Opinion on rehearing issued October 24, 2013.
In The
Court of Appeals For The
First District of Texas ———————————— NO. 01-12-00581-CV ——————————— NEWSPAPER HOLDINGS, INC., INTEGRACARE OF TEXAS, LLC, AND CHARLOTTE PATTERSON, Appellants V. CRAZY HOTEL ASSISTED LIVING, LTD., CRAZY HOTEL ASSISTED LIVING, GP, LLC, LEISURE LIFE SENIOR APARTMENT HOUSING II, LTD., AND CHARLES V. MILLER, JR., Appellees
On Appeal from the 234th District Court Harris County, Texas Trial Court Case No. 2011-74615
OPINION
This defamation case arises from a series of articles published in the Mineral
Wells Index (the Index), a newspaper owned by Newspaper Holdings, Inc. (NHI). The articles reported regulatory compliance problems and official investigations
into the Crazy Water Retirement Hotel, a local Mineral Wells assisted living
facility, and examined the conduct of Charles Miller, president of the Hotel’s
corporate owner.1 Charlotte Patterson, the Chief Compliance Officer of
IntegraCare, a home health and hospice agency, was a source for some of the
information contained in some of the articles. She contacted the newspaper after
she learned that Miller had attempted to bar the Hotel’s residents from using
IntegraCare for their home health care.
The Hotel and Miller sued Patterson, IntegraCare, and NHI (“the newspaper
defendants”) for defamation, business disparagement, and tortious interference
with contract. The Hotel alleged that NHI, and in some instances, Patterson, who
was a managerial employee of IntegraCare, published false and defamatory
statements about Miller and the Hotel and interfered with the Hotel’s contractual
relationships with its residents. Patterson, IntegraCare, and NHI responded to the
suit by moving to dismiss it under the newly-enacted Texas Citizens’ Participation
Act (TCPA). See TEX. CIV. PRAC. & REM. CODE ANN. §§ 27.001–27.011 (West
Supp. 2012). The trial court denied the motion.
1 Appellees Crazy Hotel Assisted Living, Ltd., Crazy Hotel Assisted Living, GP, and Leisure Life Senior Apartment Housing II, Ltd. did business as the Crazy Water Retirement Hotel, and we collectively refer to them as the Hotel. 2 NHI, IntegraCare, and Patterson appeal, contending that they have met the
requirements for dismissal under the TCPA—namely, that they have showed that
the allegedly defamatory statements constitute the exercise of protected free
speech, and that the Hotel and Miller have failed to make a prima facie case for
each of their claims. IntegraCare and Patterson also claim that Miller and the
Hotel failed to provide any evidence that the published statements were false or
made with negligence or actual malice, or that Miller and the Hotel incurred
damages as a result of the challenged publications. For their part, Miller and the
Hotel respond that we lack jurisdiction to consider the appeal. . We grant
rehearing, withdraw our earlier opinion, and issue this one in its stead. We vacate
our earlier judgment. Our disposition remains unchanged. We hold that we have
appellate jurisdiction, and we reverse.
Background
Events leading to suit
From 2010 through 2011, the Index published articles about problems
encountered at the Hotel. In an end-of-the-year article reviewing its major stories
in 2010, it summarized the articles as follows:
Month after month in 2010 complaints from residents and employees at the Crazy Water Retirement Hotel kept city and state inspectors returning to the building, investigating complaints of unsafe conditions, building disrepair, failure to provide services and verbal abuse of residents.
3 After going without air conditioning, hot water and gas to cook food and dry clothes for days at a time in August, residents of the Crazy Water Retirement Hotel had significant amounts of water come through the ceilings during the first week of September after a roofing job was left incomplete for several weeks. As the roof remained unrepaired into September, the Department of Aging and Disability Services pulled the facility’s assisted living license and attempted to close that portion of the facility. However as residents were fed in the lobby of the building because of rainwater coming through the dining room ceiling that weekend, owner Charles Miller was granted a temporary restraining order against the case by a judge in Austin which essentially nullified any [e]ffect of license suspension. A nurse in the assisted-living portion of the building was also accused of verbal abuse of a resident and was terminated. State investigators cited a myriad of problems throughout the building and its management. Though the roofing work was completed in October, the state and the city continued to respond to complaints at the facility through December. In the first half of 2011, the Index also reported on
the Hotel’s five-month lapse in payment of its water bill, which put it on the verge of having the water turned off;
Miller’s negotiations with the city of Mineral Wells to pay the past due water bill;
the Hotel’s failure to fully meet its negotiated payment obligations to the city in a timely manner;
Texas Department of Adult and Disabled Services’ investigations, which revealed licensing violations stemming from uncorrected problems with the physical plant; and
4 the Hotel’s hiring of a management company to rehabilitate the Hotel and that company’s decision to sever its ties with the Hotel just a few months later due to delays and paperwork problems in connection with the Hotel’s state license application.
In early August 2011, Miller authored a letter to the Hotel’s residents
informing them that the Hotel would no longer allow IntegraCare home health or
hospice workers into the building. The letter advised patients that they were
limited to choosing between two other service providers: Health Care Partners at
Home or Beyond Faith. A resident who was an IntegraCare patient called
Patterson to complain about the Hotel’s decision. Patterson contacted Miller in an
attempt to resolve the issue. They quickly reached an impasse, so Patterson called
the county district attorney, the Texas Department of Aging and Disability
Services, and the Mineral Wells city manager to inform them of the Hotel’s
actions.
The Index named Patterson as a source for its next article about the Hotel,
entitled, “Miller target of fraud probe,” which it published on August 31. The
Hotel and Miller’s original petition focuses on that article, which we reproduce
below in its entirety:
District Attorney Mike Burns said Tuesday he will be meeting with investigators from the State Attorney General’s office concerning an investigation into the Crazy Water Retirement Hotel and its owner, Charles Miller. “Their Medicaid Fraud unit is opening a case on it,” he said.
5 Burns said his office has been in contact with the AG’s office, though he did not provide specific details discussed in their correspondence. Thomas Kelley with the Texas AG’s press office said in an e-mail, “We can only confirm that this is an ongoing investigation.” “I should hear from them and have a meeting with them in a few days,” Burns noted, adding the investigation was in its infancy and a decision on what, if any, future action will be taken against Miller will likely not be made anytime soon. While Burns did not elaborate on the scope of this case, the DA’s office has been busy over the past few weeks investigating the legality of demands made by Miller that residents of the Crazy Water choose one of two preferred home health providers. The first such letter, sent to residents Aug. 5, listed the two remaining choices for home health care, specifically stating the facility would “no longer be allowing IntegraCare Home Health or Hospice in our building.” When IntegraCare’s chief corporate compliance officer, Charlotte Patterson, contacted Burns, the threat of a grand jury subpoena from the DA’s office reportedly led to Miller’s decision to rescind that demand, Patterson noted. At that time, Patterson said her concern was that Miller would try to achieve the same result by including the home health care restrictions in a future lease agreement, citing a statement in Miller’s rescission letter stipulating residents can retain their current provider “under your current lease.” Her fears were realized when, about two weeks later, Miller sent residents a subsequent letter informing those unwilling to choose one of the two preferred providers to “consider this letter to you to be Crazy Water’s advance written notice of its intent to terminate your current agreement effective September 30, 2011.” While the letter refers to lease terms allowing either the hotel or its residents to “terminate the agreement, without cause, by giving written notice to the other party 30 days in advance of the effective termination date” Burns confirmed he is currently investigating whether the eviction notice is in violation of any law. 6 Also included in the eviction notice was a section informing residents that today is the last day the hotel will operate as a licensed assisted- living facility. In response to the latest development, Patterson said IntegraCare has not been made aware of the details of the case but, as with any investigation, is willing to assist in any way possible. “I’ve been told that they might contact us for information or statements,” she said, “but that has not occurred yet.” Patterson said this case involves a number of possible areas of focus for prosecutors, such as “varying issues of patient choice and, I think, the question of elderly abuse.” In the meantime, she said, IntegraCare employees remain dedicated to assisting Crazy Water residents however they can, as evidenced on Aug. 22, when three workers volunteered their time to assist two residents in their move to a facility in Jacksboro. “On our own, [IntegraCare is] continuing to try to find alternative living arrangements” for residents of the hotel, Patterson noted.
Neither Miller nor Crazy Water manager Juan Guardado returned numerous calls and e-mails requesting a comment.
After Miller learned that the district attorney planned to embark on an
investigation, the Hotel reversed its earlier position with respect to visits from
IntegraCare. In an August 12, 2011 letter to residents, Miller rescinded the earlier
limitation on providers and informed the residents that the Hotel would allow their
health care provider of choice, including IntegraCare, into the building.
On August 18, however, the Hotel reverted to its original stance. Miller
notified the residents who continued to receive services from IntegraCare that the
Hotel intended to terminate their leases effective September 30, after which they
7 would have the option either to sign new leases restricting their choice of home
health care providers to one of the two approved providers or to vacate their
apartment by October 1. The Index reported these developments in an August 14,
2011 article:
Mineral Wells Police Chief Mike McAllester said he was contacted by an IntegraCare representative questioning whether Miller’s action [in restricting home health care providers] was legal. After discussing details, McAllester said the department’s position was that a property owner cannot restrict who renters allow in their residences. He contacted the district attorney, who reportedly agreed and began an investigation into the matter. On September 9, the Index reported that the district attorney “previously
stated he met with investigators from the state Attorney General’s office
concerning an investigation into Miller and the hotel,” and that “their Medicaid
fraud unit is opening a case on it.” A reporter from the Index contacted the attorney
general’s office and received confirmation that it had an ongoing investigation into
the Hotel, but no further comment. The newspaper contacted Miller for his
response, and he gave “no comment.”
In January 2012, the Attorney General applied for a temporary restraining
order “to gain access to [the Hotel] . . . for the purpose of conducting an
investigation to determine whether the facility is operating as an unlicensed
assisted living facility and to determine whether any resident neglect has occurred
in violation of Chapter 247 of the Texas Health and Safety Code.” The application
8 alleged that the Texas Department of Aging and Disability Services (DADS)
received a complaint in September 2011 that the Hotel was being operated as an
unlicensed assisted living facility in violation of state law and, when the DADS
sent an investigator to the Hotel, the facility staff denied her entry. An affidavit
from the investigator supported these allegations.
Trial court proceedings
The Hotel and Miller instituted this suit in late 2011, bringing claims for
defamation, business disparagement, and tortious interference against the
defendants. Patterson and IntegraCare moved to dismiss the claim in mid-March
2012, and, in a separate motion filed a few days later, NHI also sought dismissal.
Both motions invoke the parties’ free speech rights under the TCPA as grounds for
dismissal.
The trial court held a hearing on April 16th. At that hearing, plaintiffs’
counsel moved to withdraw from representation. The trial court acknowledged
that, “for purposes of the statute[,] . . . the hearing has already started,” but it
granted a continuance to allow the Hotel and Miller time to obtain new counsel.
The trial court resumed the hearing on May 29th, more than 30 days later, and
signed an order denying the newspaper defendants’ motions to dismiss on May
30th.
9 Discussion
I. Appellate Jurisdiction
As a threshold matter, we address Miller and the Hotel’s motion to dismiss
this appeal for lack of jurisdiction. Section 27.008 of the Civil Practice in
Remedies Code, entitled “Appeal,” provides:
(a) If a court does not rule on a motion to dismiss under Section 27.003 in the time prescribed by Section 27.005, the motion is considered to have been denied by operation of law and the moving party may appeal.
(b) An appellate court shall expedite an appeal or other writ, whether interlocutory or not, from a trial court order on a motion to dismiss a legal action under Section 27.003 or from a trial court’s failure to rule on that motion in the time prescribed by Section 27.005.
(c) An appeal or other writ under this section must be filed on or before the 60th day after the date the trial court’s order is signed or the time prescribed by Section 27.005 expires, as applicable.
TEX. CIV. PRAC. & REM. CODE ANN. § 27.008.
The TCPA sets strict deadlines for filing, hearing, and ruling on a motion to
dismiss. Absent a showing of good cause, the defendant must move to dismiss
pursuant to the TCPA “not later than the 60th day after the date of service of the
legal action.” TEX. CIV. PRAC. & REM. CODE ANN. § 27.003(b). A hearing on the
motion must occur by the 30th day after the date the defendant serves the motion,
and the trial court must rule on the motion by the 30th day after the hearing. Id.
§§ 27.004, 27.005(a).
10 Miller and the Hotel rely on the Fort Worth Court of Appeals’s recent
decision in Jennings v. Wallbuilders Presentations, Inc. to contend that the TCPA
does not authorize an interlocutory appeal of a trial court’s signed order denying a
motion to dismiss under the TCPA. 378 S.W.3d 519 (Tex. App.—Fort Worth
2012, no pet.). The Jennings court held that the language in the TCPA conferred
jurisdiction to review a decision under the TCPA, but only if the motion is denied
by operation of law, and not if the trial court signs an order denying the motion.
Id. at 526–28. The Fort Worth Court of Appeals reasoned that the legislature
intended to ensure that a court would review and rule on the motion, but not that its
ruling would be subject to appellate review. See id. at 527.
We need not decide whether we agree with the Fort Worth Court of
Appeals’ interpretation of section 27.008, because the trial court in this case signed
its order denying the motion too late—the defendants’ motions to dismiss were
overruled by operation of law. The statute allows a trial court to hear a motion
more than thirty days after the filing date of the motion to dismiss, but only when
its docket conditions require it. See TEX. CIV. PRAC. & REM. CODE ANN. § 27.004
(declaring that “[a] hearing on a motion [to dismiss] must be set not later than the
30th day after the date of service of the motion unless the docket conditions of the
court require a later hearing.”). In this case, the trial court continued the hearing
solely at Miller and the Hotel’s request, but it made no finding that the docket
11 conditions of the court required a hearing outside the thirty days. Because the
statute does not authorize a continuance of the hearing based solely on a party’s
request, the continuance did not stop the statutory-deadline clock; thus, the motions
were denied by operation of law on May 16, 2012, thirty days after the initial
hearing. See TEX. CIV. PRAC. & REM. CODE ANN. §§ 27.005 (ruling required “not
later than the 30th day following the date of the hearing on the motion”);
27.008(a), (c) (providing that if court does not rule on motion to dismiss under
TCPA by 30th day after hearing, motion “is considered to have been denied by
operation of law and the moving party may appeal” “on or before the 60th day
after the date . . . the time prescribed by Section 27.005 expires”). Patterson,
IntegraCare, and NHI timely filed their notices of appeal on June 19th. Because
the trial court issued its ruling more than thirty days after hearing the motion, we
hold that we have jurisdiction over this appeal.
II. Standard of review
We consider the TCPA’s language and purpose in determining the
applicable standard of review. In enacting the TCPA, the Legislature explained
that its purpose “is 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
a person to file meritorious lawsuits for demonstrable injury.” TEX. CIV. PRAC. &
12 REM. CODE ANN. § 27.002. The courts are to “construe it liberally to effectuate its
purpose and intent fully.” Id. § 27.011(b).
In deciding whether to grant a motion under the TCPA and dismiss the
lawsuit, the statute instructs a trial court to “consider the pleadings and supporting
and opposing affidavits stating the facts on which the liability or defense is based.”
Id. § 27.006. The court must determine: (1) whether the moving defendant has
shown “by a preponderance of the evidence that the legal action is based on, relates
to, or is in response to the party’s exercise of the right of free speech, the right to
petition, or the right of association”; and (2) whether the plaintiff has shown “by
clear and specific evidence a prima facie case for each essential element of the
claim in question.” Id. § 27.005(b), (c). The first step of this inquiry is a legal
question we review de novo. See City of Rockwall v. Hughes, 246 S.W.3d 621,
625 (Tex. 2008).
The legislature’s use of the term “prima facie case” in the second step
implies a minimal factual burden: “[a] prima facie case represents the minimum
quantity of evidence necessary to support a rational inference that the allegation of
fact is true.” Rodriguez v. Printone Color Corp., 982 S.W.2d 69, 72 (Tex. App.—
Houston [1st Dist.] 1998, pet. denied). The statute nonetheless requires that the
proof offered address and support each element of every claim asserted with clear
and specific evidence. See TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(b), (c).
13 Accordingly, we examine the pleadings and the evidence to determine whether
Miller and the Hotel marshaled “clear and specific” evidence to support each
alleged element of their causes of action. We review the pleadings and evidence in
a light favorable to Miller and the Hotel. Cf. Tex. Dep’t of Parks & Wildlife v.
Miranda, 133 S.W.3d 217, 227 (Tex. 2004); Fort Bend Indep. Sch. Dist. v. Gayle,
371 S.W.3d 391, 394 (Tex. App.—Houston [1st Dist.] 2012, pet. denied).
III. Right to dismissal under the TCPA
Patterson, IntegraCare, and NHI contend that they showed both that Miller
and the Hotel’s claims against them are in response to the exercise of their right to
free speech, by a preponderance of the evidence, and that Miller and the Hotel
failed to present clear and specific evidence to support each element of their claims
to establish their prima facie case. We address each contention in turn.
A. Exercise of the right to free speech, petition, and association The TCPA defines “the exercise of the right of free speech” as “a
communication made in connection with a matter of public concern.” Id.
§ 27.001(1). A “matter of public concern” includes, among other things, issues
relating to “health or safety,” and “environmental, economic, or community well-
being.” Id. § 27.001(7) (A), (B). The business of operating an assisted living
facility is a highly regulated one. See Tex. HEALTH & SAFETY CODE ANN.
§§ 247.001–247.069 (West 2010 & Supp. 2012) (the Assisted Living Facility
14 Licensing Act (AFLA)); 40 TEX. ADMIN. CODE §§ 46.1–46.71 (chapter entitled
“Contracting to Provide Assisted Living and Residential Care Services”). To
“ensure that assisted living facilities in this state deliver the highest possible
quality of care,” the legislature specifically has provided for both state and
municipal enforcement of licensing requirements. See Tex. HEALTH & SAFETY
CODE ANN. §§ 247.0011, 247.031 (West 2010). The Index’s articles relate directly
to Miller and the Hotel’s obligations to fulfill the licensing requirements and
standards set forth in these laws and regulations. AFLA not only permits, but
encourages an open airing of information relating to an assisted living facility’s
quality of care. See TEX. HEALTH & SAFETY CODE ANN. § 247.068 (West Supp.
2012) (making it unlawful for a person licensed to operate an assisted living
facility to retaliate “against a person for filing a complaint, presenting a grievance,
or providing in good faith information relating to personal care services provided
by the license holder”).
In considering the statements attributed to Patterson and IntegraCare, we
observe that the statute reflects the specific public concern of ensuring that assisted
living facility residents retain the right to choose their own health care
professionals. See TEX. HEALTH & SAFETY CODE ANN. § 247.067(c) (West Supp.
2012) (providing that “[a] resident of an assisted living facility has the right to
contract with a [licensed] home and community support services agency . . . or
15 with an independent health professional for health care services”); see also id.
§ 247.0011(1) (including as components of quality care “resident independence
and self-determination”). We hold that, as defined by the legislature, a
preponderance of the evidence establishes that each of the articles at issue in this
suit involve communications made in connection with a matter of public concern
and relate to the exercise of free speech. Accordingly, Patterson, IntegraCare, and
NHI have met the first requirement for obtaining dismissal under the TCPA. We
next turn to whether the Hotel and Miller have adduced sufficient evidence to
establish a prima facie case for each of their claims.
B. Plaintiffs’ prima facie case
1. Defamation
To maintain a defamation 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 with 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).
“Whether words are capable of the defamatory meaning the plaintiff
attributes to them is a question of law for the court.” Carr v. Brasher, 776 S.W.2d
567, 569 (Tex. 1989). Questions of law are subject to de novo review. In re
16 Humphreys, 880 S.W.2d 402, 404 (Tex. 1994). Whether a publication is an
actionable statement of fact depends on its verifiability and the context in which it
was made. See Bentley v. Bunton, 94 S.W.3d 561, 581 (Tex. 2002).
a. NHI
As the owner of a newspaper, NHI claims that Miller and the Hotel failed to
overcome NHI’s evidence that the alleged defamatory statements either are
substantially true or that it exercised due care in making them, thereby requiring
dismissal of the claims against it.
Before addressing NHI’s appellate challenge that its showing that the
reported statements are substantially true entitles it to dismissal, we consider Miller
and the Hotel’s contention that the version of the TCPA in effect when NHI moved
to dismiss their petition does not permit dismissal based on that defense. On
rehearing, Miller and the Hotel point to the Legislature’s recent passage of
subsection 27.005(d), which provides:
Notwithstanding the provisions of Subsection (c), the court shall dismiss a legal action against the moving party if the moving party establishes by a preponderance of the evidence each essential element of a valid defense to the nonmovant’s claim.
Act of June 14, 2013, 83d Leg. R.S., ch. 1042, § 2, 2013 Tex. Sess. Law Serv.
(codified at Tex. Civ. Prac. & Rem. Code Ann. § 27.005). According to Miller and
the Hotel, the subsequent addition of subsection 27.005(d) shows that the pre-
amendment Act’s silence on this issue means that movants cannot base a dismissal
17 motion upon a showing of substantial truth. We disagree. Section 27.011 of the
TCPA explains that “[t]his chapter does not abrogate or lessen any other defense . .
. available under other constitutional, statutory, case, or common law or rule
provisions,” and declares that “[t]his chapter shall be construed liberally to
effectuate its purpose and intent fully.” Id. § 27.011. The TCPA’s declared
purpose “is 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 a
person to file meritorious lawsuits for demonstrable injury.” TEX. CIV. PRAC. &
REM. CODE ANN. § 27.002 (West Supp. 2012). An interpretation of the TCPA that
would prohibit a movant from procuring dismissal based on a showing of truth
would thwart the Legislature’s declared purpose for enacting the TCPA and render
section 27.011 a nullity. TEX. GOV’T CODE ANN. § 311.023 (West 2013)
(providing that, in interpreting statute, court may consider object sought to be
attained by statute and consequences of particular statutory construction). The
Legislature could not have intended such a result. See In re Derzapf, 219 S.W.3d
327, 332 (Tex. 2007). We reject Miller and the Hotel’s urged interpretation and
hold that the pre-amendment TCPA allows a movant to procure dismissal based on
a successful showing of substantial truth.
18 Our grant of rehearing also permits us to revisit our analysis of the merits of
NHI’s substantial truth defense in light of the Supreme Court’s intervening
decision in Neely v. Wilson, No. 11-00228, 2013 WL 3240040 (Tex. June 28,
2013). In Neely, the Supreme Court clarified its prior opinion in McIlvain v.
Jacobs, 794 S.W.2d 14 (Tex. 1990), explaining that accurate reporting of third-
party allegations, standing alone, is not enough to satisfy the substantial truth
defense; rather, if a media defendant “reports that allegations were made and an
investigation proves those allegations to be true, the defamation claim is brought
within the scope of the substantial truth defense.” Id. at *8. The Court expressly
disapproved of the analysis of McIlvain’s holding on that issue in Green v. CBS,
Inc., 286 F.3d 281 (5th Cir. 2002), and KTRK Television v. Felder, 950 S.W.2d
100 (Tex. App.—Houston [14th Dist.] 1997, no writ), both of which we relied on
in analyzing NHI’s challenge to Miller and the Hotel’s claims. The United States
Supreme Court has held that, in a suit against a media defendant, the plaintiff bears
the burden of proving that the alleged defamatory statements are false.
Philadelphia Newspapers, Inc. v. Hepps, 475 U.S. 767, 776–77, 106 S. Ct. 1558,
1564 (1986) (holding that common-law presumption that defamatory speech is
false cannot stand when plaintiff sues media defendant for speech of public
concern), cited in Miranda v. Byles, 390 S.W.3d 543, 554 (Tex. App.—Houston
[1st Dist.] 2012, pet. filed). Our own court’s precedent on this issue does not
19 clearly identify which party properly bears the burden, nor has the Texas Supreme
Court definitively addressed that issue. See Miranda, 290 S.W.3d at 554. We
need not decide it in this case, however, because, in moving for dismissal, the
defendants either presented proof of substantial truth or due diligence in their
reporting or contended that the speech itself is incapable of defamatory meaning.
We consider whether the record as a whole allows a rational inference that
any of the Index’s factual allegations was false. In the context of a defamation
claim, a showing of falsity requires more than minor inaccuracies in the alleged
defamatory statements. See Turner v. KTRK Tel., Inc., 38 S.W.3d 103, 115 (Tex.
2000) (noting that substantial truth doctrine “precludes liability for a publication
that correctly conveys a story’s ‘gist’ or ‘sting’ although erring in the details”). A
statement is substantially true if the alleged defamatory statement was no more
damaging to plaintiff’s reputation, in the mind of the average listener, than a
truthful statement would have been. McIlvain v. Jacobs, 794 S.W.2d 14, 16 (Tex.
1990); Langston v. Eagle Printing Co., 797 S.W.2d 66, 69–70 (Tex. App.—Waco
1990, no writ) (concluding that statement is substantially true even if it exaggerates
plaintiff’s misconduct, as long as average reader would not attach any more
opprobrium to plaintiff’s conduct merely because of exaggeration).
Miller and the Hotel base their defamation claims against NHI on several
statements made in the Index’s reports, each of which we address in turn. They
20 first challenge the report that “The Texas Department of Aging and Disability
Services [DADS] determined in a September 2010 investigation that [a nurse
working at the Hotel] verbally abused, threatened, and intimidated a resident.”
This statement refers to an alleged incident in which a licensed vocational nurse
(LVN) reacted to a patient’s resistance to taking medication. Miller and the Hotel
deny that the event took place, but do not contest that the DADS’s investigation
proved the contrary. The Index’s report refers to “documents released by DADS”
that the Hotel did not look into the resident’s allegations before the state’s
investigation of the incident as well as other documentation, including the DADS’s
own investigative report and determination. Miller and the Hotel do not dispute
the existence or authenticity of the documentation that the Index relied on in
writing its article or the report that a Hotel attendant corroborated the resident’s
version of the event. The Index could accurately characterize the conduct found by
the report as “elder abuse.” As no evidence exists to counter the Index’s showing
that its report of the administrative determination is substantially true, it does not
provide a basis for Miller and the Hotel’s defamation claim.
Miller and the Hotel point next to the Index article entitled “Miller target of
fraud probe,” because, they contend, it falsely indicates that the Attorney General’s
office had opened an investigation into the Hotel owner’s activities for possible
Medicaid fraud. The article at issue focuses on the letters that the Hotel, under
21 Miller’s signature, sent to its residents informing them that IntegraCare would not
be permitted to enter its facility and purporting to require the residents to select as
their home health care provider one of two named providers. The article attributes
to Mike Burns, the Palo Pinto County District Attorney, statements that “th[e State
Attorney General’s] Medicaid fraud unit is opening a case on it,” and that the
district attorney’s office had met with the Attorney General’s office. In an
affidavit accompanying NHI’s motion to dismiss, Chris Agee, the Index’s reporter
who wrote the article, testified that Burns had informed him that his office had
been investigating the legality of Miller and the Hotel’s demands that the Hotel
residents choose between only two health care providers as well as the propriety of
the August 18, 2011 letter. Agee contacted the Attorney General’s office to verify
Burns’s comments. The Attorney General’s office confirmed that it had an
ongoing investigation but would not provide further details.
With respect to the Index’s August 31 article that Miller was the target of a
fraud probe, the record contains evidence that the Hotel’s state license to operate as
an assisted living facility had lapsed and had not been renewed as of the date the
Index published the article. Texas statute recognizes an assisted-living facility
resident’s right to contract with a licensed home and community support service
agency to deliver health care services to the residents at the facility, a right echoed
in the licensing standards for those facilities. See TEX. HEALTH & SAFETY CODE
22 ANN. § 247.067(c); 40 TEX. ADMIN. CODE 92.5(b). By requiring the residents to
choose between two named providers and by prohibiting them from choosing
IntegraCare as their provider, the Hotel imposed a restriction on the residents’
choices in violation of applicable licensing requirements. The article specified that
the district attorney’s office was investigating the legality of the Hotel’s attempt to
restrict the residents to choose between two home health care providers. The
article also explained that the investigation was “in its infancy” and ongoing, and
reported that the Attorney General did not identify the investigation’s subject
matter, only that it was “an ongoing investigation.” The fact that the article
mentions Medicaid does not, on balance, tip it from being substantially true to
being false and defamatory. See Turner, 38 S.W.3d at 115 (explaining that error in
details does not render media defendant liable for defamation as long as article is
substantially true).
Miller and the Hotel also point to the statement, in an August 23rd article,
that the Hotel had served “eviction notices” on its residents. The article describes a
Hotel letter as amounting to an eviction notice “for any resident unwilling to
change his or her home health care provider” from IntegraCare to one of the two
preferred home health providers. The article quotes the letter, verbatim, as
directing residents who failed to change from IntegraCare that they should:
“consider this letter to you to be Crazy Water’s advance written notice of its intent
23 to terminate your current agreement effective September 30, 2011.” While Miller
and the Hotel object to the use of the term “eviction notice” to describe the letter’s
effect on residents who preferred to remain patients of IntegraCare, the
characterization reasonably describes one possible view of the letter’s content.
Finally, Miller and the Hotel allege, as defamatory, the Index’s use of
descriptive words in reporting about the living conditions at the Hotel, such as
stating that the Hotel had a “myriad” of problems and describing water leaks as
causing water to “cascade” into the building. In an affidavit submitted with the
NHI’s motion to dismiss, Index Editor David May testified that
The Index has received, and, on occasion, reported on numerous complaints by others about the hotel . . . ranging from health and sanitary issues to fire code and structural violations. Many of these complaints resulted in investigations by City and State officials. At various times over the past few years, the City of Mineral Wells or the [DADS] threatened to shut down the Hotel because of structural or safety deficiencies.
Miller and the Hotel do not dispute May’s testimony. The Index’s
immoderate—in the Hotel’s view—word choice does not present a prima facie
case that the descriptions, viewed in context, are less than substantially true. See
Langston, 797 S.W.2d at 69 (exaggeration alone does not render substantially true
publication actionable).
NHI also moved to dismiss on the ground that Miller and the Hotel failed to
show that NHI acted negligently. Private plaintiffs must prove that the defendant
24 was at least negligent. See Foster v. Laredo Newspapers, Inc., 541 S.W.2d 809,
819 (Tex. 1976) (holding that “a private individual may recover damages from a
publisher or broadcaster of a defamatory falsehood as compensation for actual
injury upon a showing that the publisher or broadcaster knew or should have
known that the defamatory statement was false”); see also Gertz, 418 U.S. at 347,
94 S. Ct. 2997 (holding that states may define for themselves the appropriate
standard of liability for a publisher of a defamatory falsehood injurious to a private
individual “so long as they do not impose liability without fault”). Texas courts
have defined negligence in the defamation context as the “failure to investigate the
truth or falsity of a statement before publication, and [the] failure to act as a
reasonably prudent [person].” Marathon Oil Co. v. Salazar, 682 S.W.2d 624, 631
(Tex. App.—Houston [1st Dist.] 1984, writ ref’d n.r.e.) (citing El Paso Times, Inc.
v. Trexler, 447 S.W.2d 403, 406 (Tex. 1969)).
In his affidavit submitted with NHI’s motion, reporter Agee testified about
the August 31 article:
The Article summarizes the information I received from the state attorney general’s office and from the local district attorney. It also summarizes the quotes and information I received from Charlotte Patterson at Integra. I had no reason to doubt the credibility of those sources. Based on the consistency of their statements, the consistency of the written documents shown to me, I had no reason to doubt the credibility or accuracy of those sources or the information conveyed by them. Based on this information and these sources, I believed at the time the Article was published that the statements therein were substantially true, if not literally true. . . . 25 The article also recites that “[n]either Miller nor [the Hotel] manager Juan
Guardado returned numerous calls and e-mails requesting comment.” Miller and
the Hotel did not provide any evidence controverting these efforts or suggesting
that Agee should have more fully investigated some aspect of the report to satisfy
due diligence before reporting. Because Miller and the Hotel did not respond to
the Index’s showing by adducing clear and specific evidence that the challenged
statements made in the articles were false or negligently reported, they have not
made a prima facie case to support Miller and the Hotel’s defamation claim against
NHI.
b. Patterson and IntegraCare
Patterson and IntegraCare contend that they should prevail on their motion
to dismiss as well, because Miller and the Hotel have failed to provide evidence to
show that Patterson acted negligently or intentionally in making any alleged
defamatory statements. “Fault is a constitutional prerequisite for defamation
liability.” McLemore, 978 S.W.2d at 571 (citing Gertz v. Robert Welch, Inc., 418
U.S. 323, 347, 94 S. Ct. 2997, 3010–11 (1974)). “Private plaintiffs must prove that
the defendant was at least negligent.” Id. Miller and the Hotel’s defamation
claims against Patterson and IntegraCare stand on two statements quoted in the
Index: (1) Patterson’s statement that “[t]his case involves a number of possible
areas of focus for prosecutors, such as “varying issues of patient choice and, I
26 think, the question of elderly abuse,” and (2) her statement that Miller told
IntegraCare that it was denying it access to the Hotel because IntegraCare was not
“sending referrals.”
We first examine whether either of these statements was defamatory. “[T]he
meaning of a publication, and thus whether it is false and defamatory, depends on a
reasonable person’s perception of the entirety of [the] publication and not merely
on individual statements.” Bentley, 94 S.W.3d at 579. To determine whether
language is capable of having a defamatory meaning, a court should construe the
statement as a whole, in light of the surrounding circumstances, and based upon a
reasonable person’s perception of it. Vice v. Kasprzak, 318 S.W.3d 1, 17 (Tex.
App.—Houston [1st Dist.] 2009, pet. denied).
With respect to the first statement, “elderly abuse” was a strong choice of
words, but Patterson softened her meaning by indicating that some doubted the
applicability of the term, noting it only as a “possible area of focus.” Her
statement, viewed in context, refers to Miller and the Hotel’s conduct in forcing the
residents to choose between accepting one of two preferred providers or leaving
the facility—and the official investigation into whether that conduct amounted to
unlawful interference in the residents’ choice of health care providers. The record
shows that Patterson had personal knowledge that state and local officials had
opened investigations into the matter. Miller and the Hotel acknowledge that
27 ongoing investigations existed; they take issue with the descriptions of the
investigation’s scope. But an objectively reasonable person could conclude, in
context, that the statement had a basis in fact, and thus we hold that the record
lacks a prima facie showing that Patterson failed to exercise due care in making it.
We examine the second statement to determine whether it is reasonably
capable of a defamatory meaning. In Musser v. Smith Protective Services, the
Texas Supreme Court held that a former employer’s letter in which it sarcastically
accused the plaintiff of taking accounts with him when he left the business was not
reasonably capable of a defamatory meaning. 723 S.W.2d 653, 655 (Tex. 1987).
The Court reasoned that the statement “call[ed] plaintiff a strong and successful
competitor,” and that it did not accuse the plaintiff of committing a crime or
violating a law or contract. Id.
Miller and the Hotel do not offer an alternative reason for the end of the
parties’ business relationship with IntegraCare. In the articles, neither the Index
nor Patterson suggested that the Hotel’s problem lay in its motive for excluding
IntegraCare as a provider; rather, their thrust was that, regardless of the reason for
it, the Hotel’s decision to exclude IntegraCare thwarted the patients’ right to
choose their own health care provider. We hold that a statement speculating about
the Hotel’s motive for its decision is not defamatory as a matter of law. See id.
28 We hold that Miller and the Hotel failed to marshal clear and clear and specific
evidence to support their defamation claim against IntegraCare.
2. Business disparagement
To prevail on a business disparagement claim, a plaintiff must establish that
(1) the defendant published false and disparaging information, (2) with malice,
(3) without privilege, (4) that resulted in special damages to the plaintiff. Hurlbut
v. Gulf Atl. Life Ins. Co., 749 S.W.2d 762, 766 (Tex. 1987). “A business
disparagement claim is similar in many respects to a defamation action.” Forbes
Inc. v. Granada Bioscis., Inc., 124 S.W.3d 167, 170 (Tex. 2003). The two torts
differ in the interest protected: a defamation claim protects an injured party’s
personal reputation, while a business disparagement claim protects economic
interests. Id. “[A] business disparagement defendant may be held liable ‘only if
he knew of the falsity or acted with reckless disregard concerning it, or if he acted
with ill will or intended to interfere in the economic interest of the plaintiff in an
unprivileged fashion.’” Id. (quoting Hurlbut, 749 S.W.2d at 766).
Miller and the Hotel’s business disparagement claims lack merit for the
same reasons we reject their defamation claims: the lack of any evidence that the
alleged defamatory statements made by the Index were false, and, with respect to
Patterson, that she acted with malice—a higher burden than the negligent conduct
that Miller and the Hotel failed to show for their defamation claim against her.
29 3. Tortious interference
To establish a cause of action for tortious interference, a plaintiff must prove
that (1) a contract subject to interference exists, (2) the defendant committed a
willful and intentional act of interference with the contract, (3) the act proximately
caused injury, and (4) the plaintiff sustained actual damages or loss. ACS Invs.,
Inc. v. McLaughlin, 943 S.W.2d 426, 430 (Tex. 1997). “Ordinarily, merely
inducing a contract obligor to do what it has a right to do is not actionable
interference.” Id.
The Hotel offered its residents a contractual option of whether to remain at
the Hotel and change to one of its two preferred health care providers or leave the
Hotel to continue to receive health care services from IntegraCare. Nothing in the
record suggests that NHI, Patterson, or IntegraCare influenced the Hotel residents
to do anything other than exercise that option. Miller and the Hotel therefore fail
to sustain their burden to make a prima facie case of interference with a contractual
obligation.
IV. Applicability of Statutory Exclusion for Commercial Speech Finally, the Hotel contends that IntegraCare and NHI are for-profit
corporations primarily engaged in the business of selling or leasing goods or
services and that the challenged statements arise out of their provision of
commercial services, thereby triggering the TCPA exclusion for commercial
30 speech. TCPA section 27.010 (b) provides that “[t]his chapter does not apply to a
legal action brought against a person primarily engaged in the business of selling
or leasing goods or services, if the statement or conduct arises out of the sale or
lease of goods, services, or an insurance product or a commercial transaction in
which the intended audience is an actual or potential buyer or customer.” TEX.
CIV. PRAC. & REM. CODE ANN. § 27.001(b). The Hotel observes that (1) the
statements involved the Hotel’s business relationship with IntegraCare, and (2) the
Hotel’s residents were both IntegraCare customers and newspaper subscribers.
In Simpson Strong-Tie Co., Inc. v. Gore, 230 P.3d 1117 (Cal. 2010), the
Supreme Court of California considered “the scope and operation of the exemption
for commercial speech” set forth in the exemption to its own anti-SLAPP statute,
which is similar to the Texas statute’s exemption. See id. at 1123 (quoting CAL.
CODE CIV. PROC. § 425.17(c)).2 It devised a four-prong analysis for determining
whether the exemption applies. Courts should examine whether:
2 The California provision declares that:
Section 425.16 does not apply to any cause of action brought against a person primarily engaged in the business of selling or leasing goods or services, including, but not limited to, insurance, securities, or financial instruments, arising from any statement or conduct by that person if both of the following conditions exist: [¶] (1) The statement or conduct consists of representations of fact about that person’s or a business competitor’s business operations, goods, or services, that is made for the purpose of obtaining approval for, promoting, or securing sales or leases of, or commercial transactions in, the person’s goods or services, or the statement or conduct was made in the course of delivering the person’s goods or 31 (1) the cause of action is against a person primarily engaged in the business of selling or leasing goods or services;
(2) the cause of action arises from a statement or conduct by that person consisting of representations of fact about that person’s or a business competitor’s business operations, goods, or services; (3) the statement or conduct was made either for the purpose of obtaining approval for, promoting, or securing sales or leases of, or commercial transactions in, the person’s goods or services or in the course of delivering the person’s goods or services; and
(4) the intended audience for the statement or conduct [is an actual or potential buyer or customer]. Id. at 1129.3
The Simpson court first noted, as a matter of statutory construction, that the
burden of proving the applicability of an exemption from the provisions of an anti-
SLAPP statute falls on the party asserting it. See id. at 1124 (“One claiming an
exemption from a general statute has the burden of proving that he comes within
the exemption.”) (citations omitted); see generally McIntyre v. Ramirez, 109
S.W.3d 741, 745 (Tex. 2003) (holding that doctor had burden of proof to show he
was exempted from general applicability of emergency care statute). We follow
the California Supreme Court’s analysis in Simpson and conclude that the burden
services, [and ¶] (2) The intended audience is an actual or potential buyer or customer, or a person likely to repeat the statement to, or otherwise influence, an actual or potential buyer or customer . . . .
CAL. CODE CIV. PROC. § 425.17(c). 3 We have modified the fourth prong of this test to track the Texas statute. Compare TEX. CIV. PRAC. & REM. CODE ANN. § 27.010(b) with CAL. CODE CIV. PROC. § 425.17(c). 32 rested with the Hotel to show that the statute does not apply to its suit against NHI
and IntegraCare. See Simpson, 230 P.3d at 1126 (“The burden of proof as to the
applicability of the commercial speech exemption, therefore, falls on the party
seeking the benefit of it—i.e., the plaintiff.”).
The Hotel did not meet its burden to establish that the statements at issue
were commercial speech unprotected by the TCPA. With respect to the
newspaper, it is undisputed that NHI was in the business of reporting community
events, but the Hotel’s complained-of statements do not arise out of the lease or
sale of the goods or services that NHI sells—newspapers. To read news content to
constitute statements “arising out of the sale or lease” of newspapers would
swallow the protections the statute intended to afford; such a construction does not
match the statute’s dual purpose of safeguarding the right to speak, to associate,
and to petition the government, while protecting the right of an aggrieved person to
file a meritorious defamation suit. See TEX. CIV. PRAC. & REM. CODE ANN.
§ 27.002.
As for IntegraCare, its employees had a statutory duty to report problems
with respect to care of the elderly to certain state authorities, and it proffered
Patterson’s affidavit that her statements involved matters of public health and
safety. See e.g., TEX. HUM. RES. CODE ANN. § 48.051(a) (West 2013) (requiring
that “a person having cause to believe that an elderly . . . person is in the state of
33 abuse, neglect, or exploitation . . . shall” report same to Department of Protective
and Regulatory Services); TEX. HEALTH AND SAFETY CODE ANN. § 260A.002(a)
(West Supp. 2012) (“A person, including an owner or employee of a facility, who
has cause to believe that the physical or mental health or welfare of a resident has
been or may be adversely affected by abuse, neglect, or exploitation caused by
another person shall report the abuse, neglect, or exploitation in accordance with
this chapter.”). Patterson complained about the Hotel’s actions to the local district
attorney, the Department of Aging and Disability Services, the Mineral Wells City
Manager, and the Texas Attorney General Consumer Protection Division.
Patterson was also a source for the newspaper coverage.
The Hotel counters that its business dispute with IntegraCare was the reason
Patterson complained, not any public safety concern. The motive for making the
statements aside, however, Patterson made none in connection with “the sale or
lease of goods, services, or an insurance product or a commercial transaction,” nor
was her “intended audience an actual or potential buyer or customer.” Although
the Hotel’s residents may have learned about Patterson’s statements and
complaints through reading the newspaper, she did not direct the complained-of
comments to them to secure the sale of goods or services. The newspaper
concluded that the matters involved in Patterson’s statements were newsworthy to
the general public, and thus reported them aside from IntegraCare’s commercial
34 interests. The Hotel did not adduce evidence that the statements were otherwise
made in a commercial context. We hold that the Hotel failed to establish that its
suit against IntegraCare involved statements, directed to customers, arising out of a
commercial transaction, rather than statements, directed to state officials and the
general public, concerning a matter of public health and safety.
Conclusion
We hold that NHI, Patterson, and IntegraCare satisfied their burden under
the TCPA to show that Miller and the Hotel’s claims against them are based on
statements that they made in the exercise of rights to free speech and to petition the
government. See TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(b). We further
hold that Miller and the Hotel have failed to sustain their burden to show a prima
facie case for each essential element of their claims, or that their lawsuit falls
within the commercial speech exemption to the statute. See id. §§ 27.005(c),
27.010(b). We therefore reverse the trial court’s denial of the defendants’ motions
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 id. § 27.009(a).
Jane Bland Justice
Panel consists of Chief Justice Radack and Justices Bland and Huddle.