, and F. GUY YOUNGBLOOD, acting individually and in the capacities of administrative officers of the DEPARTMENT OF MILITARY AFFAIRS, STATE OF MONTANA, Defendants and Respondents.
    No. 96-011.
    Submitted September 10, 1996.
    Decided December 30, 1996.
    53 St.Rep. 1450.
    280 Mont. 378.
    930 P.2d 67.

      See C.J.S. Civil Rights § 189.
    For Appellant: Peter Michael Meloy (argued); Meloy & Morrison, Helena.
    For Respondents: Hon. Joseph P. Mazurek, Attorney General, James M Scheier (argued), Ass’t Attorney General, Helena.
   JUSTICE LEAPHART

delivered the Opinion of the Court.

Plaintiff Katharine S. Boreen (Boreen) appeals the September 14, 1995 Order of the First Judicial District Court, Lewis and Clark County, granting qualified immunity to Defendant F. Guy Youngblood (Youngblood) and dismissing Boreen’s 42 U.S.C. § 1983 claim as to Defendant Youngblood. We affirm.

We consider the following issue on appeal:

Did the District Court err in granting Defendant Youngblood qualified immunity on the basis that Boreen’s property interest in her employment was not clearly established law at the time she was constructively discharged by the Defendants?

Factual and Procedural Background

Boreen was employed by the Montana Department of Military Affairs. Following her resignation from her employment in April 1990, Boreen filed a complaint against the Department of Military Affairs, alleging constructive discharge under the Montana Wrongful Discharge From Employment Act. That action was dismissed because it was filed after the statute of limitations had passed. Boreen then filed a complaint pursuant to 42 U.S.C. § 1983 (§ 1983) alleging that she was terminated from her employment with the Department of Military Affairs, and that she was deprived of a property interest in her employment without due process of law. Youngblood, one of the named Defendants, filed an answer to the complaint. Boreen then filed an amended complaint, alleging that she was constructively discharged from her employment. Youngblood filed an answer to the amended complaint, raising, inter alia, the affirmative defense of qualified immunity. Youngblood also filed a motion to dismiss or for summary judgment. Youngblood made two primary arguments in his motion to dismiss: (1) government employees who are not covered by a collective bargaining agreement or a contract for a specific duration do not have a property interest in their employment; and (2) he was entitled to qualified immunity. Youngblood also argued that the amended complaint was barred by res judicata and collateral estoppel.

Following a hearing, in a November 16, 1993 Order, the District Court granted Youngblood’s motion to dismiss on the ground that Boreen had no property interest in her employment. The District Court rejected the argument that Boreen’s complaint was barred by res judicata and collateral estoppel. The District Court declined to rule on the question of whether Youngblood was entitled to qualified immunity.

Boreen submitted an interlocutory appeal of the November 16, 1993 Order to this Court, which reversed the District Court’s decision. Boreen v. Christensen (1994), 267 Mont. 405, 884 P.2d 761 (Boreen I). This Court determined that Boreen, whose employment was subject to “just cause” requirements for termination, had a property interest in her employment and could therefore maintain an action under § 1983. The issues of qualified immunity, res judicata, and collateral estoppel were not before this Court in that initial appeal.

The case was remanded to District Court where Youngblood renewed his motion to dismiss or for summary judgment upon the grounds of qualified immunity, res judicata, and collateral estoppel. In a September 14, 1995 Order, the District Court held that it had already rejected Youngblood’s motion for dismissal on the basis of res judicata or collateral estoppel and resolved the case on the issue of qualified immunity. The Court granted Youngblood qualified immunity on the basis that he did not violate any of Boreen’s clearly established rights of which a reasonable person should have known.

Boreen obtained a Rule 54(b), M.R.Civ.R, certification authorizing an interlocutory appeal of the Court’s September 14,1995 Order since the Order effectively dismissed the case as against both defendants.

Standard of Review '

The question of whether a district court properly granted qualified immunity involves a determination of whether the rights in question were clearly established at the time of their alleged violation, and is a question of law, reviewable, de novo. Cannon v. City and County of Denver (10th Cir. 1993), 998 F.2d 867; Williams v. Commonwealth of Kentucky (6th Cir. 1994), 24 F.3d 1526.

In Montana, the standard of review of a district court’s conclusions of law is whether the court’s interpretation of the law is correct. Carbon County v. Union Reserve Coal Co., Inc. (1995), 271 Mont. 459, 469, 898 P.2d 680, 686.

ISSUE

Was the District Court correct in holding that Boreen’s property interest in her employment was not clearly established law at the time she was constructively discharged from her employment, thereby rendering Youngblood immune from suit?

The District Court dismissed Boreen’s § 1983 claim against Youngblood on the grounds that Youngblood is entitled to qualified immunity. Because § 1983 is a federal remedy, qualified immunity from a § 1983 suit is a matter of federal law. Finch v. Wemlinger (Minn. 1981), 310 N.W.2d 66, 69-70; Cooperman v. University Surg. Assoc., Inc. (Ohio 1987), 513 N.E.2d 288, 296 (superseded by state statute in 1990).

The purpose of granting qualified immunity to public officers is not to protect them from the consequences of their wrongful acts but to facilitate the proper operation of government by protecting public officers in the discharge of their duties where they act honestly and in good faith. Rickard v. Paradis (1975), 167 Mont. 450, 539 P.2d 718. The good faith requirement has since been modified as set forth below.

The theory of qualified immunity first arose as a defense for police officers in Pierson v. Ray (1967), 386 U.S. 547, 87 S.Ct. 1213, 18 L.Ed.2d 288. The United States Supreme Court in Scheuer v. Rhodes (1974), 416 U.S. 232, 94 S.Ct. 1683, 40 L.Ed.2d 90, expanded the defense to apply to a broader group of executive branch officers. Rhodes arose out of the shootings at Kent State University in 1970. The plaintiffs alleged that Rhodes, then Governor of the State of Ohio, recklessly deployed the National Guard to the Kent State campus. Rhodes, 416 U.S. at 232, 94 S.Ct. at 1684-85. The Supreme Court found that a qualified immunity should be available to officers of the executive branch of government because of the wide range of discretion that officers of the executive branch are called upon to exercise. Rhodes, 416 U.S. at 247, 94 S.Ct. at 1691-92. The Court found that:

It is the existence of reasonable grounds for the belief formed at the time and in light of all the circumstances, coupled with good-faith belief, that affords a basis for qualified immunity of executive officers for acts performed in the course of official conduct.

Rhodes, 416 U.S. at 247-48, 94 S.Ct. at 1692. The Court explored the contours of the doctrine of qualified immunity through subsequent decisions that discussed an “objective” versus a “subjective” test of good faith. See Wood v. Strickland (1975), 420 U.S. 308, 95 S.Ct. 992, 43 L.Ed.2d 214. An official’s subjective good faith belief as to whether he or she violated the plaintiff’s constitutional rights was no longer relevant after Harlow v. Fitzgerald (1982), 457 U.S. 800, 102 S.Ct. 2727, 73 L.Ed.2d 396. The standard for granting qualified immunity was reformed in this matter:

We therefore hold that government officials performing discretionary functions generally are shielded from liability for civil damages insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known.
On summary judgment, the judge appropriately may determine, not only the currently applicable law, but whether that law was clearly established at the time an action occurred. If the law at that time was not clearly established, an official could not reasonably be expected to anticipate subsequent legal developments, nor could he fairly be said to “know” that the law forbade conduct not previously identified as unlawful... the defense would turn primarily on objective factors.

Harlow, 457 U.S. at 818-19, 102 S.Ct. at 2738.

Harlow and its progeny make clear that the qualified immunity inquiry is an objective one. See, e.g., Davis v. Scherer (1984), 468 U.S. 183, 104 S.Ct. 3012, 82 L.Ed.2d 139. The qualified immunity inquiry focuses on whether a defendant, faced with circumstances similar to those of the defendant before the court and in light of the legal authorities extant at the time the defendant acted, reasonably should have known that his or her conduct was unlawful. Qualified immunity “gives ample room for mistaken judgments by protecting all but the plainly incompetent or those who knowingly violate the law.” Hunter v. Bryant (1991), 502 U.S. 224, 229, 112 S.Ct. 534, 537, 116 L.Ed.2d 589, 596 (quoting Malley v. Briggs (1986), 475 U.S. 335, 343, 106 S.Ct. 1092, 1097, 89 L.Ed.2d 271, 280).

Harlow presents a two-pronged test to determine whether an official will be granted qualified immunity. The court must first consider whether a clearly established right has been violated and second, the court must determine whether a reasonable person or official would have known that his conduct violated that right. Sacco v. High Country Indep. Press (1995), 271 Mont. 209, 216, 896 P.2d 411, 415.

The first prong of the Harlow qualified immunity test depends on whether the constitutional right allegedly violated was clearly established at the time of the official conduct giving rise to the litigation. See Finkelstein v. Bergna (9th Cir. 1991), 924 F.2d 1449; Burgess v. Pierce County (9th Cir. 1990), 918 F.2d 104.

The plaintiff has the burden of proving that the right which the defendants allegedly violated was clearly established at the time of the alleged misconduct. Baker v. Racansky (9th Cir. 1989), 887 F.2d 183, 186.

A defendant need not have actual knowledge of a decision which the plaintiff claims clearly established the law. Neither should the defendant be required to have actual knowledge of a decision upon which he relies to show that the law was not clearly established. See, e.g., Mitchell v. Forsyth (1985), 472 U.S. 511, 105 S.Ct. 2806, 86 L.Ed.2d 411; Anderson v. Creighton (1987), 483 U.S. 635, 107 S.Ct. 3034, 97 L.Ed.2d 523.

In the present case, Boreen alleges that she had a clearly established protected property interest in her employment with the Department of Military Affairs when she was constructively discharged from her job by Youngblood in April of 1990.

Youngblood is raising the qualified immunity defense on the basis that Boreen’s protected property interest in her employment was not a clearly established right at the time she was constructively discharged. Although this Court held that Boreen did have a protected property interest in her employment in Boreen I, we must ask whether this property interest was a clearly established right in 1990 when Boreen was constructively discharged.

The United States Supreme Court has not established the requisite hierarchy of law from which to determine whether a right is clearly established. See, e.g., Harlow, 457 U.S. at 818 n.32, 102 S.Ct. at 2738 n.32, (expressly leaving this question open). Whether a United States Supreme Court decision is necessary, whether circuit courts may look to lower federal court decisions, and whether state decisional law plays a role are questions disputed among circuit courts. See Richard B. Saphire, Qualified Immunity in Section 1983 Cases and the Role of State Decisional Law, 35 Ariz. L. Rev. 621, 633 (1993). Circuit courts are in agreement that the determination of whether the right in question is clearly established begins with a relevant United States Supreme Court decision if available. See, e.g., Thomas v. Whalen (6th Cir. 1995), 51 F.3d 1285.

The United States Supreme Court’s seminal case establishing an employee’s property interest in employment is Cleveland Board of Education v. Loudermill (1985), 470 U.S. 532, 105 S.Ct. 1487, 84 L.Ed.2d 494. In Loudermill, the Court held that an Ohio statute which protected a public employee’s employment during “good behavior and efficient service” and prohibited dismissal “except for misfeasance or non-feasance in office” created a property interest in continued employment which could not be taken away without appropriate procedural safeguards. The Court concluded in Loudermill that the “just cause” provision in the Ohio statute created such a property interest.

The Court in Loudermill did not hold that all employees whose employment is subject to “just cause” or “for cause” protection have a property interest in their employment. Rather, the Supreme Court held that the language in the Ohio statute, which provided that an employee could not be fired except for specific listed reasons, gave the plaintiff a property interest in his job under Ohio law. Loudermill, 470 U.S. at 538-39, 105 S.Ct. at 1491-92. The Ohio laws expressly provided that employees were classified civil servants who were entitled to hold positions of employment, and that they were entitled to hold their positions during good behavior and efficient service. The Ohio employees’ pay could not be reduced, nor could they be suspended, or removed from their positions, except for specific statutory violations. Loudermill, 470 U.S. at 538, 105 S.Ct. at 1491.

The Supreme Court decision in Loudermill emphasized that property interests “are not created by the Constitution, they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law.” Loudermill, 470 U.S. at 538, 105 S.Ct. at 1491 (quoting Board of Regents v. Roth (1972), 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548). Thus the question of whether a property interest exists must be examined by reference to state law. Bishop v. Wood (1976), 426 U.S. 341, 344, 96 S.Ct. 2074, 2077, 48 L.Ed.2d 684, 690. The Loudermill decision, therefore, did not answer the question of whether a public employee in Montana has a property interest in his or her employment.

The “just cause” provision analyzed in Loudermill was contained in an Ohio statute whereas the “just cause” provision Boreen claims protection under is found in a Montana administrative rule. Rule 2.21.6509, ARM. In addition, Montana has an “at will” employment statute, § 39-2-503, MCA, which has been construed as providing no property interest in employment absent a “specified term” of employment. Reiter v. Yellowstone County (1981), 192 Mont. 194, 627 P.2d 845. Loudermill did not address, nor did it resolve, the issue of whether a “just cause” regulation converts an employment “at will” to employment for a specified term. It is necessary then to examine Montana law as expressed by this Court and the federal courts interpreting Montana law to determine if Boreen had a property interest in her employment in 1990.

This Court described the issue of whether a public employee in Montana had a property right in employment as one of “first impression” in Boreen I. Boreen 1, 884 P.2d at 763. The Court confirmed that “a close reading of our prior cases clarifies that we have not heretofore decided the issue presented in the instant case ....” Boreen I, 884 P.2d at 769. While the nonexistence of a decision specifically addressing the alleged right is a “significant consideration” in determining whether the right is clearly established, Fortner v. Thomas (11th Cir. 1993), 983 F.2d 1024,1028, the plaintiff need not produce a case directly on point to show that a right was clearly established. Ostlund v. Bobb (9th Cir. 1987), 825 F.2d 1371, 1374. Nonetheless, the contours of the right allegedly violated must be sufficiently clear that a reasonable official would understand that what he is doing violates that right. Anderson, 483 U.S. at 640, 107 S.Ct. at 3039.

Montana has an “at will” employment statute providing that an employment with “no specified term” may be terminated by either party on notice to the other. Section 39-2-503, MCA. Under that law, as construed by this Court prior to April 1990, such “at will” employees not covered by any written contract or collective bargaining agreement had no property interest in their employment. Reiter, 627 P.2d at 849. In Reiter this Court considered the case of a county custodian whose employment was terminated after eighteen years of service. In rejecting Reiter’s argument that he had a property interest in his employment, this Court stated:

It is clear... that property interests are created and defined by state law. The Montana statute [§ 39-2-503, MCA] creates no property interest in employment if there is no specified term.

Reiter, 627R2dat849. Reiter had argued that his longevity of service, by implication, created a property interest. The Court rejected that argument, and the Court’s pronouncements provided a firm basis for the conclusion that state employees with no specified term of employment likewise had no property interest in their employment:

Even though appellant may have had an implied contract with the county by virtue of his longevity of service, it would be a contradiction in terms to say that he had an “implied specified” period of employment. A specified term is one which the parties expressed, and there was no expression here concerning the length of employment. Section 39-2-503, MCA, operates to fill the gap left by the parties by defining the relationship as an “at-will” employment.

Reiter, 627 P.2d at 849. The Court did not answer the question of whether an administrative regulation containing a “just cause” termination provision creates a “specified period” of employment and thus a property interest in that employment.

The underlying administrative regulation which this Court considered in conjunction with Loudermill as giving rise to a property interest in Boreen I, was first discussed in Nye v. Department of Livestock (1982), 196 Mont. 222, 639 P.2d 498. The Court initially determined that Nye had completed her probationary period of state employment and hence ‘had permanent status” in her public employment, and then held that there was no showing of “just cause” for removing her from her position. Nye, 639 P.2d at 502.

In considering the question of whether Nye was entitled to judicial review of the decision following her grievance, the Court explained that the answer depended on whether her grievance was a contested case under the Montana Administrative Procedure Act (MAPA). Nye, 639 P.2d at 500-01.

The Court noted that whether a person was entitled to a contested case hearing depended not only on statutory rights providing for due process but also on whether a hearing is required as a matter of constitutional law. Nye, 639 P.2d at 501. Nye had not cited any statutory or constitutional authority which indicated that a person in Nye’s position was “required by law” to be given an opportunity for hearing prior to a determination of her rights or privileges. Nye, 639 P.2d at 501. The Court indicated that its own research had likewise not revealed any such authority. Therefore, the Court concluded that Nye’s grievance procedure did not qualify as a contested case under MAPA and consequently, Nye was not entitled to judicial review. Nye, 639 P.2d at 501. Although the Court held that Nye had “permanent status” in her employment, it did not find that such “permanent status” was a “specified term” that would defeat the “at will” nature of Nye’s employment, giving her a constitutional right to a hearing.

The Court next considered whether Nye could bring a claim of wrongful discharge. Agreeing with the district court that Nye’s employment was “at will” pursuant to § 39-2-503, MCA, this Court nevertheless found that Nye was not precluded from bringing a wrongful discharge claim:

The District Court’s order of dismissal [of the wrongful discharge claim] appears to rest upon the fact that Nye’s employment was “at will.” Section 39-2-503, MCA. However, the tort of wrongful discharge may apply to an at will employment situation.

Nye, 639 P.2d at 501-502.

The Court recognized that the administrative “just cause” rule, applicable to Nye, “may be the source of a public policy [the violation ofl which would support a claim of wrongful discharge.” Nye, 639 P.2d at 502. Reciting the due process protections contained in the policy, the Court concluded that the Department of Livestock failed to apply these regulations to Nye and, thereby, violated public policy. Nye, 639 R2d at 502. The Court then remanded the case on this issue.

Citing Nye, a later decision of this Court stated that a wrongful discharge claim based on a public policy violation is one of several “exceptions” to the right of “at will” employers to discharge employees. Prout v. Sears, Roebuck & Co. (1989), 236 Mont. 152, 157, 772 P.2d 288, 291. As noted by Justice Morrison in a subsequent concurring opinion, such a court-created exception does not abrogate the statutory employment “at will” rule:

The breach of the obligation owed by the employer may give rise to a tort action on the part of the employee, but does not convert “at will” employment to employment for a specific term.

Dare v. Montana Petroleum Mktg. Co. (1984), 212 Mont. 274,286,687 P.2d 1015, 1022 (Morrison, J., specially concurring).

When Nye is read in conjunction with Reiter and subsequent Montana decisions analyzing the “at will” statute, it is apparent that a Montana employee subject to a “just cause” provision did not have a clearly established property interest in her employment subject to the protections of the Due Process Clause. Reiter held that an implied employment contract did not create a “specified term” of employment nor did “permanent status” in the Nye case create a “specified term” that would render the “at will” statute inapplicable to an employee. Although the Court in Nye held that violation of the administrative “just cause” provision may be the basis for a claim of wrongful discharge it did not hold that “just cause” may be the basis for a protected property interest. Subsequent case law emphasized that a wrongful discharge claim did not convert an “at will” employment to a “specified term.”

Although we said that Reiter and a subsequent Montana federal district court decision suggested our decision in Boreen 1, this “suggestion” cannot fairly be said to have clearly established the law. “Government officials ... are not charged with predicting the future course of constitutional law.” Ostlund, 825 F.2d at 1374.

While the pre-1990 case law did not hold specifically that an administrative “just cause” provision did not create a property interest in employment, neither was it clear that the “just cause” provision affirmatively established a property interest. Certainly, the “contours” of an employee’s right to a property interest in employment were not sufficiently clear such that a reasonable official would understand that he was violating that right. See Anderson, 483 U.S. at 640, 107 S.Ct. at 3039. We therefore hold that at the time Boreen was constructively discharged in 1990, it was not clearly established that she had a protected property interest in her employment.

Although Boreen alleges that it was improper for the District Court to consider post-1990 decisions in its determination of whether her property interest in employment was clearly established in 1990, these decisions are relevant indicators of the state of the law before Boreen I. Generally courts do not look to post-incident decisions in determining whether the prior law had been clearly established, but such cases may serve as persuasive authority. Baker, 887 F.2d at 187.

The District Court noted that in 1991, this Court ruled that a governmental (school district) employee did not have a property interest in his employment. Medicine Horse v. Big Horn Cty. Sch. Dist. (1991), 251 Mont. 65, 823 R2d 230. In 1994, the Ninth Circuit Court of Appeals, in Hollister v. Forsythe (9th Cir. 1994), 22 F.3d 950, construed Montana law and specifically the Reiter and Medicine Horse decisions, and ruled that a county employee subject to “just cause” requirements for termination did not have a property interest in employment. This Court acknowledged the Hollister decision in Boreen I, stating “we simply do not agree” with the decision. Boreen I, 884 R2d at 769. Our disagreement with the result in Hollister illustrates the lack of clarity on the issue of whether a Montana employee subject to a “just cause” provision had a protected property interest in her job before Boreen I.

A determination of whether the law was clearly established requires an analysis of the state of the law as of the date of the incident in question as opposed to a review of legal developments after the incident. Nonetheless, the District Court did not err in noting that numerous judicial decisions after 1990 illustrate the fact that the question of whether an “at will” employee had a property right in employment was not “clearly established” before our 1994 decision in Boreen I. Moreover, the Court’s conclusion is not inconsistent with our analysis of the pre-1990 authority.

Boreen also argues that Rule 2.21.6509, ARM, the administrative rule which requires just cause and due process for disciplinary action, clearly established the right upon which Boreen bases her § 1983 claim. In other words, Boreen contends that the administrative rule is the source of her procedural due process right, and that the rule created clearly established constitutional rights as of 1990, thereby defeating Youngblood’s qualified immunity claim. Boreen’s argument is incorrect.

A similar argument was made by a discharged employee in Price v. Brittain (5th Cir. 1989), 874 F.2d 252. Price alleged that he was deprived of his property interest in employment without procedural due process. He claimed that his employee handbook, which required notice and an opportunity to respond prior to any discharge, “made the contours of his procedural due process rights clear to defendants.” Price, 874 F.2d at 261. Citing the Supreme Court’s decision in Davis, the appeals court rejected the argument:

[E]mployee handbooks cannot alone clarify established constitutional rights that are not themselves clear in light of preexisting law.

Price, 874 F.2d at 262. The court found that the defendant was entitled to qualified immunity.

The Fifth Circuit Court of Appeals’ holding as to the employee handbook underscores the problem with Boreen’s argument on the issue of whether the “just cause” provision by itself clearly established a property right in employment as of 1990.

As of 1986, this Court had held in Bick v. State, Dept, of Justice (1986), 224 Mont. 455, 457, 730 P.2d 418,420, that “it is axiomatic in Montana law that a statute cannot be changed by administrative regulation.” (Citation omitted.) Accordingly, the “just cause” provision in Rule 2.21.6509, ARM, did not by itself, as of 1990, clearly establish a property right in the face of the “at will” employment statute, § 39-2-503, MCA.

Our decision in Boreen I was based not on the administrative “just cause” provision alone, but on the administrative “just cause” provision read in conjunction with the United States Supreme Court decision in Loudermill and our decision in Nye.

As of April of 1990, § 39-2-503, MCA, provided that an employment “having no specified term” may be terminated at the will of either party. At that time, this Court had not held that an administrative rule containing a “just cause” termination provision constituted a “specified term” of employment which would render the “at will” statute inapplicable to an employee, thereby creating a property interest in his or her employment.

As the dissent points out, the “at will” employment doctrine embodied in § 39-2-503, MCA, is “antithetical” to the “just cause” requirement of Rule 2.21.6509, ARM. However, contrary to the dissent’s conclusion, the fact that the administrative rule is incompatible with the statute, only goes to prove that the law was confusing (i.e., not clearly established) until our decision in Boreen I.

Because we hold that Boreen’s property interest in her employment was not clearly established in April of 1990, we need not reach the second prong of the Harlow test for granting qualified immunity. The second prong asks whether a reasonable official under the defendant’s circumstances would have known that his conduct violated the law. Because the law was not clearly established a reasonable official could not have known of it and the second prong need not be addressed. See Lucero v. Hart (9th Cir. 1990), 915 F.2d 1367,1371 (citing Harlow for the proposition that the unsettled nature of the law, on the issue of entitlement to a job, necessarily means that the government officials could not have violated a clearly established statutory or constitutional right of which a reasonable person would have known).

We hold, therefore, that Boreen’s property interest in her employment was not clearly established when she was constructively discharged in 1990 and, consequently, Youngblood is immune from suit. The District Court’s grant of Youngblood’s motion to dismiss on the basis of qualified immunity was therefore correct. Because we affirm the District Court’s dismissal on the basis of qualified immunity we do not reach the issues of res judicata and collateral estoppel. Affirmed.

CHIEF JUSTICE TURNAGE, JUSTICE GRAY and DISTRICT COURT JUDGE PHILLIPS, sitting for JUSTICE ERDMANN concur.

JUSTICE NELSON

dissenting.

I respectfully dissent. Except as herein set forth, I do not disagree with the majority’s explication of the general principles of law pertaining to qualified immunity and to an employee’s property interest in her employment. I do, however, disagree with its application of these principles to the facts here. In that regard, I also believe that the courts — this Court included — have unnecessarily and improperly confused what is, in essence, a simple and straightforward legal concept that has been clearly established in the law for more than a decade: An employee whose employment is subject to termination only for “just cause” or “good cause” because of a contract, statute, rule or policy has a property interest in her employment and may not be deprived of that interest without due process of law; such an employee is not an “at will” employee.

First, as regards this case, the majority correctly acknowledges that, in the application of the doctrine of qualified immunity, whether the law at issue was “clearly established” focuses (in the words of the opinion) on the “legal authorities extant at the time the defendant acted.” What, then, was the law “extant” at the time Boreen was constructively terminated on April 13,1990? Obviously, in answering this question we need look no further than to federal law and Montana law as of that date.

As to federal law, the U.S. Supreme Court’s decision in Cleveland Board of Education v. Loudermill (1985), 470 U.S. 532, 105 S.Ct. 1487, 84 L.Ed.2d 494, had been the law of the land for five years prior to Boreen’s discharge. We discussed Loudermill at length in Boreen v. Christensen (1994), 267 Mont. 405, 884 P.2d 761, (Boreen I), and there is no need to repeat that analysis. Important to our discussion here, however, and again as the majority acknowledges, the Court concluded in Loudermill that the “just cause” provision in the Ohio statute at issue there created a property interest in Loudermill’s public employment. The majority cites no federal case decided in the years between Loudermill and Boreen’s termination that departed from that simple and straightforward proposition.

Accordingly, we must next look to the State of Montana law as of April 13,1990. For some twelve years prior to Boreen’s discharge, her public employment was subject to and was protected by State administrative regulations which (a) premised all disciplinary action, including discharge, on there being “just cause” and (b) required “due process” in the administration of such discipline or discharge. Again, these administrative regulations are discussed in and appended to our decision in Boreen I.

Thus, as of April 13, 1990, a public employer in Montana which had adopted the administrative regulations aforementioned, knew or should have known that the public employee could not be terminated absent there being just cause, as defined in 2.21.6507(6), ARM, and that the employee was entitled to due process prior to termination all as set forth and defined in 2.21.6506, 6507 and 6509, ARM. Moreover on that date, given Loudermill, that same public employer knew or should have known that if state law conditions termination of public employment on “just cause” — as was the case here — then that law creates in the employee a property interest in her employment.

In short, on April 13,1990, the law was clearly established that an employee whose employment is subject to termination only for “just cause” under state law had a property interest in her employment and could not be deprived of that interest without due process of law. That simple and straightforward legal principle derived directly from the unambiguous requirements of Montana law and federal law “extant” on that date. On April 13, 1990, Youngblood needed to look no further than the Administrative Rules of Montana and Loudermill to arrive at that conclusion.

Notwithstanding, Respondents here go to great lengths arguing that the above settled principle of law was not clearly established in April 1990 — and in fact was not clearly established until our decision in Boreen I. The majority agrees. However, viewed from an objective standard, as the majority concedes it must, such a position is insupportable.

First, as early as 1985, the principle of law articulated above could not have been more clear to Montana public officials. Through Attorney General Mike Greely, Montana participated in Loudermill as amicus curiae on behalf of the Cleveland Board of Education. See, Loudermill, 470 U.S. at 534, 105 S.Ct. at 1489. The State took the position that state employees should not have a property interest in their employment simply because they are protected by an administrative just cause requirement. Obviously, Loudermill can hardly be read as supportive of that position. Having advanced that argument, however, and in light of the Court’s decision in Loudermill, the handwriting was clearly on the wall five years before Boreen was constructively discharged. She was protected by a just cause/due process provision in Montana law; she had a property interest in her employment.

Second, while not dealing with the constitutional property interest issue addressed in Loudermill, this Court recognized in Nye v. Department of Livestock (1982), 196 Mont. 222, 639 P.2d 498, that the same just cause/due process regulations which governed Boreen’s employment were a source of public policy that would support a claim of wrongful discharge and that the State (Department of Livestock) had violated public policy by failing to apply these regulations. Again, three years before Loudermill, public employers in Montana were on notice that just cause/due process requirements in administrative regulations would implicate an employee’s right to notice and an opportunity to be heard and to the retention of her job if those regulations were not followed.

Under these circumstances and given the actual state of the law as of April 13, 1990, any claim that the principle of law establishing Boreen’s property interest in her employment was not clearly established must necessarily find justification in some other basis than a simple reading of the provisions of Montana’s public policy expressed in the Administrative Rules of Montana cited above and in what the majority concedes is the “seminal [U.S. Supreme Court] case” on this subject.

Enter the “at will” employment doctrine. As of April 13, 1990, one case, Reiter v. Yellowstone Cty. (1981), 192 Mont. 194, 627 P.2d 845, had discussed Montana’s at will employment statute, § 39-2-503, in conjunction with an employee’s claim of a property interest in his employment. We held that, “[t]he Montana statute create[d] no property interest in employment if there [was] no specified term” and therefore, Reiter had no constitutionally protected property interest in his employment. Reiter, 627 P.2d at 849-50. Importantly, as we. pointed out in Boreen I:

Reiter did not raise, nor did we address, the effect on the “at will” nature of the plaintiff’s employment of the parties conditioning termination on a demonstration of “just cause” under an administrative regulation adopted by the government. In fact, we specifically pointed out that Reiter’s employment “was not covered by any

written contract or collective bargaining agreement or ordinance.” Boreen I, 884 P.2d at 765 (citing Reiter, 627 P.2d at 847).

Accordingly, whatever Reiter stands for, it can hardly be argued that our decision in that case made unclear the unambiguous requirements of Montana law as expressed in the above cited administrative regulations and in the subsequent Loudermill decision, when Reiter did not even address the Loudermill issue. Correctly, we rejected out of hand any application oí Reiter (and its progeny) in Boreen I and we should, likewise, do so here.

Montana’s “at will” employment statute and the cases interpreting that statute simply have no bearing where the employee is protected, by a just cause/due process legal requirement. In fact, the whole concept of “at will” employment is antithetical to the legal mandate that an employee may not be discharged except for just cause or good cause. “At will” employment, as we have defined it, is the ability of an employer to dismiss his employee “for a good reason, bad reason or for no reason at all.” Scott v. Eagle Watch Investments, Inc. (1991), 251 Mont. 191, 195, 828 P.2d 1346, 1349. That definition simply cannot be reconciled with a legal requirement that the employer can only discharge his employee for just cause or good cause — i.e., as the corollary, that he may not terminate his employee for a bad reason or no reason at all. The concepts of “at will” employment and “just cause” termination are purely and simply incompatible with each other, and our use here of “at will” employment cases to justify our decision not only flies in the face of our rejection of the applicability of those cases in Boreen I, but also lends further confusion to what was, at least in April of 1990, a clearly established principle of law. The issue of “at will” employment was a red herring in Boreen I; it is in this case as well. Boreen never was an “at will” employee; she was entitled to retain her job until her employer established just cause for her termination and provided her with due process before discharging her. Boreen I, 884 P.2d at 766-67.

That brings me to my last point. The law in April 1990 was clearly established. The majority’s reliance on post-1990 cases to explain what law was extant at the time Boreen was constructively discharged is plainly improper under the doctrine of qualified immunity articulated in Harlow v. Fitzgerald (1982), 457 U.S. 800, 102 S.Ct. 2727, 73 L.Ed.2d 396. The fact that since 1990 courts have engrafted onto the rule in Loudermill legal concepts — like “at will” employment — that plainly have no bearing on the rule articulated in that case speaks not to any confusion in the law in 1990, but rather to judicial attempts to avoid what Loudermill — and Montana’s administrative regulations — clearly require.

Much is made by the Respondents and by the majority of our statements in Boreen I that our decision was one of first impression. True enough. Boreen I was just such a case; this Court had not, prior to that case, directly addressed the Loudermill issue. It does not, however, follow from a case being one of first impression before a particular court, that the legal principle on which the case is decided has not been already clearly established in the black-letter law or in some other controlling body of case law. In fact, as pointed out above, that was precisely the situation in Boreen I. Montana’s administrative regulations and Loudermill dictated the rule in Boreen I. Moreover, by. the time we decided Boreen I in 1994, the courts had had four years to complicate and confuse what was clear in 1990. Notwithstanding, even with the additional four years of state and federal case law, this Court had no apparent difficulty in concluding, on the basis of Montana’s administrative regulations and Loudermill, that Boreen had a property interest in her public employment. If that simple principle of law was clear to this Court in 1994, it was, likewise, certainly clearly established in April 1990. We did not make any new law in 1994; we simply set forth what clearly had been the law since 1985.

Our decision here cannot be justified on the basis of the principles of law cited by the majority. The law was clearly established on April 13, 1990: because Boreen’s employment was protected by state regulations prohibiting her from being discharged absent her employer demonstrating just cause, she had a property interest in her employment and could not be deprived of that property interest without due process of law. Youngblood is not entitled to qualified immunity from her § 1983 claims.

Katharine Boreen won the battle in Boreen I; unfortunately, she has lost the war in Boreen II. I dissent.

JUSTICES TRIEWEILER and HUNT join in the foregoing dissent.