Kenneth L. Berry v. Bay, Ltd. ( 2020 )

NUMBER 13-18-00438-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI - EDINBURG
KENNETH L. BERRY, Appellant,
v.
BAY, LTD., Appellee.
On appeal from the 343rd District Court
of San Patricio County, Texas.
MEMORANDUM OPINION
Before Justices Benavides, Hinojosa, and Tijerina
Memorandum Opinion by Justice Hinojosa
Appellee Bay, Ltd. sued appellant Kenneth L. Berry for defamation. Berry filed a
motion to dismiss under the Texas Citizens Participation Act (TCPA), 1 which the trial
1 The Texas Citizens Participation Act is commonly referred to as an “anti-SLAPP” law—“SLAPP”
is an acronym for “Strategic Lawsuits Against Public Participation.” Entravision Commc’ns Corp. v.
Salinas, 487 S.W.3d 276, 278 n.2 (Tex. App.—Corpus Christi–Edinburg 2016, pet. denied). We note that
the Texas Legislature recently amended the TCPA. The amendments became effective September 1,
court denied by operation of law. See TEX. CIV. PRAC. & REM. CODE ANN. §§ 27.001–
.011. In two issues, Berry argues: (1) the trial court erred in denying his TCPA motion
to dismiss; and (2) the trial court abused its discretion in failing to rule on his objections
to evidence and motion to strike. We reverse and remand.
I. BACKGROUND
A. Pleadings
In its live pleading, Bay alleges the following facts. Bay is a general contractor
that owns a barge fleeting service at its Redfish Bay facility in San Patricio, Texas. In
2009, Bay decided to “cut up and sell” a barge located at the facility. In July 2015, the
Texas Commission on Environmental Quality (TCEQ) notified Bay that an anonymous
source reported that Bay impermissibly buried the barge in question at the location. The
TCEQ investigated the allegation in order to determine whether Bay had improperly
discharged pollutants. The TCEQ ultimately concluded that the allegation was untrue.
On May 30, 2017, Bay learned through Berry’s deposition testimony in an
unrelated lawsuit between the parties that Berry made the anonymous report to TCEQ
that triggered its investigation. Bay contended that Berry’s report was motivated by a
personal vendetta against his brothers, who are owners of Bay. Bay maintained that
Berry has “a demonstrated history of making continuing false allegations against Bay.”
Bay alleged that it suffered damages from Berry’s defamatory statements because it
expended funds to defend itself against the claim that it had improperly buried a barge at
2019. Because this suit was filed before September 1, 2019, it is governed by the statute as it existed
before the amendments, and all of our citations and analysis are to that version of the statute. See Act of
May 24, 2013, 83d Leg., R.S., ch. 1042, §§ 1–3, 5, 2013 Tex. Gen. Laws 2499, 2499–500 (amended 2019)
(current version at TEX. CIV. PRAC. & REM. CODE ANN. §§ 27.001–.011).
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its facility. Bay contended that it did not discover the nature of the defamatory comments
until Berry’s 2017 deposition. It filed suit on March 5, 2018.
Berry filed an answer2 asserting the affirmative defenses of limitations, substantial
truth, absolute privilege, and qualified privilege. 3
B. TCPA Motion to Dismiss
Berry later filed a motion to dismiss pursuant to the TCPA, which was supported
by evidence. Berry contended that his statements to the TCEQ were based upon his
exercise of free speech and his right to petition. Berry further contended that Bay could
not meet its burden to establish by clear and specific evidence a prima facie case for each
essential element of its defamation claim. See id. § 27.005(c). Berry further argued that
Bay’s claim is barred by the applicable one-year limitations period. See id. § 16.002.
Bay filed a response with supporting evidence. 4 Bay argued that Berry’s
statements to the TCEQ were defamatory per se and were verifiably false. Bay further
contended that Berry made the statements with actual malice or, alternatively, that he did
so negligently. Bay also claimed that its evidence established that it suffered general
and special damages as a result of Berry’s comments. Finally, Bay maintained that it
did not discover that Berry made the defamatory statements at issue until May 30, 2017,
and, therefore, its suit was timely filed.
2 Berry’s answer was filed subject to his motion to transfer venue, which is not at issue in this
appeal.
3 Berry asserted other affirmative defenses that are not relevant to this appeal.
4 Bay later filed an amended response supported by additional evidence.
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In their respective motion and response, both parties rely on Berry’s
aforementioned deposition testimony in a separate lawsuit filed by Berry and others
against Bay, which concerned property rights in certain ranch property. Berry and Bay
were represented by the same trial counsel in both proceedings. In Berry’s deposition,
Bay’s counsel asked Berry whether he “ever talk[ed] to anyone at TCEQ with regard to
the Redfish Bay Terminal Diamondhead Barge?” Berry acknowledged that he made a
report to TCEQ after reviewing satellite images, which he believed indicated that a barge
was buried at the location.
C. Trial Court’s Ruling
Following a hearing, Berry’s motion to dismiss was overruled by operation of law.
This interlocutory appeal followed. See id. § 51.014(a)(12).
II. TEXAS CITIZENS PARTICIPATION ACT
The TCPA protects citizens from retaliatory lawsuits that seek to intimidate or
silence them on matters of public concern. In re Lipsky, 460 S.W.3d 579, 586 (Tex.
2015) (orig. proceeding). The legislature enacted the TCPA “to encourage and
safeguard the constitutional rights of persons to petition, speak freely, associate freely,
and otherwise participate in government to the maximum extent permitted by law and, at
the same time, protect the rights of [persons] to file meritorious lawsuits for demonstrable
injury.” TEX. CIV. PRAC. & REM. CODE ANN. § 27.002. “The TCPA’s purpose is to identify
and summarily dispose of lawsuits designed only to chill First Amendment rights, not to
dismiss meritorious lawsuits.” Lipsky, 460 S.W.3d at 589 (citing TEX. CIV. PRAC. & REM.
CODE ANN. § 27.002). When a plaintiff’s claim implicates a defendant’s exercise of First
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Amendment rights, chapter 27 allows the defendant to move for dismissal. See TEX. CIV.
PRAC. & REM. CODE ANN. § 27.003(a); Andrews County v. Sierra Club, 463 S.W.3d 867,
867 (Tex. 2015).
Reviewing a TCPA motion to dismiss requires a three-step analysis. Youngkin v.
Hines, 546 S.W.3d 675, 679 (Tex. 2018). As a threshold matter, the moving party must
show by a preponderance of the evidence that the TCPA properly applies to the legal
action against it. TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(b). If the moving party
meets its burden, the nonmoving party must then establish by clear and specific evidence
a prima facie case for each essential element of its claim. Id. § 27.005(c). If the
nonmoving party satisfies that requirement, the burden finally shifts back to the moving
party to prove each essential element of any valid defenses by a preponderance of the
evidence. Id. § 27.005(d).
The clear and specific standard “neither imposes a heightened evidentiary burden
or categorically rejects the use of circumstantial evidence when determining the plaintiff’s
prima-facie-case burden under the Act.” Andrews County, 463 S.W.3d at 867; see
Lipsky, 460 S.W.3d at 591 (“In a defamation case that implicates [chapter 27], pleadings
and evidence that establish[] the facts of when, where, and what was said, the defamatory
nature of the statements, and how they damaged the plaintiff should be sufficient to resist
a TCPA motion to dismiss.”). The phrase “clear and specific evidence” has been defined
as more than mere notice pleading, but not more than the burden of proof required for the
plaintiff to prove at trial. See Lipsky, 460 S.W.3d at 590–91.
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We review de novo the trial court’s determinations that the parties met or failed to
meet their § 27.005 burdens. Tex. Campaign for the Env’t v. Partners Dewatering Int’l,
LLC, 485 S.W.3d 184, 192 (Tex. App.—Corpus Christi–Edinburg 2016, no pet.); Tervita,
LLC v. Sutterfield, 482 S.W.3d 280, 282 (Tex. App.—Dallas 2015, pet. denied).
III. LIMITATIONS
In his first issue, Berry argues that the trial court erred in denying its TCPA motion
to dismiss. The parties do not dispute, and we agree, that Berry’s alleged defamatory
remarks were made pursuant to his exercise of First Amendment rights. Given the
applicability of the TCPA, Berry argues he is entitled to dismissal on two distinct grounds:
(1) Bay failed to establish by clear and specific evidence a prima facie case for each
essential element of its defamation claim, and (2) even if Bay met its evidentiary burden,
Berry has established the essential elements of its affirmative defenses by a
preponderance of the evidence. Because we find it to be dispositive, we first address
Berry’s contention that he established his limitations defense by a preponderance of the
evidence.
A. Applicable Law
The statute of limitations is an affirmative defense which must be proven by the
defendant. See TEX. R. CIV. P. 94. As noted above, when the TCPA applies, the trial
court must dismiss a plaintiff’s suit if the movant establishes by a preponderance of the
evidence each essential element of a valid defense to the nonmovant’s claim. TEX. CIV.
PRAC. & REM. CODE ANN. § 27.005(d). The limitations period for a defamation claim is
one year. Id. § 16.002. Defamation claims “generally accrue when the allegedly
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defamatory matter is published or circulated.” Glassdoor, Inc. v. Andra Group, LP, 575
S.W.3d 523, 528 (Tex. 2019). However, the discovery rule applies to an action for
defamation if the defamatory statement is inherently undiscoverable or not a matter of
public knowledge. Velocity Databank, Inc. v. Shell Offshore, Inc., 456 S.W.3d 605, 609
(Tex. App.—Houston [1st Dist.] 2014, pet. denied). When the discovery rule applies, it
tolls accrual of a cause of action until a claimant discovers or in the exercise of reasonable
diligence should have discovered the injury and that it was likely caused by the wrongful
acts of another. Glassdoor, 575 S.W.3d. at 530. The determination of when a cause of
action accrues is a question of law subject to de novo review. Schneider Nat’l Carriers,
Inc. v. Bates, 147 S.W.3d 264, 274–75 (Tex. 2004); Cortina v. P.I. Corp., 385 S.W.3d
613, 618 (Tex. App.—Corpus Christi–Edinburg 2012, no pet.).
B. Analysis
Berry argues that Bay learned in July 2015 that TCEQ received an anonymous
report that Bay buried a barge at its facility It cites the affidavit testimony of Bay’s general
counsel, in which he testified that Bay received a call from TCEQ in July 2015 regarding
the disposal of its barge at the Redfish Bay facility. Therefore, Berry contends that Bay’s
suit, which was filed on March 5, 2018, is barred by limitations. Bay does not dispute the
timeline urged by Berry. Nevertheless, Bay maintains that “until May 2017, Bay did not
discover the wrongful nature of the claims being made to the TCEQ, only that someone
had accused Bay of burying a barge at the Redfish Bay Terminal.” As noted above,
Berry’s deposition disclosure was made in response to Bay’s counsel directly asking
Berry whether he was the source of the TCEQ report. The deposition testimony
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pertained to a separate lawsuit entirely unrelated to the burying of a barge but involving
the same parties. It is evident from this line of questioning that Bay had reason to believe
Berry was the individual who made the TCEQ report at some point prior to the deposition.
We agree with Bay that the discovery rule applies to its defamation claim, insofar
as Berry’s statements to TCEQ were inherently undiscoverable at the time they were
published to the TCEQ. However, we disagree that its claim was tolled until the date it
learned that Berry was the source of the allegations. Application of the discovery rule
does not turn on whether the injured person knows the exact identity of the tortfeasor or
all of the ways in which the tortfeasor was at fault in causing the injury. Schlumberger
Tech. Corp. v. Pasko, 544 S.W.3d 830, 834 (Tex. 2018). Rather, its application concerns
whether the injured person is aware that she has an injury and that it was likely caused
by the wrongful acts of another. Id.
In Glassdoor, the Texas Supreme Court reviewed this principle in relation to a
defamation cause of action. 575 S.W.3d 523. The plaintiff in that case filed a petition
under Texas Rule of Civil Procedure 202 to conduct a pre-suit deposition of a website
operator. Id. at 525; see TEX. R. CIV. P. 202 (“Depositions Before Suit or to Investigate
Claims”). The petitioner sought to investigate potential defamation 5 claims against
several anonymous individuals who posted negative statements about the petitioner on
the site. Glassdoor, 573 S.W.3d at 525. The Court concluded that the TCPA applied
to a Rule 202 petition and that the proceeding was rendered moot by the fact that the
petitioner’s potential claims against the anonymous speakers were time-barred. Id.
5 The petitioner was also investigating potential business disparagement claims.
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In its analysis, the Court assumed that the petitioner would have the benefit of the
discovery rule for its potential defamation claims, but it noted that the petitioner
necessarily learned of the negative posts before filing its Rule 202 petition. Id. at 528.
With that framework in mind, the Court noted that more than two years had elapsed since
the accrual of the potential claims. Id. The Court rejected the petitioner’s argument that
the anonymous nature of the posts presented discovery rule issues. Id. at 530. Rather,
the Court reemphasized that the limitations period commences when a claimant discovers
the injury, even if the claimant does not know the exact identity of the wrongdoer. Id.
The Court explained that the petitioner could have filed suit against “Doe defendants” and
conducted discovery about their identities, but it chose instead to proceed under Rule
202, “thereby risking the timeliness of its potential claims.” Id. The Court ultimately held
that “the statute of limitations barred [the petitioner’s] potential claims against each of the
ten anonymous reviewers,” thereby rendering the Rule 202 petition moot. Id.
Here, Bay discovered its injury and that it was caused by the wrongful acts of
another when, in July 2015, TCEQ notified Bay of the report made by an anonymous
source. It matters not that Bay did not then know the identity of the anonymous source.
See id. Bay did not file its defamation claim until almost three years later, well outside
the applicable one-year limitations period. See TEX. CIV. PRAC. & REM. CODE ANN.
§ 16.002. We conclude that Berry established its limitations defense by a
preponderance of the evidence. Therefore, the trial court erred in denying his motion to
dismiss under the TCPA. See Tex. Campaign for the Env’t, 485 S.W.3d at 192;
Sutterfield, 482 S.W.3d at 282.
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We sustain Berry’s first issue. Due to our resolution of this issue, we need not
address his remaining issue. See TEX. R. APP. P. 47.1 (stating that the appellate court
must address every issue raised and necessary to final disposition of the appeal).
IV. CONCLUSION
We reverse the trial court’s denial of Berry’s TCPA motion to dismiss, and we
remand the case to the trial court for further proceedings as required by the statute and
to order dismissal of the suit. See TEX. CIV. PRAC. & REM. CODE ANN. § 27.009.
LETICIA HINOJOSA
Justice
Delivered and filed the
30th day of January, 2020.
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