Kenneth L. Berry v. Bay, Ltd.

• Court: Court of Appeals of Texas
• Decided: January 30, 2020
• Docket: 13-18-00438-CV
• Status: Published

Opinion

NUMBER 13-18-00438-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI - EDINBURG

KENNETH L. BERRY, Appellant,

v.

BAY, LTD., Appellee.

On appeal from the 343rd District Court of San Patricio County, Texas.

MEMORANDUM OPINION

Before Justices Benavides, Hinojosa, and Tijerina Memorandum Opinion by Justice Hinojosa

Appellee Bay, Ltd. sued appellant Kenneth L. Berry for defamation. Berry filed a

motion to dismiss under the Texas Citizens Participation Act (TCPA), 1 which the trial

1 The Texas Citizens Participation Act is commonly referred to as an “anti-SLAPP” law—“SLAPP”

is an acronym for “Strategic Lawsuits Against Public Participation.” Entravision Commc’ns Corp. v. Salinas, 487 S.W.3d 276, 278 n.2 (Tex. App.—Corpus Christi–Edinburg 2016, pet. denied). We note that the Texas Legislature recently amended the TCPA. The amendments became effective September 1, court denied by operation of law. See TEX. CIV. PRAC. & REM. CODE ANN. §§ 27.001–

.011. In two issues, Berry argues: (1) the trial court erred in denying his TCPA motion

to dismiss; and (2) the trial court abused its discretion in failing to rule on his objections

to evidence and motion to strike. We reverse and remand.

I. BACKGROUND A. Pleadings

In its live pleading, Bay alleges the following facts. Bay is a general contractor

that owns a barge fleeting service at its Redfish Bay facility in San Patricio, Texas. In

2009, Bay decided to “cut up and sell” a barge located at the facility. In July 2015, the

Texas Commission on Environmental Quality (TCEQ) notified Bay that an anonymous

source reported that Bay impermissibly buried the barge in question at the location. The

TCEQ investigated the allegation in order to determine whether Bay had improperly

discharged pollutants. The TCEQ ultimately concluded that the allegation was untrue.

On May 30, 2017, Bay learned through Berry’s deposition testimony in an

unrelated lawsuit between the parties that Berry made the anonymous report to TCEQ

that triggered its investigation. Bay contended that Berry’s report was motivated by a

personal vendetta against his brothers, who are owners of Bay. Bay maintained that

Berry has “a demonstrated history of making continuing false allegations against Bay.”

Bay alleged that it suffered damages from Berry’s defamatory statements because it

expended funds to defend itself against the claim that it had improperly buried a barge at

2019. Because this suit was filed before September 1, 2019, it is governed by the statute as it existed before the amendments, and all of our citations and analysis are to that version of the statute. See Act of May 24, 2013, 83d Leg., R.S., ch. 1042, §§ 1–3, 5, 2013 Tex. Gen. Laws 2499, 2499–500 (amended 2019) (current version at TEX. CIV. PRAC. & REM. CODE ANN. §§ 27.001–.011).

2 its facility. Bay contended that it did not discover the nature of the defamatory comments

until Berry’s 2017 deposition. It filed suit on March 5, 2018.

Berry filed an answer2 asserting the affirmative defenses of limitations, substantial

truth, absolute privilege, and qualified privilege. 3

B. TCPA Motion to Dismiss

Berry later filed a motion to dismiss pursuant to the TCPA, which was supported

by evidence. Berry contended that his statements to the TCEQ were based upon his

exercise of free speech and his right to petition. Berry further contended that Bay could

not meet its burden to establish by clear and specific evidence a prima facie case for each

essential element of its defamation claim. See id. § 27.005(c). Berry further argued that

Bay’s claim is barred by the applicable one-year limitations period. See id. § 16.002.

Bay filed a response with supporting evidence. 4 Bay argued that Berry’s

statements to the TCEQ were defamatory per se and were verifiably false. Bay further

contended that Berry made the statements with actual malice or, alternatively, that he did

so negligently. Bay also claimed that its evidence established that it suffered general

and special damages as a result of Berry’s comments. Finally, Bay maintained that it

did not discover that Berry made the defamatory statements at issue until May 30, 2017,

and, therefore, its suit was timely filed.

2 Berry’s answer was filed subject to his motion to transfer venue, which is not at issue in this appeal.

3 Berry asserted other affirmative defenses that are not relevant to this appeal.

4 Bay later filed an amended response supported by additional evidence.

3 In their respective motion and response, both parties rely on Berry’s

aforementioned deposition testimony in a separate lawsuit filed by Berry and others

against Bay, which concerned property rights in certain ranch property. Berry and Bay

were represented by the same trial counsel in both proceedings. In Berry’s deposition,

Bay’s counsel asked Berry whether he “ever talk[ed] to anyone at TCEQ with regard to

the Redfish Bay Terminal Diamondhead Barge?” Berry acknowledged that he made a

report to TCEQ after reviewing satellite images, which he believed indicated that a barge

was buried at the location.

C. Trial Court’s Ruling

Following a hearing, Berry’s motion to dismiss was overruled by operation of law.

This interlocutory appeal followed. See id. § 51.014(a)(12).

II. TEXAS CITIZENS PARTICIPATION ACT

The TCPA protects citizens from retaliatory lawsuits that seek to intimidate or

silence them on matters of public concern. In re Lipsky, 460 S.W.3d 579, 586 (Tex.

2015) (orig. proceeding). The legislature enacted the TCPA “to encourage and

safeguard the constitutional rights of persons to petition, speak freely, associate freely,

and otherwise participate in government to the maximum extent permitted by law and, at

the same time, protect the rights of [persons] to file meritorious lawsuits for demonstrable

injury.” TEX. CIV. PRAC. & REM. CODE ANN. § 27.002. “The TCPA’s purpose is to identify

and summarily dispose of lawsuits designed only to chill First Amendment rights, not to

dismiss meritorious lawsuits.” Lipsky, 460 S.W.3d at 589 (citing TEX. CIV. PRAC. & REM.

CODE ANN. § 27.002). When a plaintiff’s claim implicates a defendant’s exercise of First

4 Amendment rights, chapter 27 allows the defendant to move for dismissal. See TEX. CIV.

PRAC. & REM. CODE ANN. § 27.003(a); Andrews County v. Sierra Club, 463 S.W.3d 867,

867 (Tex. 2015).

Reviewing a TCPA motion to dismiss requires a three-step analysis. Youngkin v.

Hines, 546 S.W.3d 675, 679 (Tex. 2018). As a threshold matter, the moving party must

show by a preponderance of the evidence that the TCPA properly applies to the legal

action against it. TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(b). If the moving party

meets its burden, the nonmoving party must then establish by clear and specific evidence

a prima facie case for each essential element of its claim. Id. § 27.005(c). If the

nonmoving party satisfies that requirement, the burden finally shifts back to the moving

party to prove each essential element of any valid defenses by a preponderance of the

evidence. Id. § 27.005(d).

The clear and specific standard “neither imposes a heightened evidentiary burden

or categorically rejects the use of circumstantial evidence when determining the plaintiff’s

prima-facie-case burden under the Act.” Andrews County, 463 S.W.3d at 867; see

Lipsky, 460 S.W.3d at 591 (“In a defamation case that implicates [chapter 27], pleadings

and evidence that establish[] the facts of when, where, and what was said, the defamatory

nature of the statements, and how they damaged the plaintiff should be sufficient to resist

a TCPA motion to dismiss.”). The phrase “clear and specific evidence” has been defined

as more than mere notice pleading, but not more than the burden of proof required for the

plaintiff to prove at trial. See Lipsky, 460 S.W.3d at 590–91.

5 We review de novo the trial court’s determinations that the parties met or failed to

meet their § 27.005 burdens. Tex. Campaign for the Env’t v. Partners Dewatering Int’l,

LLC, 485 S.W.3d 184, 192 (Tex. App.—Corpus Christi–Edinburg 2016, no pet.); Tervita,

LLC v. Sutterfield, 482 S.W.3d 280, 282 (Tex. App.—Dallas 2015, pet. denied).

III. LIMITATIONS

In his first issue, Berry argues that the trial court erred in denying its TCPA motion

to dismiss. The parties do not dispute, and we agree, that Berry’s alleged defamatory

remarks were made pursuant to his exercise of First Amendment rights. Given the

applicability of the TCPA, Berry argues he is entitled to dismissal on two distinct grounds:

(1) Bay failed to establish by clear and specific evidence a prima facie case for each

essential element of its defamation claim, and (2) even if Bay met its evidentiary burden,

Berry has established the essential elements of its affirmative defenses by a

preponderance of the evidence. Because we find it to be dispositive, we first address

Berry’s contention that he established his limitations defense by a preponderance of the

evidence.

A. Applicable Law

The statute of limitations is an affirmative defense which must be proven by the

defendant. See TEX. R. CIV. P. 94. As noted above, when the TCPA applies, the trial

court must dismiss a plaintiff’s suit if the movant establishes by a preponderance of the

evidence each essential element of a valid defense to the nonmovant’s claim. TEX. CIV.

PRAC. & REM. CODE ANN. § 27.005(d). The limitations period for a defamation claim is

one year. Id. § 16.002. Defamation claims “generally accrue when the allegedly

6 defamatory matter is published or circulated.” Glassdoor, Inc. v. Andra Group, LP, 575

S.W.3d 523, 528 (Tex. 2019). However, the discovery rule applies to an action for

defamation if the defamatory statement is inherently undiscoverable or not a matter of

public knowledge. Velocity Databank, Inc. v. Shell Offshore, Inc., 456 S.W.3d 605, 609

(Tex. App.—Houston [1st Dist.] 2014, pet. denied). When the discovery rule applies, it

tolls accrual of a cause of action until a claimant discovers or in the exercise of reasonable

diligence should have discovered the injury and that it was likely caused by the wrongful

acts of another. Glassdoor, 575 S.W.3d. at 530. The determination of when a cause of

action accrues is a question of law subject to de novo review. Schneider Nat’l Carriers,

Inc. v. Bates, 147 S.W.3d 264, 274–75 (Tex. 2004); Cortina v. P.I. Corp., 385 S.W.3d

613, 618 (Tex. App.—Corpus Christi–Edinburg 2012, no pet.).

B. Analysis

Berry argues that Bay learned in July 2015 that TCEQ received an anonymous

report that Bay buried a barge at its facility It cites the affidavit testimony of Bay’s general

counsel, in which he testified that Bay received a call from TCEQ in July 2015 regarding

the disposal of its barge at the Redfish Bay facility. Therefore, Berry contends that Bay’s

suit, which was filed on March 5, 2018, is barred by limitations. Bay does not dispute the

timeline urged by Berry. Nevertheless, Bay maintains that “until May 2017, Bay did not

discover the wrongful nature of the claims being made to the TCEQ, only that someone

had accused Bay of burying a barge at the Redfish Bay Terminal.” As noted above,

Berry’s deposition disclosure was made in response to Bay’s counsel directly asking

Berry whether he was the source of the TCEQ report. The deposition testimony

7 pertained to a separate lawsuit entirely unrelated to the burying of a barge but involving

the same parties. It is evident from this line of questioning that Bay had reason to believe

Berry was the individual who made the TCEQ report at some point prior to the deposition.

We agree with Bay that the discovery rule applies to its defamation claim, insofar

as Berry’s statements to TCEQ were inherently undiscoverable at the time they were

published to the TCEQ. However, we disagree that its claim was tolled until the date it

learned that Berry was the source of the allegations. Application of the discovery rule

does not turn on whether the injured person knows the exact identity of the tortfeasor or

all of the ways in which the tortfeasor was at fault in causing the injury. Schlumberger

Tech. Corp. v. Pasko, 544 S.W.3d 830, 834 (Tex. 2018). Rather, its application concerns

whether the injured person is aware that she has an injury and that it was likely caused

by the wrongful acts of another. Id.

In Glassdoor, the Texas Supreme Court reviewed this principle in relation to a

defamation cause of action. 575 S.W.3d 523. The plaintiff in that case filed a petition

under Texas Rule of Civil Procedure 202 to conduct a pre-suit deposition of a website

operator. Id. at 525; see TEX. R. CIV. P. 202 (“Depositions Before Suit or to Investigate

Claims”). The petitioner sought to investigate potential defamation 5 claims against

several anonymous individuals who posted negative statements about the petitioner on

the site. Glassdoor, 573 S.W.3d at 525. The Court concluded that the TCPA applied

to a Rule 202 petition and that the proceeding was rendered moot by the fact that the

petitioner’s potential claims against the anonymous speakers were time-barred. Id.

5 The petitioner was also investigating potential business disparagement claims.

8 In its analysis, the Court assumed that the petitioner would have the benefit of the

discovery rule for its potential defamation claims, but it noted that the petitioner

necessarily learned of the negative posts before filing its Rule 202 petition. Id. at 528.

With that framework in mind, the Court noted that more than two years had elapsed since

the accrual of the potential claims. Id. The Court rejected the petitioner’s argument that

the anonymous nature of the posts presented discovery rule issues. Id. at 530. Rather,

the Court reemphasized that the limitations period commences when a claimant discovers

the injury, even if the claimant does not know the exact identity of the wrongdoer. Id.

The Court explained that the petitioner could have filed suit against “Doe defendants” and

conducted discovery about their identities, but it chose instead to proceed under Rule

202, “thereby risking the timeliness of its potential claims.” Id. The Court ultimately held

that “the statute of limitations barred [the petitioner’s] potential claims against each of the

ten anonymous reviewers,” thereby rendering the Rule 202 petition moot. Id.

Here, Bay discovered its injury and that it was caused by the wrongful acts of

another when, in July 2015, TCEQ notified Bay of the report made by an anonymous

source. It matters not that Bay did not then know the identity of the anonymous source.

See id. Bay did not file its defamation claim until almost three years later, well outside

the applicable one-year limitations period. See TEX. CIV. PRAC. & REM. CODE ANN.

§ 16.002. We conclude that Berry established its limitations defense by a

preponderance of the evidence. Therefore, the trial court erred in denying his motion to

dismiss under the TCPA. See Tex. Campaign for the Env’t, 485 S.W.3d at 192;

Sutterfield, 482 S.W.3d at 282.

9 We sustain Berry’s first issue. Due to our resolution of this issue, we need not

address his remaining issue. See TEX. R. APP. P. 47.1 (stating that the appellate court

must address every issue raised and necessary to final disposition of the appeal).

IV. CONCLUSION

We reverse the trial court’s denial of Berry’s TCPA motion to dismiss, and we

remand the case to the trial court for further proceedings as required by the statute and

to order dismissal of the suit. See TEX. CIV. PRAC. & REM. CODE ANN. § 27.009.

LETICIA HINOJOSA Justice

Delivered and filed the 30th day of January, 2020.