MKC ENERGY INVESTMENTS INC v. SHELDON

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Court of Appeals of Texas,Beaumont.

MKC ENERGY INVESTMENTS, INC., Appellant v. Scot SHELDON and Sheldon, Jordan & Dunham, L.L.P., Appellees.

No. 09-04-235 CV.

Decided: September 22, 2005

Before McKEITHEN, C.J., KREGER, and HORTON, JJ. Robert A. Plessala, Cokinos, Bosien & Young, Houston, for appellant. Donald B. McFall and Joseph R. Little, McFall, Sherwood & Breitbeil, P.C., Houston, for appellee.

OPINION

MKC Energy Investments, Inc. (“MKC”) appeals a summary judgment granted in favor of attorney Scot Sheldon and Sheldon, Jordan & Dunham, L.L.P. (“Sheldon”), on all third-party causes of action asserted against them.   MKC appeals raising three issues:  (1) the statements of Sheldon should not be privileged because they were made prior to and without reference to any pending or proposed judicial proceedings, (2) MKC's motion to continue the summary judgment should have been granted to allow further discovery, and (3) in the absence of the absolute immunity defense, genuine issues of material fact exist to preclude summary judgment on all causes of action.   We affirm the trial court's judgment on other grounds.

BACKGROUND

MKC owns a building in which the Southeast Texas Regional Planning Commission (“RPC”) was a tenant.   During 2000 and 2001, several RPC employees, as well as other tenants in the building, complained of health problems allegedly related to the building.   Beginning in July, 2001, various community newspapers began reporting on the alleged problems with the building.   RPC retained Sheldon as its attorney with regard to the conflict with MKC and the problems with the building, and MKC retained its own legal counsel.   In addition to hiring lawyers, each party retained experts to render opinions about the condition of the building.   The expert for RPC eventually prepared a report of her investigation and findings.   On August 29, 2001, the Beaumont Enterprise ran an article concerning RPC's decision to vacate the building.   Sheldon responded to a reporter's telephone call and is quoted in the article with various statements, including that the conditions of the building were “dangerous” and “unhealthy.”   Sheldon is further quoted as saying that the building had “dangerous levels of certain types of mold” that prompted Sheldon to “advise [the RPC] to evacuate the premises.”   In the same article, Sheldon gave the reporter the name of MKC's attorney and added that MKC “denied any unsafe conditions.”

Within a week of that newspaper article, MKC sued the RPC in federal court seeking, among other things, a declaratory judgment on concerns over the building.   On or about October 16, 2001, the RPC, represented by Sheldon, filed the underlying cause in Jefferson County district court.   On or about July 1, 2003, MKC filed its First Amended Counterclaims and Third-Party Claims against Sheldon asserting tortious interference, business disparagement and conspiracy arising out of the quotes attributed to Sheldon in the Beaumont Enterprise.   On August 7, 2003, RPC's Motion to Abate the case for sixty days was granted by the trial court to allow RPC time to obtain new counsel and Sheldon to obtain counsel of its own.   No formal discovery was begun by MKC on the claims against Sheldon.   On October 27, 2003, Sheldon filed a Motion for Summary Judgment.   MKC filed a sworn motion to continue the summary judgment hearing as well as a supplemental motion.   MKC filed a response to the Motion for Summary Judgment including a renewed Motion for Continuance, on November 18, 2003.   We note that the record does not evidence that the trial court ever heard MKC's motion for continuance or that any oral hearing was ever requested.   Oral arguments were heard on November 21, 2003, and the trial court signed a summary judgment in favor of Sheldon dismissing all of MKC's third-party claims.   By order signed April 23, 2004, the court severed its summary judgment ruling in favor of Sheldon.   MKC timely filed a notice of appeal.

 Although both a no-evidence and a traditional motion for summary judgment were filed in this case, our analysis is under the traditional standard.   The standard of review in a defamation case is the same as in other summary judgment cases, despite the presence of constitutional considerations.   See Casso v. Brand, 776 S.W.2d 551, 556-57 (Tex.1989).   A summary judgment for a defendant will be upheld when the defendant negates an essential element of plaintiffs theory of recovery.   See Science Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex.1997).   In reviewing a summary judgment, an appellate court must take as true the evidence favorable to the nonmovant.  Id. Summary judgment is appropriate when a dispositive question of law is involved.   See Lear Siegler, Inc. v. Perez, 819 S.W.2d 470 (Tex.1991).   Whether an unambiguous statement is reasonably capable of defamatory meaning is a dispositive question of law in a libel case.   See Musser v. Smith Prot. Servs., Inc., 723 S.W.2d 653, 655 (Tex.1987).   In reviewing a summary judgment in which the trial court has not provided the basis for its decision, as here, we must review each ground asserted in the motion and affirm the trial court's judgment if any of these grounds are meritorious.  Carr v. Brasher, 776 S.W.2d 567, 569 (Tex.1989);  Williams v. United Pentecostal Church Intern., 115 S.W.3d 612, 614 (Tex.App.-Beaumont 2003, no pet.).   Furthermore, where both traditional and “no evidence” motions for summary judgment are filed, the reviewing court must uphold the summary judgment if it can be sustained under either method.   See Dow Chemical Co. v. Francis, 46 S.W.3d 237, 242 (Tex.2001).

 The elements of a claim for business disparagement are:  (1) publication of disparaging words by the defendant, (2) falsity, (3) malice, (4) lack of privilege, and (5) special damages.  Granada Biosciences, Inc. v. Forbes, Inc., 49 S.W.3d 610, 615 (Tex.App.-Houston [14th Dist.] 2001), rev'd on other grounds, 124 S.W.3d 167 (Tex.2003) (citing Hurlbut v. Gulf Atl. Life Ins. Co., 749 S.W.2d 762, 766 (Tex.1987)).  “The tort is part of the body of law concerned with the subject of interference with commercial or economic relations.   The Restatement identifies the tort by the name ‘injurious falsehood’ and notes its application ‘in cases of the disparagement of property in land, chattels, or intangible things or of their quality.’  Restatement (Second) of Torts § 623A, comment a (1977).”   An action for business disparagement is similar in many respects to an action for defamation.   Hurlbut, 749 S.W.2d at 766.

Both involve the imposition of liability for injury sustained through publications to third parties of a false statement affecting the plaintiff.   The two torts, however, protect different interests.   The action for defamation is to protect the personal reputation of the injured party, whereas the action for injurious falsehood or business disparagement is to protect the economic interests of the injured party against pecuniary loss.

More stringent requirements have always been imposed on the ‘plaintiff seeking to recover for injurious falsehood in three important respects-falsity of the statement, fault of the defendant and proof of damage.’  Restatement (Second) of Torts § 623A, comment g (1977).   Regarding falsity, the common law presumed the defamatory statement to be false and truth was a defensive matter.   The plaintiff in a business disparagement claim, however, must plead and prove the falsity of the statement as part of his cause of action.

Hurlbut, 749 S.W.2d at 767.

 To support a claim for business disparagement, the published statements must be, at a minimum, defamatory.   Granada Biosciences, 49 S.W.3d at 616;  see also Delta Air Lines, Inc. v. Norris, 949 S.W.2d 422, 427 (Tex.App.-Waco 1997, writ denied).  “All assertions of opinion are protected by the first amendment of the United States Constitution and article I, section 8 of the Texas Constitution.”  Carr, 776 S.W.2d at 570.  “Whether a statement is an opinion or an assertion of fact is a question of law.”  Id.;  see also Delta Air Lines, 949 S.W.2d at 426.   Whether the words used are reasonably capable of a defamatory meaning is a question of law.  Delta Air Lines, 949 S.W.2d at 426;  Musser, 723 S.W.2d at 654.  “The court construes the statement as a whole in light of the surrounding circumstances based upon how a person of ordinary intelligence would perceive the entire statement.”  Musser, 723 S.W.2d at 655.  “The question should not be submitted to the jury unless the language is ambiguous or of doubtful import.”   See Ezrailson v. Rohrich, 65 S.W.3d 373, 376 (Tex.App.-Beaumont 2001, no pet.) (quoting Garcia v. Burris, 961 S.W.2d 603, 605 (Tex.App.-San Antonio 1997, pet. denied)).   The statements alleged to be defamatory must be viewed in their context;  they may be false, abusive, unpleasant, or objectionable to the plaintiff and still not be defamatory in light of the surrounding circumstances.   See San Antonio Express News v. Dracos, 922 S.W.2d 242, 248 (Tex.App.-San Antonio 1996, no writ).   The entire communication-not mere isolated sentences or portions-must be considered.   See Musser, 723 S.W.2d at 655.

We must first determine whether the statements attributed to Sheldon in the newspaper articles were actually defamatory as pled by MKC. In order to do so, we must examine the published articles at issue in their entirety rather than examine separate sentences or words excerpted from such articles.   See Musser, 723 S.W.2d at 653.  “This is true because statements may be made defamatory by taking them out of context, and although they may be false, abusive, unpleasant and objectionable to the plaintiff, they may not be ‘defamatory’ in an actionable sense.”  Simmons v. Ware, 920 S.W.2d 438, 444-45 (Tex.App.-Amarillo 1996, no pet.).

 The ordinary reader could not reasonably understand the complained-of statements attributed to Sheldon in this case to have a defamatory meaning.   Prior to the publication of Sheldon's comments to the reporter, at least four previous newspaper articles had been published chronicling the allegations of “sick building syndrome” involving the building owned by MKC. In the article made the basis of MKC's complaints, Sheldon is identified as the attorney for RPC and the statements attributed to him explain the lawsuit being contemplated between his client and MKC regarding the building and the termination of the lease with such landlord.   Sheldon's statements are obviously interspersed, at the sole discretion of the reporter, with other direct quotes of a representative of his client for the writer's purpose.   However, it is important to remember that our task is not to determine what the statement meant to the plaintiff, but whether it would be considered defamatory to the average reader.   See Herald-Post Publishing Co., v. Hervey, 282 S.W.2d 410, 415 (Tex.Civ.App.-El Paso 1955, writ ref'd n.r.e.), and San Antonio Express News v. Dracos, 922 S.W.2d 242, 249 (Tex.App.-San Antonio 1996, no writ).   Moreover, in the same paragraph wherein Sheldon is reported as saying “[t]he conditions are dangerous and unhealthy,” Sheldon is quoted as saying, “The landlord has denied any unsafe conditions.”   The attorney further explained in such article the constructive eviction of his client.   Based upon a review of the entire article in light of the circumstances in which it was reported, the statements attributed to Sheldon are not reasonably capable of defamatory meaning but, instead, constitute opinions of the attorney regarding his client's position in the impending lawsuit.   Under the circumstances here, the complained-of statements of Sheldon were not defamatory.

As stated earlier herein, as the trial court did not specify the grounds upon which the summary judgment was granted, the reviewing court will affirm the judgment if any theory advanced in the motion is meritorious.  State Farm Fire & Casualty Co. v. S.S., 858 S.W.2d 374, 380 (Tex.1993);  Carr, 776 S.W.2d at 569.   Although not briefed by either party, Sheldon's Motion for Summary Judgment includes an assertion that the statements were not defamatory as a matter of law.   As we have found the statements were not defamatory as a matter of law, the trial court properly could have granted summary judgment on MKC's business disparagement cause of action.   And, because we have determined the statements were not defamatory as a matter of law, we need not determine whether the statements were privileged and thus, do not reach issue number one.

 Appellant's third issue complains the trial court erred in granting summary judgment on all causes of action.   Sheldon's Motion for Summary Judgment prayed that the court grant a summary judgment on all claims asserted by MKC. MKC's remaining causes of action of tortious interference and conspiracy are both grounded on its business disparagement/defamation cause of action.   When non-libel claims are based on a libel cause of action, the person claiming a defamatory statement must first establish the libel elements in order to recover on the non-libel claims.   See generally Rogers v. Dallas Morning News, 889 S.W.2d 467, 474 (Tex.App.-Dallas 1994, writ denied);  see also Evans v. Dolcefino, 986 S.W.2d 69, 79 (Tex.App.-Houston [1st Dist.] 1999, no pet.).   We have already determined the statements attributed to Sheldon were not defamatory as a matter of law.   Because MKC failed to establish the elements of its business disparagement/defamation cause of action, it failed to meet a condition precedent to recovery on its other causes of action.   Consequently, the trial court did not err in granting summary judgment on all causes of action.   We thus overrule issue number three.

 We next address MKC's complaint that its' motion to continue the summary judgment proceeding should have been granted to allow further discovery.   The granting or denial of a motion for continuance is within the trial court's sound discretion.  General Motors Corp. v. Gayle, 951 S.W.2d 469, 476 (Tex.1997).   We review the trial court's ruling for an abuse of discretion.   See Clemons v. State Farm Fire & Cas. Co., 879 S.W.2d 385, 393 (Tex.App.-Houston [14th Dist.] 1994, no writ).   Before the reviewing court will reverse the trial court's ruling, it should clearly appear from the record that the trial court has disregarded the party's rights.  Yowell v. Piper Aircraft Corp., 703 S.W.2d 630, 635 (Tex.1986).   An appellate court may reverse a trial court for abuse of discretion only if, after searching the record, it is clear the trial court's decision was arbitrary and unreasonable.  Simon v. York Crane & Rigging Co., 739 S.W.2d 793, 795 (Tex.1987).   In a summary judgment context, it is generally not an abuse of discretion to deny a motion for continuance if the party has received the twenty-one days' notice required by Texas Rule of Civil Procedure 166a(c).  White v. Mellon Mortg. Co., 995 S.W.2d 795, 803 (Tex.App.-Tyler 1999, no pet.);  McAllister v. Samuels, 857 S.W.2d 768, 773 (Tex.App.-Houston [14th Dist.] 1993, no writ).

 “A party seeking more time to oppose a summary judgment must file an affidavit describing the evidence sought, explaining its materiality, and showing the due diligence used to obtain the evidence.   Tex.R. Civ. P. 166a(g), 251, 252.”  Carter v. MacFadyen, 93 S.W.3d 307, 310 (Tex.App.-Houston [14th Dist.] 2002, pet. denied).  “The affidavit must show why the continuance is necessary;  conclusory allegations are not sufficient.   See Nat'l Union Fire Ins. Co. of Pittsburgh, PA v. CBI Indus., Inc., 907 S.W.2d 517, 520-22 (Tex.1995) (holding further time for discovery unnecessary as construction of unambiguous contract required no discovery).”   Id. Generally, when a movant fails to comply with the requirement of Rule 251 that the motion for continuance be supported by affidavit, we presume the trial court did not abuse its discretion in denying the motion.  Villegas v. Carter, 711 S.W.2d 624, 626 (Tex.1986);  Garcia v. Tex. Employers' Ins. Ass'n, 622 S.W.2d 626, 630 (Tex.App.-Amarillo 1981, writ ref'd n.r.e.).   While MKC did file a verified motion for continuance seeking further discovery, MKC never presented the trial court with an affidavit setting forth with any specificity the evidence sought that was allegedly not obtainable prior to the scheduled hearing on the motion for summary judgment, nor did MKC request a hearing date from the court on such motion.   Despite its objections to the trial court's deadlines, MKC's counsel was able to file a response to Sheldon's motion for summary judgment.

Appellant's reliance upon the holding in Helfand v. Coane, 12 S.W.3d 152 (Tex.App.-Houston [1st Dist.] 2000, pet. denied), to support this issue on appeal is misplaced.  Helfand is factually distinguishable from the case at hand regarding the discovery issue but provides some guidance on this issue.   In Helfand, the Houston Court noted that in judicial immunity cases, there are multiple components to the absolute privilege:  the communication must bear some relationship to a judicial proceeding;  the attorney must be employed for that proceeding;  and the communication must be in furtherance of that representation.  Helfand, 12 S.W.3d at 157.   Whether an alleged defamatory communication is related to a proposed or existing judicial proceeding is a question of law.  Thomas, 940 S.W.2d at 343.   Determining whether a communication is absolutely privileged requires sufficient discovery.   Helfand, 12 S.W.3d at 157.   The trial court in Helfand entered an order freezing all discovery until after the summary judgment was considered.   In the case before us, while the trial court abated the proceedings for a period of sixty days prior to the filing of the summary judgment, the trial court had not entered any order prohibiting discovery after the abatement had terminated.

Further distinguishing Helfand, Helfand's claim arose not only from a publication of statements by Coane in a letter but also from a re-publication of alleged defamatory statements.   Discovery was required regarding the circumstances of the re-publication of the alleged defamatory statements.   Based on those facts, the Houston Court found an abuse of discretion to deny the motion for continuance.   The statements at issue in this case were made by Sheldon and published in the newspaper.   The newspaper articles were included in the record and available to the trial court.   In this case, unlike Helfand, there is no dispute regarding the publication of the articles or the facts surrounding the statements.   Under the circumstances here, the statements were not defamatory and further discovery was unnecessary.   We hold the trial court did not abuse its discretion by denying appellant's motion to continue the summary judgment proceedings and overrule appellant's second issue.

The judgment of the trial court is AFFIRMED.

CHARLES KREGER, Justice.

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