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Peterka v. Dennis: FAMILY LAW | TORT - no quasi-judicial immunity for accountant; tho court-appointed neutral, not a judicial function

STATE OF MINNESOTA
IN COURT OF APPEALS
A07-0165
Catherine F. Peterka,
Appellant,
vs.
Stephen G. Dennis, Certified Public Accountant, et al.,
Respondents,
Todd R. Haugan, Attorney at Law,
Defendant.
Filed January 29, 2008
Reversed and remanded
Stoneburner, Judge
Hennepin County District Court
File No. 27CV04007174
Richard E. Bosse, Law Offices of Richard E. Bosse, Chtd., 303 Douglas Avenue, Box
315, Henning, MN 56551 (for appellant)
John M. Degnan, Jesse R. Orman, Briggs and Morgan, P.A., 2200 IDS Center, 80 South
Eighth Street, Minneapolis, MN 55402 (for respondents)
Considered and decided by Stoneburner, Presiding Judge; Halbrooks, Judge; and
Crippen, Judge.*
S Y L L A B U S
1. An order based on a stipulation of parties to a dissolution action requiring
the parties to select an independent neutral and cooperate with the independent neutrals
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, 10.
2
evaluation of the parties business assets does not confer quasi-judicial immunity on the
independent neutral.
2. Public policy does not require that accountants retained by parties to a
dissolution action to perform an independent neutral evaluation of business assets be
granted quasi-judicial immunity.
O P I N I O N
STONEBURNER, Judge
Appellant sued respondents, an accountant and his employer, asserting that the
accountant committed malpractice, for which his employer is vicariously liable, in
evaluating businesses in connection with appellants dissolution action. Because the
accountant was retained as an independent neutral evaluator of the businesses and a
district court order required appellant and her husband to cooperate with and pay for the
evaluation, respondents moved for summary judgment asserting quasi-judicial immunity.
The district court granted summary judgment, holding that court appointment and public
policy required that respondents be protected by quasi-judicial immunity. Because we
conclude that respondent accountant was not retained or appointed to perform a judicial
function, we reverse and remand.
FACTS
Appellant Catherine Peterka brought an action to dissolve her marriage to Mark
Peterka (husband). Appellant and her husband agreed to have their business assets
valued by a neutral evaluator, and the district court incorporated this agreement into its
order for temporary relief, requiring them to select the neutral from a list provided by the
3
court. The accountant they initially retained withdrew, apparently due to concern about
the parties cooperation with his efforts. He recommended, among others, respondent
Stephen Dennis of respondent Baune, Dosen & Co. (Baune Dosen) to complete the
evaluations.
Appellant and her husband agreed to retain Dennis. Dennis conditioned his
employment on the parties obtaining a court order appointing him as a neutral. Appellant
and her husband signed a stipulation for an order requiring them to cooperate with
Denniss independent neutral evaluation of their business assets and ordering each to pay
one-half of his fees and costs. The district court issued the stipulated order.
Dennis appraised the businesses and testified at the dissolution trial. The district
court based its finding on the businesses value on Denniss testimony.
After the dissolution judgment was entered, appellant brought this action against
Dennis for malpractice. Based on her experts opinion, appellant alleged that Dennis
breached the standard of care applicable to such business appraisals by using the book
value of the inventory rather than the fair market value of the inventory, resulting in a
loss to appellant of 6,672 in the property division.1 The complaint asserted that
Baune Dosen, as Denniss employer, is vicariously liable for Denniss malpractice.
Respondents moved for summary judgment, arguing that as a court-appointed
neutral, Dennis is entitled to quasi-judicial immunity, and Baune Dosen is entitled to
vicarious quasi-judicial immunity. The district court agreed and granted summary
1 Appellant also sued the attorney who represented her in the dissolution trial (not the
same attorney who hired Dennis) for malpractice, but has settled that action by a
Perringer Agreement.
4
judgment to respondents, concluding that, as a matter of law, Dennis was court appointed
and therefore entitled to quasi-judicial immunity. The district court determined that
public policy requires quasi-judicial immunity for independent neutral evaluators of
business property in dissolution proceedings. This appeal followed.
ISSUES
I. Did the district court err in determining that because the district court
ordered the parties to cooperate and pay for respondents independent neutral evaluation
of their business assets, respondents are entitled to quasi-judicial immunity?
II. Did the district court err in determining that respondents are entitled to
quasi-judicial immunity for public-policy reasons?
ANALYSIS
On appeal from summary judgment, we ask two questions: (1) whether there are
any genuine issues of material fact and (2) whether the [district] court[] erred in [its]
application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). On
appeal, the reviewing court must view the evidence in the light most favorable to the
party against whom judgment was granted. Fabio v. Bellomo, 504 N.W.2d 758, 761
(Minn. 1993).
Minnesota has long recognized that quasi-judicial immunity should be extended
to all to whom the law or the agreement of the parties, commits the exercise of authority
of an essentially judicial nature. Dziubak v. Mott, 503 N.W.2d 771, 775 (Minn. 1993)
(quotation omitted) (extending immunity to public defenders for policy reasons). This
immunity applies to all determinations and acts made in a judicial capacity, however
5
erroneous or by whatever motives prompted. Linder v. Foster, 209 Minn. 43, 45, 295
N.W.2d 299, 300 (1940).
Despite language in Dziubak that an agreement of the parties may be sufficient to
extend judicial immunity, to date, case law appears to condition a grant of quasi-judicial
immunity on the presence of both court appointment and the exercise of authority of a
judicial nature. See Zagaros v. Erickson, 558 N.W.2d 516, 523-24 (Minn. App. 1997)
(reserving the issue of extending judicial immunity to custody evaluators who are not
court appointed), review denied (Minn. Apr, 17, 1997); Koelln v. Nexus Residential
Treatment Facility, 494 N.W.2d 914, 920 (Minn. App. 1993) (holding that a question of
fact about whether Nexus was court appointed made summary judgment inappropriate on
that issue, but affirming summary judgment denying quasi-judicial immunity on the
ground that Nexus was not performing a function integral to the judicial process), review
denied (Minn. Mar. 22, 1993); Sloper v. Dodge, 426 N.W.2d 478, 479 (Minn. App. 1988)
(recognizing that quasi-judicial immunity has been extended to court-appointed
psychiatrists and physicians who prepare and submit medical evaluations relating to
judicial proceedings but concluding that a fact question about whether Dodge was court
appointed precluded summary judgment that he was entitled to quasi-judicial immunity).
I. Quasi-judicial immunity only extends to an exercise of authority of an
essentially judicial nature
In this case, the district court concluded that Dennis was a court-appointed neutral.
From our review of the record, it appears that there is a question of fact on this issue, but
whether or not Dennis was court appointed does not end the inquiry into whether he is
6
entitled to quasi-judicial immunity, because such immunity only extends to the exercise
of judicial authority. Appellant, relying on Gammel v. Ernst & Ernst, 245 Minn. 249, 72
N.W.2d 364 (1955), argues that the function Dennis performed was not of a judicial
nature.
In Gammel, the supreme court reversed a grant of quasi-judicial immunity to
accountants retained pursuant to a merger agreement between two corporations to
conduct a binding independent audit to determine the value of stock. Id. at 255-56, 72
N.W.2d at 368-69. The supreme court quoted from the United States Court of Appeals in
a prior related action in rejecting the argument that because the audit was to be binding,
the accountants were exercising a judicial function:
We do not think it soundly can be said that the legal effect of
[the contract of the parties] was to constitute [accountants] as
an umpire or arbiter, with an obligation to hear, consider and
produce a result in relation to the contentions of the parties.
Rather . . . it seems to us that what the contract provided for
was the making of a sound accountancy appraisal of earnings,
by an independent auditor, through the use necessarily of
proper applicable auditing process, but with the ultimate result
inherently to be produced by the judgment, discretion and
skill which the selected expert would be called upon to
exercisenot as an arbiter but as an accountant-evaluator
* * *.
Id. at 256, 72 N.W.2d at 369 (quoting Sanitary Farm Dairies, Inc. v. Gammel, 195 F.2d
106, 114-15 (8th Cir. 1952)). We agree with appellant that Denniss function in the
dissolution action was very similar to the function of the accountants in Gammel.
In this case, Denniss evaluation of business assets did not involve an exercise of
authority that is essentially judicial in nature. Denniss function was to apply sound
7
accounting principles to develop factual bases supporting his expert opinion on the value
of businesses in which appellant and her husband had an interest. Dennis had to exercise
the same skill and judgment required by those in his profession; but like the accountants
in Gammel, exercise of that judgment did not equate to performing a judicial function.
Dennis was retained, whether by appellant and her husband or by the court, to give his
expert opinion on the businesses value, not as a decision-maker to determine competing
claims of appellant and her husband. For the reasons stated in Gammel, we conclude that
even if Dennis was a court-appointed neutral, he was not appointed to perform a judicial
function, and therefore is not entitled to quasi-judicial immunity. Because Dennis is not
entitled to such immunity, Baune Dosen is therefore not entitled to vicarious quasijudicial
immunity.
II. Public policy does not compel a grant of quasi-judicial immunity to a neutral
evaluator of business assets
Respondents argue that because Dennis was appointed to provide a service to the
court, public policy requires that quasi-judicial immunity be extended to him, because
without immunity, professionals will be reluctant to provide an important service to the
court. But the language of the district courts order and finding of fact indicate that
Dennis was providing a service to the parties, not the court, by providing evidence to the
court on the value of the businesses at issue. Notwithstanding that the district courts
decision-making in the dissolution action was aided by the agreement of appellant and
her husband to use one expert witness, nothing in the circumstances of this case indicates
that the district court precluded appellant and her husband from disagreeing with
8
Denniss opinion or presenting additional evidence on the issue of the value of the
businesses. Under the facts of this case, we conclude that the language in Gammel does
not support a grant of quasi-judicial immunity to an accountant valuing assets in a
dissolution action purely on public policy grounds.
Generally, judicial immunity applies to those who resolve disputes through the
exercise of independent and impartial judgment:
The doctrine of judicial immunity is supported by a longsettled
understanding that the independent and impartial
exercise of judgment vital to the judiciary might be impaired
by exposure to potential damages liability. Accordingly, the
touchstone for the doctrines applicability has been
performance of the function of resolving disputes between
parties, or of authoritatively adjudicating private rights.
Antoine v. Byers & Anderson, Inc., 508 U.S. 429, 435-36, 113 S. Ct. 2167, 2171 (1993)
(quotation omitted) (declining to extend judicial immunity to court reporters). A
distinction exists between the arbitration of a controversy and an agreement which
requires a designated party to determine values, quantities, losses, or similar facts.
Comins v. Sharkansky, 644 N.E.2d 646, 648 (Mass. App. Ct. 1995) (quotation omitted)
(holding that accountant was not entitled to quasi-judicial immunity because he did not
exercise quasi-judicial functions nor render expert services to the court). The
Massachusetts Appeals Court noted in Comins that [i]n similar circumstances, cases
elsewhere have not accorded appraisers immunity even when they have claimed to be
arbitrators. Id. at 649 (citing, among other cases and treatises, Gammel, 245 Minn. at
255-56, 72 N.W.2d at 364).
9
Accountants are generally subjected to the same standards of reasonable care as
lawyers, doctors, engineers, and other professionals providing skilled services for
compensation. Id. at 253, 72 N.W.2d at 367. As stated in Gammel, even without a grant
of immunity, liability arises only when an accountants performance of services indicates
a lack of reasonable care, fraud or bad faith, or a failure to follow accepted accounting
principles best suited for the work to be performed. Id. Therefore, immunity for
accountants performing an appraisal is not compelled by public policy.
D E C I S I O N
Because Denniss function of providing the court with an independent neutral
evaluation of business assets was not an exercise of authority of a judicial nature, and
because public policy does not require a grant of judicial immunity to accountants
providing neutral asset evaluations, we reverse summary judgment granted to
respondents based on quasi-judicial immunity and remand for further proceedings. Our
remand shall not be construed as an expression of opinion by this court regarding whether
any malpractice exists in this case, or on any other dispute between the parties.
Reversed and remanded.
 

 
 
 

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