What is malicious prosecution? A case from Montana. (Legal Briefs).

In the interests of environmental health protection, public policy sometimes demands aggressive enforcement of health laws. It is not advisable, however, for the aggressiveness to become personal or vindictive, as can happen in some situations. For a victim of zealousness, one remedy is a request for personnel sanctions against an environmental health official. Alternatively, the victim might file a civil rights lawsuit under 42 U.S.C. [section] 1983 (1) or a common-law malicious-prosecution action. This column concerns the malicious-prosecution case of Plouffe v. Montana Dept. of Pub. Health & Human Services, Dept. of Environ. Qual., and John Does 1 through 20.2

The plaintiffs were owners and operators of a Montana resort. The resort offered golf, dining, overnight accommodations, and public bathing. The water in the bathing facilities was supplied by natural hot springs, and the facilities consisted of an indoor spa, an indoor swimming pool, and two outdoor pools. Other facilities at the resort were a public water system and a sewage disposal system.

From 1989 to 1996, there were numerous contacts between the owners and Montana environmental health personnel. Ultimately, in June 1994, the Department of Health and Environmental Services filed a civil complaint against the resort. The resort was charged with failure to submit required drinking-water samples, violation of swimming pool standards, and unpermitted discharge of swimming pool and sewage lagoon water. Instead of serving and prosecuting the complaint, the department discussed the issues with the plaintiffs for 16 months. During the negotiations, the department submitted three proposed consent orders in which the plaintiffs were required to admit to the allegations in the complaint.

The plaintiffs refused to agree to the consent orders, Nonetheless, the department negotiated a Corrective Action Agreement with a group hired by the plaintiffs to manage the resort. The month after the management group signed the agreement, they were discharged, and the plaintiffs resumed operational control of the resort.

The department tried again to negotiate with the plaintiffs. The owners, however, demanded that the state of Montana pay them substantial damages for the loss of business and business opportunities caused by the department's closure of the outdoor swimming pool at the resort, and by the negative publicity that resulted from the state's civil action. The state rejected the owners' proposal, but voluntarily and unilaterally dismissed the lawsuit,

The owners sued the Montana departments and 20 unknown employees involved in the activity against the resort. A jury trial was conducted. At the conclusion of the plaintiffs' proof, the judge dismissed the case on the grounds that the plaintiffs had failed to prove three parts of their case.

A malicious prosecution cause of action has six elements:

1. a judicial proceeding was commenced and prosecuted against the plaintiff;

2. the defendant was responsible for instigating, prosecuting, or continuing such proceeding;

3. there was a lack of probable cause for the defendant's acts;

4. the defendant was actuated by malice;

5. the judicial proceeding terminated favorably for the plaintiff; and

6. the plaintiff suffered damage. (3)

The trial court believed the plaintiffs had failed to prove a lack of probable cause, malice, and a favorable termination of the underlying lawsuit (elements 3, 4, and 5). The Montana Supreme Court disagreed, reversed the decision of the district court, and remanded the case for trial.

Probable cause is "reasonable grounds for suspicion, supported by circumstances reasonably strong in themselves to warrant a reasonably prudent and cautious [person] to believe that the accused is guilty of the offense charged." This is an objective standard based on the facts known to the defendant at the time the lawsuit was initiated. It is applicable to both civil and criminal lawsuits. In a subsequent malicious-prosecution action, the jury must consider the "totality of the circumstances" in deciding whether there was probable cause at the time the first lawsuit was filed.

In Plouffe, the owners contested the accuracy and truthfulness of the allegations made by Montana. They claimed the county and state pool inspectors used different criteria for testing water clarity. The Montana Department of Environmental Quality had refused or failed to give the owners a final ruling on the applicable standard after numerous letters and telephone calls.

The resort met the 1995 swimming pool standards, according to the owners. Indeed the owners had made many improvements in the late 1980s to ensure compliance with the applicable standards. The owners claimed the state agencies had misinterpreted their own regulations.

The owners did admit that they had sometimes failed to submit periodic drinking-water samples and had refused to obtain a discharge permit for the sewage lagoon. Those violations allegedly were mere "procedural violations," which did not cause a significant risk to public health and safety. The Montana Supreme Court ruled that

Under the totality of circumstances test for probable cause in the context of a malicious prosecution, where proof of probable cause for part of a claim does not necessarily support probable cause to prosecute the underlying action, we conclude that reasonable jurors could find that the State lacked a trustworthy factual basis to support the reasonable suspicions of a conscientious and careful person that Plouffe and Ereaux had violated the public health and safety laws as alleged.

Plaintiffs in a malicious prosecution action must also prove malice, Malice may be proven based on an official's deliberate behavior stemming from actual knowledge or intentional disregard for probable injury to another. Otherwise, malice may be inferred from the lack of probable cause.

The law presumes that a person intends the consequences of his or her voluntary acts, and we have reasoned that a malicious intent to vex, annoy, or injure may be presumed where a prosecution is motivated by "some collateral or private purpose and not to vindicate the law."

The final issue was whether the underlying action was terminated in favor of the plaintiffs. Here, Montana had voluntarily dismissed without prejudice the action against the owners. Therefore, Montana could have initiated another lawsuit against the owners.

The Montana Supreme Court said, however, that

For the termination of the underlying action to be deemed favorable to the defendant, the termination "must reflect on the merits of the underlying action." This Court has recognized "the natural assumption that one does not simply abandon a meritorious action once instituted."

The parties disputed whether the resort operation had changed to obtain substantial compliance resulting in a lack of need to pursue litigation. Therefore, this factual dispute required a jury to resolve it. It is interesting to note that on this issue, two of the six justices agreed with the state that a voluntary dismissal is not a favorable termination for the plaintiffs and dissented from the majority opinion.

This is an instructive case about malicious-prosecution action against government officials and should be reviewed by all environmental health personnel. It may, however, have limited application to many environmental health officers because of sovereign immunity.

Sovereign immunity protects the government and its employees unless the government consents to be sued. (4) Montana had consented to be sued. (5) Where sovereign immunity has been removed, it is often retained against malicious-prosecution actions. (6) Environmental health officials at state and local levels should have definite guidance on the elements and implications of malicious-prosecution actions, and on the application of sovereign immunity to their enforcement actions.

Editor's note: Readers who have questions about cases discussed in Legal Briefs may contact Mr. Sikora by e-mail at <[e-mail]>.

References

(1.) See Herr v. Pequea Township, 274 F.3d 109 (3rd Cir. 2001): "Herr's [section] 1983 claim against the defendants in this case is analogous to the common law tort of malicious use of civil process by a state actor. Accordingly liability cannot be imposed under the teaching of McArdle unless all elements of the common law tort are satisfied."

(2.) Plouffe v. Montana Dept. of Pub. Health & Human Services, Dept. of Environ. Qual., and John Does 1 through 20. (2002). 2002 Mt. 64. http://www.loislaw.com (18 Apr. 2002).

(3.) Id. at 4.

(4.) Grad, Frank P., Public Health Law Manual, at 242-245 (2nd ed. 1990).

(5.) Montana Stat. [section] 2-9-102 (2002): "Every governmental entity is subject to liability for its torts and those of its employees acting within the scope of their employment or duties whether arising out of a governmental or proprietary function except as specifically provided by the legislature under Article II, section 18, of The Constitution of the State of Montana."

(6.) See Tenn. Code Ann. [section] 29-20-205 (2001): "Immunity from suit of all governmental entities is removed for injury proximately caused by a negligent act or omission of any employee within the scope of his employment except if the injury arises out of:

1. the exercise or performance or the failure to exercise or perform a discretionary function, whether or not the discretion is abused;

2. false imprisonment pursuant to a mittimus from a court, false arrest, malicious prosecution, intentional trespass, abuse of process, libel, slander, deceit, interference with contract rights, infliction of mental anguish, invasion of right of privacy or civil rights

See also N.M. Stat. Ann. [section] 41-4-12 (2002); Utah Code Ann. [section] 63-30-10 (2001).