William Francis and Incline Energy Partners, L.P. v. Phoenix Capital Group Holdings, LLC ( 2023 )

Affirmed in part and Reversed in part and Opinion Filed August 29, 2023
In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-22-01260-CV
WILLIAM FRANCIS AND INCLINE ENERGY PARTNERS, L.P.,
Appellants
V.
PHOENIX CAPITAL GROUP HOLDINGS, LLC, Appellee
On Appeal from the 116th Judicial District Court
Dallas County, Texas
Trial Court Cause No. DC-22-06350
MEMORANDUM OPINION
Before Justices Nowell, Goldstein, and Breedlove
Opinion by Justice Breedlove
Appellants William Francis (Francis) and Incline Energy Partners, L.P.
(Incline) appeal the trial court’s November 9, 2022 order partially granting and
partially denying their motion to dismiss appellee Phoenix Capital Group Holdings,
LLC (Phoenix)’s claims under the Texas Citizens Participation Act (TCPA). See
TEX. CIV. PRAC. & REM. CODE ANN. § 27.003(a). We reverse the portions of the trial
court’s judgment denying dismissal of Phoenix’s claims for: (1) disparagement;
(2) defamation; (3) tortious interference with prospective contract; (4) conspiracy;
and (5) unfair competition. We affirm the portion of the trial court’s judgment
denying dismissal of Phoenix’s claim for defamation per se, and we remand the case
for further proceedings on that cause of action, as well as on the issue of attorney’s
fees.
I. BACKGROUND1
Incline and Phoenix are direct competitors in the oil and gas industry. Francis
serves as Incline’s managing partner. Incline also competes with companies
previously operated by Adam Ferrari with whom Incline had previously been
involved in business disputes and litigation. In 2019, Ferrari pleaded guilty to a
felony theft charge related to forgery of deeds in a mineral transaction, and Incline
obtained information regarding Ferrari’s criminal proceedings in litigation between
one of Ferrari’s businesses and an affiliate of Incline. In exchange for his guilty plea
Ferrari received a deferred sentence pursuant to which the felony charge would be
dismissed following the expiration of three years upon compliance with the terms of
his probation. Ferrari’s criminal records were then sealed, and the felony charge
was dismissed in 2022. Ferrari’s arrest and plea deal became the subject of articles
published in The Greeley Tribune, a local newspaper, as well as the Denver Post.
1
Many of the facts of this case are disputed; therefore, we limit our discussion to those facts necessary to
our analysis and, where specific facts necessary to our analysis are disputed, we identify both parties’
assertions.
–2–
At some point after receiving the documents related to Ferrari’s criminal
background, Incline began investigating Ferrari’s possible involvement with
Phoenix. While Incline asserts that Ferrari controls Phoenix as its CEO and that
Phoenix has attempted to conceal Ferrari’s role within the company, Phoenix
contends that Ferrari is only one of many non-executive consultants it employs.
Specifically, Phoenix asserts that Ferrari’s role is limited to being a “Petroleum
Engineering Consultant.” Phoenix offered evidence that it has no CEO and instead
is managed by Manager and COO Lindsey Wilson, along with CFO Curtis Roger
Allen.
The present dispute centers primarily on an email sent by Francis to Crystal
Taylor on June 17, 2021 (the “Taylor email”).2 Both Phoenix and Incline sought a
potential transaction with the family of Sheila Krystal, a landowner with mineral
interests in Colorado. Taylor is Krystal’s niece. In April 2021, Incline contracted
with the Krystal family to purchase certain oil and gas interests. The deed conveying
those interests to Incline was recorded on June 2, 2021. At some point, Phoenix
made a competing offer and characterized Incline’s offer as a “low ball” offer,
prompting some of Krystal’s family members, led by Taylor, to seek to renegotiate
the deal with Incline. In response, Francis sent the following to Taylor:
2
Phoenix also alleged that Francis sent an anonymous package to First International Bank & Trust (FIBT)
containing allegedly defamatory content. The trial court dismissed the portions of the lawsuit relying on
the FIBT package, and Phoenix does not cross-appeal. Therefore, our discussion is limited only to the
Taylor email.
–3–
You citing Phoenix/Ferrari as the other offer/group that is telling you
that we low balled you is all the information I need to know. We made
your aunt aware of those permits when she had called us and not the
other way around.
I would love nothing more than to defend my company’s track record
versus the misdeeds that Phoenix/Ferrari has performed over the years.
Namely, the fact that their CEO was arrested and convicted for forging
a mineral owners signature in order to defraud her of hundreds of
thousands of dollars.
Francis also included the links to several articles regarding Ferrari’s criminal history.
Phoenix filed suit on June 15, 2022, alleging: (1) defamation and defamation
per se, libel and libel per se, slander and slander per se; (2) business disparagement;
(3) tortious interference with contract; (4) tortious interference with prospective
contract and relationship; (5) unfair competition; and (6) civil conspiracy. Francis
and Incline filed a general denial and affirmative defenses on July 8, 2022. Francis
and Incline filed a motion to dismiss under the TCPA on August 16, 2022. Phoenix
filed objections to evidence submitted along with Francis’s and Incline’s motion to
dismiss on September 29, 2022, along with their response to the motion to dismiss.
Francis and Incline filed their own motion to strike evidence on October 3, 2022.
The trial court held a hearing on the motions to strike as well as the motion to dismiss
on October 6, 2022, and entered an order on November 8, 2022 partially granting
and partially denying objections from both sides. On November 9, 2022, the trial
court entered an order partially granting and partially denying appellants’ TCPA
–4–
motion to dismiss. More specifically, the order reads that Francis’s and Incline’s
motion to dismiss
is denied except as to the tortious interference with a [sic] existing
contract claim and, to the extent that such claims rest upon statements
other than the Taylor email, Plaintiff’s defamation and business
disparagement claims are dismissed to that extent only. It is further
ordered that movant is awarded $10,000 for reasonable and necessary
costs and fees in defending against the dismissed legal action.3
Francis and Incline appealed the trial court’s ruling on November 23, 2022.
In five issues, they complain that the trial court erred: (1) in denying the motion to
dismiss regarding the disparagement and defamation claims relying on the Taylor
email; (2) in denying the motion to dismiss regarding the tortious interference with
prospective contract claim; (3) in denying the motion to dismiss regarding the
conspiracy and unfair competition claims; (4) regarding evidentiary objections,
which likely resulted in the improper denial of their motion; and (5) by abusing its
discretion regarding the fee award.
II. APPLICABLE LAW
The TCPA is Texas’s anti-SLAPP law, providing a means to dismiss so-called
“Strategic Lawsuits Against Public Participation.” Krasnicki v. Tactical Entm’t,
LLC, 583 S.W.3d 279, 282 (Tex. App.—Dallas 2019, pet. denied). The TCPA
“protects citizens who petition or speak on matters of public concern from retaliatory
3
The order is unclear whether by “movant” the court means both Francis and Incline, and if so, whether
the award is for $10,000 to each party or $10,000 split between the two moving parties.
–5–
lawsuits that seek to intimidate or silence them.” In re Lipsky, 460 S.W.3d 579, 584
(Tex. 2015) (orig. proceeding). That protection comes in the form of a motion to
dismiss suits, or claims within suits, that appear to stifle the defendant’s exercise of
those rights. Barnes v. Kinser, 600 S.W.3d 506, 509 (Tex. App.—Dallas 2020, pet.
denied); see White Nile Software, Inc. v. Carrington, Coleman, Sloman &
Blumenthal, LLP, No. 05-19-00780-CV, 2020 WL 5104966, at *4 (Tex. App.—
Dallas Aug. 31, 2020, pet. denied) (mem. op.). We construe the TCPA liberally to
fully effectuate its purpose and intent. TEX. CIV. PRAC. & REM. CODE ANN.
§ 27.011(b). We review a trial court’s ruling on a TCPA motion to dismiss de novo.
Mireskandari v. Casey, 636 S.W.3d 727, 734 (Tex. App.—Dallas 2021, pet. denied).
In our review, we consider the pleadings, evidence a court could consider under civil
procedure rule 166a, and any supporting and opposing affidavits stating the facts on
which the liability or defense is based. Id. at 735.
Under the TCPA, a party may file a motion to dismiss a legal action based on
or in response to a party’s exercise of the right of free speech. TEX. CIV. PRAC. &
REM. CODE ANN. § 27.003(a). “Exercise of the right of free speech” means a
communication made in connection with a matter of public concern. Id. § 27.001(3).
A “matter of public concern” is defined as a statement or activity regarding:
(A) a public official, public figure, or other person who has drawn
substantial public attention due to the person’s official acts, fame,
notoriety, or celebrity;
(B) a matter of political, social, or other interest to the community; or
–6–
(C) a subject of concern to the public.
Id. § 27.001(7).
The TCPA process generally involves three steps. Mireskandari, 636 S.W.3d
at 734. First, the TCPA movant has the burden to demonstrate the nonmovant’s
legal action is based on or in response to the moving party’s exercise of the right of
association, right of free speech, or the right to petition. Id. Second, if the movant
meets its step-one burden, the burden of proof shifts to the nonmovant to establish
by clear and specific evidence a prima facie case for each essential element of the
claim. Id. Third, if the nonmovant meets its step-two burden, the burden of proof
shifts back to the movant to establish an affirmative defense or other grounds on
which the moving party is entitled to judgment as a matter of law. Id. at 735. If the
nonmovant either cannot meet its step two burden or the movant establishes an
affirmative defense, the motion to dismiss will be granted. Id.
III. DISCUSSION
A. TCPA Step One
Because we review the denial of a motion to dismiss under the TCPA de novo,
we first consider whether the appellants have satisfied their step-one burden. See
Dallas Morning News, Inc. v. Hall, 579 S.W.3d 370, 377 (Tex. 2019); Thomas v.
Wm. Charles Bundren & Assocs. Law Grp. PLLC, No. 05-20-00632-CV, 2021 WL
3159795, at *3 (Tex. App.—Dallas July 26, 2021, no pet.) (mem. op.). In conducting
–7–
our review, we consider the pleadings, evidence a court could consider under Texas
Rule of Civil Procedure 166a, and supporting and opposing affidavits stating the
facts on which the liability or defense is based. See TEX. CIV. PRAC. & REM. CODE
ANN. § 27.006(a). More specifically, we must determine whether the Taylor email,
the communication upon which Phoenix’s lawsuit rests, constitutes a matter of
public concern. Id. § 27.001(7). For a movant to trigger the TCPA’s dismissal
framework, there must first be a “communication” as defined by section 27.001(1).
Id. § 27.001(1).
The relevant portion of the Taylor email states:
[T]he fact that their CEO was arrested and convicted for forging a
mineral owners [sic] signature in order to defraud her of hundreds of
thousands of dollars.
Neither party challenges whether the Taylor email is a “communication.”
Therefore, we must analyze whether the statement was made while exercising the
right of free speech. See Thomas, 2021 WL 3159795, at *5. The “exercise of the
right of free speech” means “a communication made in connection with a matter of
public concern.” See TEX. CIV. PRAC. & REM. CODE ANN. § 27.001(3).
A “matter of public concern” means “a statement or activity regarding: (A) a
public official, public figure, or other person who has drawn substantial public
attention due to the person’s official acts, fame, notoriety, or celebrity; (B) a matter
–8–
of political, social, or other interest to the community; or (C) a subject of concern to
the public.” See id. § 27.001(7)(A)–(C).4
We are constrained by this court’s interpretation of “matter of public
concern,” which includes within its ambit “criminal acts.” See Garcia v. Semler,
663 S.W.3d 270, 281 (Tex. App.—Dallas 2022, no pet.) (communication alleging
theft of estate sale signs is a matter of public concern because “[i]t is well-settled
that even after the 2019 amendments, ‘criminal acts are matters of public concern’”);
Austin v. Amundson, No. 05-22-00066-CV, 2022 WL 16945911, at *3 (Tex. App.—
Dallas Nov. 15, 2022, no pet.) (mem. op.) (allegation of road rage is a matter of
public concern); Page v. Bakewell, No. 05-21-00905-CV, 2022 WL 4007879, at *4
(Tex. App.—Dallas Sept. 2, 2022, no pet.) (mem. op.) (communication alleging the
hiring of a hit man to “take care” of ex-wife is a matter of public concern); Beard v.
McGregor Bancshares, Inc., No. 05-21-00478-CV, 2022 WL 1076176, at *6 (Tex.
App.—Dallas Apr. 11, 2022, pet. denied) (mem. op.) (statements about the killing
of Joanna Gaines’ goats implicated a matter of public concern because they
concerned criminal activity); Miller v. Schupp, No. 02-21-00107-CV, 2022 WL
60606, at *2 (Tex. App.—Fort Worth Jan. 6, 2022, no pet.) (mem. op.) (Instagram
4
In 2019, the legislature amended the definition of “matter of public concern.” The prior definition
included: “(A) health or safety; (B) environmental, economic, or community well-being; (C) the
government; (D) a public official or public figure; or (E) a good, product, or service in the marketplace.”
Act of May 18, 2011, 82nd Leg., R.S., Ch. 341, 2011 Tex. Gen. Laws 961, 962 (current version at TEX.
CIV. PRAC. & REM. CODE ANN. § 27.001(7)).
–9–
message alleging drug addition, sexual assault, and physical assault is a matter of
public concern); CBS Stations Grp. of Tex., LLC v. Burns, No. 05-21-00042-CV,
2021 WL 4398031, at *3 (Tex. App.—Dallas Sept. 27, 2021, no pet.) (mem. op.)
(news broadcast involving robbery, high-speed chase, and arrest of suspect is a
matter of public concern).
Incline’s accusation that Phoenix’s CEO “was arrested and convicted for
forging a mineral owners [sic] signature in order to defraud her of hundreds of
thousands of dollars” is a communication regarding an allegation of criminal
activity. See TEX. PENAL CODE ANN. § 32.21 (forgery). Phoenix argues, however,
that this particular communication is not a subject of concern to the public because
the allegation was made in a private communication, between private parties,
regarding a private transaction, which affects only the fortunes of the parties to the
communication. Phoenix asks this court to reject a bright line rule that all
communications regarding criminal activity are a matter of public concern, without
regard to the content, form, and context of the speech. See Saks & Co., LLC v. Li,
653 S.W.3d 306, 316 (Tex. App.—Houston [14th Dist.] 2022, no pet.) (finding
“dubious” the proposition that any statement about the commission of a crime is
matter of public concern). Phoenix asserts that the content, form, and context of the
speech removes it from the scope of a matter of public concern because the Taylor
email was not addressed to the community and was not a news report, a statement
made to law enforcement, or a public social media post.
–10–
We need not reach the broader question of whether every communication
regarding criminal activity is a subject of concern to the public because the Taylor
email fits squarely within the scope of “public concern” that has been adopted by
this court. Phoenix’s focus on the fact that the allegation was shared in a private
email is misplaced because whether Incline had posted its allegations of criminal
activity on a public social media post, rather than in a private email, does not change
the subject matter of the allegation or the TCPA analysis. The TCPA does not
require a communication to be public in order for it to constitute a matter of public
concern. See Lippincott v. Whisenhunt¸ 462 S.W.3d 507, 508 (Tex. 2015) (per
curiam) (holding that despite the private context of a private email regarding the
employment of a nurse anesthetist, the communication nevertheless amounted to a
matter of public concern because it regarded the provision of medical services by a
health care professional).5
Because the Taylor email regards a matter of public concern, we conclude that
Francis and Incline have satisfied their step-one burden. See Page, 2022 WL
5During oral argument and in subsequent briefing, the parties considered the applicability of Morris v.
Daniel, 615 S.W.3d 571, 573, 578 (Tex. App.—Houston [1st Dist.] 2020, no pet.), to the present case. We
find Morris distinguishable. In that case, the general subject of the communication, the health and safety
of children, was a matter of public concern, but the specific issue identified in the communication, the
health and safety of one child, was not because it affected only the concerns of that specific child. Id. By
contrast, the criminal history and continued involvement of Ferrari with a large-scale oil and gas company
is potentially relevant to anyone involved in the buying and selling of mineral rights in the areas the parties
do business. The present case is therefore more analogous to Lippincott. See Lippincott¸ 462 S.W.3d at
508, discussed above.
–11–
4007879, at *4; Beard, 2022 WL 1076176, at *6. We now turn to consider whether
Phoenix satisfied its burden under step two.
B. TCPA Step Two
Because Francis and Incline satisfied their initial burden, we now move to
step two of the burden-shifting analysis: whether Phoenix established by clear and
specific evidence a prima facie case for each essential element of its claims for
defamation,6 defamation per se, business disparagement,7 tortious interference,8 and
civil conspiracy.9 10 TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(c).
6
The elements of a defamation action include (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) caused
damages. In re Lipsky, 460 S.W.3d at 594. The plaintiff must plead and prove damages, unless the
defamatory statements are defamatory per se. Id. at 593. Defamation per se refers to statements that are so
obviously harmful that general damages may be presumed. See id. at 592. The elements of a defamation
per se claim are similar to that of a claim for defamation and differ only in that damages are presumed. See
Van Der Linden v. Khan, 535 S.W.3d 179, 198 (Tex. App.—Fort Worth 2017, pet. denied).
7
To prevail on a business disparagement claim, the plaintiff must establish that (1) the defendant published
disparaging words about the plaintiff’s economic interests; (2) with malice; (3) without privilege; (4) that
resulted in special damages. Marketshare Telecom, L.L.C. v. Ericsson, 198 S.W.3d 908, 924–25 (Tex.
App.—Dallas 2006, no pet.).
8
The elements of a tortious interference with prospective business relations claim are: (1) there was a
reasonable probability that plaintiff would have entered into a business relationship with a third party;
(2) the defendant either acted with a conscious desire to prevent the relationship from occurring or knew
the interference was certain or substantially certain to occur as a result of the conduct; (3) the defendant’s
conduct was independently tortious or unlawful; (4) the interference proximately caused the plaintiff injury;
and (5) the plaintiff suffered actual damage or loss as a result. Coinmach Corp. v. Aspenwood Apt. Corp.¸
417 S.W.3d 909, 923 (Tex. 2013). Phoenix plead tortious interference with existing contract but limits
itself to tortious interference with prospective contract and business relations on appeal.
9
The elements of civil conspiracy are: (1) two or more persons; (2) an object to be accomplished; (3) a
meeting of the minds on the object or course of action; (4) one or more unlawful, overt acts; and
(5) damages as a proximate result. RTLC AG Prod. Inc. v. Treatment Equip. Co., 195 S.W.3d 824, 833
(Tex. App.—Dallas 2006, no pet.).
10
Phoenix also pleaded “unfair competition” but provided no elements or legal analysis to support its claim
beyond the mere assertion that Francis’s defamatory and tortious conduct constituted unfair competition.
Accordingly, Phoenix has not presented anything for our review on this claim. TEX. R. APP. P. 38.1.
–12–
“[A prima facie case, in its traditional legal meaning] 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 at 590. A prima facie standard generally
requires only 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)).
“Prima facie evidence is evidence that, until its effect is overcome by other evidence,
will suffice as proof of a fact in issue. In other words, a prima facie case is one that
will entitle a party to recover if no evidence to the contrary is offered by the opposite
party.” Rehak Creative Servs., Inc. v. Witt, 404 S.W.3d 716, 726 (Tex. App.—
Houston [14th Dist.] 2013, pet. denied) (citation omitted), disapproved on other
grounds by In re Lipsky, 460 S.W.3d at 587–88).
“[A] plaintiff must provide enough detail to show the factual basis for its
claim.” In re Lipsky, 460 S.W.3d at 591; see D Magazine Partners, L.P. v. Rosenthal,
475 S.W.3d 470, 480 (Tex. App.—Dallas 2015), aff’d in part, rev’d in part on other
grounds, 529 S.W.3d 429 (Tex. 2017). “Conclusory statements are not probative
and accordingly will not suffice to establish a prima facie case.” Serafine v. Blunt,
466 S.W.3d 352, 358 (Tex. App.—Austin 2015, no pet.) (op. on reh’g). In other
words, “bare, baseless opinions” are not “a sufficient substitute for the clear and
specific evidence required to establish a prima facie case” under the Act. In re
–13–
Lipsky, 460 S.W.3d at 592. “Opinions must be based on demonstrable facts and a
reasoned basis.” Id. at 593.
1. Defamation, business disparagement, tortious interference with
prospective contract, and civil conspiracy
With the sole exception of defamation per se, all of Phoenix’s causes of action
require a showing of damages; therefore, we turn first to evaluating whether Phoenix
established a prima facie case of damages.
Phoenix alleges that the evidence shows that the Taylor email “(1) interfered
with and disrupted Phoenix’s business and economic interest with Taylor and her
family; (2) harmed Phoenix’s reputation; (3) caused Taylor not to do business with
or sell mineral rights to Phoenix; and (4) caused Taylor to do business with and sell
mineral rights to Incline despite Incline’s substantially inferior ‘low ball’ offer.” The
evidence Phoenix relies on to support this assertion is the Taylor email itself as well
as the fact that Krystal did not ultimately sell mineral rights to Phoenix. However,
Phoenix fails to address the timeline of events showing that Incline and Krystal had
already entered into a contract for the subject mineral rights prior to Phoenix’s
involvement.
According to the mineral and royalty deed offered by Phoenix as an exhibit to
its response to the TCPA motion to dismiss, the deed transferring Krystal’s mineral
rights to Incline was effective as of April 1, 2021, was signed and notarized by Sheila
Krystal on May 19, 2021, and was recorded in the Dunn County records on June 2,
–14–
2021. Phoenix’s CFO, Curtis Allen, attests that the interests conveyed in that deed
are the same interests that are the subject of Phoenix’s offer referenced in Taylor’s
email. This evidence shows that, at the very latest, the transaction at issue between
Krystal and Incline was completed by June 2, 2021. The Taylor email upon which
Phoenix’s claims are based was not sent until June 17, 2021. By the time Francis
sent the Taylor email the mineral rights had already been transferred to Incline.
Accordingly, the email came too late for any prospective interference with Phoenix’s
interests in the subject mineral rights.
Further, a close reading of the email from Taylor that prompted Francis’s
response does not support Phoenix’s allegations that, if not for the Taylor email, the
Krystal family would have sold its interests to Phoenix because its offer was twice
that of Incline’s. Instead, Taylor describes ongoing negotiations between
Francis/Incline and Taylor regarding the price discrepancy in an attempt to seek a
resolution. Taylor notes that “[w]e do very much appreciate your offer to make
things right by honoring any other official offers during that time period” and
provides Francis with the details of Phoenix’s offer, ostensibly so that Incline could
address the discrepancy as discussed. There is no suggestion in Taylor’s email that
she or the family were planning to breach their existing contract with Incline or to
enter into a new agreement with Phoenix—every indication in the email instead
suggests an ongoing attempt to resolve discrepancies with Incline despite Phoenix’s
higher offer.
–15–
Phoenix’s Manager and COO Lindsey Wilson alleges in her affidavit that
“Phoenix was close to closing the transaction with Ms. Krystal and Ms. Taylor, but
after the email from Francis, Ms. Taylor had doubts about Phoenix and Incline
ultimately purchased the mineral rights.” However, not only is this statement
contradicted by the clear timeline of events, her allegation that Phoenix was “close
to closing the transaction” is unsupported by any evidence in the record. Phoenix
offers no other evidence to support its assertion that the Taylor email caused
damages.
Phoenix failed to establish a prima facie case for the essential element of
damages; therefore, we sustain Francis’s and Incline’s first, second, and third issues
as they apply to the defamation, business disparagement, tortious interference with
prospective contract, and civil conspiracy claims. See In re Lipsky, 460 S.W.3d at
592.
2. Defamation per se
In addition to its other causes of action, Phoenix pled defamation per se.
Unlike Phoenix’s other causes of action, defamation per se does not require a
showing of damages. See Van Der Linden, 535 S.W.3d at 198. Therefore, Phoenix
can still carry its step two burden by making a prima facie showing of the elements
of a defamation per se claim. See id.Defamation per se refers to statements that are so obviously harmful that
general damages may be presumed. See In re Lipsky, 460 S.W.3d at 592. General
–16–
damages include non-economic losses, such as loss of reputation and mental
anguish. Id. Defamation per se is itself broken down into separate categories of
falsehoods. Id. at 596. Accusing someone of a crime, of having a foul or loathsome
disease, or of engaging in serious sexual misconduct are examples of defamation per
se. Id. Remarks that adversely reflect on a person’s fitness to conduct his or her
business or trade are also deemed defamatory per se. Id. And whether a statement
qualifies as defamation per se is generally a question of law. Id. If false and
disparaging statements injure a corporation’s reputation, it can sue for defamation
per se just like flesh-and-blood individuals. Waste Mgmt. of Texas, Inc. v. Texas
Disposal Sys. Landfill, Inc., 434 S.W.3d 142, 151 (Tex. 2014). Francis and Incline
do not argue that defamation per se is inapplicable to the facts of this case; therefore,
we turn to consider whether Phoenix satisfied its step two burden on each element
of defamation per se.
The elements of a defamation per se claim are similar to that of a claim for
defamation: (1) the 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. In re
Lipsky, 460 S.W.3d at 593. Defamation per se differs only in that damages are
presumed. Van Der Linden, 535 S.W.3d at 198.
a. Publication of a false statement
Francis and Incline first contend that Phoenix cannot meet its burden on the
first element of defamation per se because the allegedly defamatory statement in the
–17–
Taylor email was true “in its gist.” Truth in the “gist” exists where the actual
statement is no more “damaging to the person affected by it than a literally true
statement would have been.” River Oaks L-M. Inc. v. Vinton-Duarte, 469 S.W.3d
213, 239–40 (Tex. App.—Houston [14th Dist.] 2015, no pet.). To support this
argument, they assert that the statement at issue is “Phoenix’s CEO, Adam Ferrari,
is a felon,” and argue that because Ferrari pled guilty to a felony, the statement is
true in its gist even though Ferrari ultimately completed probation and was cleared
of the felony charges as a result.
However, Francis’s and Incline’s assertion ignores the plain text of the
statement in an attempt to distinguish what Francis allegedly “meant” from what he
actually said. Unlike appellants’ rewriting of the statement, the actual email said
“the fact that their CEO was arrested and convicted for forging a mineral owners
signature in order to defraud her of hundreds of thousands of dollars.” A factual
restatement of the allegedly disparaging statement at issue, then, can be condensed
to “Phoenix’s CEO is a felon,” and Phoenix has met its burden of providing
competent evidence demonstrating that Phoenix does not have a CEO and that none
of its executives have been convicted of a felony.
b. Defamatory concerning the plaintiff
Francis and Incline argue that Phoenix cannot meet its burden on this element
because Phoenix failed to address how or why the email’s assertion of Ferrari’s
relationship with Phoenix was defamatory; however, this again requires us to read
–18–
additional words into the Taylor email that are not there. Francis and Incline do not
argue that the statement “Phoenix’s CEO is a felon” is not defamatory; indeed, Texas
law provides that this is exactly the type of statement that satisfies the showing
required under a defamation per se standard. See In re Lipsky, 460 S.W.3d at 596
(holding remarks that adversely reflect on a person’s fitness to conduct his or her
business or trade are defamatory per se). Therefore, Phoenix has established a prima
facie showing of the second element of defamation per se.
c. Requisite degree of fault
A private individual need only prove negligence to prevail on a defamation
per se claim. Id. at 593. To prove negligence, a private individual must show “that
the publisher . . . knew or should have known that the defamatory statement was
false.” Foster v. Laredo Newspapers, Inc., 541 S.W.2d 809, 819 (Tex. 1976).
Although appellants allege that they believe that a felon (Ferrari) actually is acting
as Phoenix’s CEO despite their attempts to conceal the extent of his involvement,
the court must review the evidence in the light most favorable to Phoenix, the
claimant/nonmovant. Dyer v. Medoc Health Servs., LLC, 573 S.W.3d 418, 424
(Tex. App.—Dallas 2019, pet. denied). The evidence provided by Phoenix satisfies
a prima facie showing that Incline and Francis, as regular business competitors
experienced in dealing with Phoenix and its executives, should have known that the
statement was false, despite its allegations of having conducted research that created
the suspicion of Ferrari’s deeper involvement with Phoenix. See D Magazine
–19–
Partners, L.P. v. Rosenthal, 529 S.W.3d 429, 437–40 (Tex. 2017) (holding that a
prima facie showing of negligence was made in spite of evidence that raised
suspicion of the allegedly defamatory statement’s truth).
Because Phoenix has satisfied its step two burden regarding its defamation
per se claim, we turn to step three of the TCPA analysis. See Mireskandari, 636
S.W.3d at 735.
C. TCPA Step Three
If the nonmovant meets its step-two burden, the burden of proof shifts back to
the movant to establish an affirmative defense or other grounds on which the moving
party is entitled to judgment as a matter of law. Id. One such affirmative defense to
defamation per se is privilege, an affirmative defense which Francis and Incline pled.
See In re Lipsky, 460 S.W.3d at 592; Butler v. Cent. Bank & Tr. Co., 458 S.W.2d
510, 514 (Tex. App.—Dallas 1970, writ dism’d).
Qualified privilege in the context of defamation includes all communications
made in good faith on any subject matter in which the author has an interest. Id.Circumstances that may give rise to the privilege include:
(1) a belief that publication protects the publisher’s interest; (2) a belief
that publication protects the interest of certain recipients or third
persons; (3) a belief that a person sharing a common interest in the
published information is entitled to know that information…and (5) a
belief that an important public interest requires publication.
Steinhaus v. Beachside Envtl. LLC, 590 S.W.3d 672, 677 (Tex. App.—Houston
[14th Dist.] 2019, pet. denied). As discussed in detail above, at the time of the Taylor
–20–
email, Incline produced evidence demonstrating that it had an existing contract with
the Krystal family as well as an ongoing business relationship which Phoenix was
attempting to disrupt. Accordingly, we conclude that Francis and Incline have
provided evidence raising the affirmative defense of privilege, and we remand the
case to the trial court for further consideration of this issue. See id.Because we sustain issues one through three, we need not address appellants’
fourth issue. TEX. R. APP. P. 47.1. Further, our disposition of issues one through
three require us to remand the case to the trial court for reconsideration of the award
of attorney’s fees challenged in issue five; therefore, we do not address it here. Id.IV. CONCLUSION
We reverse the portions of the trial court’s judgment denying dismissal of
Phoenix’s claims for: (1) disparagement; (2) defamation; (3) tortious interference
with prospective contract; (4) conspiracy; and (5) unfair competition. We affirm the
portion of the trial court’s judgment denying dismissal of Phoenix’s claim for
defamation per se, and we remand the case for further proceedings on that cause of
action as well as on the issue of attorney’s fees.
/Maricela Breedlove/
221260f.p05 MARICELA BREEDLOVE
JUSTICE
–21–
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
WILLIAM FRANCIS AND On Appeal from the 116th Judicial
INCLINE ENERGY PARTNERS, District Court, Dallas County, Texas
L.P., Appellants Trial Court Cause No. DC-22-06350.
Opinion delivered by Justice
No. 05-22-01260-CV V. Breedlove. Justices Nowell and
Goldstein participating.
PHOENIX CAPITAL GROUP
HOLDINGS, LLC, Appellee
In accordance with this Court’s opinion of this date, the trial court’s
November 9, 2022 “Order Partially Granting and Partially Denying Defendants’
TCPA Motion to Dismiss” is AFFIRMED in part and REVERSED in part. We
REVERSE that portion of the trial court’s order denying appellee Phoenix Capital
Group Holdings, LLC’s motion to dismiss appellants William Francis and Incline
Energy Partners, L.P.s’ claims for disparagement, defamation, tortious interference
with prospective contract, conspiracy, and unfair competition.
In all other respects, the trial court’s order is AFFIRMED. We REMAND
this cause to the trial court for further proceedings consistent with this opinion.
It is ORDERED that each party bear its own costs of this appeal.
Judgment entered this 29th day of August, 2023.
–22–