RCO LEGAL, P.S., INC. Et Al. v. JOHNSON.
RCO LEGAL, P.S., INC. Et Al. v. JOHNSON.
Opinion
*661 Larry W. Johnson sued his former employer, RCO Legal, P.S., Inc. ("RCO"), as well as various persons associated with the firm, alleging that they defamed him. RCO filed a motion to dismiss or strike Johnson's complaint pursuant to OCGA § 9-11-11.1, which is Georgia's anti-SLAPP statute. 1 Johnson also filed a motion to strike portions of an affidavit made by RCO's general counsel, James Galbraith, as well as exhibits attached to that affidavit. The trial court denied RCO's motion to dismiss Johnson's complaint, and also granted Johnson's motion to strike. RCO, James Galbraith, Stephen Routh, Janaya Carter, and Lori McGowan now appeal.
After a thorough review of the record, we determine that the trial court erred in granting Johnson's motion to strike the Galbraith affidavit without considering circumstantial evidence of authenticity of the attached exhibits. We also conclude that, although the trial court properly denied the appellants' motion to dismiss Johnson's complaint, Johnson's allegation of defamation stemming from RCO's summary judgment motion during arbitration proceedings, as well as communications to RCO's human resources director, should have both been struck from the complaint because neither would have supported a claim for defamation. Thus, we affirm in part, vacate in part, and remand this case with direction.
"We review de novo the trial court's denial of [a]ppellants' motion to dismiss. In reviewing the trial court's order, we construe the
*662
pleadings in the light most favorable to the plaintiff with any doubts resolved in the plaintiff's favor." (Citations omitted.)
Jubilee Dev. Partners v. Strategic Jubilee Holdings
,
RCO is a Washington-based law firm that provides mortgage default services. In June 2013, RCO hired Johnson as the vice president for the southeast region, and he was to co-manage RCO's southeast region client files with his then-law partner, Joel Freedman. Johnson and Freedman maintained a separate law firm ("J&F"), with its own escrow accounts, assets and obligations. According to Johnson's employment agreement with RCO, Johnson was due to receive a severance payment of 36 months' salary, provided that he was terminated without cause. James Galbraith is RCO's general counsel; Stephen Routh is an RCO shareholder and founding partner; Janaya Carter is RCO's managing shareholder; and Lori McGowan is senior counsel with the firm.
Underlying Johnson's complaint is a foreclosure sale on property which belonged to Luther Carl Murray. J&F conducted that sale in April 2013, and the sale yielded $76,602.89 in excess funds, payable to Mr. Murray. J&F mailed a letter to Mr. Murray notifying him of the excess funds, but he did not respond. J&F then mailed another letter to Mr. Murray, along with a check for the excess funds, to a different address which a private investigator had found. Once again, Mr. Murray did not respond.
J&F then had a private investigator visit Mr. Murray, who lived with his mother. The investigator brought a check for the excess funds, as well as a "Release and Hold Harmless Agreement" so that Mr. Murray could *495 receive the funds. After the investigator explained the purpose of his visit, Mr. Murray stated that he did not want the check, and that the investigator's client should keep it. Mr. Murray's mother testified, "[h]e didn't mean that." Although the investigator left his contact information, neither Mr. Murray nor his mother contacted him. Johnson also averred that he had a conversation with Mr. Murray, during which Mr. Murray stated that he did not want the excess funds, and that Johnson should keep them. When Mr. Murray's mother was deposed in 2017, she testified that an envelope with a check came to the home in 2014, and that Mr. Murray had received it but never opened it.
In April 2015, Johnson had the check reissued, and the named payees were "Luther Carl Murray and Johnson & Freedman, LLC." As Johnson had initially instructed that the payees be named in the alternative, he changed the "and" to "or," initialed this change, and then deposited the check into his personal bank account. Johnson later paid that money to J&F, and Freedman put the money into *663 J&F's escrow account. In July 2015, J&F sought the counsel of another firm regarding where to direct the funds. That firm sent Mr. Murray a letter informing him that J&F was holding the excess funds, which they intended to turn over to the State, and advising him that he had 60 days to claim the funds from J&F. With no response from Mr. Murray, J&F filed an unclaimed property report with the Georgia Department of Revenue, and issued a check to the Department in the amount of the excess funds.
In September 2015, RCO terminated Johnson's employment "for cause," based partly on alleged mismanagement of the southeast region, and misuse and misappropriation of company resources. The letter informed Johnson that because he was being terminated for cause, i.e., "theft, dishonesty, fraud, gross negligence or willful misconduct in the performance of [his] assigned duties," he was not eligible for any severance payment. Johnson filed an arbitration claim against RCO in Washington State, and RCO filed Bar complaints against Johnson in Georgia, North Carolina, and Tennessee. 2
Johnson ultimately requested the Department of Revenue to reimburse him the excess funds, and the Department issued a check in the amount of the excess funds, to "Johnson & Freedman LLC[,] Attn Larry W Johnson." After Johnson filed a complaint for declaratory judgment in the Columbia County Superior Court, that court determined that Mr. Murray had surrendered his claim to the excess funds, and that JF Legal (formerly J&F) was entitled to the funds.
In 2017, Johnson filed a complaint against the appellants in DeKalb County, alleging that the defendants committed slander and libel 3 under OCGA § 51-5-1 et seq. Specifically, he complained of the following alleged acts and statements pertaining to his handling of the excess funds: (1) RCO's summary judgment motion in the arbitration proceeding, in which RCO claimed that Johnson committed theft when he deposited the excess funds into his personal bank account; (2) theft accusations that Galbraith and Routh made by telephone to in-house counsel for the Federal National Mortgage Association ("Fannie Mae"), as well as in other similar calls; (3) verbal and written theft accusations by RCO (and Galbraith and/or Carter) to McGowan and RCO's director of human resources; and (4) theft accusations by McGowan to an RCO associate attorney and Johnson's *664 former administrative assistant. 4
RCO filed a motion to dismiss or strike, arguing that Johnson's claim arose out of communications that are protected by the anti-SLAPP statute. 5 Johnson then filed a *496 motion to strike portions of Galbraith's affidavit, and all the exhibits attached to that exhibit. After a hearing, the trial court ruled that RCO had not met its burden of authenticating the exhibits attached to Galbraith's affidavit, and the trial court therefore granted Johnson's motion. As to the appellants' motion to dismiss, the trial court found that although the alleged communications fell within the scope of the anti-SLAPP statute, Johnson had demonstrated a probability of prevailing on his defamation claim. The trial court therefore denied the appellants' motion, and this appeal followed.
1. First, the appellants contend that the trial court erred in granting Johnson's motion to strike portions of the Galbraith affidavit because it ignored circumstantial evidence of authenticity for the attached exhibits. 6 We agree.
"We review a trial court's decision on a motion to strike only for an abuse of discretion." (Citation omitted.)
Hayward v. The Kroger Co.
,
Under Georgia's Evidence Code, "authentication or identification as a condition precedent to admissibility shall be satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims." OCGA § 24-9-901 (a). Thus, " '[a]uthentic' does not mean that the document is a legally valid or enforceable instrument; authenticity is merely a matter of identification, or
*665
showing that this writing is the one in question." (Citation and punctuation omitted.)
Koules
, supra,
Here, Galbraith filed an affidavit, attaching 12 exhibits, comprised of copies of e-mails, checks, bank receipts, ledgers, and letters. 7 Many of the documents bear company logos, letterheads, telephone and facsimile numbers, e-mail addresses and legal disclaimers. The trial court's order does not reflect that it considered the contents, subject or appearance of any of the exhibits. Rather, the trial court ruled that "pre-discovery evidence" did not provide "the necessary circumstantial context to determine authenticity," and it then struck paragraphs of Galbraith's affidavit on the basis that he had not laid a foundation for the admission of the exhibits.
At the hearing, however, the appellants argued that many of the e-mails were retrieved from RCO's server, because they had been stored there while Johnson worked for RCO. Also, some of the exhibits attached to the Galbraith affidavit appear consistent with other evidence that was submitted to the trial court. For instance, J&F's attorney, *497 Charles Pollack, averred that J&F engaged his firm's services in July 2015, regarding the excess funds. The exhibits include e-mails with dates in July 2015, sent to and from law firm addresses, containing exchanges among "Charles I. Pollack," "Larry W. Johnson," and "Joel A. Freedman," apparently concerning the excess funds. Another exhibit features a copy of a check which is substantially the same as one that Johnson also submitted to the trial court.
Thus, there were indeed circumstances that the trial court should have considered, along with the documents' distinctive characteristics, to determine authenticity.
8
Koules
, supra,
2. Next, the appellants argue that the trial court erred in denying their motion to dismiss or strike Johnson's complaint because accusations that Johnson committed a theft of Mr. Murray's funds were both true and privileged. We conclude that the trial court did not err in denying the motion, but we further hold that the allegations of defamation based on RCO's summary judgment motion, as well as communications to RCO's human resources director, should have been struck from the complaint.
(a) Georgia's anti-SLAPP statute
The General Assembly enacted the anti-SLAPP statute to encourage Georgians to participate "in matters of public significance and public interest through the exercise of their constitutional rights of petition and freedom of speech." OCGA § 9-11.11.1 (a). Thus, the anti-SLAPP statute provides protection for claims
against a person or entity arising from any act of such person or entity which could reasonably be construed as an act in furtherance of the person's or entity's right of petition or free speech under the Constitution of the United States or the Constitution of the State of Georgia in connection with an issue of public interest or concern.
OCGA § 9-11-11.1 (b) (1). As is pertinent to this case, these acts include:
(1) Any written or oral statement or writing or petition made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law; [or]
(2) Any written or oral statement or writing or petition made in connection with an issue under consideration or *667 review by a legislative, executive, or judicial body, or any other official proceeding authorized by law.
OCGA § 9-11-11.1 (c) (1) - (2). A claim arising from such an act is subject to a motion to strike, "unless the court determines that the nonmoving party has established that there is a probability that the nonmoving party will prevail on the claim." (Emphasis supplied.) OCGA § 9-11-11.1 (b) (1).
Thus, in analyzing whether a complaint is subject to being struck under the anti-SLAPP statute, we employ a two-step process. We must first determine whether Johnson's defamation claim arose from acts which "could reasonably be construed" as
*498
either of the two types of conduct enumerated above. If so, "[t]he burden then shifts to [Johnson] to demonstrate that there is a probability that [ ]he will prevail on h[is] claims at trial."
Neff v. McGee
,
(b) Whether appellants' conduct was in furtherance of the covered right
Here, the trial court found that, when construing the statute broadly, all the allegations of theft against Johnson could reasonably be construed as statements made in connection with official proceedings, specifically, the State Bar's review of the Bar grievance, the ongoing arbitration between RCO and Johnson, or an apparent Department of Justice investigation of J&F. The trial court's ruling in this regard was correct.
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First, "issues before the State Bar involving conduct of attorneys are official proceedings authorized by law." (Punctuation omitted.)
Jefferson v. Stripling
,
(c) Whether Johnson demonstrated a probability of prevailing on his claims.
We now examine whether Johnson demonstrated a "probability" of prevailing on his various defamation claims. "To establish a
*499
cause of action for defamation, a plaintiff must submit evidence of (1) a false and defamatory statement about himself; (2) an unprivileged communication to a third party; (3) fault by the defendant amounting at least to negligence; and (4) special damages or defamatory words 'injurious on their face.' " (Citation omitted).
Chaney v. Harrison & Lynam, LLC
,
Thus, we turn to whether Johnson has made a prima facie showing on the remaining two elements of his defamation claim-an unprivileged communication to a third party, and fault by the appellants amounting at least to negligence. In doing so, we highlight that "[c]ommunications which are afforded an absolute privilege cannot form the basis of a defamation action, regardless of the falsity of the statements or the speaker's malicious intent; conditionally privileged statements, on the other hand, are actionable upon a showing of malice." (Citation omitted.)
Renton v. Watson
,
(i) Theft allegations in RCO's summary judgment motion in the arbitration proceeding were subject to absolute privilege.
OCGA § 51-5-8 extends absolute privilege to "[a]ll charges, allegations, and averments contained in regular pleadings filed in a court of competent jurisdiction, which are pertinent and material to the relief sought, whether legally sufficient to obtain it or not .... However false and malicious such charges, allegations, and averments may be, they shall not be deemed libelous." See also
Simmons v. Futral
,
We find that RCO's allegations in its summary judgment motion were absolutely privileged and could not form the basis of a defamation claim. Here, RCO filed this pleading in an ongoing arbitration before the American Arbitration Association, following Johnson's claim for money damages from RCO. For purposes of the arbitration, the parties were deposed, conducted discovery, and submitted various exhibits to the arbitrator for his consideration, and the arbitrator was tasked with ruling on whether RCO was entitled to terminate Johnson with cause. See
Green
, supra, 317 Ga. App. at 155 (1), 730 S.E.2d (1)61 (analogizing an arbitration to a quasi-judicial proceeding).
12
Compare
*500
Davis v. Shavers
,
The appellants argue that the trial court erred in ruling that Johnson demonstrated a probability of succeeding on a defamation claim based on theft accusations allegedly made to Fannie Mae's counsel. We discern no error.
In his complaint, Johnson claimed that Galbraith made the same theft accusations from the summary judgment motion to counsel at Fannie Mae, as well as others in the mortgage industry. First, Johnson has made a prima facie showing that the theft allegations were communicated to Fannie Mae's counsel via a telephone call.
14
Saye
,
The question, therefore, is whether the statements were conditionally privileged under OCGA § 51-5-7. In an action for slander or libel, a defense of conditional privilege requires (1) good faith; (2) an interest to be upheld; (3) a statement properly limited in its scope and occasion; and (4) publication to proper persons.
*672
Smith v. DiFrancesco
,
Here, Johnson pleaded and averred that Routh and Galbraith did not relay theft allegations to Fannie Mae's counsel in good faith, but rather, in an attempt to assassinate his character, given that the statements were not made in connection with any Bar grievance or investigation, and because Routh and Galbraith were not offering Fannie Mae any legal advice. The appellants' evidence does not defeat Johnson's claim as a matter of law. Indeed, RCO's pleadings and affidavits do not evince any explanation of why Fannie Mae's attorneys were "proper persons" to whom they needed to relay any theft allegations against Johnson. Although RCO argued that it was advised to "disclose or report [Johnson's] misconduct to affected clients," the appellants have never claimed that Routh and Galbraith communicated the allegations to Fannie Mae's counsel in an attorney-client context. Compare
Saye
,
*673 (iii) Law firm communications.
We now examine the defamation claim insofar as it stems from the appellants' communication of theft accusations to RCO's director of human resources, senior counsel, a former RCO associate attorney, and Johnson's former administrative assistant. The appellants contend that Johnson's claim must fail in this regard because these communications were all intracorporate and therefore were not published. We find that this exception applies only to the statements made to RCO's human resources director, and that Johnson otherwise demonstrated a probability of prevailing on his defamation claim based on these law firm communications.
As discussed above, publication of defamatory information generally occurs when it is communicated to anyone other
*502
than the person being defamed.
Saye
, supra,
Georgia courts have further refined the broad definition of publication so that, when the communication is intracorporate, or between members of unincorporated groups or associations, and is heard by one who, because of his/her duty or authority has reason to receive information, there is no publication of the allegedly slanderous material, and without publication, there is no cause of action for slander.
(Citation omitted.)
Fink v. Dodd
,
The appellants argue that Galbraith (RCO's general counsel) shared evidence from the arbitration with the director of human resources because she was responsible for managing human relations for the firm. To the extent that theft allegations were relayed to the director of human resources, we agree that her position would have given her reason to receive that information. This is particularly so because Johnson was terminated for cause, i.e., "theft, dishonesty, fraud, gross negligence or willful misconduct," and he then filed an arbitration claim against RCO based on this termination. See
Kurtz v. Williams
,
As it pertains to McGowan (senior counsel), a former associate attorney at RCO, and Johnson's former administrative assistant, we cannot say, as a matter of law, that any of these persons were subject to the intracorporate exception. There is no evidence that McGowan supervised or managed Johnson, or that she was involved in his termination, any investigation of Johnson, or the filing of any Bar grievance against him. Indeed, McGowan testified that she asked for a copy of the Bar complaint because she was "curious about the ongoing litigation" from a "litigator's perspective." Although McGowan knew that subpoenas were coming from the Department of Justice to J&F, this does not establish that she had reason to be advised of theft allegations against Johnson. McGowan's own testimony shows that when the administrative assistant informed her of the subpoenas, she directed her to speak with the managing shareholder about where to direct them, and she was "out of it at that point." Compare
Terrell v. Holmes
,
Similarly, we do not find that either Johnson's former administrative assistant or the associate attorney had any reason to be informed of theft accusations. Insofar as the administrative assistant was in possession of the subpoenas, the evidence shows that she merely needed to know where to direct them. 17 And as with the communications to Fannie Mae's counsel, the trial court correctly found that Johnson made a prima facie showing that these communications were not limited so as to be conditionally privileged. 18 Thus, Johnson demonstrated a probability that he would prevail on his defamation claim based on these law firm communications.
In sum, the trial court erred in striking portions of the Galbraith affidavit and the attached exhibits without considering circumstantial *503 evidence of the exhibits' authenticity, and the trial court should do so on remand. The trial court correctly denied the appellants' motion to dismiss Johnson's complaint, but Johnson could not maintain any defamation action based on his allegations of slanderous *675 statements in RCO's summary judgment motion or those made to RCO's director of human resources. Thus, these allegations should have been struck from the complaint.
Judgment affirmed in part, vacated in part, and case remanded with direction.
Brown and Goss, JJ., concur.
"Georgia's anti-SLAPP [strategic lawsuits against public participation] statute is intended to protect persons exercising their rights to free speech and to petition."
Jubilee Dev. Partners v. Strategic Jubilee Holdings
,
RCO claims that Johnson also misappropriated and converted other funds.
We note that "the requirements for slander per se apply to libel per se because ... the definition of slander in Georgia has been incorporated into the definition of libel."
Cottrell v. Smith
,
In his amended complaint, Johnson indicates that he is not basing his defamation claims on the filing of the Bar grievance documents. We also note that the State Bar of Georgia dismissed the grievance filed against Johnson.
The appellees also moved to strike the affidavit of Thomas Fruit, an investigator whose services Johnson had used. The trial court denied that motion, but we do not address that decision because RCO does not enumerate it as error. Although the appellants challenge the affidavit in their reply brief, "this Court will not consider arguments raised for the first time in a reply brief." (Citation omitted.)
Barron v. Wells Fargo Bank
,
In their appellate brief, the appellants allege that Johnson also misappropriated client funds and funds belonging to third parties. The appellants describe these allegations at length, and claim that the trial court "erred by considering only the Luther Murray situation." The trial court did not err in this regard because Johnson's defamation claims were specifically based on the theft allegations as they concerned the excess funds that had been due to Mr. Murray.
In the trial court, Johnson conceded that paragraphs 1-8, as well as paragraph 36 and 38 of the affidavit were admissible or potentially admissible, but he objected to the admissibility of the remaining paragraphs of the affidavit.
We note that a print-out of an e-mail is not self-authenticating under Georgia law.
Koules
, supra,
Johnson argues that we should affirm the trial court's order because all the exhibits violate the best evidence rule and contain hearsay. The trial court did not rule on these issues, and we cannot address them in the first instance.
State v. Wood ,338 Ga. App. 181 , 188 (4), n.4,790 S.E.2d 84 (2016) (given that admission of evidence is within the discretion of the trial court, appellate court could not determine evidentiary issue in the first instance).
This "probability-of-prevailing" standard became a part of Georgia's anti-SLAPP statute when it was amended in 2016,
Neff
, supra,
To satisfy the second prong, a plaintiff responding to an anti-SLAPP motion must state and substantiate a legally sufficient claim. Put another way, the plaintiff must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited. ... [W]e neither weigh credibility, nor compare the weight of the evidence. Rather, we accept as true the evidence favorable to the plaintiff ... and evaluate the defendant's evidence only to determine if it has defeated that submitted by the plaintiff as a matter of law.
(Citations and punctuation omitted.)
Oasis West Realty, LLC v. Goldman
,
The record shows as follows: RCO's director of human resources testified that Galbraith told her about a Bar complaint. McGowan testified, "I think it's pretty fairly well known amongst the attorneys who worked together for a long time that there was litigation between Mr. Johnson and RCO with regard to his termination" and "that's the context in which it's been discussed." When Johnson e-mailed Susan Shaw, an associate attorney at RCO, requesting an affidavit pertaining to the arbitration, Shaw responded that she had "bec[o]me aware of some of the information/background." In an e-mail, Fannie Mae's counsel told Johnson that they were "made aware of the pending arbitration between the parties." Although Johnson's former administrative assistant testified that McGowan had told her that Johnson had deposited Mr. Murray's funds without his permission, this administrative assistant also handled Department of Justice subpoenas directed to J&F, and there was discussion among the staff about "what to do" with them.
See also
W. Mass. Blasting Corp. v. Metro. & Cas. Ins. Co.
,
Emory Univ. v. Metro Atlanta Task Force for the Homeless
,
There is ambiguity as to precisely what Routh (RCO's founding partner) and Galbraith said to Fannie Mae's counsel. While being deposed, Routh was asked about a call concerning "misconduct on Mr. Johnson's part," and Routh confirmed that such a conversation occurred with him, Galbraith, and Fannie Mae's counsel. However, when Routh was asked about what was said in the call, counsel did not allow him to answer. Although Johnson has not presented evidence of the statement(s) communicated to Fannie Mae's counsel, this is not fatal to his claim at this juncture. The filing of a motion to dismiss under the anti-SLAPP statute stays all discovery. OCGA § 9-11-11.1 (1)(d). Again, Johnson need only state and substantiate a legally sufficient claim, and we construe the pleadings in the light most favorable to Johnson as the nonmovant, with any doubts resolved in his favor. It is possible that, with additional discovery, Johnson can produce evidence of the statement(s). See
Renton
, supra,
The trial court noted that there was no evidence that Fannie Mae was RCO's client.
The appellants argue that this case must be remanded because the trial court did not assess the element of fault. The trial court did, however, address inferred malice. There was no dispute in this case that Johnson is a private figure, and thus, Johnson would have only been required to make a showing that the appellants acted with ordinary negligence.
Riddle v. Golden Isle Broadcasting
,
The appellants argue that even if the intracorporate exception did not apply to these communications, they were subject to an attorney-client privilege. This argument is not meritorious because there is no evidence of any such relationship.
As previously discussed, malice is inferred where the slander per se is actionable and the utterance is not privileged.
Reference
- Full Case Name
- Rco Legal, P.S., Inc. v. Larry W. Johnson
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- Published