Opinion
Case No. 8:04CV32.
July 22, 2004
MEMORANDUM AND ORDER
This matter is before the Court on a Motion to Strike Portions of Defendant's Affirmative Defenses (Filing No. 11), a Motion to Dismiss (Filing No. 14), and Cross-Motions for Summary Judgment. (Filing Nos. 22 24). The Defendants have also filed a Motion to Strike the Plaintiff's Answer to the Motion to Dismiss and a Motion for Sanctions (Filing No. 24).
In its Complaint (Filing No. 1), Plaintiff Homestead Capital Company ("Homestead") alleges in Count I that the Defendants, Jose and Sandra Toro ("the Toros"), tortiously interfered with Homestead's business and contractual relationship with First National Bank of Omaha ("FNBO"), and in Count II, that the Toros defamed Homestead by sending FNBO correspondence with an enclosure. In their Answer (Filing No. 9), the Toros, appearing pro se, assert the affirmative defenses that (1) the statements communicated are privileged as public documents, (2) the statements communicated to FNBO are true, and (3) the owner of Homestead had a duty to inform FNBO of the statements communicated.
Jose Toro is a member of the bar in the District of Columbia, Maryland and New York, but has not been admitted to practice before this Court. (Filing No. 15, pg. 9).
MOTIONS TO STRIKE
Homestead's Motion
Homestead filed a Motion to Strike Portions of Defendant's Affirmative Defenses pursuant to Federal Rule of Civil Procedure 12(f) (Filing No. 11). "The court may order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed.R.Civ.P. 12(f). Rule 12(f) permits the trial court to strike an insufficient defense at any time on the court's initiative. Stanbury Law Firm, P.A. v. IRS, 221 F.3d 1059, 1063 (8th Cir. 2000). The matter will ordinarily be stricken only if its presence is likely to work actionable harm. Howell v. Gray, 10 F.R.D. 268, 270 (D. Neb. 1950). A statement is "immaterial" when the matter does not have value in developing the issues of the case. Geir v. Educational Service Unit No. 16, 144 F.R.D. 680, 687 n. 10 (D. Neb. 1992).
Although the Toros appear as pro se defendants, a pro se litigant is held to the same standards as one who is represented by counsel. State v. Lindsay, 517 N.W.2d 102, 107 (Neb. 1994). In their Answer, the Toros allege the affirmative defenses of truth and privilege. This Court finds that those defenses are reasonably related to the controversy presented in this case and that they are properly asserted pursuant to Federal Rule of Civil Procedure 8(c). Even if the Toros' narrative statements could be viewed as scandalous, similar allegations were presented by Homestead in Exhibits A and B accompanying the Complaint. Therefore, the Toro's Answer did not create prejudice or harm to Homestead. For these reasons, Homestead's Motion to Strike will be denied.
The Toros' Motion
The Toros also filed a Motion to Strike Homestead's Answer to the Defendant's Motion to Dismiss (Filing No. 24), which is part of the same document as the Toros' Cross-Motion for Summary Judgment and Motion for Sanctions. In their brief, the Toros argue that Homestead's opposition is "nothing more than self-serving arguments self-promoting Plaintiff's guarantor, Tompkins." (Filing No. 25 at 6.) Federal Rule of Civil Procedure 7(b)(1) states that a motion "shall state with particularity the grounds therefor." Fed.R.Civ.P. 7(b)(1). The Court finds no grounds stated in Toros' motion, nor on the Court's independent review, to warrant striking Homestead's Answer to the Toros' Motion to Dismiss. Homestead's Answer to the Toros' Motion to Dismiss is construed by the Court as a brief in opposition to the Motion to Dismiss. The Toros' Motion to Strike is denied.
CROSS-MOTIONS FOR SUMMARY JUDGMENT Standard of Review
Because the Toros filed a Motion to Dismiss (No. 14) after their Answer (No. 9) was already part of the record, this Court may treat it as a Motion for Judgment on the Pleadings under Fed.R.Civ.P. 12(c). Both parties, however, have now filed Motions for Summary Judgment. Homestead has submitted affidavits and other documents in support of its Motion for Summary Judgment. The Toros did not submit evidentiary materials in support of their own motions or in opposition to Homestead's motion. The Court has considered all arguments advanced in support of all motions when reviewing the Cross-Motions for Summary Judgment under Federal Rule of Civil Procedure 56.
Fed.R.Civ.P. 12(c) states in part:
If, on a motion for judgment on the pleadings, matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.
The Toros' Cross-Motion for Summary Judgment is part of Filing No. 24.
Summary judgment is proper if the evidence, viewed in the light most favorable to the nonmoving party, demonstrates no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Philip v. Ford Motor Co., 328 F.3d 1020, 1023 (8th Cir. 2003). A "genuine" issue of material fact is more than "some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).
The proponent of a motion for summary judgment "bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of 'the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting Fed.R.Civ.P. 56(c)). The proponent need not, however, negate the opponent's claims or defenses. Id. at 324-25. In response to the proponent's showing, the opponent's burden is to "come forward with 'specific facts showing that there is a genuine issue for trial.'" Matsushita, 475 U.S. at 587 (quoting Fed.R.Civ.P. 56(e)).
The court's function is to serve as a gatekeeper determining whether there is evidence generating a genuine issue of material fact for trial on each essential element of a claim, not to weigh evidence, decide credibility questions, or determine the truth of any factual issue. Bell v. Conopco, Inc., 186 F.3d 1099, 1101 (8th Cir. 1999). "[T]here is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). "If the evidence is merely colorable . . . or is not significantly probative . . . summary judgment may be granted." Id. at 249-50 (citations omitted).
Summary judgment is "properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed 'to secure the just, speedy and inexpensive determination of every action.'" Celotex Corp., 477 U.S. at 327. Nevertheless, the Court's function is not to weigh the credibility and persuasiveness of evidence in the context of a motion for summary judgment. Bryan v. Norfolk W. Ry., 154 F.3d 899, 902 (8th Cir. 1998).
Facts
Homestead is a Nebraska Corporation with its principal place of business in Wayne, Nebraska. (Complaint ¶ 1). For the past five years, Homestead and its principal owner and officer, Rodney Tompkins, have had a banking relationship with FNBO. ( Id. ¶¶ 7-8). Jose and Sandra Toro are residents of Montgomery County, Maryland ( Id. ¶¶ 2-3).
Background information regarding a separate lawsuit that is pending in Maryland is warranted at this juncture. In January of 2001, Tompkins agreed under certain conditions to loan five million dollars to OmniViral Therapeutics, LLC ("OVT"), a company founded by the Toros. In exchange, Tompkins became Chairman of the Board and acquired a 58% ownership interest in OVT. The Toros retained a 28% ownership interest in OVT. Following a business dispute between Tompkins and the Toros, the Toros filed a complaint against Tompkins and OVT in the Circuit Court for Montgomery County, Maryland, alleging breach of contract, intentional misrepresentation, negligent misrepresentation, breach of fiduciary duty, breach of operating agreement, conspiracy to gain control of the company unlawfully, and demand for removal of Tompkins as an Officer and Chairman of the Board. ( Id., Exhibit B). Based on the record before this Court, it appears that the Maryland action is currently pending.
Homestead has had an ongoing credit relationship with FNBO for the past five years. In early October of 2003, FNBO preliminarily approved an increase in Homestead's line of credit that was contingent on final approval from the FNBO Loan Committee. ( Id. ¶ 10). On or about October 10, 2003, while Homestead was awaiting final approval on the new line of credit, the Toros wrote a letter to a senior vice president of FNBO involved with FNBO's relationship with Tompkins and Homestead. ( Id. ¶ 10). It appears that the Toros mailed the letter to FNBO on the same day they filed their complaint in Maryland The Toros' letter informed FNBO that Tompkins was named as a defendant in a lawsuit commenced by the Toros that was pending in the Circuit Court for Montgomery County, Maryland The letter states to FNBO, "[g]iven that Mr. Tompkins is one of your clients, we are obligated to inform you of this lawsuit. ( Id., Exhibit A). Enclosed with the letter was a copy of the complaint (hereinafter the "Maryland Complaint"). ( Id. ¶¶ 7-8).
Homestead also alleges, undisputed by the Toros, that the Toros sent copies of the Maryland Complaint and similar cover letters to the State National Bank and Trust, The Wayne Herald, both of which are located in Tompkins' and Homestead's home town of Wayne, Nebraska, the investment banking firm of Roberts, Mitani, Aqua, LLC, and Gregory R. Jones, counsel for the University of South Alabama.
After receiving the letter and the Maryland Complaint from the Toros, Gail Klanderud, an officer of FNBO, postponed final approval of Homestead's request to the Loan Committee. (Filing No. 21, Klanderud Aff. ¶ 10) On November 26, 2003, FNBO agreed to renew Tompkin's line of credit, but with a 4.8% interest rate floor rather than the 4.0% rate that had been preliminarily approved. (Id. ¶ 12). Klanderud, who handled the day-to-day responsibilities of the loan to Homestead, and Charles Fries, a senior vice president who served on the Loan Committee, had no knowledge of the Toros nor of the subject matter of the Maryland Complaint prior to their receipt of the Maryland Complaint. ( Id. ¶ 9, Fries Aff. ¶ 7). Klanderud and Fries have stated that the letter and the Maryland Complaint caused the delay of the loan renewal and the increase of the interest rate. (Klanderud Aff. ¶ 12, Fries Aff. ¶ 10). In the Complaint, Homestead alleged that the delays in the loan approval and the increased interest rate were caused by FNBO's receipt of the letter and the Maryland Complaint from the Toros, and Homestead seeks money damages in excess of $75,000 from the Toros.
The Toros allege that all statements made in the Maryland Complaint are true and that they are unconditionally privileged. The Toros argue that they felt obligated to inform FNBO of the lawsuit because they knew FNBO was providing financial backing to Tompkins. The Toros state that they also plan to call an FNBO representative as a witness in the Maryland suit. (Filing No. 9, hereinafter "Answer" at 6-7).
Analysis — Homestead's Motion for Summary Judgment Count 1: Tortious Interference
Homestead alleges that the Toros intentionally and unjustifiedly sent the letter and the Maryland Complaint to FNBO that interfered with Homestead's contractual and business relationship.
The elements of tortious interference with a business relationship or expectation are (1) the existence of a valid business relationship or expectancy, (2) knowledge by the interferer of the relationship or expectancy, (3) an unjustified intentional act of interference on the part of the interferer, (4) proof that the interference caused the harm sustained, and (5) damage to the party whose relationship or expectancy was disrupted. Huff v. Schwartz, 606 N.W.2d 461, 466 (Neb. 2000).
There is no dispute as to the first element: an ongoing business relationship existed between Homestead, Tompkins and FNBO. The Toros argue, however, that they knew nothing of the bank's relationship with Homestead. (Filing No. 15 at 8.) This Court must determine whether there is a genuine issue of fact regarding whether the Toros had sufficient knowledge of the relationship between FNBO and Homestead through their admitted awareness of the business relationship between FNBO and Tompkins.
A defendant has sufficient knowledge of a business relationship if a reasonable inquiry would have led to the disclosure of the contractual relationship. See, e.g., Revere Transducers, Inc. v. Deere Co., 595 N.W.2d 751, 764 (Iowa 1999); Kallok v. Medtronic, Inc. 573 N.W.2d 356, 362 (Minn. 1998). The Toros admit that they knew that Tompkins had numerous business ventures other than the company in which they owned an interest. (Filing No. 25 at 13.) There is no genuine issue of fact regarding whether the Toros knew that Tompkins was obtaining financing for other companies such as Homestead. That fact is apparent from the undisputed evidence that the Toros mailed the letter and the Maryland Complaint to FNBO at just the time when Tompkins was obtaining financing for Homestead from FNBO. The Toros have submitted no evidence to create a genuine issue relative to that fact. Accordingly, I find that Homestead has demonstrated that the Toros had sufficient knowledge of a business relationship among Tompkins, Homestead and FNBO, thereby satisfying the second element of the tortious interference claim.
In fact, the Toros faxed the Maryland Complaint to Tompkins at Heritage Homes, one of Tompkins's other businesses. (Filing No. 25 at 11).
The Toros argue that their action was justified and unintentional. To be liable for tortious interference, the actor must act for the primary purpose of interfering with the performance of the contract or know that interference is certain to occur as a result of his or her action. Restatement (Second) of Torts ___ 766 cmt. j (1979). The Nebraska Supreme Court, which has adopted the Restatement, supra, ___ 767, considers seven factors in determining whether an interference was unjustified:
(a) the nature of the actor's conduct,
(b) actor's motive,
(c) the interests of the other with which the actor's conduct interferes,
(d) the interests sought to be advanced by the actor,
(e) the social interests in protecting the freedom of action of the actor and the contractual interests of the other,
(f) the proximity or remoteness of the actor's conduct to the interference and
(g) the relations between the parties.
Huff v. Swartz, 606 N.W.2d 461, 468 (Neb. 2000); Restatement (Second) of Torts § 767. The fact-finder is to engage in a balancing process of the above factors and the facts of the case, not upon rules of law or generalizations. Id.
The Toros argue that their intention was not to deprive Tompkins of future credit, but to prevent further injury to their company, OVT, in Maryland by preserving the Toros' and OVT's reputation of honesty. Yet the Toros have failed to produce any evidence that FNBO had any financial involvement with OVT. Although the Toros indicate that they wanted to try to obtain more information on Tompkins from FNBO and that they considered FNBO's representatives as potential witnesses in their Maryland action, their October 10 letter to FNBO did not mention any request for information or their view of FNBO representatives as potential witnesses.
The Toros argue that Tompkins had a duty to disclose information regarding the Maryland action to FNBO, but they point to no evidence or law to support that argument. The record is devoid of evidence indicating that Tompkins was under a legal duty to disclose the information to FNBO. Rather, Tompkins stated that he was never asked by FNBO to provide information concerning "threatened litigation surrounding [his] personal investments." (Tompkins Aff. ¶ 4). The Toros have presented no evidence to the contrary. Consequently, the Court finds no genuine issue of material fact that could lead a reasonable jury to determine that the interference was justified. Even though the Maryland Complaint is a public document, the Toros' act of mailing the Maryland Complaint to FNBO constituted an intentional, unjustified interference. The Toros' arguments that have been advanced in opposition to Homestead's evidence do not satisfy the Toros' burden of coming forward with evidence to demonstrate genuine issues of material fact for trial. See Matsushita, 475 U.S. at 587 (quoting Fed.R.Civ.P. 56(e)).
To succeed on a tortious interference claim, Homestead also must prove that the interference caused the harm sustained. Tompkins and FNBO representatives agree that FNBO's receipt of the Maryland Complaint caused a delay in the Loan Committee's approval process. They also agree that even though the loan was initially approved at a 4% interest rate floor, it was raised to a 4.8% floor as a result of the information sent to FNBO by the Toros. The Toros have offered no evidence to dispute this fact. I find there is no genuine issue that the Toros' mailing of the Maryland Complaint to FNBO caused harm to Homestead in the form of monetary damages.
The Court concludes that Homestead has made a prima facie case for tortious interference. The Toros have failed to demonstrate that a genuine issue of material fact exists or that they have any defense to the tortious interference claim. Accordingly, the Court concludes that Homestead is entitled to summary judgment as a matter of law on its claim that the Toros tortiously interfered with its business relationship with FNBO. Because neither party has presented proof of the amount of damages sustained by Homestead, the Court will grant summary judgment on liability, but will reserve the issue of the amount of damages, related to the tortious interference claim.
Count 2: Defamation
Homestead also seeks summary judgment on its defamation claim. Whether a communication is defamatory is a question of law for the court. Wheeler v. Nebraska State Bar Ass'n, 508 N.W.2d 917 (Neb. 1993), cert. denied 511 U.S. 1084 (1994). In Nebraska, language is actionable if, by its nature and obvious meaning, it falsely subjects a person to public ridicule, causing disgrace. Rhodes v. Star Herald Printing Co., 113 N.W.2d 658, 661 (Neb. 1962); Treutler v. Meridith Corp., 455 F.2d 255, 258 (8th Cir. 1972). To succeed on its defamation claim, Homestead must show:
(1) a false and defamatory statement concerning the plaintiff;
(2) an unprivileged publication to a third party;
(3) fault amounting to at least negligence on the part of the publisher;
(4) either actionability of the statement irrespective of special harm or the existence of special harm caused by the publication.Norris v. Hathaway, 561 N.W.2d 583, 585-86 (Neb.Ct.App. 1997); Restatement (Second) of Torts ___ 558, 50 Am. Jur. 2d Libel and Slander ___ 21 (1995). In proving a defamatory publication, the plaintiff is not required to show that the defamatory statement was made known to the public generally. McCune v. Neitzel, 457 N.W.2d 803, 810 (Neb. 1990).
A defamatory statement may be actionable per se or it may be actionable per quod, that is, an allegation requiring proof of the defamatory meaning of the words used and of special damages. K Corp. v. Stewart, 526 N.W.2d 429, 433 (Neb. 1995). "[T]he circumstances under which the publication of an allegedly defamatory communication was made, the character of the audience and its relationship to the subject of the publication, and the effect the publication may reasonably have had upon such audience must be taken into consideration." Matheson v. Stork, 477 N.W.2d 156, 161 (Neb. 1991).
Spoken or written words are slanderous or libelous per se only if they falsely impute the commission of a crime involving moral turpitude, an infectious disease, or unfitness to perform the duties of an office or employment, or if they prejudice one in his or her profession or trade or tend to disinherit one. Id. at 160-61. The burden of proving the falsity of a statement is generally on the party who has brought the defamation action, as an element of the prima facie case. Bartels v. Retail Credit Co., 175 N.W.2d 292, 297 (Neb. 1970). "States may not permit recovery . . . when liability is not based on a showing of knowledge of falsity or reckless disregard for the truth." Gertz v. Welch, 418 U.S. 323, 349 (1974); Bartels, 175 N.W.2d at 297; Restatement (Second) of Torts ___ 581A.
The Toros assert the truth of the Maryland Complaint as an affirmative defense to Homestead's defamation action. The truth of an allegedly-defamatory statement is a complete defense unless it is proved that the publication was made with actual malice. Neb. Rev. Stat. ___ 25-840 (Reissue 1995). See White v. Ardan, Inc., 430 N.W.2d 27 (Neb. 1988); Turner v. Welliver, 411 N.W.2d 298 (Neb. 1987); Helmstadter v. North American Biological, Inc., 559 N.W.2d 794 (Neb.Ct.App. 1997). A defendant who relies on the truth of the defamatory matter published by him or her as a defense has the burden of proving that the statement was true. Bartels, 175 N.W.2d at 297.
Although the statements made in the Maryland Complaint clearly prejudiced Tompkins in his profession by influencing the FNBO Loan Committee's decision regarding Homestead's credit terms, neither Homestead nor the Toros presented sufficient evidence to establish the truth or falsity of the statements alleged in the Maryland Complaint. To this Court's knowledge, the claims alleged in the Maryland Complaint are still pending in the Circuit Court for Montgomery County, Maryland Consequently, a genuine issue of material fact remains as to the truth or falsity of the Maryland Complaint. Both Homestead's motion for summary judgment and the Toros' motions for summary judgment on the defamation claim will be denied.
Analysis — Toros' Motion for Summary Judgment
The Toros' Motion for Summary Judgment raises additional issues relative to their affirmative defenses that warrant discussion.
Standing
The Toros allege that Homestead does not have standing in a defamation cause of action because the alleged defamatory statement expressly mentioned Tompkins but not Homestead. A corporation is defamed by communications defamatory of its officers, agents or stockholders only if the statement also reflects discredit upon the method by which the corporation conducts its business. Restatement (Second) of Torts ___ 561 cmt. b; 53 C.J.S. Libel and Slander ___ 113; Am. Jur. 2d Libel and Slander ___ 351; Life Printing Pub. Co. v. Field, 64 N.E.2d 383 (Ill.App. 1946). A corporation may maintain an action for libel even if the corporation is not specifically mentioned in the communication, if the statement injures the property, the credit, or the business of the corporation. National Refining Co. v. Benzo Gas Motor Fuel Co., 20 F.2d 763, 766 (8th Cir. 1927) (applying Missouri law); see also Security Benefit Ass'n v. Daily News Pub. Co., 299 F. 445, 446-47 (8th Cir. 1924) (applying Nebraska law); Levitt v. S.C. Food Serv., Inc., 820 F.Supp. 366, 367 (N.D. Ill. 1993) ; Brown Williamson Tobacco Corp. v. Jacobson, 713 F.2d 262 (7th Cir. 1983); Diplomatic Elec., Inc. v. Westinghouse Elec. Supply Co., 378 F.2d 377, 382-83 (5th Cir. 1967).
Tompkins is the principal officer and shareholder of Homestead. The publication of the Maryland Complaint communicated allegations that Tompkins had breached a fiduciary duty and perpetrated a fraud on the Toros. Such information can, and, in this case undisputably did, affect the credit or the business relations of Homestead. Therefore, Homestead has standing to bring its claim against the Toros for defamation.
Privilege
The Toros also assert that the communication of the Maryland Complaint is privileged. A defamatory statement in a pleading is absolutely privileged when it is relevant to, or has some reasonable relation to, the judicial proceeding in which it is filed. Beckenhauer v. Predoehl, 338 N.W.2d 618, 620 (Neb. 1983); Restatement (Second) of Torts ___ 587; Sinnett v. Albert, 195 N.W.2d 506, 508 (Neb. 1972). The republication of a libel, however, in circumstances where the initial publication is privileged, is generally unprotected. Doe v. McMillan, 412 U.S. 306, 315 n. 8 (1973) (holding that a republishing carries no immunity when it is not an essential part of the legislative process). A person cannot confer privilege upon himself by making the original defamatory publication and then reporting to other people what he had stated. Restatement (Second) of Torts ___ 611, illus. 2.
The Toros allege that the mailing of the letter and Maryland Complaint was related to the judicial proceeding in Maryland The letter sent to FNBO did not indicate that the bank was about to become a party to the judicial proceeding, nor did it inform the bank that a representative would be called as a witness. ( See Complaint, Exhibit A.) FNBO representatives who had business dealings with Tompkins were wholly unfamiliar with the Toros at the time they received the Maryland Complaint. (Fries Aff. ¶ 7; Klanderud Aff. ¶ 9.) In addition, the letter accompanying the Maryland Complaint was not a part of any judicial proceeding. The letter did not communicate the Toros' plan to involve FNBO in the Maryland lawsuit. The Toros' publication of the letter and the Maryland Complaint to FNBO was not sufficiently related to the judicial proceedings in Maryland to be absolutely privileged.
Though the Toros' communication of the Maryland Complaint to FNBO does not enjoy an absolute privilege, it may benefit from a qualified privilege if it was made by one who has an interest in the subject matter to another (1) who also has an interest in the subject matter, or (2) stands in such relation that it is a reasonable duty, or is proper, for the writer to give the information. Turner, 411 N.W.2d at 307. See Restatement (Second) of Torts ___ 596. One who upon an occasion giving rise to a conditional privilege publishes defamatory matter concerning another abuses the privilege if he or she does not reasonably believe the matter to be necessary to accomplish the purpose for which the privilege is given. Restatement (Second) of Torts ___ 605.
The Nebraska Supreme Court has explained the qualified privilege in greater detail. First, the parties must share an interest in the subject matter, and the publication must be made for the protection of the recipient or a third person. Turner, 411 N.W.2d at 307-08. The conditional privilege involved in this case depends on the relationship between the Toros, FNBO, and Tompkins. It is clear from the Maryland Complaint that Tompkins and the Toros had a business relationship concerning OVT in Maryland FNBO maintained a business relationship with Tompkins, but the FNBO officer who worked with Tompkins had no knowledge of the Toros until receiving the letter and the Maryland Complaint. Although the Toros argue that they mailed the Maryland Complaint to protect the financial interests of OVT, the Toros have provided no evidence to demonstrate how their communication to FNBO could have protected OVT, particularly because the Toros sued Tompkins and OVT in the Maryland action. (Filing No. 1, Exhibit B.) Therefore, on this record, the Court finds no common interest between FNBO and the Toros that would entitle the communication to a qualified privilege.
A publication may also carry a qualified privilege if made to a recipient to whom the publisher owes a legal duty to publish the matter or to whom the publication is within generally accepted standards of decent conduct. Turner, 411 N.W.2d at 308. One may not, unasked, volunteer information merely because he or she reasonably believes that the recipient would ask for it if he or she knew it was available. Restatement (Second) of Torts § 595 cmt.j. Affidavits from FNBO representatives establish that FNBO had no direct relationship with the Toros. There is no evidence before the Court to demonstrate that the Toros had a fiduciary duty to FNBO based on Tompkin's business relationship with the bank.
The Toros allege that "it appeared to them that one of the sources of money to finance OVT was FNBO," (Answer at 6) but have not produced factual findings to support this allegation.
Even if there is no legal duty that requires the publication, disclosure may be sanctioned by social standards, thereby entitling the communication to a qualified privilege. While the parties have not directed the Court to any case on point, I note that when addressing generally-accepted standards of conduct among credit agencies that communicate to subscribers of credit information, the Restatement (Second) of Torts § 595 states that a "general publication to all subscribers is privileged only if it includes those who require information concerning the other's credit to protect their business interests." Restatement (Second) of Torts § 595 cmt. h. See also Bartels, 175 N.W.2d at 296. This situation is different for two reasons. First, FNBO did not make any request, formal or informal, for information on its clients from the Toros. Second, the application procedures of FNBO indicate that it did not require information concerning its clients' pending lawsuits. Therefore, there is no evidence to support a finding that the Toros' communication to FNBO was within generally-accepted standards of conduct. To the extent that the Toros' move for summary judgment on the basis of an absolute or qualified privilege, the motion is denied.
MOTION FOR SANCTIONS
The Toros also file a Motion for Sanctions due to what they refer to as a "material misrepresentation" made by Homestead in connection with the Maryland Complaint. Specifically, the Toros argue that an affidavit submitted by Homestead misrepresents the date the Maryland case was filed.
Under Fed.R.Civ.P. 11(b), attorneys presenting documents to the court must certify that to the best of their knowledge, information and belief, formed after a reasonable inquiry under the circumstances, that the factual contentions documented have evidentiary support or are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery. A motion for sanctions under Fed.R.Civ.P. 11(c) applies if, after notice and a reasonable opportunity to respond, the court determines that an attorney has violated Rule 11(b).
This Court does not find the statement of an inaccurate date in an affidavit as a violation of 11(b), and even if it could be considered as such, Homestead has amended its affidavit to correct the discrepancy in a timely manner. (Filing No. 29.) Therefore, the Toros' Motion for Sanctions is denied.
For all the reasons provided in this Memorandum,
IT IS ORDERED:
1. The Plaintiffs' Motion to Strike portions of the Defendant's Answer (Filing No. 11) is denied.
2. The Plaintiff's Motion for Summary Judgment (Filing No. 22) is granted in part and denied in part as follows:
a) Plaintiff's Motion for Summary Judgment on the tortious interference claim is granted as to liability only, reserving the issue of the amount of damages; and
b) Plaintiff's Motion for Summary Judgment on the defamation claim is denied;
3. The Defendants' Motion to Strike the [Plaintiff's] Answer to the Defendants' Motion to Dismiss (part of Filing No. 24) is denied;
4. The Defendants' Motion to Dismiss (Filing No. 14) is denied as moot because the Defendants' arguments were considered in connection with the Defendants' Cross-Motion for Summary Judgment;
5. The Defendants' Cross-Motion for Summary Judgment (part of Filing No. 24) is denied; and
6. The Defendants' Motion for Sanctions (Filing No. 24) is denied.