Jaime Mendez v. Paul C. Kavanaugh

NUMBER 13-11-00622-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI – EDINBURG
JAIME MENDEZ, Appellant,
v.
PAUL C. KAVANAUGH, Appellee.
On appeal from the 445th District Court
of Cameron County, Texas.
MEMORANDUM OPINION
Before Chief Justice Valdez and Justices Garza and Vela
Memorandum Opinion by Justice Garza
Appellant, Jaime Mendez, challenges the trial court’s summary judgment in favor
of appellee, Paul C. Kavanaugh, in a libel case. By two issues, Mendez argues that
Kavanaugh failed to conclusively establish his affirmative defense of qualified privilege.
We affirm.
I. BACKGROUND
Both parties are residents of Acacia Lake Townhouses in Brownsville, Texas.
Kavanaugh was the president of the Acacia Lake Townhouses Homeowners’
Association (“ALTHA”) prior to Mendez being elected president of ALTHA in March
2007. Prior to Mendez’s election, Kavanaugh had undertaken an investigation of
“perceived irregularities” on the part of ALTHA’s treasurer, Sandra Walsdorf. When
Mendez took over as ALTHA president, Kavanaugh asked Mendez to cooperate with
the investigation by providing certain banking and financial records. Mendez declined to
cooperate. Kavanaugh subsequently contacted the Brownsville Police Department and
pressed charges against Mendez and Walsdorf for embezzlement, fraud, and other
offenses.
On August 31, 2007, Kavanaugh authored a memorandum addressed to the
ALTHA members and its counsel, which was posted on the ALTHA bulletin board. The
memorandum read:
It has become very apparent to me that the treasurer of the ALTHA, Ms.
Sandra Walsdorf, and the current president of ALTHA, have no desire to
allow the members of the ALTHA to know what is going on with the
finances.
For that reason, and based on the evidence I am enclosing in this memo, I
have found myself obligated to file charges against Ms. Walsdorf and Mr.
Mendez for embezzlement, fraud, conspiracy to use ALTHA funds in an
illegal manner, and for making false presentations of ALTHA finances to
the owners/members of the Association.
If any owner/member of the Association wishes to obtain a copy of the
charges that I have formally filed with the City of Brownsville Police
Department they may do so by referencing the case # written on the
above from [sic].
The Cameron County District Attorney declined to pursue a criminal prosecution in the
matter.
Mendez filed his libel suit against Kavanaugh on January 22, 2008, seeking
actual and exemplary damages. On June 27, 2011, Kavanaugh filed his first amended
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motion for traditional summary judgment, contending that he was entitled to judgment
as a matter of law based on the affirmative defense of qualified privilege. The summary
judgment motion contained an affidavit by Kavanaugh stating, in relevant part, as
follows:
In 2006, I was . . . elected the [ALTHA] board President. After reviewing
financial records and an audit pertaining to the calendar year 2006, I
became suspicious of certain irregularities I noticed on behalf of the
Treasurer, Sandra Walsdorf. I noticed for example that in 2005 Ms.
Walsdorf did not pay the association for her portion of the property
insurance. I also noticed she did not pay her maintenance fees. Later I
learned Ms. Walsdorf was claiming she had made a personal loan to the
homeowner’s association and that she was repaying herself from
association funds. There were no records of any loan made by Ms.
Walsdorf.
In the following months and years, I conducted an internal investigation. I
obtained copies of some of the supporting documents that I needed, but
many of the documents were not provided to me even after repeated
requests. I requested that the then President, Jaime Mendez, provide me
access to banking records and other financial records. He refused to
cooperate with me. He constantly sided with and protected Ms. Walsdorf.
I documented these instances of interference and advised all
concerned. . . .
To this day, I stand by the investigation. I continue to stand by the
statements made in my memorandum of August 31, 2007. I believe all of
those statements are true and correct. . . .
In the end, the District Attorney’s Office of Cameron County advised me
that they were not going to pursue this matter but that I and/or the board of
directors of [ALTHA] could file a civil lawsuit against Ms. Walsdorf to
recover the funds for which she was not able to account. Neither the
Brownsville Police Department nor the Cameron County District Attorney’s
office ever found any evidence that Ms. Sandra Walsdorf had given a loan
to the homeowners’ association.
I do not understand why the District Attorney’s office did not pursue my
complaint to the end. I therefore disagree with their decision to do
nothing. Because of the evidence that I possess and have presented to
the other homeowners I continue to believe that Ms. Walsdorf committed
fraud against the association.
In response to Kavanaugh’s motion, Mendez pointed to a statement made by
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Kavanaugh, in response to a discovery request, that “[t]o my knowledge Mr. Mendez did
not ever directly embezzle funds from [ALTHA].” Mendez also filed his own affidavit in
which he describes “an ongoing history of intimidation and harassment not only to
myself but other ALTHA members by Kavanaugh” and insists that the criminal charges
filed against him by Kavanaugh are “completely false.” The affidavit also refers to an
email sent by Kavanaugh explaining that Kavanaugh would drop the criminal charges if
Mendez provided ALTHA bank statements for November and December of 2001 and
January of 2008.
The trial court granted Kavanaugh’s summary judgment motion on August 31,
2011, and this appeal followed.
II. DISCUSSION
A. Standard of Review
We review a trial court’s granting of a traditional summary judgment de novo.
See Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003);
Branton v. Wood, 100 S.W.3d 645, 646 (Tex. App.—Corpus Christi 2003, no pet.). In
our review, we determine whether the movant met its burden to establish that no
genuine issue of material fact exists and that the movant is entitled to judgment as a
matter of law. TEX. R. CIV. P. 166a(c); Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211,
215 (Tex. 2002); City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678
(Tex. 1979). The movant bears the burden of proof and all doubts about the existence
of a genuine issue of material fact are resolved against the movant. See Sw. Elec.
Power Co., 73 S.W.3d at 215. We take as true all evidence favorable to the non-
movant, and we indulge every reasonable inference and resolve any doubts in the non-
movant’s favor. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005).
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B. Applicable Law
Libel is defamation expressed in written form. TEX. CIV. PRAC. & REM. CODE ANN.
§ 73.001 (West 2011). To maintain a libel cause of action, the plaintiff must prove that
the defendant: (1) published a statement; (2) that was defamatory concerning the
plaintiff; (3) while acting with either actual malice, if the plaintiff was a public official or
public figure, or negligence, if the plaintiff was a private individual, regarding the truth of
the statement. WFAA-TV, Inc. v. McLemore, 978 S.W.2d 568, 571 (Tex. 1998) (citing
Carr v. Brasher, 776 S.W.2d 567, 569 (Tex. 1989)). When a defamation plaintiff is a
public official or public figure, the United States Constitution requires the plaintiff to
establish falsity of the statement. Curtis Publ’g Co. v. Butts, 388 U.S. 130, 155 (1967);
N.Y. Times v. Sullivan, 376 U.S. 254, 279–80 (1964); Turner v. KTRK Television, 38
S.W.3d 103, 116–18 (Tex. 2000). Falsity for constitutional purposes is determined
based on whether a statement carries a “provably false factual connotation.” Milkovich
v. Lorain Journal Co., 497 U.S. 1, 18 (1990); Turner, 38 S.W.3d at 116.
To be entitled to the affirmative defense of qualified privilege, the person making
the statement must make it in good faith on a subject matter in which the speaker has a
common interest with the other person, or with reference to which the speaker has a
duty to communicate to the other. Grant v. Stop-N-Go Mkt. of Tex., Inc., 994 S.W.2d
867, 874 (Tex. App.—Houston [1st Dist.] 1999, no pet.) (citing Randall’s Food Mkts.,
Inc. v. Johnson, 891 S.W.2d 640, 646 (Tex. 1995); Galveston County Fair & Rodeo, Inc.
v. Glover, 880 S.W.2d 112, 120 (Tex. App.—Texarkana 1994, writ denied)). The
privilege applies as long as the communication passes only to persons having an
interest or duty in the matter to which the communications relate. Id. (citing Randall’s
Food Mkts., 891 S.W.2d at 646). The privilege is lost if the person claiming it does not
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act for the purpose of protecting the common interest. Id. (citing Hardwick v. Houston
Lighting & Power Co., 881 S.W.2d 195, 199 (Tex. App.—Corpus Christi 1994, writ
dism’d w.o.j.)).
The privilege is also inapplicable if the statement is made with actual malice. Id.
In the context of defamation, “actual malice” is a term of art distinct from traditional
common-law malice and does not include ill will, spite, or evil motive. Alaniz v. Hoyt,
105 S.W.3d 330, 346 (Tex. App.—Corpus Christi 2003, no pet.) (citing Hagler v. Proctor
& Gamble Mfg. Co., 884 S.W.2d 771, 771 (Tex. 1994) (per curiam); Wal-Mart Stores,
Inc. v. Lane, 31 S.W.3d 282, 291 (Tex. App.—Corpus Christi 2000, pet. denied)).
Instead, “actual malice” means that the defendant made the statement “with knowledge
that it was false or with reckless disregard of whether it was true or not.” New Times,
Inc. v. Isaacks, 146 S.W.3d 144, 155 (Tex. 2004) (citing Huckabee v. Time Warner
Entm’t Co., 19 S.W.3d 413, 420 (Tex. 2000)). “Reckless disregard” is a subjective
standard, focusing on the defendant’s state of mind. Isaacks, 146 S.W.3d at 162. Mere
negligence is not enough. Id. Rather, the plaintiff must establish that the defendant in
fact entertained serious doubts as to the truth of his publication, or had a high degree of
awareness of the probable falsity of the published information. Id.
C. Analysis
1. Actual Malice
By his first issue, Mendez argues that Kavanaugh was not entitled to judgment
as a matter of law on his qualified privilege defense because he failed to conclusively
establish that he acted without actual malice.
In response, Kavanaugh first asserts that the August 31, 2007 memorandum
could not have been defamatory because it did not state that Mendez actually
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committed crimes; rather, it merely stated that Kavanaugh had filed charges with police
alleging that Mendez committed crimes. We do not find this argument persuasive. A
statement is defamatory if it tends to injure one’s reputation, exposing one to public
hatred, contempt, ridicule, or financial injury, or if it tends to impeach a person’s
honesty, integrity, virtue, or reputation. Montemayor v. Ortiz, 208 S.W.3d 627, 651
(Tex. App.—Corpus Christi 2006, pet. denied); Austin v. Inet Techs., Inc., 118 S.W.3d
491, 496 (Tex. App.—Dallas 2003, no pet.). Whether a statement is defamatory
depends on whether a person of ordinary intelligence would perceive the entire
statement as so affecting the reputation of the plaintiff. See Carr, 776 S.W.2d at 569–
70; Musser v. Smith Protective Servs., Inc., 723 S.W.2d 653, 655 (Tex. 1987). A
“person of ordinary intelligence” is one who “exercises care and prudence, but not
omniscience, when evaluating allegedly defamatory communications.” Isaacks, 146
S.W.3d at 157. In determining whether a statement is defamatory, each statement is
construed as a whole, in light of surrounding circumstances. Turner, 38 S.W.3d at 114;
Musser, 723 S.W.2d at 654-55. The August 31, 2007 memorandum stated that
Kavanaugh, based on his investigation, “found himself obligated to file charges” against
Mendez for fraud, embezzlement, conspiring to use ALTHA funds illegally, and making
false representations regarding ALTHA’s finances. A person of ordinary intelligence
would perceive this statement as actually accusing Mendez of committing the named
offenses; accordingly, the statement, if false, is per se defamatory. Christy v. Stauffer
Publ’ns, Inc., 437 S.W.2d 814, 815 (Tex. 1969) (“To charge one falsely with the
commission of any crime for which he may be punished by imprisonment is slander or
libel per se”); Mustang Athletic Corp. v. Monroe, 137 S.W.3d 336, 339 (Tex. App.—
Beaumont 2004, no pet.).
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We next address whether Kavanaugh successfully negated actual malice—and
thereby established his entitlement to the qualified privilege—with his summary
judgment evidence. A libel defendant can negate actual malice as a matter of law by
presenting evidence that he or she did not publish the statement with knowledge of its
falsity or reckless disregard for its truth. See WFAA-TV, 978 S.W.2d at 574. An
affidavit from an interested witness will negate actual malice only if it is “clear, positive,
and direct, otherwise credible and free from contradictions and inconsistencies, and
[able to be] readily controverted.” TEX. R. CIV. P. 166a(c), see Casso v. Brand, 776
S.W.2d 551, 558 (Tex. 1989). If a defendant has produced competent evidence
negating actual malice, the burden will shift to the plaintiff to present controverting proof
raising a genuine issue of material fact. See TEX. R. CIV. P. 166a(c).
We find that Kavanaugh’s affidavit conclusively disproved that he “in fact
entertained serious doubts as to the truth of his publication.” See Isaacks, 146 S.W.3d
at 162. The affidavit states that Kavanaugh “continue[s] to stand by” the statements in
the memorandum. It also reaffirms that Mendez failed to cooperate with Kavanaugh’s
investigation and refused to provide him with financial records after repeated requests.
Mendez’s affidavit did not controvert this “clear, positive, . . . direct, [and] otherwise
credible” allegation. See TEX. R. CIV. P. 166a(c). Mendez did provide evidence, in the
form of Kavanaugh’s interrogatory response, that Kavanaugh did not believe that
Mendez “directly” embezzled funds from ALTHA. However, Kavanaugh correctly notes
that it is not necessary, under the penal code, for Mendez to have “directly” embezzled
funds in order for him to have committed the crime of embezzlement. See TEX. PENAL
CODE ANN. § 7.02(a) (West 2011) (describing the law of parties). Instead, Kavanaugh
could have reasonably believed, as of August 31, 2007, that Mendez’s refusal to
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cooperate with Kavanaugh’s ongoing investigation indicated that Mendez was “acting
with intent to promote or assist” Walsdorf in her commission of crimes, which if true
would make Mendez criminally liable under the law of parties. See id. § 7.02(a)(2), (3).
Mendez did not produce evidence in response to Kavanaugh’s affidavit to controvert
this.
Taking as true all evidence favorable to Mendez and indulging every reasonable
inference in his favor, we conclude that Kavanaugh established that the statements in
his August 31, 2007 memorandum were made without actual malice, and Mendez did
not produce evidence to raise a fact issue. Valence Operating Co. v. Dorsett, 164
S.W.3d 656, 661 (Tex. 2005). We overrule Mendez’s first issue.
2. Publication to Party With Corresponding Interest or Duty
By his second issue, Mendez contends that Kavanaugh was not entitled to
judgment as a matter of law on his qualified privilege defense because he failed to
conclusively establish that the August 31, 2007 memorandum was “only communicated
to another party having a corresponding interest or duty.” See Grant, 994 S.W.2d at
874 (citing Randall’s Food Mkts., Inc., 891 S.W.2d at 646). In particular, Mendez claims
in his affidavit that the memorandum was not only published to the individual members
of ALTHA but was also “posted . . . on the communal board at Acacia Lake
Townhouses which is open to the public to see.” We do not find Mendez’s argument
persuasive. The memorandum was specifically addressed to “[a]ll owners/members of
[ALTHA]” and to ALTHA’s counsel. Moreover, “if a defamatory statement is privileged,
the casual or accidental presence of a third party will not take it out of the privilege.”
Thomas-Smith v. Mackin, 238 S.W.3d 503, 510 (Tex. App.—Houston [14th Dist.] 2007,
no pet.) (citing RESTATEMENT (SECOND) OF TORTS § 604 cmt. b (1977) (“One privileged to
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publish defamatory matter may, without abuse of the privilege use a method of
communication that involves an incidental publication of the defamatory matter to
persons to whom he is not otherwise privileged to publish it, if the method, although not
the only way in which the information can be effectively communicated, is customary
and sanctioned by business or other necessity.”). Accordingly, no fact issue has been
raised regarding whether the memorandum was “only communicated to another party
having a corresponding interest or duty.” We overrule Mendez’s second issue.
III. CONCLUSION
The trial court’s judgment is affirmed.
DORI CONTRERAS GARZA
Justice
Delivered and filed the
21st day of August, 2012.
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