Minor v. Failla

Alan MINOR, Individually, and d/b/a Minor
Manufacturing, Inc. v. J.P. FAILLA,
Individually and In His Capacity as
Councilman for the City of Gould, Arkansas,
and Robert Stephens, Individually and In His
Capacity as Councilman for the City of Gould,
Arkansas

96-1265                                            ___ S.W.2d ___

                    Supreme Court of Arkansas
                 Opinion delivered June 30, 1997


1.   Motions -- directed verdict -- review of order granting. -- In reviewing
     an order granting a directed-verdict motion, the appellate
     court considers the evidence in the light most favorable to
     the party against whom the verdict was directed; if any
     substantial evidence exists that tends to establish an issue
     in favor of that party, it is error for the trial court to
     grant the directed-verdict motion.

2.   Torts -- defamation -- elements. -- A party must prove the following
     elements to establish a claim for defamation: (1) the
     defamatory nature of the statement of fact; (2) that
     statement's identification of or reference to the plaintiff;
     (3) publication of the statement by the defendant; (4) the
     defendant's fault in the publication; (5) the statement's
     falsity; and (6) damages.

3.   Torts -- defamation -- case involving spoken words appropriately termed one
     for slander. -- Where the case at bar involved asserted damages
     resulting from spoken words against non-media defendants, it
     was appropriately termed one for slander.
4.   Torts -- defamation -- test for establishing. -- The test for
     establishing defamation per se is as follows: where the
     natural consequence of the words is a damage, as if they
     import a charge of having been guilty of a crime, or of having
     a contagious distemper, or if they are prejudicial to a person
     in office or to a person of a profession or trade, they are in
     themselves actionable; in other cases, the party who brings an
     action for words, must show the damage which was received from
     them.

5.   Torts -- defamation -- no evidence of actual losses required. -- The
     benefit to a plaintiff in establishing defamation per se is
     that no evidence of damages in the form of actual losses is
     required.

6.   Torts -- defamation -- whether words of appellees were actionable was
     question of fact for jury -- substantial evidence that appellees accused
     appellant of crime. -- In this case, the words of appellees were
     actionable if, taken together with the attendant
     circumstances, they implicated appellant in the commission of
     a crime; this was a question of fact for the jury; given the
     attendant circumstances, and viewing the evidence in the light
     most favorable to appellant, the supreme court concluded that
     there was substantial evidence that appellees had accused
     appellant of committing a crime; the critical fact was that
     they solicited the aid of law enforcement to determine the
     legitimacy of appellant's claim against the city for water
     damage and property loss. 

7.   Torts -- defamation -- determination of existence of privilege is matter
     of law. -- The determination of the existence of a privilege is
     a matter of law.

8.   Torts -- defamation -- when publication may be privileged. -- A
     publication may be conditionally privileged if the
     circumstances induce a correct or reasonable belief (1) that
     there is information that affects a sufficiently important
     interest of the recipient or a third person and (2) that the
     recipient is one to whom the publisher is under a legal duty
     to publish the defamatory matter or is a person to whom its
     publication is otherwise within the generally accepted
     standards of decent conduct.

9.   Torts -- defamation -- when qualified privilege may be invoked. -- A
     communication is held to be qualifiedly privileged when it is
     made in good faith upon any subject matter in which the person
     making the communication has an interest or in reference to
     which he has a duty, and to a person having a corresponding
     interest or duty, although it contains matters which, without
     such privilege, would be actionable.
10.  Torts -- defamation -- qualified privilege must be exercised in reasonable
     manner and for proper purpose -- when privilege may be lost. -- A
     qualified privilege must be exercised in a reasonable manner
     and for a proper purpose; the immunity does not extend to
     irrelevant defamatory statements that have no relation to the
     interest entitled to protection; the qualified privilege is
     also lost if it is abused by excessive publication; if the
     statement is made with malice; and if the statement is made
     with a lack of grounds for belief in the truth of the
     statement.

11.  Torts -- defamation -- whether statement falls outside scope of qualified
     privilege is question of fact for jury. -- The question of whether a
     particular statement falls outside the scope of the qualified
     privilege for one of these reasons is a question of fact for
     the jury.

12.  Torts -- defamation -- communication was in fulfillment of appellees'
     official duties -- qualified privilege attached. -- Where appellees
     both occupied positions on the city council and the sewer
     committee and spoke to another public official, the sheriff,
     about potential criminal activity in connection with their
     positions, the supreme court viewed the communication as
     nothing more than fulfillment of their official duties; thus,
     the court held that the qualified privilege attached.
13.  Motions -- directed verdict -- trial court correctly granted motion in
     favor of appellees. -- Where there was some evidence presented of
     a perceived controversy between one of the appellees and
     appellant with respect to appellant's decision as president of
     the local school board to deny the appellee's niece a transfer
     to another school district, the supreme court concluded that
     this matter was not sufficiently developed and failed to rise
     to the level of substantial evidence of malice on the
     appellee's part; nor did the court agree that substantial
     evidence was presented that appellees had falsely accused
     appellant of a crime; the supreme court held that the trial
     court correctly directed a verdict in favor of appellees.

14.  Appeal & error -- appellant must develop issue for appeal. -- It is
     incumbent on the appellant to develop an issue for purposes of
     appeal.


     Appeal from Lincoln Circuit Court; Fred D. Davis, III, Judge;
affirmed.
     Kearney Law Offices, by: John L. Kearney, for appellant.
     Ralph C. Ohm, for appellees.

     Robert L. Brown, Justice.
     Appellant Alan Minor, individually, and d/b/a Minor
Manufacturing, Inc. (Minor), appeals a directed verdict in favor of
appellees J.P. Failla and Robert Stephens by the circuit court on
his claim for defamation.  The matter was tried by the court
sitting without a jury.
     The genesis for the litigation was a complaint for defamation
filed by Minor against Failla and Stephens.  The complaint alleged
that Minor had filed a claim with the City of Gould seeking
compensation for water damage and property loss to his necktie
manufacturing plant.  The matter was referred by City officials to
the City's liability carrier, which investigated the claim, and
after determining its validity, paid a reasonable sum on Minor's
behalf for the losses.  Minor alleged that after the claim was
paid, Failla and Stephens made statements to third parties that
Minor had obtained the insurance payment through "dishonest,
fraudulent and/or criminal means."  Minor further alleged that the
councilmen made the statements to private citizens in Gould and
caused the statements to be published in the Arkansas Democrat-
Gazette.  And, finally, he alleged that they caused a criminal
complaint to be filed against him with both the Lincoln County
Sheriff's Department and the Arkansas State Police.  Minor prayed
for substantial compensatory and punitive damages.  Failla and
Stephens answered that any statements made by them were true and
that they were protected by a qualified immunity due to their
official capacities.
     At trial, numerous witnesses testified about rainfall,
converging pipelines, the City's problem with sewerage, and whether
the water or sewerage damage was caused by blockage in the pipeline
on Minor's property or the City's.  Lincoln County Sheriff Loyd
Phillips testified that he was contacted by Stephens, who asked him
to determine whether a claim had been paid to Minor Manufacturing
and, if so, in what amount.  He stated that he was also asked to
determine whether the claim was legitimate. He testified that he
contacted Failla, who wanted him to find out whether the sewer had
"backed up" on the City's property or on Minor's property.  The
Sheriff added that Failla and Stephens believed that the claim, if
it was paid, was not legitimate.  He testified that he took no
action but referred the matter to Lloyd Franklin, an investigator
with the Arkansas State Police.
     State Police Investigator Lloyd Franklin testified that he
received the complaint from Sheriff Phillips regarding the loss at
Minor Manufacturing and treated it as a criminal charge.  He stated
that his goal was to investigate whether the City had authorized an
improper insurance claim.  He added that he investigated the matter
as a theft-of-property violation because if the liability was not
the City's, then unlawful deceit could be involved.  He testified
that at the completion of his investigation, he did not recommend
a criminal charge to the prosecuting attorney, and none was filed.
     Kay Perry, a senior claims adjuster for the City's liability
carrier, testified that she became familiar with the file when
Stephens called and asked for a copy.  She released a copy of the
file to him, who she said was upset because the claim had already
been paid to Minor.  She testified that Minor initially claimed
$5,058 but that total benefits paid on his behalf were $10,369.15.
     Joe Farmer also testified.  He stated that while he was
employed by the Arkansas Democrat-Gazette, he covered the Gould
City Council because the town was suffering financial difficulties
and a turnover in the mayor's office.  He stated that Failla told
him that there was an investigation occurring on an insurance
payment made to Minor.  He added that he did not believe that
Failla thought Minor was guilty of any wrongdoing and specifically
stated that he did not recall either Failla or Stephens indicating
that Minor was engaged in wrongdoing.
     Danny Snyder was called out of turn by the defense.  Snyder
testified that he was licensed as a master plumber and that he had
found a significant number of tree roots in the line connecting
Minor's manufacturing plant to the City's sewer system.  He
testified that prior to removing the roots, water was backed up to
Minor's two buildings.  After the roots were removed, the water
flowed freely to the sewer system.  Snyder testified that he went
into both of Minor's buildings and found clear water, as opposed to
sewer water, which caused him to believe that the flood problem was
possibly caused by an overflowing commode.  Snyder's opinion
throughout was that Minor's building was flooded by clear water --
not sewer water.
     Failla and Stephens were then called by Minor as witnesses. 
Failla testified that he believed the City's insurance carrier
would deny coverage once it saw Danny Snyder's report.  He further
stated that he had asked the City's mayor, A.B. Allen, for a status
report on Minor's claim.  After the claim was paid, he said he
turned the matter over to Sheriff Phillips because he did not know
what else to do.  He admitted that he was contacted by Joe Farmer
with the Arkansas Democrat-Gazette on at least two occasions during
October 1993.  Farmer authored two articles for the newspaper: one
dated October 21, 1993, entitled: "Open city books or face inquiry,
Gould citizen group warns mayor"; and a second dated October 27,
1993, entitled: "State police investigate whether manufacturer
actually got settlement."  Failla agreed that his contributions to
the October 27 article were accurately reflected by Farmer.
     Stephens testified that when he learned of the damage to
Minor's business, he understood that there was a possibility that
the City was at fault.  He stated that he and Failla waited for a
report on the final action to be taken on the claim but never
received one.  He testified that, based largely on Danny Snyder's
report, he did not believe the claim should have been paid.  He
also believed that there was a discrepancy in the amount paid
because the payment was higher than that requested by Minor. 
Stephens testified that he then went to Sheriff Phillips with the
insurance file because he believed that both the city council and
the mayor should have been involved in the handling of the claim. 
He maintained that the insurance company should not have paid the
claim.  He added that he spoke with reporter Joe Farmer two times. 
He stated that he gave him a copy of the insurance file so that if
Farmer printed anything, he would print the truth.  He agreed with
the October 27, 1993 newspaper article, which quoted him as saying
that he did not believe the accident was the City's fault. 
     Minor was the final witness to testify.  He stated that after
filing his claim for damage to his necktie manufacturing business,
Mayor Allen and the city council agreed that the proper route to go
was to submit a claim to the insurance carrier.  Minor testified
that he subsequently received two checks from the carrier totalling
$3,638.  He learned that money for damages to the buildings
themselves would be paid directly to another company, Metro
Builders & Restoration Specialists.  After this payment, he said
that he was approached by State Police Investigator Franklin, who
told him that he had received information that he was trying to
defraud the insurance company based on his receipt of over $10,000
on a claim that was worth approximately $3,000.  He also testified
that he spoke with reporter Joe Farmer on the same subject.  To
both men, he gave the same explanation for how payments were
distributed.  Nevertheless, he complained that Farmer's October 20
article referenced payment of $10,000 to Minor Manufacturing and
the fact "city officials" believed the claim to be worth only
$3,200.  He stated that he confronted Stephens over whether he was
the source for the story about the $10,000 check.  He testified
that Stephens did not deny that he made the statement but said only
that he did not agree with the settlement.  Minor claimed that
because of these articles, his business had closed in February
1994.
     At the conclusion of Minor's case, Failla and Stephens moved
for a directed verdict on the basis that Minor had failed to prove
that any statements made by them constituted slander.  The trial
court agreed.  The court stated that Minor was caught in a
"political crossfire" between the mayor and city council and that
there were no false statements made by Failla and Stephens and no
statements that reflected dishonest conduct on the part of Minor. 
The court further concluded that there was no showing of malice by
the councilmen and that in any case Failla and Stephens would be
entitled to a qualified privilege based on their positions on the
city council and the City's sewer committee.  Judgment in favor of
Failla and Stephens was entered accordingly.
     The sole issue on appeal is whether the trial court erred in
granting the councilmen's motion for directed verdict.  In
reviewing an order granting a motion for directed verdict, this
court considers the evidence in the light most favorable to the
party against whom the verdict was directed.  Lakeview Country
Club, Inc. v. Superior Prods., 325 Ark. 218, 926 S.W.2d 428 (1996);
Higgins v. General Motors Corp., 287 Ark. 390, 699 S.W.2d 741
(1985).  If any substantial evidence exists that tends to establish
an issue in favor of that party, it is error for the trial court to
grant the directed-verdict motion.  Lakeview Country Club, Inc. v.
Superior Prods., supra.
     Minor urges that the trial court erred in directing a verdict
relating to the statements Failla and Stephens made to Sheriff
Phillips because the statements constituted defamation per se in
that they implicated Minor in criminal activity.  A party must
prove the following elements to establish a claim for defamation:
(1) the defamatory nature of the statement of fact; (2) that
statement's identification of or reference to the plaintiff; (3)
publication of the statement by the defendant; (4) the defendant's
fault in the publication; (5) the statement's falsity; and (6)
damages.  Mitchell v. Globe Intern. Pub., Inc., 773 F. Supp. 1235
(W.D. Ark. 1991).  The case at bar involves asserted damages
resulting from spoken words against non-media defendants and is
appropriately termed one for slander.  See Braman and the Gus Blass
Co. v. Walthall, 215 Ark. 582, 225 S.W.2d 342 (1949).  See also
Parkman v. Hastings, 259 Ark. 59, 531 S.W.2d 481 (1976).
     We have explained the test for establishing defamation per se
as follows:
     Where the natural consequence of the words is a damage,
     as if they import a charge of having been guilty of a
     crime, or of having a contagious distemper, or if they
     are prejudicial to a person in office, or to a person of
     a profession or trade, they are in themselves actionable;
     in other cases, the party who brings an action for words,
     must show the damage which was received from them.
Ewing v. Cargill, Inc., 324 Ark. 217, 219, 919 S.W.2d 507, 508
(1996), quoting Reese v. Haywood, 235 Ark. 442, 443, 360 S.W.2d 488, 489 (1962); Studdard v. Trucks, 31 Ark. 726, 727 (1877).  The
benefit to a plaintiff in establishing defamation per se is that no
evidence of damages in the form of actual losses is required. 
Waymire v. DeHaven, 313 Ark. 687, 858 S.W.2d 69 (1993); Ransopher
v. Chapman, 302 Ark. 480, 791 S.W.2d 686 (1990).
     Although Minor never points to any specific slanderous
statements made by Failla and Stephens to Sheriff Phillips, it is
apparent that his argument focuses on what the two men asked
Sheriff Phillips to do.  Minor asserts that Failla and Stephens
effectively filed a criminal complaint based on facts known by them
to be false.  Failla and Stephens deny this and maintain that they
just wanted to know whether the insurance claim was legitimate.
     In this case, the words of Failla and Stephens were actionable
if, taken together with the attendant circumstances, they
implicated Minor in the commission of a crime.  This is a question
of fact for the jury.  Bland v. Verser, 299 Ark. 490, 774 S.W.2d 124 (1989); Dean v. Black & White Stores, Inc., 186 Ark. 667, 55 S.W.2d 500 (1932).  Given the attendant circumstances, and viewing
the evidence in the light most favorable to Minor, we conclude that
there was substantial evidence that Failla and Stephens had accused
Minor of committing a crime.  Although they argue that they merely
sought an investigation to determine whether the claim should have
been paid, the critical fact is that they solicited the aid of law
enforcement to determine the claim's legitimacy. 
     Nevertheless, the trial court determined that even if Failla's
and Stephens's statements to Sheriff Phillips were slanderous, they
were protected by a privilege.  We agree.  Determination of the
existence of a privilege is a matter of law.  See, e.g., Pogue v.
Cooper, 284 Ark. 202, 680 S.W.2d 698 (1984).  This court has stated
that a publication may be conditionally privileged if the
circumstances induce a correct or reasonable belief that (1) there
is information that affects a sufficiently important interest of
the recipient or a third person; and (2) the recipient is one to
whom the publisher is under a legal duty to publish the defamatory
matter or is a person to whom its publication is otherwise within
the generally accepted standards of decent conduct.  Dillard Dept.
Stores, Inc. v. Felton, 276 Ark. 304, 307, 634 S.W.2d 135, 136-37
(1982), citing Restatement (Second) of Torts  595 (1981).  This court
has further clarified the conditions under which the qualified
privilege may be invoked:
     A communication is held to be qualifiedly privileged when
     it is made in good faith upon any subject-matter in which
     the person making the communication has an interest or in
     reference to which he has a duty, and to a person having
     a corresponding interest or duty, although it contains
     matters which, without such privilege, would be
     actionable.
Navorro-Monzo v. Hughes, 297 Ark. 444, 451, 763 S.W.2d 635, 638
(1989), quoting Bohlinger v. Germania Life Ins. Co., 100 Ark. 477, 
482-83, 140 S.W. 257, 259 (1911).
     We have further held that the qualified privilege must be
exercised in a reasonable manner and for a proper purpose and that
the immunity does not extend to irrelevant defamatory statements
that have no relation to the interest entitled to protection. 
Navorro-Monzo v. Hughes, supra.  The qualified privilege is also
lost if it is abused by excessive publication; if the statement is
made with malice; and if the statement is made with a lack of
grounds for belief in the truth of the statement.  Navorro-Monzo v.
Hughes, supra; Ikani v. Bennett, 284 Ark. 409, 682 S.W.2d 747
(1985).  The question of whether a particular statement falls
outside the scope of the qualified privilege for one of these
reasons is a question of fact for the jury.  See Braman and the Gus
Blass Co. v. Walthall, supra.
     The case of Baker v. Mann, 276 Ark. 278, 634 S.W.2d 125
(1982), provides guidance on this point.  In Baker, the mayor of
Shannon Hills and five members of the city council signed a letter
issued to the prosecuting attorney which contained allegations of
missing public records, missing weapons that had been confiscated,
lack of records showing the disposition of drugs and drug
paraphernalia, and missing equipment, all of which implicated the
police department.  The former police chief and three former part-
time police officers filed suit and alleged that they had not been
guilty of any wrongdoing but that the letter accused them of
criminal activity.  The trial court directed a verdict on the
ground that the letter was protected by a qualified privilege.
     On appeal, this court agreed with the determination of the
trial court:
          In the present case the mayor and aldermen were
     discharging a public duty in asking the prosecuting
     attorney to initiate an investigation of former public
     employees' possible mishandling of public records, public
     property, and public funds.
Baker v. Mann, 276 Ark. at 281, 634 S.W.2d  at 126.  This court
noted that there was an absence of proof on the issues of whether
the letter was published with malice or with any knowledge that its
contents were untrue.
     In the instant case, Failla and Stephens both occupied
positions on the City's council and sewer committee and spoke to
another public official, Sheriff Phillips, about potential criminal
activity in connection with their positions.  We view this as
nothing more than fulfillment of their official duties.  Thus, we
hold that the qualified privilege attached. 
     There are two additional points.  There was some evidence
presented of a perceived controversy between Failla and Minor with
respect to Minor's decision as president of the Gould School Board
to deny Failla's niece a transfer to another school district.  We
conclude this matter was not sufficiently developed and fails to
rise to the level of substantial evidence of malice on Failla's
part.  Nor do we agree that substantial evidence was presented that
Failla and Stephens falsely accused Minor of a crime.  In sum, the
trial court correctly directed a verdict in favor of the
councilmen.
     Minor in his complaint also complained of Failla's and
Stephens's intentional publication of slander through the Arkansas
Democrat-Gazette newspaper.  In his brief on appeal, however, Minor
makes only passing reference to the fact that Failla and Stephens
made slanderous comments to a news journalist, presumably Joe
Farmer, but he does not develop this point in his argument. 
Rather, the thrust of his brief concerns the referral of the
criminal matter to Sheriff Phillips and Minor's contention that
there was no qualified immunity.  We will not speculate on which
statements made to Farmer and published in the newspaper Minor
claims to be slanderous.  It is incumbent on the appellant to
develop an issue for purposes of appeal.  See, e.g., Morrison v.
Jennings, 328 Ark. 278, 943 S.W.2d 559 (1997); Milam v. Bank of
Cabot, 327 Ark. 256, 937 S.W.2d 653 (1997); Granquist v. Randolph,
326 Ark. 809, 934 S.W.2d 224 (1996).
     Affirmed.