Andrew T. McGregor and Yellow Rose Communications, Inc. v. Oscar Vela

• Court: Court of Appeals of Texas
• Decided: February 14, 2002
• Docket: 03-01-00299-CV
• Status: Published

Opinion

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-01-00299-CV

Andrew T. McGregor and Yellow Rose Communications, Inc., Appellants

v.

Oscar Vela, Appellee

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 200TH JUDICIAL DISTRICT NO. 99-12077 HONORABLE PAUL DAVIS, JUDGE PRESIDING

A jury found that Andrew T. McGregor, president and part owner of Yellow Rose

Communications, Inc., defamed Oscar Vela. The jury found that McGregor made false, defamatory

statements with actual malice in his official capacity with Yellow Rose. The jury found actual

damages of $125,000 and punitive damages of $5,000. The district court awarded judgment

accordingly, assessing damages against both McGregor and Yellow Rose. Appellants McGregor and

Yellow Rose jointly contend that they were wrongly denied a jury instruction and charge on qualified

privilege. They also contend that there was no evidence to support the findings of defamation per

se, actual malice, and damages. McGregor argues that the finding that he made the statements in his

official capacity should absolve him of individual liability. We will affirm the judgment. BACKGROUND

Yellow Rose is a Texas corporation owned by McGregor, his wife, and son.

McGregor is the president. Yellow Rose owns two Central Texas radio stations that play Spanish-

language music. Oscar Vela is well-known as the dominant promoter of Spanish-language dances

and concerts in Austin—particularly those involving bands from Monterrey, Mexico. However, in

1999, McGregor was attempting to challenge Vela’s dominance in the promotion of such dances and

concerts. Pati Urdiales was a Yellow Rose employee who worked as a salesperson, a disc jockey,

and a booking agent, who also wanted to become a promoter in her own right; two months after

McGregor fired her in September 1999, she went to work for a rival radio station owned by Jose

Garcia. Vela advertises his events on Garcia’s radio stations.

McGregor signed a letter dated August 6, 1999 on radio-station letterhead1 discussing

the state of Spanish-language music promotion in Austin. He noted that before his stations arrived,

Austin was monopolized by one radio station operator and one booking agent. The monopoly seemed to be disliked by the community. Clubs were and are still selling alcohol to underage teens....narcotics still flow freely through the Clubs and Concerts.

The business of providing Hispanic entertainment to this Central Texas area is under a cloud that is not wholesome and motivated by monopolistic greed.

Now there is another radio voice playing artists[’] records, NOT accepting Payola and helping out of town booking companies have the advertising needed to establish new CLUBS and SHOWS.

Word is spreading that the ‘Mafia-Like’ dividing of the Texas cities may be coming to an end. However it still persists.

1 McGregor testified that this was not embossed letterhead paper, but merely paper with the logos on it. We will call it letterhead for simplicity.

2 Mexico’s reputation, true or not, is one of sending Bands here with narcotics on board the buses and into the Clubs. One booking agent still brags that he ‘controls’ Austin Mexican bookings and no one else can come into this city.

He threatens to pit one band and one venue against another to dilute profits. He has threatened that ‘people will get hurt’ if they interfere with his monopoly.

The letter goes on to reiterate some of these allegations and then position McGregor’s nascent

Superior Booking Agency and radio stations as an alternative to the status quo. McGregor testified

that, despite his statement that one booking agent had a monopoly on Austin, he did not have a

particular booking agent in mind but an amalgam of several agents. Urdiales said she heard

McGregor confirm with his lawyer, “So if I say all what he does but don’t mention his name, I won’t

get in trouble?” Urdiales did not specify in her testimony what the subject of McGregor’s

confirmation was. Garcia, Urdiales’s current employer and owner of rival radio stations on which

Vela advertises, testified that the letter could only refer to Vela.

McGregor gave the letter to Urdiales to give to her cousin, a music journalist in

Monterrey. She testified that she was directed to deliver it to the United States embassy, which she

did, and to other people in the music business, which she did not do after her cousin told her about

the letter’s contents. McGregor testified that he prepared the letter at Urdiales’s request that he

provide her cousin an overview of the Austin music scene; Urdiales denied McGregor’s assertion that

she or her cousin requested it.

In other notes McGregor sent following up on successful promotions, he used less

inflammatory language but expressly called Vela a monopolistic booking agent. In an undated memo

sent to three men (without their last names) in the late spring of 1999, McGregor stated, “We are also

3 working to break the ‘stranglehold’ Oscar Vela has placed on bringing Mexican acts to Austin. His

monopoly will soon be over.” In a note dated August 31, 1999, also on letterhead, McGregor wrote

to Esteban de Paz stating, “We especially are dissappointed [sic] that a person like Oscar Vela is able

to ‘control’ the entertainment in this huge growing marketplace.”

Witnesses testified that McGregor made similar oral statements. Freddie Quinonez,

owner of a ballroom in Florence, said McGregor told him that he had sent a letter to a newspaper in

Monterrey stating that Vela sold drugs; Quinonez denied that Vela had ever threatened him or told

him not to advertise with McGregor’s station. Though Vela did request that Quinonez not advertise

his Florence shows in Austin in order to avoid diluting business for both of them, Quinonez said that

when economic necessity required him to advertise in Austin, Vela said to him, “[D]o whatever you

have to do.” Quinonez said he chose to advertise with McGregor’s more powerful station in order

to reach his Florence audience and avoid direct conflict with Vela’s advertisements on Garcia’s

station. Anthony Villanueva, a former employee of Vela and of McGregor who now works for

Garcia’s radio station, said McGregor told friends and employees that Vela was a drug dealer and that

he was in the Mafia. Villanueva said that everybody at the Yellow Rose office knew about the

August 6 letter. He denied saying that Vela told him not to advertise his shows on McGregor’s

stations; though he denied saying that Vela was in the actual Mafia, he did admit saying that Vela was

“into sort of a music Mafia” based on his control of the booking of Monterrey-based bands in Austin.

Urdiales said McGregor told Oscar Flores, a Monterrey entertainment empresario, that he should not

work with Vela because Vela was a drug dealer and that Flores’s bands would be at risk at Vela’s

events because of the drug deals, the prostitution, and the alcohol sold to minors. Urdiales said that

4 she heard McGregor confirm with his lawyer before sending the August 6 letter that he would not

get in trouble if he did not mention Vela’s name. She said that she heard McGregor tell his

employees and clients much the same information that he wrote in the letter. She heard him tell the

Drug Enforcement Agency (“DEA”) that Vela was selling drugs and alcohol to minors at his dances.

All three witnesses said they warned McGregor about the inaccuracy of his statements

maligning Vela. Urdiales said she told McGregor directly that she had not seen any of the illegal

activities mentioned in the August 6 letter at Vela’s events. She said that when his vice president,

Elena Quezada, warned him to ensure that they had seen such activities before making the assertions,

McGregor told her to follow his instructions. Quinones testified that he told McGregor he had never

seen Vela do anything illegal. Villanueva also testified, “I told him that the fact that they were

charging Oscar Vela was incorrect.”

Vela sued for defamation, and the jury found in his favor. Considering the three

written communications and various conversations detailed above, the jury found that McGregor’s

statements were both defamation and defamation per se, were not true, were made in his capacity as

an officer, employee or agent of Yellow Rose, and caused Vela $125,000 in damages based on loss

of reputation, mental suffering, shame, embarrassment, humiliation, and loss of business income. The

jury also found by clear and convincing evidence that McGregor made the statements knowing they

were false or with reckless disregard for the truth; the jury awarded $5,000 in exemplary damages.

ANALYSIS

Appellants present five issues on appeal. They contend that there was no evidence

of defamation per se, damages, or actual malice. They also contend that the court improperly rejected

5 a jury charge and instruction on qualified privilege. McGregor contends that we should reverse the

judgment against him individually because he made the statements as a corporate officer.

When reviewing appellants’ no-evidence challenges, we will consider all the evidence

in the light most favorable to Vela, making every reasonable inference in his favor. See Associated

Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 285-86 (Tex. 1998); Transportation Ins.

Co. v. Moriel, 879 S.W.2d 10, 25 (Tex. 1994); Best v. Ryan Auto Group, Inc., 786 S.W.2d 670, 671

(Tex. 1990). We will uphold the jury’s finding if more than a scintilla of evidence supports it.

Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499 (Tex. 1995); Seideneck v. Cal Bayreuther

Assocs., 451 S.W.2d 752, 755 (Tex. 1970); In re King’s Estate, 244 S.W.2d 660, 661 (Tex. 1951).

The evidence supporting a finding is more than a scintilla if reasonable minds could arrive at the

finding given the facts proved in the particular case. See Crye, 907 S.W.2d at 499; Moriel, 879

S.W.2d at 25.

Though appellants’ issues are stated as no-evidence challenges, in their argument they

quote the factual sufficiency standard, indicating that they want such review. We consider all the

evidence and uphold the jury’s verdict unless we find that (1) the evidence is too weak to support the

finding, or (2) the finding is so against the overwhelming weight of the evidence as to be manifestly

unjust. Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex. 1996); Cain v. Bain, 709 S.W.2d 175, 176 (Tex.

1986). In reviewing the evidence, we bear in mind that the jury is the sole judge of the credibility of

witnesses and is entitled to accept or reject testimony and to decide what weight to give it. Simons

v. City of Austin, 921 S.W.2d 524, 531 (Tex. App.—Austin 1996, writ denied).

6 Appellants’ complaint that there was no evidence of defamation per se does not

require reversal of the judgment. The jury’s finding of defamation stands unchallenged and provides

a basis for a damage award. Texas Dep’t of Human Res. v. Orr, 730 S.W.2d 435, 436 (Tex.

App.—Austin 1987, no writ); see also Ponton v. Munro, 818 S.W.2d 865, 867-68 (Tex.

App.—Corpus Christi 1991, no writ). Further, legally and factually sufficient evidence supports the

finding of defamation per se. The district court instructed the jury that “[d]efamation per se means

a statement that tends to affect a person injuriously in his business, occupation, or office; or charges

the person with illegal or immoral conduct.” See Bradbury v. Scott, 788 S.W.2d 31, 38 (Tex.

App.—Houston [1st Dist.] 1989, writ denied) (affecting business); Diaz v. Rankin, 777 S.W.2d 496,

499 (Tex. App.—Corpus Christi 1989, no writ) (alleging illegality). The finding is supported by

several communications.

The oral statements McGregor made to or in the presence of Quinonez, Villanueva,

and Urdiales support the finding of defamation per se. All three testified that McGregor told them

that Vela sold illegal drugs. Though all three witnesses have ties to Vela, and three other witnesses

testified that Urdiales is known to lie, the jury was not required to discount their testimony.

Evidence supports a finding that McGregor’s August 6 letter defames Vela per se.

In one passage of the letter, McGregor juxtaposes Mexico’s reputation for smuggling drugs through

bands on buses with the statement that one booking agent controls which bands come into Austin;

in another, McGregor states that this booking agent has threatened that people who interfere with

his monopoly will suffer economic and physical harm. The fact that McGregor did not name Vela

does not prevent the letter from defaming him. “[P]ublication does not require that the plaintiff be

7 named, if those who know the plaintiff and are acquainted with him understand that the defamatory

publication referred to him.” Newspapers, Inc. v. Matthews, 339 S.W.2d 890, 894 (Tex. 1960); see

also Galveston County Fair & Rodeo, Inc. v. Glover, 880 S.W.2d 112, 119 (Tex. App.—Texarkana

1994, writ denied). McGregor protests that he had an amalgam of several booking agents in mind,

but his undated memo speaks of Vela’s monopoly and stranglehold on the Austin market, and his

August 31 note states that Vela controls the marketplace. Further, Vela and others testified that Vela

was the preeminent booking agent for Monterrey bands; Garcia testified that the letter could have

referred only to Vela. The evidence supports a finding that Vela was the unnamed agent.

McGregor’s failure to say “the booking agent is selling drugs” does not prevent the letter from being

defamatory. “[A]n allegedly defamatory publication should be construed as a whole in light of the

surrounding circumstances based upon how a person of ordinary intelligence would perceive it.”

Turner v. KTRK Television, Inc., 38 S.W.3d 103, 114 (Tex. 2000). By asserting that Vela threatens

violence to maintain his monopoly and implying that he uses bookings to smuggle and sell drugs,

McGregor both charged Vela with illegality and attacked his business reputation. Vela testified that

these statements impaired his business relationship with Flores and reduced his bookings, although

he conceded that some of the slowdown in his bookings might be due to market conditions and

increased competition. The evidence is legally and factually sufficient to support a finding of

defamation per se.

McGregor next challenges the actual damages award. He contends that Vela failed

to prove injury to reputation and loss of income. Because sufficient evidence supports the jury’s

finding of defamation per se through injury to Vela’s reputation in business and his reputation as law-

8 abiding, Vela can recover general damages without proof of other injury. See Leyendecker &

Assocs., Inc. v. Wechter, 683 S.W.2d 369, 374 (Tex.1984); Knox v. Taylor, 992 S.W.2d 40, 60 (Tex.

App.—Houston [14th Dist.] 1999, no pet.). We also note that Vela testified about a reduction in

business, impairment of business relationships, and the stress and anxiety produced by McGregor’s

affronts to his business reputation and allegations to law enforcement agencies of illegal activities.

Though some evidence supports the view that Vela’s business losses were due to market conditions

and not to damage to his reputation, we conclude that the record contains legally and factually

sufficient evidence to support the jury’s award of $125,000 in actual damages.

McGregor does not contest the jury’s finding that the defamatory statements were

false, but challenges the finding that he made the statements knowing that they were false or with

reckless disregard for the truth. See Huckabee v. Time Warner Entm’t Co., 19 S.W.3d 413, 420

(Tex. 2000). McGregor said he learned of drug and alcohol problems in local clubs from the DEA

and the Texas Alcoholic Beverage Commission, and that he also learned of problems through the

media. Urdiales, however, testified that she heard McGregor report to the DEA that Vela was

dealing drugs. Several people testified that they had neither seen nor smelled drugs being used at

Vela’s dances or concerts. Quinonez, Villanueva, and Urdiales all testified that they warned

McGregor at various times that his assertions about Vela’s drug dealing and strong-arm tactics were

not true. Urdiales testified that when Quezada asked McGregor if he was sure that they had seen the

activities alleged because false allegations could be troublesome, McGregor responded, “You just do

it. I tell you to do it, and you just do it.” McGregor continued to make the assertions about Vela

despite these warnings. Though McGregor attacked these witnesses’ credibility, the jury was free

9 to believe them. The evidence is legally and factually sufficient to support the jury’s finding that he

made these allegations about Vela with at least reckless disregard for their truth.

The evidentiary support for the finding of actual malice renders harmless any error in

the court’s refusal to submit an instruction and charge on qualified privilege. McGregor contends

that he was entitled to the instruction and charge because there was evidence that his letters and

statements regarding Vela were made in good faith on a subject matter in which he had a common

interest with the recipient or with reference to which he had a duty to communicate to the recipient.

See Grant v. Stop-n-Go Mkt. of Texas, Inc., 994 S.W.2d 867, 874 (Tex. App.—Houston [1st Dist.]

1999, no pet.). The qualified privilege “justifies the communication when it is made without actual

malice.” Id. (emphasis added). Because the jury found that the communication was made with actual

malice, McGregor’s claim of qualified privilege would have failed even if the jury had found that the

privilege applied. Error in the submission of an issue is harmless when the findings of the jury in

answer to other issues are sufficient to support the judgment. See Boatland of Houston, Inc. v.

Bailey, 609 S.W.2d 743, 750 (Tex.1980).

Finally, McGregor contends that he is insulated from personal liability for statements

made in the scope of performing his duties for the corporation. The corporate structure does not

shield McGregor from all tort liability, however. Corporate agents who knowingly direct or

participate in a tortious act may be held individually liable without piercing the corporate veil.

Barclay v. Johnson, 686 S.W.2d 334, 336 (Tex. App.—Houston [1st Dist.] 1985, no writ); see also

Leyendecker, 683 S.W.2d at 375. There is ample evidence that McGregor, acting as Yellow Rose’s

10 president, personally directed and committed the defamation of Vela. The district court did not err

by assessing the damage award against McGregor individually.

CONCLUSION

Having resolved all issues in favor of the judgment, we affirm the district court’s

judgment based on the jury’s verdict.

Bea Ann Smith, Justice

Before Chief Justice Aboussie, Justices B. A. Smith and Puryear

Affirmed

Filed: February 14, 2002

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