Carolyn Barnes v. University Federal Credit Union and Government Employees Insurance Company/GEICO Insurance

Opinion

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-08-00426-CV

Bertha Means and Harlem Cab Company d/b/a Austin Cab, Appellants

v.

ABCABCO, Inc. d/b/a Lone Star Cab Co., and Solomon Kassa, Appellees

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 200TH JUDICIAL DISTRICT NO. D-1-GN-07-001106, HONORABLE PAUL R. DAVIS JR., JUDGE PRESIDING

OPINION

Bertha Means and Harlem Cab Company d/b/a Austin Cab (collectively, “Austin

Cab”) sued ABCABCO, Inc. d/b/a Lone Star Cab Co. and Solomon Kassa (collectively, “Kassa”)

for slander and several other claims based on allegedly defamatory comments Kassa made regarding

Austin Cab. The trial court granted Kassa’s no-evidence motion for summary judgment on Austin

Cab’s claims on the ground that Kassa’s statements were not defamatory. Austin Cab’s single point

of error on appeal is that the trial court erred in granting summary judgment as to Austin Cab’s claim

for slander. Because we hold that the statements are not defamatory as a matter of law, we affirm

the trial court’s order.

FACTUAL AND PROCEDURAL BACKGROUND

Kassa worked as a taxicab driver for Austin Cab as an independent contractor

between 1998 and 2003. While he was driving for Austin Cab, Kassa formed his own cab company, Lone Star Cab, and began efforts to gain a taxicab franchise from the City of Austin. At the time,

only three cab companies held franchises, but the City was considering granting an additional

franchise. As part of his efforts, Kassa appeared at City of Austin committee and council meetings

to advocate on behalf of his cab company. Meanwhile, Kassa’s relationship with Austin Cab ended

in May 2003 when Austin Cab terminated his contract because of Kassa’s repeated failure to comply

with certain contractual terms. Kassa told others, however, that Austin Cab had terminated his

contract because he had started his own cab company and was trying to gain a franchise to compete

with Austin Cab.1 Specifically, at an April 5, 2007 Austin City Council meeting at which the award

of a new taxicab franchise was under consideration, Doug Young, Kassa’s attorney and agent, made

the following comments:

I do want to point out . . . that you are not going to see a lot of the drivers from Lone Star and here’s why, you will hear from Solomon [Kassa], one of the officers of Lone Star. He has been the public face since 2003. The first time he talked at an Urban Transportation Committee in 2003, his contract with one of the three existing cab companies was summarily terminated within days of his appearance at that meeting. . . . The point was made to the drivers, if you are currently a driver for one of the existing companies and it’s no secret that the existing companies have all been on the record and the Urban Transportation Commission and I think they will be before you today, that they favor Mr. Fodo, their subcontractor for the award of this franchise. It’s not safe for Lone Star’s drivers to come and advocate for Lone Star today.

Six days after these comments, Austin Cab sued Kassa for declaratory judgment,

tortious interference, libel, slander and defamation, and business disparagement. Austin Cab’s

claims were based on the statements made by Kassa or his agent regarding the reasons Austin Cab

1 Austin Cab maintains that Kassa’s efforts to gain a competing taxicab franchise were not a factor in the termination of the contract and that the sole reason for termination was his failure to pay a deposit required by the contract. Kassa does not dispute the basis for his termination.

2 terminated its contract with Kassa, including the agent’s April 5, 2007 statement to the Austin City

Council. After a short time for discovery, Kassa filed a no-evidence motion for summary judgment

as to each of Austin Cab’s claims, arguing that Austin Cab had no evidence that: (1) the statements

were defamatory, (2) the statements were false, (3) the statements were directed at Austin Cab,

(4) Austin Cab suffered actual damages, (5) the statements constitute defamation per se,

(6) the statements constitute slander per se, (7) the statements were published within one year of the

date suit was filed, and (8) the statements were published maliciously. Austin Cab filed a response

to Kassa’s motion, attaching both documentary and testimonial evidence, and amended its pleadings

to add claims for reckless infliction of emotional distress and negligence. After a hearing on Kassa’s

motion, the trial court rendered partial summary judgment as to Austin Cab’s claims for declaratory

judgment, tortious interference, libel, slander and defamation, and business disparagement on the

ground that the April 5, 2007 statement to the Austin City Council was not defamatory.

Austin Cab next filed a motion to modify or vacate the trial court’s partial summary

judgment, and Kassa filed a motion for no-evidence summary judgment as to Austin Cab’s

remaining claims. After examining the pleadings and hearing argument from counsel on Austin

Cab’s motion to modify or vacate and Kassa’s second motion for summary judgment, the trial court

modified the previous partial summary judgment “to reflect that [Kassa’s] Motion for Summary

Judgment is granted solely as to the statements made by [Kassa’s agent] but further finds that said

statements are not defamatory and that the Motion to Vacate Summary Judgment is denied.” The

trial court then addressed Kassa’s second motion for summary judgment and granted it “as to any

and all other allegedly defamatory statements that were made by or attributed to” Kassa and

dismissed all of Austin Cab’s remaining claims without specifying the grounds relied on for its

3 ruling. Austin Cab’s single point of error on appeal is that the district court erred in granting Kassa’s

motion for summary judgment on the slander claim stemming from Kassa’s April 5, 2007 statement

to the Austin City Council. Austin Cab does not appeal the trial court’s dismissal of its other claims.

STANDARD OF REVIEW

We review summary judgments de novo. Joe v. Two Thirty Nine Joint Venture,

145 S.W.3d 150, 156 (Tex. 2004). Under the “no-evidence” rule 166a(i) standard, a defendant may

move for summary judgment on the ground that there is no evidence of one or more essential

elements of a claim on which the plaintiff would have the burden of proof at trial. See Tex. R. Civ.

P. 166a(i). A no-evidence summary judgment is essentially a pre-trial directed verdict and we apply

the same legal-sufficiency standard. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 750

(Tex. 2003). We review the evidence in the light most favorable to the non-movant, disregarding

all contrary evidence and inferences. Id. at 751. We will affirm a no-evidence summary judgment

if the non-movant fails to produce more than a scintilla of probative evidence raising a genuine issue

of fact as to an essential element of a claim on which the non-movant would have the burden of

proof at trial. Holmstrom v. Lee, 26 S.W.3d 526, 530 (Tex. App.—Austin 2000, no pet.). More than

a scintilla of evidence exists when reasonable and fair-minded people could differ in their

conclusions based on that evidence. Forbes, Inc. v. Granada Biosciences, 124 S.W.3d 167, 172

(Tex. 2003).

DISCUSSION

Austin Cab contends that Kassa’s statement to the Austin City Council is slander

because it accuses Austin Cab of firing Kassa for trying to compete with Austin Cab. To prove a

4 cause of action for slander, a plaintiff must prove that the defendant orally communicated a

defamatory statement to a third person without justification or excuse. Randall’s Food Markets,

Inc. v. Johnson, 891 S.W.2d 640, 646 (Tex. 1995). The issue for our determination is whether the

words used by Kassa’s agent are “reasonably capable of a defamatory meaning.” Musser v. Smith

Protective Serv., Inc., 723 S.W.2d 653, 655 (Tex. 1987). Because Kassa’s words are unambiguous,

this determination is a question of law for the court. Id.

Proper Use of No-Evidence Summary Judgment

Before we reach the issue of whether the statement is defamatory, we address

sua sponte whether it was proper for the trial court to grant a no-evidence summary judgment on a

question of law. Questions of law are proper subjects of traditional motions for summary judgment,

see, e.g., Johnson v. City of Fort Worth, 774 S.W.2d 653, 655-56 (Tex. 1989), but Kassa raised the

issue in a no-evidence motion for summary judgment and the trial court granted summary judgment

on that ground. The Dallas Court of Appeals has held that purely legal issues can never be the

subject of a no-evidence motion for summary judgment. Harrill v. A.J.’s Wrecker Serv., Inc.,

27 S.W.3d 191, 194 (Tex. App.—Dallas 2000, pet. dism’d w.o.j.); but see Cone v. Fagadau Energy

Corp., 68 S.W.3d 147, 156 (Tex. App.—Eastland 2001, no pet.) (holding that purely legal issue may

be addressed as part of no-evidence summary judgment). Harrill, however, cites no authority for

its bright-line proposition, nor does the court offer reasoning to support its conclusion. Harrill,

27 S.W.3d at 194. Furthermore, Harrill is distinguishable because the motion for summary

judgment there involved a movant who had the burden of proof on the legal issue. Id.; see also

Tex. R. Civ. P. 166a(i) (movant cannot have burden of proof on subject of no-evidence summary

judgment).

5 The purpose of summary judgment is to permit the trial court to promptly dispose of

cases that involve unmeritorious claims or untenable defenses. City of Houston v. Clear Creek Basin

Auth., 589 S.W.2d 671, 678 n.5 (Tex. 1979); see also Gaines v. Hamman, 358 S.W.2d 557, 563

(Tex. 1962) (summary judgment “provide[s] a method of summarily terminating a case when it

clearly appears that only a question of law is involved and that there is no genuine issue of fact”).

Likewise, the no-evidence summary judgment allows a court to “pierce the pleadings” and evaluate

the evidence to see if there is a genuine need for trial. Benitz v. Gould Group, 27 S.W.3d 109, 112

(Tex. App.—San Antonio 2000, no pet.). In the absence of an articulated reason or further support,

we decline to follow Harrill’s lead and instead review the legal issue on appeal to determine if it was

properly presented to the trial court and is susceptible to review under no-evidence summary-

judgment standards.

Kassa’s no-evidence motion asserted that Austin Cab could not produce any evidence

of a defamatory statement, which is an element of Austin Cab’s slander claim. See Randall’s Food

Markets, Inc., 891 S.W.2d at 646. Kassa’s motion meets the requirements of Rule 166a(i). See Tex.

R. Civ. P. 166a(i). To defeat Kassa’s motion, Austin Cab had to present evidence raising a genuine

issue of material fact regarding the existence of a defamatory statement. Id. Austin Cab produced

a transcript of the statement and witness affidavits regarding the effect of the statement on those who

heard it. After reviewing the evidence, the trial court found that the statement was not defamatory.

If the statement produced by Austin Cab as evidence of a defamatory statement is not capable of

defamatory meaning as a matter of law, then, logically, Austin Cab failed to produce evidence of a

defamatory statement. Thus, summary judgment was proper. See King Ranch, 118 S.W.3d at 751

(no-evidence summary judgment should be sustained when there is complete absence of evidence

6 of vital fact). Because the question of defamatory meaning was presented to the trial court within

the framework of rule 166a(i) and because it is subject to a proper analysis under the no-evidence

summary-judgment standards, we hold that it was not improper for the trial court to consider this

legal issue under a no-evidence motion for summary judgment.

Analysis of Statement

Next we address de novo whether the words used by Kassa’s agent were reasonably

capable of a defamatory meaning. See Musser, 723 S.W.2d at 654. We construe as a matter of

law language that is unambiguous on its face and find it not actionable if it lacks

defamatory meaning. See Carr v. Brasher, 776 S.W.2d 567, 570 (Tex. 1989); Musser, 723 S.W.2d

at 655 (if ambiguous, trier-of-fact must determine statement’s meaning and effect on listener). When

considering whether a statement is defamatory, we construe the statement as a whole, in light of the

surrounding circumstances, based on how a person of ordinary intelligence would perceive the entire

statement. Id.

A statement is defamatory if it tends to injure the person’s reputation, exposing the

person to public hatred, contempt, ridicule, or financial injury, or if it tends to impeach that person’s

honesty, integrity, or virtue. See Tex. Civ. Prac. & Rem. Code Ann. § 73.001 (West 2005) (libel);

Restatement (Second) of Torts § 559 (1977) (defamation). A communication that is merely

unflattering, abusive, annoying, irksome, or embarrassing, or that hurts only the plaintiff’s feelings,

however, is not actionable. H.O. Merren & Co., Ltd. v. A. H. Belo Corp., 228 F. Supp. 515, 517

(N.D. Tex. 1964), aff’d, 346 F.2d 568 (5th Cir. 1965); Rawlins v. McKee, 327 S.W.2d 633, 635

(Tex. Civ. App.—Texarkana 1959, writ ref’d n.r.e.); see also 1 Robert D. Sack, Sack on

Defamation 2-12 (3d ed. 2009). To be defamatory, a statement should be derogatory, degrading, and

7 somewhat shocking, and contain “element[s] of personal disgrace.” Sack, supra at 2-17 (quoting

W. Page Keeton, et al., Prosser & Keeton on the Law of Torts § 111 (5th ed. 1984)). Thus, it is not

defamatory to accuse a person of doing that which he has a legal right to do. Associated Press

v. Cook, 17 S.W.3d 447, 456 n.8 (Tex. App.—Houston [1st Dist.] 2000, no pet.) (“[E]xercising a

legal right is not defamatory as a matter of law.”); see also Musser, 723 S.W.2d at 655 (accusing

someone of doing that which they had right to do is not defamatory).

The statement in this case was made at an Austin City Council meeting during public

comments regarding the award of a new taxicab franchise by the City. The speaker was advocating

on behalf of Kassa to encourage the Austin City Council to award the franchise to Kassa’s cab

company. The unambiguous meaning of Kassa’s statement and, in fact, the meaning ascribed to it

by Austin Cab, is that Austin Cab terminated Kassa’s contract as soon as it found out that Kassa was

seeking the award of a taxicab franchise that would compete with Austin Cab.2 The statement does

not suggest some wrongful or unethical conduct by Austin Cab. It does not suggest that Austin Cab

violated a law or the term of a contract or that Austin Cab breached its contractual obligations.

What it does state is that Austin Cab terminated its contract with Kassa because he was

supporting a competitor.

The ability to terminate a contract is a legal and ethical option often available to

parties to a contract. See, e.g., Tex. Bus. & Com. Code Ann. § 2.10(c) (West 2009) (“‘Termination’

occurs when either party pursuant to a power created by agreement or law puts an end to the contract

otherwise than for its breach.”). It is similar to the right of an employer or an employee to terminate

2 Although we do not necessarily agree that “one of the existing companies” refers to either appellant as Austin Cab asserts, we assume it does for purposes of review because our finding that the statement is not defamatory is dispositive of the appeal.

8 the employment relationship at any time, with or without cause, absent agreement to the contrary.

See County of Dallas v. Wiland, 216 S.W.3d 344, 347 (Tex. 2007). For the same reasons, the

suggestion that the action was retaliation for Kassa’s support of a competitor does not make the

statement defamatory. The decision to terminate a contract or to fire an employee because the

contractor or employee actively supports a competitor is an option available to a business absent

agreement to the contrary. Businesses in a free-enterprise system are expected to protect and

promote their best interests. See Wilkow v. Forbes, Inc., 241 F.3d 552, 557 (7th Cir. 2001)

(“[S]edulous pursuit of self-interest is the engine that propels a market economy.”). These are

business decisions, and, like other business decisions, they are made in the context of the free

enterprise system where competition is expected. Musser, 723 S.W.2d at 655.

Although Austin Cab finds Kassa’s statement insulting and offensive, the statement

lacks the element of disgrace or wrongdoing necessary for slander. Kassa’s agent did nothing more

than accuse Austin Cab of doing that which it had a legal right to do; thus, Kassa’s statement is not

defamatory. Cf. Musser, 723 S.W.2d at 655 (statement that former employee “relieved” his former

employer of some of its accounts is not defamatory because it does not accuse employee of anything

other than competitiveness); Cook, 17 S.W.3d at 456 n.8 (statement that person invoked Fifth

Amendment right is not defamatory as matter of law); San Antonio Express News v. Dracos,

922 S.W.2d 242, 248 (Tex. App.—San Antonio 1996, no writ) (statement that employee “walked

off the job . . . without any excuse” is not defamatory because it does not suggest he did anything

illegal or unethical); Einhorn v. LaChance, 823 S.W.2d 405, 411 (Tex. App.—Houston [1st Dist.]

1992, writ dism’d w.o.j.) (statement that someone was “attempting to form a union” is not

defamatory despite prejudice against unions); Taylor v. Houston Chronicle Publ’g Co., 473 S.W.2d

9 550, 554 (Tex. Civ. App.—Houston [1st Dist.] 1971, writ ref’d n.r.e.) (statement that coach refused

to do his job unless player was traded is not defamatory because he had right to do so); Herald-Post

Publ’g Co. v. Hervey, 282 S.W.2d 410, 415 (Tex. Civ. App.—El Paso 1955, writ ref’d n.r.e.)

(statement that mayor changed city’s retirement plan to get rid of one employee is not defamatory

because mayor and council had right to formulate retirement plan as they saw fit).

Based on our review of the statement in light of the circumstances in which it was

made, we hold that it is not defamatory as a matter of law. Because the statement is not defamatory

as a matter of law, Austin Cab produced no evidence of a defamatory statement and the trial court

properly granted Kassa’s no-evidence motion for summary judgment as to Austin Cab’s claim for

slander. We therefore overrule Austin Cab’s sole issue on appeal.

CONCLUSION

Having overruled Austin Cab’s sole issue, we affirm the trial court’s order.

__________________________________________

David Puryear, Justice

Before Chief Justice Jones, Justices Puryear and Henson

Affirmed

Filed: June 3, 2010