LMV-AL Ventures, LLC v. Carol Hemphill ( 2020 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-19-00164-CV
LMV-AL Ventures, LLC, Appellant
v.
Carol Hemphill, Appellee
FROM COUNTY COURT AT LAW NO. 2 OF TRAVIS COUNTY
NO. C-1-CV-18-008784, THE HONORABLE ERIC SHEPPERD, JUDGE PRESIDING
MEMORANDUM OPINION
LMV-AL Ventures, LLC, (LMV) appeals from an order dismissing its claims
against Carol Hemphill pursuant to the Texas Citizens’ Participation Act (TCPA). See Tex. Civ.
Prac. & Rem. Code §§ 27.001–.011.1 LMV sued Hemphill in connection with her statements
criticizing The Harbor at Lakeway, an assisted living facility run by LMV. We will affirm the
trial court’s order.
1 All citations in this opinion to the TCPA are to the version in effect before the
September 2019 amendments became effective. See Act of May 21, 2011, 82nd Leg., R.S.,
ch. 341, § 2, 2011 Tex. Gen. Laws 961, 961–64 (current version at Tex. Civ. Prac. & Rem. Code
§§ 27.001–.011), amended by Act of May 24, 2013, 83d Leg., R.S., ch. 1042, §§ 1–3, 5,
2013 Tex. Gen. Laws 2499, 2499–500 (the version at issue in this opinion); see also
Act of May 20, 2019, 86th Leg., R.S., H.B. 2730, §§ 1–9 (the 2019 amendments), 11–12
(providing that a suit filed before the amendments become effective “is governed by the law in
effect immediately before that date”).
BACKGROUND2
Hemphill is the legal guardian of her brother, John Hurley. Hurley has not been
able to live independently since suffering a brain injury from an illness. In February 2016,
Hemphill decided to move Hurley to The Harbor. Prior to the move, The Harbor’s staff assessed
Hurley to determine the care he required. The assessment reflects that while Hurley was capable
of performing daily tasks independently, his “[j]udgment and memory are not always good.
Needs monitoring and guidance and occasional redirection.” Hemphill executed a rental
agreement specifying his “level of care,” i.e., the services Hurley would receive.
According to Hemphill, her brother’s health declined during the next eighteen
months. He gained a substantial amount of weight, experienced serious tooth decay, developed
high blood pressure and cholesterol, and often went up to a week at a time without bathing,
brushing his teeth, or changing his clothes. Hemphill attributed the change to the staff’s failure
to remind her brother to take his medication and to tend to his personal hygiene—tasks Hurley
could perform if prompted. They also, in her view, failed to ensure he followed the restricted
diet recommended by his physician.
In September 2017, Hemphill sent a letter detailing all her concerns to John
Redford, the Harbor’s executive director, and Paul DeNucci, LMV’s principal. Hemphill alleges
Hurley was evicted as a result of the letter, while The Harbor maintains that Hemphill terminated
the rental agreement herself. Regardless of the cause, September 2017 was Hurley’s last month
at The Harbor. During that month, Hemphill filed a complaint with the Texas Department of
2 We draw these facts from the live pleadings and the parties’ supporting and opposing
affidavits. See Tex. Civ. Prac. & Rem. Code § 27.006(a) (directing courts deciding whether to
dismiss under TCPA to “consider the pleadings and supporting and opposing affidavits stating
the facts on which the liability or defense is based”).
2
Health and Human Services (HHS) and left a review of The Harbor on senioradvisor.com and
Google reviews.3 The complaint resulted in an unannounced inspection of The Harbor on
September 6, 2017, which The Harbor alleges forced them to cancel a training session for its
staff and lose the presenter’s $5,000 fee.4 The review states:
I wish I could give fewer stars. The Harbor has been unable to provide the
simplest of personal care – reminders. Found my loved one after a week in the
same clothing, underwear and socks and he had not bathed or taken a shower.
Nor do they follow doctor ordered specific diets (although they say they can)
which results in declined health and well-being. If you want your loved one to
have happy hour as many as 5 days a week (but always 3), then this is the place
for you. There has been constant staff turnover resulting in lack of continuity of
care and communication. The worst thing is that they are unresponsive to
complaints about care and neglect and instead blame the resident, the family[,]
and evict you for fraudulent reasons. They seem to have no understanding of the
waters navigated by caregivers and family when a loved-one is in a facility.
Hurley moved out of The Harbor on October 2, 2017.
LMV sold The Harbor the following year. Shortly after the sale, Misty Knight
left her position there to become director of nursing at an independent living facility in
Georgetown. Knight met with Hemphill and others at that facility the following month. The
record does not reflect the reason for the meeting, but Knight alleges in an affidavit that
Hemphill told those in attendance that “she knew that Paul DeNucci had to sell [T]he Harbor
because State authorities made him sell it.” Knight responded that she “did not believe
Mr. DeNucci had sold [T]he Harbor because of any improper conduct, but [Hemphill]
was insistent.”
3 Hemphill left the same review on both websites, but senioradvisor.com deleted the
word “neglect” and replaced it with “[Removed].”
4 HHS later informed Hemphill by letter that it determined The Harbor was complying
with all “rules or regulations related to your concerns.”
3
LMV sued Hemphill for business disparagement, tortious interference with an
existing contract, and defamation. Hemphill filed a motion to dismiss these claims under the
TCPA, and LMV filed a response with affidavits from DeNucci, Redford, and Knight. LMV
subsequently nonsuited its claim for tortious interference with an existing contract. The trial
court dismissed all of LMV’s claims and awarded Hemphill fees and sanctions as required by the
TCPA. LMV timely appealed.
DISCUSSION
“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 applies to the legal action against it. Tex.
Civ. Prac. & Rem. Code § 27.005(b). If the moving party meets that burden, the nonmoving
party must establish “by clear and specific evidence a prima facie case for each essential element
of the claim in question.” Id. § 27.005(c). If the nonmoving party satisfies that requirement, the
burden shift backs to the moving party to prove each essential element of any valid defense by a
preponderance of the evidence. Id. § 27.005(d). Courts determining whether to grant a TCPA
dismissal motion are to consider “the pleadings and supporting and opposing affidavits stating
the facts on which the liability or defense is based.” Id. § 27.006(a). We review de novo
whether a party carried its assigned burden. Long Canyon Phase II & III Homeowners Ass’n v.
Cashion, 517 S.W.3d 212, 217 (Tex. App.—Austin 2017, no pet.).
Conceding that Hemphill demonstrated the TCPA applies, LMV argues that it
established a prima facie case of defamation and business disparagement by clear and specific
4
evidence.5 A prima facie case “refers to evidence sufficient as a matter of law to establish a
given fact if it is not rebutted or contradicted.” In re Lipsky, 460 S.W.3d 579, 590 (Tex. 2015)
(orig. proceeding). Stated differently, “[i]t is the ‘minimum quantum of evidence necessary to
support a rational inference that the allegation of fact is true.’” Id. (quoting In re E.I. DuPont de
Nemours & Co., 136 S.W.3d 218, 223 (Tex. 2004) (orig. proceeding) (per curiam)). “Clear and
specific evidence” means that “more than mere notice pleading” is required to establish a prima
facie case. Bedford v. Spassoff, 520 S.W.3d 901, 904 (Tex. 2017) (per curiam). The plaintiff
“must provide enough detail to show the factual basis for its claim.” Id. (quoting In re Lipsky,
460 S.W.3d at 591).
Defamation
LMV asserted two defamation claims—one arising from the online review and a
second claim arising from Hemphill’s statements to Knight.6 The essential elements of
defamation are: (1) publication of a false statement of fact to a third party, (2) that was
defamatory concerning the plaintiff, (3) with the requisite degree of fault, and (4) that
proximately caused damages, unless the statement is defamatory per se. D Magazine Partners,
L.P. v. Rosenthal, 529 S.W.3d 429, 434 (Tex. 2017); see Brady v. Klentzman, 515 S.W.3d 878,
886 (Tex. 2017) (distinguishing defamation per se and per quod for purposes of damages).
“In a defamation case, the threshold question is whether the words used ‘are
reasonably capable of a defamatory meaning.’” Dallas Morning News v. Tatum, 554 S.W.3d
5 LMV does not appeal the dismissal of its nonsuited claim or the award of fees or
sanctions pertaining to that claim.
6 We note that Hemphill admits authorship of the online reviews but denies making the
oral statements attributed to her by Knight.
5
614, 624 (Tex. 2018) (quoting Musser v. Smith Protective Servs., 723 S.W.2d 653, 654 (Tex.
1987)). In making this initial determination, we examine the statement’s “gist.” Rosenthal,
529 S.W.3d at 434. That is, we construe the statement “as a whole in light of the surrounding
circumstances based upon how a person of ordinary intelligence would perceive it.” Id. (quoting
Turner v. KTRK Television, Inc., 38 S.W.3d 103, 114 (Tex. 2000)). This analysis is objective
and involves two independent steps. Tatum, 554 S.W.3d at 625. The first step is to decide
“whether the meaning the plaintiff alleges is reasonably capable of arising from the text of which
the plaintiff complains.” Id. The second is to determine whether that meaning, if reasonably
capable of arising from the text, “is reasonably capable of defaming the plaintiff.” Id.
Generally, a statement is defamatory if it “tends to injure a person’s reputation
and thereby expose the person to public hatred, contempt, ridicule, or financial injury or to
impeach any person’s honesty, integrity, virtue, or reputation.” Texas Disposal Sys. Landfill,
Inc. v. Waste Mgmt. Holdings, 219 S.W.3d 563, 580 (Tex. App.—Austin 2007, pet. denied)
(citing Tex. Civ. Prac. & Rem. Code § 73.001). Defamation is either per se or per quod. Id.
Defamation per se occurs when a statement is “so obviously detrimental to one’s good name that
a jury may presume general damages, such as for loss of reputation or for mental anguish.”
Tatum, 554 S.W.3d at 624 (citing Hancock v. Variyam, 400 S.W.3d 59, 63–64 (Tex. 2013)).
Statements that injure a person in their office, profession, or occupation typically constitute
defamation per se. Id. To qualify as defamation per se under this category, the statement must
“affect the plaintiff in some manner that is peculiarly harmful to the plaintiff’s trade, business, or
profession and not merely upon the plaintiff’s general characteristics.” In re Lipsky, 460 S.W.3d
at 596 (citing Hancock, 400 S.W.3d at 66–67). On the other hand, defamation per quod is
6
defamation that is not actionable per se. Tatum, 554 S.W.3d at 624. We begin with the question
of whether Hemphill’s statements are defamatory per se.
Review
LMV argues the gist of the review “is that The Harbor failed to provide the level
of care [to Hurley that] they were supposed to” under the rental agreement. The review does not
mention the rental agreement, but LMV reasons that accusing it of failing to provide certain care
necessarily implies that LMV was contractually obligated to provide that care. We disagree.
The review describes Hurley’s poor condition, alleges various omissions by The Harbor’s staff
that allegedly caused it, and contends The Harbor’s staff were unable or unwilling to rectify
these problems. While we agree that the review asserts LMV should have provided additional
care, a reasonable person would not perceive the review as stating LMV breached a contract by
failing to provide that care. Rather, a reasonable construction of the review is simply that LMV
failed to provide Hurley with needed care, resulting in his poor condition.
Hemphill argues this accusation alone is not defamatory per se because the
alleged failure to care for Hurley does not necessarily call into question LMV’s fitness as a
provider of assisted living services. On the arguments before us, we agree. LMV insists that it is
was not improper to refuse to provide Hurley with any additional care because the rental
agreement did not require it, and LMV had the legal right to refuse to provide any care not
required by the agreement. See 26 Tex. Admin. Code § 553.125(b)(2)(E) (Tex. Health and
Human Servs., Resident’s Bill of Rights and Provider’s Bill of Rights) (stating that providers of
assisted living services may “refuse to perform services for the resident or the resident’s family
other than those contracted for by the resident and the provider”). Additionally, LMV contends
7
that it could not legally provide additional care because Hurley had the right to make his own
decisions regarding clothing, bathing, and diet. See id. § 553.125(a)(E)(i), (T) (providing that
each resident “has the right to make his/her own choices regarding personal affairs, care,
benefits, and services” and to “determine his or her dress, hair style, [and] other personal
effects”). Whether or not LMV is correct on these matters, (an issue we do not decide here),
LMV’s entire argument on appeal presumes that the conduct alleged in the review—failing to
remind Hurley to bathe and change clothes and to ensure he followed a doctor-ordered diet—
could have been the proper course of action for a provider of assisted-living services. We
conclude based on the arguments before us that the review does not accuse LMV of conduct
“peculiarly harmful” to its reputation for providing assisted living services. See In re Lipsky, 460
S.W.3d at 596; Hancock, 400 S.W.3d at 66–67. The review is not defamatory per se.
Oral statements
The parties also dispute whether Hemphill’s comment during the meeting with
Knight that “she knew that Paul DeNucci had to sell [T]he Harbor because State authorities
made him sell it” constitutes defamation per se. LMV contends that Hemphill’s accusation of a
forced sale “adversely reflect[s] on LMV’s fitness to conduct it business” because a forced sale
implies either misconduct by DeNucci or “deficiencies” in the care The Harbor provided. To
show that a factual statement carries a defamatory implication, the “plaintiff must point to
‘additional, affirmative evidence’ within the [statement] itself that suggests the defendant
‘intends or endorses the defamatory inference.’” Tatum, 554 S.W.3d at 635 (quoting White
v. Fraternal Order of Police, 909 F.2d 512, 520 (D.C. Cir. 1990)). LMV relies wholly on
Knight’s affidavit to carry this burden. Knight states that she told Hemphill that she “did not
8
believe Mr. DeNucci had sold [T]he Harbor because of any improper conduct, but [Hemphill]
was insistent.” While an allegation that its principal was involved in misconduct might impugn a
corporation’s general characteristics, standing alone it is not “peculiarly harmful” to a reputation
for operating assisted living centers. See In re Lipsky, 460 S.W.3d at 596; Hancock, 400 S.W.3d
at 66–67. LMV also contends that Hemphill’s statement implies the sale was forced due to
deficiencies in the care provided to The Harbor’s residents, but LMV does not direct us to any
“additional, affirmative evidence” supporting that implication. See Tatum, 554 S.W.3d at 635.
Hemphill’s statement does not constitute defamation per se.
Damages
Our conclusion that the review and Hemphill’s oral statements are not defamatory
per se means that LMV must have presented prima facie evidence of its damages to overcome
Hemphill’s dismissal motion. See Rosenthal, 529 S.W.3d at 434 (stating damages are essential
element of defamation claim “unless the statement constitutes defamation per se” (citing In re
Lipsky, 460 S.W.3d at 593)); see also Waste Mgmt. of Texas, Inc. v. Texas Disposal Sys. Landfill,
434 S.W.3d 142, 146 n.7 (Tex. 2014) (noting that “[d]efamation per se . . . requires no proof of
actual monetary damages”). LMV does not dispute that it produced no evidence to satisfy this
element for either claim. We conclude LMV failed to establish a prima facie case for either of
its defamation claims, and we overrule its first issue.
Business Disparagement
LMV’s business disparagement claim also pertains to the online review. “To
recover for business disparagement, ‘a plaintiff must establish that (1) the defendant published
false and disparaging information about it, (2) with malice, (3) without privilege, (4) that resulted
9
in special damages to the plaintiff.’” Waste Mgmt. of Tex., 434 S.W.3d at 155 (quoting Forbes
Inc. v. Granada Biosciences, 124 S.W.3d 167, 170 (Tex. 2003)). Special damages “are
economic damages such as for lost income.” Id. (quoting Hancock, 400 S.W.3d at 65). LMV
argues that it produced clear and specific evidence that Hemphill’s complaint to HHS resulted in
the loss of the presenter’s fee. However, the causal link between the complaint and later
disruption of the speaker’s presentation is not evident from the record. Further, LMV argued in
the court below that the lost presenter’s fee constituted its damages for tortious interference with
a contract, not business disparagement. “Parties are restricted on appeal to the theory on which
the case was tried.” Wells Fargo Bank, N.A. v. Murphy, 458 S.W.3d 912, 916 (Tex. 2015)
(quoting Davis v. Campbell, 572 S.W.2d 660, 662 (Tex.1978)). “Appellate courts are similarly
restricted and may not overlook the parties’ trial theories.” Id. LMV therefore may not rely on
the loss of the presenter’s fee as evidence of economic damages. And with no other evidence of
damages in the record, we conclude LMV failed to establish a prima facie case of special
damages. We overrule LMV’s second issue.
CONCLUSION
Having overruled LMV’s issues on appeal, we affirm the trial court’s order.
__________________________________________
Edward Smith, Justice
Before Chief Justice Rose, Justices Kelly and Smith
Concurring Opinion by Chief Justice Rose
Affirmed
Filed: March 6, 2020
10