NO. 90-271
IN THE SUPREME COURT OF THE STATE OF MONTANA
1991
DARYLE R. MURPHY, as Guardian Ad
Litem for L. C.,
Plaintiff and Appellant,
v.
STATE OF MONTANA, and THE DEPARTMENT
OF INSTITUTIONS FOR THE STATE OF MONTANA,
Defendants and Respondents.
APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis and Clark,
The Honorable Thomas C. Honzel, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Donald W. Molloy, Esq., Billings, Montana
Gary E. Wilcox, Esq., Billings, Montana
Terry L. Seiffert, Esq., Billings, Montana
For Respondent:
Mark D. Parker, Esq., Billings, Montana
Kimberly A. Kradolfer, Esq., Assistant Attorney
General, Helena, Montana
Submitted: March 7, 1991
Decided: Aprilll, 1991
Filed:
Clerk
Chief Justice J. A. Turnage delivered the Opinion of the Court.
The plaintiff, L.C., brought this action in the District Court
of the First Judicial District, Lewis and Clark County, to recover
damages from the State of Montana as a consequence of her confine-
ment and treatment in the Montana State Hospital at Warm Springs.
Here, she appeals an order granting partial summary judgment to the
State for all acts or omissions before July 1, 1973. We affirm.
The issues are:
1. Did the District Court err in ruling that the State's
purchase of insurance for a later time period did not waive
sovereign immunity for torts occurring prior to 1973?
2. Did the court err in ruling that the statutory bond
requirements for state employees do not waive sovereign immunity?
3. Did the court err in holding that the daily operation of
Montana State Hospital at Warm Springs was not a proprietary
function which would preempt the defense of sovereign immunity?
The State moves to strike references in L.C.'s recitation of
the facts to a deposition of Dr. Harr. That deposition is not in
the record on appeal. This Court frowns upon references in briefs
to matters not in the record. Such matters will not be considered
by the Court. Garza v. Peppard (1986), 222 Mont. 244, 248, 722
P.2d 610, 612-13. The statements attributed to Dr. Harr have not
been considered in reaching this Opinion.
L. C. was placed in the state mental institution, Montana State
Hospital at Warm Springs, in 1963 at the age of thirteen. Except
for brief periods, she remained there until 1975. In 1986, through
her guardian ad litem, she filed this suit, alleging that she
became seriously mentally ill as a result of being confined in the
Montana State Hospital. Her complaint includes claims of false
imprisonment; cruel and inhumane punishment; denial of freedom, due
process, education and equal protection; outrageous conduct;
negligence; and negligent supervision.
In March 1987, the District Court granted the State's motion
to dismiss this action, ruling that the statute of limitations had
run before the complaint was filed. Concluding that L.C.'s double
disability of minority and mental illness had tolled the statute
of limitations, this Court reversed the lower court's ruling and
remanded the case for further proceedings. Murphy for L.C. v.
State (1987), 229 Mont. 342, 748 P.2d 907.
On remand, the State moved for partial summary judgment that
sovereign immunity bars recovery for any of its acts before July
1, 1973. After briefing and oral argument, the court entered an
order granting that motion. L.C. obtained certification of the
order under Rule 54(b), M.R.Civ.P., and appeals.
I
Did the District Court err in ruling that the State's purchase
of insurance for a later time period did not waive sovereign
immunity for torts occurring prior to 1973?
L.C. argues that an insurance policy purchased to cover the
State for personal injury and other claims for the period from July
1, 1973, through July 1, 1976, relates back to her claims because
some of her damages were manifested during that period. The
District Court noted that under 5 1-2-109, MCA, no law is retroac-
tive unless expressly so declared and that prior to July 1, 1973,
the State could not be sued for injury caused by its actions or
those of its officers. Under the 1889 Montana Constitution, the
State had sovereign immunity. The court found no indication in
legislative history of an attempt to extend a waiver of sovereign
immunity to pre-1973 torts committed by the State. Further, it
reviewed federal case law and concluded that because L.C.Is injury
manifested itself prior to the insurance policy period, the
insurance policy does not cover the injury.
After the District Court made its ruling, this Court issued
its opinion in Crowell v. School Dist. No. 7 (Mont. 1991), 805 P.2d
522, 48 St.Rep. 81. In Crowell, the Court held that the purchase
of insurance may waive sovereign immunity to the extent of the
insurance coverage. Therefore, we must examine the terms of the
insurance policy.
L.C. maintains that her claims fall under coverage "E,"
personal injury liability, of the State s insurance policy. She
argues that the policy contains no time limitation on when an
injury under coverage 81E11
occurred.
Coverage "El1 applies to damages for false arrest, detention,
imprisonment, malicious prosecution, libel or slander, publication
or utterance in violation of an individual's right of privacy, and
wrongful entry or eviction or other invasion of the right of
private occupancy. It provides that lldamagesll
means Itonly those
damages which are payable because of personal injury arising out
of an offense to which this insurance applies. The insurance
policy provides at endorsement #1 that
(b) . . . the total liability of the company
for all damages because of all ... personal
injury and other damages to which this policy
applies which occur durins each annual period
while this policv is in force commencins from
its effective date shall not exceed the limit
of liability stated in the Schedule of this
endorsement ... [Emphasis supplied.]
Endorsement #1 clearly encompasses personal injury under coverage
l1El1and limits damages to those which occur "during each annual
period while this policy is in force commencing from its effective
date.
L.C. also argues that, under the insurance policy's definition
of lloccurrence, her claim constitutes one "occurrence" lasting
from her initial hospitalization in 1963 to her eventual release
in 1975. The policy language upon which she relies appears in
endorsement #1:
(c) For the purpose of determining the limit
of the company's liability, all . . . per-
sonal injury, and other damages to which this
policy applies arising out of continuous or
repeated exposure to substantially the same
general conditions shall be considered as
arising out of one occurrence.
The policy defines woccurrence" as:
an event, or a continuous or repeated exposure
to conditions, which results in bodily injury
or property damage during the policy period
that is neither knowingly nor intentionally
caused by or at the direction of the insured.
L.C. argues that all of her damages arise from one lloccurrencell
which is covered under the policy.
In interpreting the term "occurrencet1 insurance policies,
in
courts have developed several theories of exception to the basic
principle that an insurance policy provides coverage only for
incidents occurring during the policy period. These theories were
developed in cases involving delayed manifestation of injury, as
in exposure to asbestos. Coverage has been allowed if the act
causing the injury occurred during the policy period or if the
injury initially manifested itself during the policy period. See
Hancock Laboratories, Inc. v. Admiral Ins. (9th Cir. 1985), 777
In this case, neither the State's acts or omissions prior to
July 1, 1973, nor the initial manifestation of the injury occurred
during the policy period. Because L.C. alleges that she became
seriously mentally ill by February of 1964, she admits that her
injury manifested itself prior to the policy period.
L.C. cites Truck Ins. Exchange v. Woldstad (1984), 212 Mont.
418, 687 P.2d 1022, as authority that damages need not occur while
the insurance policy is in force. In that case, Woldstad died from
injuries received after the expiration of the insurance policy
provided by Truck Insurance Exchange. This Court held that,
nevertheless, there was coverage under the policy. But that
insurance policy contained language not found in the State's policy
here. Specifically, coverage was provided for "bodily injury,
sickness or disease, including death at anytime resulting there-
from, sustained by any person." Woldstad, 687 P.2d at 1024.
We conclude that claims arising from pre-1973 acts or omis-
sions by the State are not covered under the terms of this in-
surance policy. We hold that the District Court was correct in
ruling that the State did not waive sovereign immunity for the
period prior to 1973 by its purchase of the insurance policy for
the period from July 1, 1973, through July 1, 1976.
I1
Did the court err in ruling that the statutory bond require-
ments for state employees do not waive sovereign immunity?
Sections 6-101 to 6-104, RCM (1947), repealed in 1965 and
replaced by 5 5 6-105 to 6-108, RCM (1947), mandated that surety
bonds be purchased for state officers and employees. L.C. argues
that under Longpre v. Joint School District No. 2 (1968), 151 Mont.
345, 443 P.2d 1, these mandatory bonding requirements waive the
defense of sovereign immunity.
In Loncrpre, this Court held that a statute requiring school
districts operating their own buses to carry automobile bodily
injury and liability insurance constituted a waiver of the school
districtst immunity from suit, to the extent of the insurance
coverage. In this case, the District Court concluded that applica-
tion of the rule set forth in Lonqpre would only protect from the
mishandling of state funds and does not constitute a complete
waiver of sovereign immunity. The court stated that there is
nothing in the bonding statutes which implies a legislative intent
to waive immunity for torts committed by a bonded state officer or
employee. We agree. The statutes are aimed at protection from
mishandling of state funds. "The amount for which a state officer
or employee shall be bonded shall be based on the amount of money
or property handled and the opportunity for defalcation." Section
6-106, RCM (1947).
L.C. also argues that the State's immunity was waived under
the Civil Rights Act of 1964, codified at 42 U.S.C. 5 5 2000d to
2000d-4. The terms of the Act became applicable to the Montana
State Hospital at Warm Springs in 1965 when the hospital became
part of the Division of Mental Hygiene of the Department of
Institutions. Although L.C. raised this argument before the
District Court, that court did not address the argument.
The federal courts have recognized that remedies available
under the Act do not include monetary damages. Drayden v.
Needville Independent School Dist. (5th Cir. 1981), 642 F.2d 129,
133; but see Rhodes v. Charter Hosp. (S.D. Miss. 1989), 730 F.Supp.
1383, as to recovery of back pay. Moreover, the Act is addressed
to discrimination on grounds of race, color, or national origin,
none of which have been claimed here. We conclude that this
argument has no merit.
Because the bond purchased by the State is not included in the
record, the issue of whether the terms of that bond waived immunity
in this instance is not before us. We hold that the District Court
did not err in concluding that the bonding statutes do not waive
immunity for the tort and constitutional claims raised here.
I11
Did the court err in holding that the daily operation of
Montana State Hospital at Warm Springs was not a proprietary
function which would preempt the defense of sovereign immunity?
L.C. asserts that the daily operation of a state mental
hospital is a proprietary function under which the defense of
sovereign immunity is not allowed. She cites Jacoby v. Chouteau
County (1941), 112 Mont. 70, 112 P.2d 1068.
Jacobv involved an accident on a county-operated ferry which
crossed the Missouri River. The case stands for the general
proposition that governmental units are liable for negligence in
the exercise of proprietary functions. Here, the District Court
concluded that because the establishment of the state institution
for the insane was constitutionally mandated in Article X, Section
1 of the 1889 Montana Constitution, and was not discretionary, its
operation was a governmental and not a proprietary function.
That operation of a hospital by a unit of government is
required and not merely permitted indicates that the activity is
a governmental rather than a proprietary function. See, Annota-
tion, ttImmunityfrom liability for damages in tort of state or
governmental unit or agency in operating hospital,I1 25 ALR 2d 203,
223 (1952). Another consideration is whether the hospital is
operated for profit, an indication of a proprietary function, or
as a charity, an indication of a governmental function. Annota-
tion, 25 ALR 2d at 219. The Montana State Hospital at Warm Springs
is not run as a profit-making venture.
We hold that the District Court did not err in ruling that the
constitutionally mandated state mental hospital was a governmental
function under the shield of sovereign immunity prior to 1973.
We concur:
Justice William E. Hunt, Sr., dissenting:
I dissent. The facts alleged by plaintiff, if true, paint an
ugly and disturbing picture of events that occurred at the Montana
State Hospital at Warm Springs. At the age of 13, L.C. was
diagnosed as having "behavior problems" and was confined by the
State to the hospital. While in the llcarell the hospital she was
of
denied the opportunity to associate with children of her own age
and instead lived with adults suffering from severe mental
illnesses. She was prohibited from obtaining an education and was
compelled to work at the hospital to earn spending money. She
received numerous electric shock treatments as punishment for her
behavior. She was raped by male employees. When she protested
the assaults, the hospital ignored her complaints. She was forced
to engage in "cock fightsgf
with other patients while staff members
observed and wagered on the results.
Despite this outrageous treatment, the majority allows the
State to hide behind the shield of sovereign immunity by adhering
to the troubling and somewhat strained distinctions between
governmental and proprietary functions. Even allowing that the
regular day-to-day operation of the hospital is a governmental
function, the activities alleged in this case are so horrifying
that one cannot seriously believe that they flowed from the pursuit
of governmental objectives. Surely, no government that I wish to
be a part of would engage in such appalling conduct.
Although the State may be immune from suit for torts arising
from the discharge of governmental functions, there are times when
the misdeeds alleged by the plaintiff exceed the bounds of
governmental purposes. [TIhe intentional use or misuse of a badge
of governmental authority for a purpose unauthorized by law is not
the exercise of a governmental function." Smith v. Department of
Public Health, 410 N.W.2d 749, 780 (Mich. 1987). Here, we have a
case where the hospital at Warm Springs, under the guise of
governmental authority, engaged in illegal acts for the purpose of
punishing and warehousing L.C., not for treating and caring for
her. The hospital refused to give L.C. educational opportunities
granted by the Montana Constitution. It forced her to work for
wages in contravention of Montana law. It stood by silently while
she was raped by employees. It condoned her degradation for the
financial gratification of staff members. Certainly, none of these
activities were authorized by law. Certainly, the hospital should
not be allowed to engage in such cruel and inhumane conduct without
fear of reprisal.
The judiciary is the sanctuary of the dispossessed, of those
who have a voice in no other quarter. It should not tolerate the
State's exploitation of the individual by hiding behind slight
legal niceties such as the ones used here. If the plaintiff Is
allegations are true, the shield of sovereign immunity has become
the sword of institutional brutality.
If the plaintiff's allegations are not true, the shield of
sovereign immunity has denied our public servants the opportunity
to repudiate the accusations.
I would reverse the District Court.
Justice Terry N. Trieweiler dissenting:
I concur in the dissent of Justice Hunt. /'