Jerome Karam and JMK5 Holdings, LLC v. the Akers Firm, PLLC Brock Akers Cordt Akers Daly & Black, P.C. And Andrew Dao ( 2024 )

Affirmed and Memorandum Opinion filed July 9, 2024.
In The
Fourteenth Court of Appeals
NO. 14-23-00127-CV
JEROME KARAM AND JMK5 HOLDINGS, LLC, Appellants
V.
THE AKERS FIRM, PLLC; BROCK AKERS; CORDT AKERS; DALY &
BLACK, P.C.; AND ANDREW DAO, Appellees
On Appeal from the 10th District Court
Galveston County, Texas
Trial Court Cause No. 22-CV-1147
MEMORANDUM OPINION
Appellants Jerome Karam and JMK5 Holdings, LLC filed suit against
appellees The Akers Firm, PLLC; Brock Akers; Cordt Akers; Daly & Black, P.C.;
and Andrew Dao for defamation and civil conspiracy. 1 Appellees filed a motion to
dismiss appellant’s suit pursuant to the Texas Citizens Participation Act (“TCPA”);
1
Because they have the same last name, we will refer to Cordt Aker and Brock Akers by
their first names.
the trial court granted appellees’ motion. In two issues on appeal, appellants assert
that (1) the trial court erred in dismissing their claims and (2) the trial court erred
in awarding attorney’s fees to appellees. Concluding that appellants did not meet
their burden under step two of the TCPA, we affirm the judgment as challenged on
appeal.
I. BACKGROUND
Karam is the founder and owner of JMK5, which owns and operates
multiple properties and businesses in Galveston County which appellants self-
describe as spanning “millions of square feet.” Appellees are the lawyers and law
firms representing Ashlyn Moore in a suit against Karam and JMK5.
According to Moore, Karam approached her while she was exercising at
World Gym—one of the businesses operated by JMK5. Moore knew him as the
owner of the bar she worked at. Karam indicated he wanted to show Moore the
massage therapy offices at the gym. Karam walked Moore to an isolated hallway
of mostly-empty offices. While there, Karam began making “inappropriate
comments” to Moore. Karam then led Moore to the cryo-chamber, instructing her
to get into it. He closed the door and indicated he wanted a surprise when he
opened the door. When he opened it, Karam expressed his disappointment that
Moore was still clothed and demanded she take off her clothes. Moore claims she
said no, but Karam would not step aside from the door of the cryo-chamber, which
was the only way to exit. Moore alleges that “Karam began groping her, outside of
her clothing. . . . pull[ing] out cash and then put[ting] it into Moore’’s clothes. . . .
groping Moore inside of her clothing, ultimately touching her breasts, buttocks,
and placing his finger on and around her anus without her consent.”
Moore met with a detective from the Texas City Police Department and
detailed her allegations against Karam. Based on her description of the event, the
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Galveston Criminal District Attorney’s Office (DA’s Office) did not accept
charges and stated there was no need to interview Karam. After the DA’s Office
declined to press charges, Moore made several posts on various social media
platforms accusing Karam of sexually assaulting her.
Karam filed suit against Moore for defamation per se, seeking $100 million
in damages and an injunction to prevent Moore from publishing further accusations
against Karam. Moore retained appellees to represent her in Karam’s suit. The
Akers firm sent a letter, signed by Brock Akers, to Karam’s counsel, seeking an
“early and quiet resolution.” Attached to the letter was a counterclaim; appellees
informed Karam that the counterclaim had not yet been filed but “[we] thought we
would reach out to you to consult with Mr. Karam about whether or not he has
concerns about how very public all of this will become once it is filed.”
Moore later filed an amended answer that included counterclaims against
Karam and JMK5, seeking $1 million in damages and alleging claims of sexual
assault, assault, battery, negligence, gross negligence, and respondeat superior. 2
Moore’s counterclaim asserted that Karam sexually assaulted her, that Karam had
acted inappropriately numerous times against other employees, both sexually and
nonsexually, that JMK5 was aware of Karam’s conduct and yet did nothing about
it.
Then, appellees collectively made several public statements related to the
case:
• Cordt gave an interview with a television news reporter, asserting, in
part, that Karam sexually assaulted Moore.
• Dao made a post on Instagram summarizing what one of Karam’s
2
As appellants boldly proclaim: “Karam did not capitulate to the Defendants’
demands[.]” The record does not make it clear whether the out-of-court negotiations failed or
Karam simply refused to negotiate in the first place.
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former HR manager’s had allegedly told him.
• Dao gave an interview to The Daily Beast, claiming, in part, that
“Karam sexually assaulted our client.”
Based on these statements, appellants filed the present suit against appellees,
alleging claims of defamation, defamation per se, civil conspiracy to defame,
negligence, gross negligence, and business disparagement. Appellants later
dismissed the claims for negligence, gross negligence, and business disparagement,
leaving the claims for defamation, defamation per se, and civil conspiracy to
defame. Appellees filed a motion to dismiss appellants’ suit pursuant to the TCPA.
The trial court granted the motion to dismiss and awarded attorney’s fees.
II. TCPA ANALYSIS
In appellants’ first issue, they contend the trial court erred in dismissing their
claims pursuant to the TCPA.
A. Standard of review and applicable law
“The TCPA’s purpose is to identify and summarily dispose of lawsuits
designed only to chill First Amendment rights, not to dismiss meritorious
lawsuits.” In re Lipsky, 460 S.W.3d 579, 589 (Tex. 2015); see Tex. Civ. Prac. &
Rem. Code Ann. § 27.002. The TCPA contemplates an expedited dismissal
procedure when a “legal action” is “based on or is in response to a party’s exercise
of the right of free speech, right to petition, or right of association[.]” Tex. Civ.
Prac. & Rem. Code Ann. § 27.003(a). The right of free speech and right to petition
are at issue in this appeal. To accomplish this objective, the TCPA provides a
multi-step process for the dismissal of a “legal action” to which it applies. See
Montelongo v. Abrea, 622 S.W.3d 290, 295–96 (Tex. 2021). In the first step, the
party filing a motion to dismiss under the TCPA bears the burden to demonstrate
that the legal action “is based on or is in response to a party’s exercise of the right
of free speech, right to petition, or right of association[.]” Tex. Civ. Prac. & Rem.
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Code Ann. §§ 27.003(a), .005(b).
But under the second step, the court may not dismiss the action if the
nonmovant “establishes by clear and specific evidence a prima facie case for each
essential element of the claim.” Tex. Civ. Prac. & Rem. Code Ann. § 27.005(c).
“Prima facie [evidence] . . . is the minimum quantum of evidence necessary to
support a rational inference that the allegation of fact is true.” USA Lending Group,
Inc. v. Winstead PC, 669 S.W.3d 195, 200 (Tex. 2023) (internal quotation marks
omitted). “Evidence is ‘clear and specific’ if it provides enough detail to show the
factual basis for the claim.” Id.Under the third step, the movant can still win dismissal if he establishes “an
affirmative defense or other grounds on which the moving party is entitled to
judgment as a matter of law.” Tex. Civ. Prac. & Rem. Code Ann. § 27.005(d).
In construing the TCPA and determining its applicability, we review
statutory construction issues de novo. See Lippincott v. Whisenhunt, 462 S.W.3d
507, 509 (Tex. 2015) (per curiam). Similarly, whether the parties have met their
respective burdens is a question of law that we review de novo. See Dallas
Morning News, Inc. v. Hall, 579 S.W.3d 370, 377 (Tex. 2019). Under the de-novo
standard, we make an “independent determination and apply the same standard
used by the trial court in the first instance.” Fawcett v. Grosu, 498 S.W.3d 650,
656 (Tex. App.—Houston [14th Dist.] 2016, pet. denied) (internal quotation marks
omitted). In conducting our review, we view the pleadings and evidence in the
light most favorable to the nonmovant. Sanchez v. Striever, 614 S.W.3d 233, 242–
43 (Tex. App.—Houston [14th Dist.] 2020, no pet.) (collecting cases).
B. Second step of the TCPA framework
Appellants do not dispute that the TCPA applies to this suit. However, under
the second step of the analysis, appellants contend they established, with clear and
specific evidence, a prima facie case for each essential element of their claims.
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Appellants further argue that appellees could not establish any affirmative defenses
as a matter of law. We need not reach the third step of the TCPA because
appellants did not establish by clear and specific evidence a prima facie case for
each essential element of their claim. Tex. Civ. Prac. & Rem. Code Ann.
§ 27.005(c).
1. Defamation and defamation per se
The elements of defamation are: (1) the defendant published a false
statement; (2) that defamed the plaintiff; (3) with the requisite degree of fault
regarding the truth of the statement; and (4) damages, unless the statement
constitutes defamation per se. Bedford v. Spassoff, 520 S.W.3d 901, 904 (Tex.
2017) (per curiam). “In a defamation case that implicates the [TCPA], pleadings
and evidence that establishes 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 motion to dismiss under the [TCPA].” Id. (internal quotation
marks omitted). A statement is considered published when it is communicated to a
third person who is capable of understanding its defamatory meaning and in such a
way that the person understood its defamatory meaning. See Exxon Mobil Corp. v.
Rincones, 520 S.W.3d 572, 579 (Tex. 2017).
a. Karam’s defamation claim against Cordt Aker
Karam’s defamation claim against Cordt is premised on the following
statements that Cordt made to a news reporter in response to a media inquiry
regarding the suit filed by Moore against Karam:
(1) Karam “lured” Moore into an empty area of World Gym;
(2) Karam “grope[d]” Moore on January 31, 2022 “against her will”; and
(3) Moore was “powerless” because Karam, a “60-something year
old-man . . . blocked her exit” during the encounter.
Even though fault is the third element, we begin by analyzing whether Karam met
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his burden to show prima facie evidence on the element of fault because it is
dispositive in this case.
“A private individual need only prove negligence, whereas a public figure or
official must prove actual malice.” In re Lipsky, 460 S.W.3d at 593. “‘Actual
malice’ in this context means that the statement was made with knowledge of its
falsity or with reckless disregard for its truth.” Id. Under the negligence standard,
the defendant is negligent if they “knew or should have known a defamatory
statement was false.” D Magazine Partners, L.P. v. Rosenthal, 529 S.W.3d 429,
440 (Tex. 2017).
We do not need to address whether Karam is a private or public individual
because we conclude that Karam did not establish a prima facie case of actual
malice or negligence regarding Cordt’s statements. Karam does not assert that
Cordt was aware of his statements being false, but Karam argues that Moore’s
statements had a “high probability of falsity,” and thus Cordt acted with reckless
disregard for the truth of the statements or at least should have known that the
statements were false. According to Karam, the evidence reflects Cordt’s
negligence/malice in several ways.
First, Karam claims that Moore is a “pathological liar” and her allegations of
sexual assault had a “high probability of falsity,” as proven by a Tiktok video she
posted in which she lip-syncs to an audio track of a woman saying, “I love lying.”
However, this social media post does not even raise a scintilla of evidence
regarding her propensity to lie or the truthfulness of her allegations. Such a video,
posted a year before her allegations of sexual assault, would not make a reasonable
attorney doubt the claims of their client, and that is assuming the attorney was even
aware of the video’s existence. And nothing in the record or pleadings indicates
that Cordt was aware of the Tiktok video before he made his statement to the
public media.
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Karam next argues that Cordt’s negligence/malice was demonstrated by his
failure to fully investigate the contents of Moore’s statements to the police.
According to Karam, the decision of the DA’s Office’s to not press charges against
Karam should have revealed to Cordt that Moore’s allegations were false.
However, “[b]are, baseless opinions do not create fact questions, and neither are
they a sufficient substitute for the clear and specific evidence required to establish
a prima facie case under the TCPA. . . . Opinions must be based on demonstrable
facts and a reasoned basis.” In re Lipsky, 460 S.W.3d at 592 (internal citations
omitted). Appellants’ bare opinion that Cordt failed to investigate is not supported
by any facts. To the contrary, Cordt’s statements to the media closely tracked the
statements made by Moore to the police, suggesting he did investigate her
statements. Also, the investigation performed by Cordt and the other appellees
unearthed the fact that other women claimed to have had similar experiences with
Karam, which would only provide Cordt with more reason to believe Moore’s
assertions, not less.
Karam also argues that Cordt acted with negligence or malice because the
record reflects that Moore had three motivations for lying. Two of the alleged
motivations were only made known through an affidavit—by one of Moore’s prior
co-workers—that was submitted after Cordt gave his statements to the news. It is
unclear whether Cordt was aware of these facts and alleged motivations at the time
he made his statement. The affidavit suggested that Moore had lost her job at a bar
that was indirectly owned by Karam and JMK5. The co-worker also averred that
Moore had asked for Karam’s number and wanted him to be her “sugar daddy.”
The third-alleged motivation Moore had for lying was the fact that Karam had
evicted her father, and that Moore’s father was “extremely hostile during the
eviction.” But just because Moore’s father had been evicted by Karam does not
provide a reasonable basis to conclude that Moore made false statements and that
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Cordt knew or should have known his statements were false at the time he made
them. See id. Claiming that Cordt knew, or should have known, Moore was lying
simply because she ostensibly had a motive to lie is nothing more than a bare
conclusion. See id.
Because we conclude that Karam failed to provide prima facie evidence
regarding fault, we conclude trial court did not err in dismissing Karam’s
defamation suit against Cordt.
b. Karam’s defamation claim against Brock Aker
There is no evidence in the record that Brock ever made defamatory
statements about Karam or JMK5. At most, the record shows that Brock signed the
presuit demand letter to Karam and Moore’s first amended answer with
counterclaims, but neither of those were published by Brock to a third party. See
Rincones, 520 S.W.3d at 579. Therefore, the trial court did not err in dismissing
Karam’s defamation claim against Brock.
c. Karam’s defamation claim against the Aker firm
There is also no evidence that the Aker firm itself made any defamatory
statements about Karam. Karam alleges that Cordt was speaking “on his firm’s
behalf” when he spoke to the news reporter. But Karam does not offer any factual
support for this allegation. In re Lipsky, 460 S.W.3d at 592 (“[b]are, baseless
opinions do not create fact questions”). To the contrary, the news article associated
with the press interview attributed the statements to Cordt individually, not the
Aker law firm. Therefore, the trial court did not err in dismissing Karam’s
defamation claim against the Aker firm.
d. JMK5’s defamation claims against the Aker appellees,
collectively
There is no evidence that any of the Aker appellees made any defamatory
statements about JMK5 as a business. All the alleged defamatory statements were
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about Karam. Therefore, the trial court did not err in dismissing JMK5’s
defamation claims against the Aker appellees.
e. JMK5 and Karam’s defamation claims against Dao and
Daly & Black
JMK5 and Karam identify two instances in which Dao allegedly defamed
them: (1) an Instagram post and (2) an interview with The Daily Beast. Karam and
JMK5 claim that in his Instagram post, Dao “affirmatively and independently
stated Mr. Karam sexually assaulted Ms. Moore, that [Karam] had committed
multiple previous sexual assaults, and that [JMK5] swept [them] under the rug.”
But that misrepresents what Dao said in his Instagram post:
After the sexual assault of our client, one of Jerome Karam’s former
Human Resources managers in his company reached out to our client.
The HR manager indicated she had quit because the guilt was killing
her, and also indicated that what our client described had also
previously happened to ‘many other women.’ The incidents were
swept under the rug.
Appellants have never contested that a former HR manager reached out to Dao nor
do they challenge the veracity of the alleged statements made by the former HR
manager. Thus, regarding the Instagram post, appellants did not present prima
facie evidence that Dao’s Instagram post constituted a false statement. And for the
same reasons stated above in analyzing Cordt’s alleged fault, appellants have not
demonstrated negligence or malice on Dao’s part; nothing in the record suggests
that Dao knew or should have known that what he was posting was false.
Concerning the Daily Beast interview, we conclude that appellants have did
not demonstrate prima facie evidence of fault. The following paragraph appeared
in the news article following Dao’s interview:
“In short: Karam sexually assaulted our client,” attorney Andrew Dao
told The Daily Beast, alleging that Karam “has a history” of such
misconduct. “Our client filed a police report and spoke out about it[.]
Karam then initiated a lawsuit and sued . . . in an attempt to silence
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her. After he filed this lawsuit, one of his former HR managers
reached out to our client, to essentially say that this misconduct by
Karam has gone on for far too long, and that his company has been
sweeping it under the rug.”
Regarding the second half of the paragraph, appellants have not shown Dao
published a false statement for the same reasons as those stated above: appellants
have not disputed the assertion that one of Karam’s former HR managers reached
out to Dao. Further, appellants have not shown that Dao’s claim that Karam “has a
history” of such sexual misconduct was a “false statement.” The record contains
evidence that before Moore’s allegations in this suit, at least one woman was
awarded $100,000 for alleging Karam molested her, after she intervened in the suit
of another woman who raised similar claims against him.
The only potentially false statement remaining is “Karam sexually assaulted
our client,” but our analysis as it applied to Cordt’s statements apply equally here;
appellants did not establish prima facie evidence that Dao knew or should have
known that statement was false. Appellants present no evidence demonstrating that
Dao acted unreasonably in making this statement or in investigating Moore’s
claims.
Regarding the defamation claims against Daly & Black, it is unclear what
defamatory statements the firm allegedly made, but to the extent appellants’ claims
are based on Dao’s statements above, we apply the same reasoning to conclude
there is no evidence that Daly & Black acted with negligence or malice in making
any allegedly defamatory statements. We also note that there is no evidence that
Dao was speaking on behalf of Daly & Black; the article attributes the quote to
Dao as an individual and does not mention Daly & Black.
Therefore, the trial court did not err in dismissing the defamation claims
against Dao and Daly & Black. Having concluded that the trial court did not err in
dismissing all of appellants’ defamation claims against appellees, we next address
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appellants’ conspiracy-to-defame claims.
2. Conspiracy to Defame
The essential elements of a civil conspiracy require that two or more persons
have a meeting of the minds to accomplish an unlawful objective and take one or
more unlawful, overt acts to accomplish the objective. See First United Pentecostal
Church of Beaumont v. Parker, 514 S.W.3d 214, 222 (Tex. 2017); see also Juhl v.
Airington, 936 S.W.2d 640, 644 (Tex. 1996) (“[C]ivil conspiracy requires specific
intent” to agree “to accomplish an unlawful purpose or to accomplish a lawful
purpose by unlawful means.”).
“[C]ivil conspiracy is not an independent tort . . . . [it] is a theory of
vicarious liability.” Agar Corp., Inc. v. Electro Circuits Int’l, LLC, 580 S.W.3d
136, 140, 142 (Tex. 2019). Thus, “a lawsuit alleging a civil conspiracy that
committed some intentional tort is still a ‘suit for’ that tort.” Id. at 142. As applied
to this case, a plaintiff must prove the underlying tort of defamation to establish
liability on a conspiracy-to-defame theory. See id.
Because we have already concluded that appellants did not establish prima
facie evidence on every essential element of their defamation claims against
appellees, it necessarily follows that appellants did not demonstrate by prima facie
evidence that appellees conspired to defame appellants. See Dallas Symphony
Ass’n, Inc. v. Reyes, 571 S.W.3d 753, 763 (Tex. 2019) (“Without defamation, there
can be no conspiracy to defame.”). The trial court did not err in dismissing
appellants’ conspiracy-to-defame claims against appellees.
We overrule appellants’ first issue.
III. ATTORNEY’S FEES
In their third issue, appellants argue that the trial court erred in awarding
Daly & Black $140,000 in attorney’s fees relating to the defamation and
conspiracy-to-defame claims, arguing that the amount was “unreasonably large.”
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Appellants do not challenge the fees awarded to the Aker appellees, to Daly as an
individual, Black as an individual, or to any of the appellees related to the
dismissed claims of negligence, gross negligence, and business disparagement.
If the court orders dismissal of any “legal action” under the TCPA, the court
“shall award” “court costs, reasonable attorney’s fees, and other expenses incurred
in defending against the legal action as justice and equity may require.” Tex. Civ.
Prac. & Rem. Code Ann. § 27.009(a). The amount a trial court awards under the
TCPA is within the trial court’s sound discretion. See Sullivan v. Abraham, 488
S.W.3d 294, 299 (Tex. 2016).
Appellants argue that Daly & Black did not need to research step one of the
TCPA analysis so thoroughly because appellants conceded the suit fell within the
TCPA. However, under these facts, we cannot conclude the trial court abused its
discretion in awarding attorney’s fees to appellees for researching an issue on
which they bore the burden of proof.
Likewise, appellants complain about the amount of time Daly & Black spent
researching step two of the TCPA analysis. Appellants assert that because the
burden of step two falls on appellants, appellees’ research on the topic should have
been “minimal.” However, it was reasonable for appellees to perform step two
research to provide context regarding the relative fault required. The parties
actively disputed whether Karam was a private or public figure. Accordingly, we
cannot say the trial court abused its discretion in awarding fees for this area of
research.
Appellants further complain about the 4.7 hours Daly & Black billed for
amending their initial disclosures. According to appellants, amending their
disclosures “required essentially no work on the part of [appellees’] counsel.”
However, based on the record before us reflecting that appellees did need to amend
their disclosures of all persons with relevant facts, we cannot say that the trial court
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abused its discretion in awarding fees related to amending the initial disclosures.
Appellants also broadly argue that because Daly & Black has expertise on
TCPA cases, they should not have needed as much time to prepare for the case. We
find this argument unpersuasive. Appellants do not make any specific arguments
concerning how appellees’ TCPA expertise should have reduced their attorney’s
fees nor do appellants identify any tasks that were unreasonable because of their
expertise. Further, appellants did not offer any specifics as to their position on what
a reasonable amount of time incurred would have been on this case given their
expertise. Nor did appellants offer any competing expert testimony.
In summary, we conclude that the trial court did not abuse its discretion in
its award of reasonable attorney’s fees. We overrule appellants’ second issue.
IV. CONCLUSION
We affirm the judgment of the trial court as challenged on appeal.
/s/ Charles A. Spain
Justice
Panel consists of Justices Bourliot, Zimmerer, and Spain.
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