Obert v. State, 558 P.3d 1110

Background

Laura Obert, a Broadwater County Commissioner (2008–2019), entered a 2016 deferred prosecution agreement with the State after a DCI investigation; she repaid alleged overpayments and agreed to recuse on conflicts.
In 2019–2020 county attorney Cory Swanson renewed complaints and provided records; Special prosecutor Marty Lambert charged Obert with felony theft and misdemeanor official misconduct in 2020.
The district court dismissed the criminal charges in March 2021 (order became final when the State did not appeal).
Obert sued the State and Swanson in 2022 alleging breach of the deferred prosecution agreement, breach of the covenant of good faith and fair dealing (bad faith), malicious prosecution, and procedural due process violations.
The District Court granted defendants’ motion to dismiss under Rule 12(b)(6): it held contract claims time‑barred, dismissed bad‑faith claims for lack of a “special relationship,” and dismissed malicious prosecution and due process claims (prosecutorial immunity and insufficiency of pleading).
Montana Supreme Court: affirmed dismissal of bad‑faith, malicious prosecution (Swanson), and due process claims; reversed dismissal of breach of contract and covenant claims on statute‑of‑limitations grounds and remanded.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
1. Accrual/statute of limitations for breach of deferred prosecution agreement	Obert: accrual delayed until criminal dismissal became final (then filed within one year).	State: accrual occurred when State breached (at latest May 21, 2020), so suit was time‑barred.	Court: accrual delayed until criminal proceedings terminated in plaintiff’s favor (adopting McDonough reasoning); reversal of dismissal on timeliness.
2. Bad‑faith (contract‑based tort) — existence of a “special relationship”	Obert: unequal bargaining power with the State supports special relationship; pleadings sufficient.	State: Obert negotiated with counsel and freely entered a favorable deferred agreement; no unequal bargaining position as a matter of law.	Court: facts in complaint (including counsel negotiation and voluntary signing) insufficient to show inherent inequality; affirm dismissal.
3. Malicious prosecution against county attorney Swanson — instigation and immunity	Obert: Swanson instigated and actively pursued prosecution beyond mere referral; pleadings support claim.	Swanson/State: referral and forwarding evidence were within statutory duties and quasi‑judicial functions; absolute prosecutorial immunity.	Court: Swanson acted within prosecutorial duties and is protected by absolute prosecutorial (quasi‑judicial) immunity; dismissal affirmed.
4. Procedural due process — pre‑deprivation hearing before rescission of agreement	Obert: State nullified the agreement and pursued charges without notice/hearing, violating due process.	State: probable cause and post‑charge pretrial evidentiary processes satisfy due process; no authority requires pre‑indictment hearing.	Court: no due process violation; State obtained leave on probable cause and district court held pretrial hearing that vindicated the Agreement. Dismissal affirmed.

Key Cases Cited

McDonough v. Smith, 588 U.S. 109 (2019) (civil‑claim accrual rule may be delayed until criminal proceedings terminate in the plaintiff’s favor)
Castaneda v. United States, 162 F.3d 832 (5th Cir. 1998) (deferred‑prosecution agreements treated as contracts; courts may require judicial determination before unilateral revocation)
Imbler v. Pachtman, 424 U.S. 409 (1976) (prosecutors entitled to absolute immunity for actions intimately associated with judicial phase)
Rosenthal v. County of Madison, 170 P.3d 493 (Mont. 2007) (prosecutorial immunity / quasi‑judicial role for county attorneys)
Ronek v. Gallatin County, 740 P.2d 1115 (Mont. 1987) (prosecutorial immunity principles applied to county actors)
McDaniel v. State, 208 P.3d 817 (Mont. 2009) (discusses limits of entity immunity for contract claims; treated as distinguishable/problematic in majority opinion)
Buckley v. Fitzsimmons, 509 U.S. 259 (1993) (distinguishes prosecutorial investigative acts from advocacy functions when assessing immunity)
Van de Kamp v. Goldstein, 555 U.S. 335 (2009) (scope of prosecutorial immunity for judicial‑phase and related supervisory acts)
Burns v. Reed, 500 U.S. 478 (1991) (limits on absolute immunity for pretrial legal advice distinct from advocacy functions)
Reed v. Goertz, 598 U.S. 230 (2023) (cautions about concurrent civil and criminal proceedings and comity concerns)