Amy's Enterprises v. Sorrell (2001-519); 174 Vt. 623; 817 A.2d 612
SUPREME COURT DOCKET NO. 2001-519
SEPTEMBER TERM, 2002
Amy's Enterprises d/b/a } APPEALED FROM:
Vermont Breakopen and Bingo Supplies }
v. } Washington Superior Court
William Sorrell, et al. }
Trial Judge: Mathew J. Katz
In the above-entitled cause, the Clerk will enter:
¶ 1. Plaintiff appeals a decision of the Washington County
Superior Court dismissing its claims against the State of Vermont and
various defendants employed by the State. Defendants were sued in their
official capacity and individually. They are: William Sorrell, Attorney
General of the State of Vermont; Michael Hogan, Commissioner of the
Department of Liquor Control (DLC); William Griffin, Chief Assistant
Attorney General; Albert Elwell, Chief Inspector for the DLC; Paula
Niquette, Inspector for the DLC; and Paul Farnham, Inspector for the DLC.
Relying principally on the well-established doctrines of sovereign and
official immunity, we affirm.
¶ 2. In January 2001, in the course of an investigation into
illegal gaming tickets, liquor control inspectors Farnham and Niquette
entered the Eagle Lodge in South Burlington. The Eagle Lodge relinquished
to the inspectors certain break-open tickets which had been purchased from
Amy's Enterprises. In the course of that exchange, plaintiff alleges that
Inspector Farnham told the proprietor of the Eagle Lodge that the tickets
distributed by plaintiff were "probably illegal." This characterization is
the fountainhead from which plaintiff's claims against the State, its
officials, intermediate supervisors, and inspectors, flowed.
¶ 3. Under Rule 12(b)(6) dismissal should be affirmed where there
exist no facts or circumstances that would entitle the plaintiff to relief.
See Powers v. Office of Child Support, ___ Vt. ___, 795 A.2d 1259, 1263
(2002). Plaintiff claims that the superior court erred in holding that
sovereign and official immunity protects Defendants from claims of tortious
interference with business relations, and slander. He also claims that the
superior court improperly relied on such immunity when it dismissed his 42
U.S.C. § 1983 claims.
¶ 4. Sovereign immunity precludes suits against the State
for acts essentially governmental in nature, unless that immunity is
expressly waived. See Denis Bail Bonds, Inc. v. State, 159 Vt. 481,
484-85, 622 A.2d 495, 497 (1993). In certain circumstances, the State has
waived its immunity by statute. See 12 V.S.A. § 5601. Sovereign immunity
also confers immunity on the State from liability for torts committed by
its officers or employees. See Libercent v. Aldrich, 149 Vt. 76, 80, 539 A.2d 981, 983 (1987); see also Cronin v. State, 148 Vt. 252, 257, 531 A.2d 929, 932 (1987) (sovereign immunity protecting the state attaches to all
actions of the state and its employees acting
within the scope of their employment), overruled on other grounds by
Libercent, 149 Vt. at 80, 539 A.2d at 983 (1987).
¶ 5. The first issue to be addressed is the claim against the
State, and whether the State has waived its sovereign immunity. The
analysis required for determining whether immunity has been waived requires
that the elements pled against the state be sufficiently comparable to the
elements of an action for which a private person could be liable. See
Powers, __ Vt. at ___, 795 A.2d at 1264 (finding no analog between the
activities of Office of Child Support and a private person). If no such
analog to private action exists, suit against the state is precluded.
Denis Bail Bonds, 149 Vt. at 486, 622 A.2d at 498; see also LaShay v.
Dep't. of Soc. Serv., 160 Vt. 60, 68, 625 A.2d 224, 229 (1993) (government
is immune when no private analog exists). The plaintiff failed to
establish any analogy between the regulation, investigation and enforcement
of liquor and gambling laws and some act of a private individual that could
give rise to a cause of action. The responsibilities of the Department of
Liquor Control and the Attorney General's office in investigating and
regulating dram shops and break-open ticket distributors are uniquely
governmental. Without an analogy to private action, a claim may not lie
against the State. Even if such an analogy had been made, such claims are
still barred by 12 V.S.A. § 5601 (e)(1), (6). Section 5601(e)(1) provides
an exception to the State's waiver of sovereign immunity for "[a]ny . . .
act or omission of an employee of the state exercising due care, in the
execution of a statute or regulation, whether or not such statute or
regulation is valid," and § 5601(e)(6) excepts "any claim arising out of .
. . misrepresentation . . . or interference with contractual rights."
¶ 6. Against the intermediate officials and the liquor
inspectors, plaintiff alleges claims arising from negligent supervision,
slander and tortious interference with a business relationship. First,
plaintiff maintains that Chief Assistant Attorney General Griffin
supervised the investigation and, in the course of that supervision,
refused to authorize the release of the seized gaming tickets. The only
allegation against Chief Inspector Elwell is that he supervised inspectors
Farnham and Niquette. Plaintiff alleges that defendant Farnham committed
slander when he warned the proprietor that plaintiff's other break-open
tickets were "probably illegal." Additionally, plaintiff maintains that the
seizure of the tickets constituted tortious interference with a business
relationship, and that the interference gave rise to a 42 U.S.C. § 1983
claim based on a violation of due process.
¶ 7. Generally, claims based on the acts or omissions of an
employee of the state acting within the scope of employment lie against the
state, not against the individual employees who allegedly committed the
harm. 12 V.S.A. § 5602(a). However, there is an exception in the Vermont
Tort Claims Act which allows claims to be brought against an employee for
gross negligence or willful misconduct, even if the conduct occurred within
the scope of employment. See id. § 5602(b). In order to maintain a claim
of gross negligence, a plaintiff must present facts that show an individual
defendant "heedlessly and palpably violated of a legal duty owed to
plaintiff." See Powers v. Office of Child Support, ___ Vt. at ___, 795 A.2d at 1266 (2002). No such allegation is made against the individual
defendants in this case. By failing to assert facts sufficient to meet the
requirements of § 5602, plaintiff failed to state a claim against the
individual defendant officials upon which a court may grant relief.
¶ 8. With respect to defendant investigators, liquor control
inspectors Farnham and Niquette, plaintiff's claims, including those of
slander and tortious interference, are also barred by qualified immunity.
In applying qualified immunity, the general rule is that lower level
officers, employees and agents are immune only when they are: "1) acting
during the course of their employment and
acting, or reasonably believe they are acting, within the scope of their
authority; 2) acting in good faith; and 3) performing discretionary, rather
than ministerial acts." Libercent, 149 Vt. at 81, 539 A.2d at 984.
Plaintiff asserts that defendants exceeded the statutory authority of the
Liquor Control Board by seizing the break-open tickets. However, this
Court has confirmed the power of the Liquor Control Board to police
gambling on premises where liquor is served. In re Con-Elec., 168 Vt. 576,
577, 716 A.2d 822, 824 (1998). In that case, we held that as Liquor
Control Board Regulation 9, "merely prohibits what the Legislature has
proscribed . . . its promulgation and enforcement did not exceed the
Board's authority." Id at 577, 716 A.2d at 824.
¶ 9. This Court has adopted the federal standard for good faith.
Cook v. Nelson, 167 Vt. 505, 509, 712 A.2d 1362, 384 (1998). The
determination of good faith depends upon the objective reasonableness of
the official's conduct. "[I]f the official's conduct does not violate
clearly-established rights of which a reasonable person would have known,
the official is protected by qualified immunity from tort liability." Id.
Such acts are objectively reasonable if an officer of reasonable competence
could have made the same choice in similar circumstances. Long v.
L'Esperance, 166 Vt. 566, 571, 701 A.2d 1048, 1052 (1988); see Malley v.
Briggs, 475 U.S. 335, 341 (1986). In light of the various protections
afforded to officials in the context of an investigation and the nature of
the comments made by Inspector Farnham to the bartender at the Eagle Lodge,
the inspectors' behavior was not objectively unreasonable. In the absence
of any clearly established rules governing this situation, it cannot be
said that no reasonable officers would have acted in the same manner.
¶ 10. A discretionary function is an act which requires the
exercise of judgment in its performance, or, in the alternative, where
there is no specifically dictated course of action for the employee to
follow. See Searles v. Agency of Transportation, 171 Vt. 562, 563, 762 A.2d 812, 814 (2000) (mem.) (adopting standard of U.S. v. Gaubert, 499 U.S. 315, 322-23 (2000)). This Court has previously held that decisions made in
the course of investigations are discretionary. See Levinsky v. Diamond,
151 Vt. 178, 191, 559 A.2d 1073, 1082 (1989) (publicity decisions made by
assistant attorneys general in course of investigation were discretionary),
overruled on other grounds by Muzzy v. State, 155 Vt. 279, 583 A.2d 82
(1990). The investigation of potentially criminal conduct related to
locations where alcohol is distributed is fundamental to the duties of
liquor control inspectors. As it requires substantial judgment in terms of
means and manner, the act of investigation is a discretionary one.
Otherwise, the ability of public officers to perform their obligations
would be impermissibly inhibited. Without an allegation that inspectors
Farnham and Niquette acted with anything but good faith and due care in the
performance of a discretionary act, they are subject to qualified immunity
for actions undertaken in the course of their investigation and
consequently shielded from the claims of plaintiff.
¶ 11. The superior court held plaintiff had conceded the § 1983
claims by not raising them in its response to the state's motion to
dismiss. Failure to respond to a Rule 12(b)(6) motion to dismiss for
failure to state a claim does not necessarily warrant granting the motion
for dismissal, unless the complaint does not sufficiently state a claim
upon which relief can be granted. In order for this Court to consider the
claims of a litigant, they must be adequately raised below. This Court
will not reverse a lower court when a party's failure to raise an issue
denied that court the opportunity to consider it. Duke v. Duke, 140 Vt.
543, 545, 442 A.2d 460, 462 (1982). In reviewing a Rule 12(b)(6) motion,
this Court assumes all factual allegations pleaded in the complaint are
true. Richards v. Town of Norwich, 169 Vt. 44, 48-49, 726 A.2d 81, 85
(1999). Such motions assume the truth of a pleading's factual allegation
and tests only its legal sufficiency. See McCall v. Pataki,
232 F.3d 321, 322 (2nd Cir. 2000) (dismissal merely for failing to respond
to a 12(b)(6) claim was error). Even if the trial court may have erred in
dismissing the § 1983 claims as waived, which we do not decide, this Court
may rely on alternative grounds in affirming that decision. See In re
Handy, 171 Vt. 336, 343, 764 A.2d 1226, 1234 (2000).
¶ 12. While plaintiff's claims against defendants as individuals
under 42 U.S.C. § 1983 fall short in the pleadings because of defendants'
eligibility for qualified immunity, they also fail because the plaintiff no
longer had a possessory interest in the seized tickets. In Levinsky v.
Diamond, we recognized that a loss to prospective business operations is
too speculative to support a § 1983 claim. 151 Vt. at 196-97, 559 A.2d at
1085. In that case, plaintiff alleged, among other things, that defamatory
comments made by officials in the Attorney General's office interfered with
his potential business. A plaintiff cannot sustain a § 1983 action without
indicating that he has been deprived of a right secured to him by the
Fourteenth Amendment. Paul v. Davis, 424 U.S. 693, 713 (1976). In the
case at hand, plaintiff maintains that seizure of tickets which he no
longer owned, from an entity with which he conducted business and was not
otherwise connected, coupled with a comment made by an inspector in the
course of an investigation, interfered with his business prospects because
the investigator knew or should have known that such a statement from a law
enforcement official could have a devastating effect on plaintiff's future
business. Such an attenuated interest is too speculative to support a
claim for relief. Accordingly, as noted above, defendant officials were
subject to qualified immunity, and the State of Vermont has not waived its
sovereign immunity in cases of this kind.
BY THE COURT:
Jeffrey L. Amestoy, Chief Justice
John A. Dooley, Associate Justice
James L. Morse, Associate Justice
Denise R. Johnson, Associate Justice
Marilyn S. Skoglund, Associate Justice