Jalou II, Inc., A Louisiana Corporation, d/b/a Houma Truck Stop & Casino and Fidelity & Deposit Company of Maryland VS Sandra L. Liner and Debra A. Grow
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STATE OF LOUISIANA COURT OF APPEAL FIRST CIRCUIT NO 2010 CA 0048 JALOU II INC A LOUISIANA CORPORATION DBA HOUMA TRUCK STOP CASINO AND FIDELITY AND DEPOSIT COMPANY OF MARYLAND VERSUS SANDRA L LINER AND DEBRA A GROW Judgment Rendered JUN 1 6 2010 Appealed from the 32nd Judicial District Court In and for the Parish of Terrebonne State of Louisiana Case No 139 763 The Honorable Randall L Bethancourt Judge Presiding Stanwood R Duval Houma Louisiana John D Schoonenberg Houma Louisiana Eugene R Preaus Mayra L Scheurmann Counsel for DefendantAppellant Debra and Randy Grow Counsel for PlaintiffAppellee Jalou II Inc doing business as Casino Houma Truck Stop New Orleans Louisiana Counsel for PlaintiffAppellee Fidelity and Deposit Company of Maryland Sandra L Liner Appellee Defendant Pro Se Houma Louisiana BEFORE DOWNING GAIDRY AND McCLENDON JJ GAIDRY J A former employee of a truck stop casino and her husband appeal a summary judgment dismissing their claims for damages for defamation and malicious prosecution against her former employer and its insurer For the following reasons we affirm the summary judgment FACTUAL BACKGROUND AND PROCEDURAL HISTORY The plaintiff Debra A Grow was employed as a casino manager or supervisor from September 2001 until November 1 2002 by Jalou II Inc Jalou II which operated the Houma Truck Stop and Casino in Houma Louisiana The business operations at that location included a convenience store restaurant and video poker casino Ms Grow was hired and trained for her position by the location general manager Sandra L Liner s The casino at the Houma Truck Stop and Casino had approximately 50 video poker machines As casino manager Ms Grow had the primary responsibility for the drops or retrievals of cash from each video poker machine The drops were conducted twice a week on Monday and Thursday and a courier service would transport the cash to be deposited in the bank on the same days Jalou II had detailed written procedures describing the casino manager sduties related to each step to be followed in the drop procedure counting the retrieved cash preparing drop reports and maintaining a specified cash balance in the casino safe Near the end of May 2002 Ms Liner the general manager instructed Ms Grow to delay making a regular delivery of cash for deposit with the courier Ms Grow complied with Ms Liner request despite her s 1 Debra A Grow is a defendant in the principal action but occupies the status of plaintiff in the reconventional demand filed by her and her husband against the plaintiffs in the principal action Because only the dismissal of the reconventional demand is at issue in this appeal for convenience we refer to Ms Grow and her husband as plaintiffs rather than defendants or plaintiffs in reconvention See La C art 1040 P 2 knowledge that the delay violated Jalou II written procedures requiring s regular scheduled deposits It thereafter became an established practice initiated at Ms Liner sdirection for Ms Grow to delay the regular deposits until the next regularly scheduled deposit date or even later The practice continued on an uninterrupted basis until October 31 2002 when Jalou II s management discovered its existence The treasurer of the Louisiana division of Jalou II parent corporation s had conducted an initial internal audit of the Houma Truck Stop and Casino that revealed chronic cash shortages and an ongoing pattern of delayed deposits from both the convenience store and casino operations suggestive of a cash kiting or lapping scheme On October 31 2002 the treasurer reported his initial findings to Thomas E Hamilton the vice president of finance of Jalou II parent corporation Colonial Management s On the morning of November 1 2002 Rick Gottardi a vice president of Jalou II reported the theft of 210 to the Houma Police 69 014 Department Officer Lawrence Arceneaux was dispatched to the Houma Truck Stop and Casino where he interviewed Mr Gottardi and two other managerial employees of Jalou IL According to his initial written report Officer Arceneaux was advised that approximately 87 had been 69 836 stolen from the convenience store operation and that approximately 2 Kiting is more commonly associated with the illegal practice of checkkiting or writing a check against a bank account with insufficient funds in the hope that funds from a previously deposited check will be credited to cover the amount of the outstanding check See Black Law Dictionary 253 887 8th ed 2004 s Lapping is an embezzlement technique involving the use of accounts receivable from a customer or revenue from a later accounting period to cover shortages due to the responsible stheft in accounts receivables from another customer or revenue from an employee earlier period See Black Law Dictionary 896 8th ed 2004 Cent Bucks Sch Dist v s Cogan 719 A 7 8 Commw Ct Pa 1998 and U v Crook 213 Fed 754 2d S Appx 756 10th Cir 2007 See also Ray Gibbins Certified Welders Inc v Griggs 543 So 2d 68 70 La App 1st Cir 1989 According to the evidence in the record the scheme employed by Ms Liner involved the second variant of lapping described above in which tomorrow sfunds are used to pay for today sfunds See State v Plunkett 497 2d A 725 727 R 1985 I 3 00 178 122 had been taken from the casino operation Jalou Il s managerial employees also advised Officer Arceneaux that the possible suspects in the theft were Ms Liner and Ms Grow the two employees with access to the convenience store and casino cash receipts After Officer Arceneaux completed his initial investigation the investigation was transferred to the police department sdetective bureau Detectives Kyle Faulk and Cory Johnson were assigned to conduct the investigation of the reported theft and went to the Houma Truck Stop and Casino later that morning According to Detective Faulk written report s dated November 19 2002 Mr Gottardi and another managerial employee of Jalou 11 advised Detective Faulk that Ms Liner and Ms Grow were the two subjects that handled the money responsible sic for the deposits He was also provided a copy of the initial audit showing an approximate figure of 69 014 210 missing Ms Liner and Ms Grow were both questioned on November 1 2002 Ms Liner initially denied any involvement in the misappropriation of the missing funds and denied having a gambling problem after being questioned by Detective Faulk regarding gambling stubs casino cards and unexplained large bank deposit and withdrawal receipts found in her purse Ms Grow was also interviewed by Detective Faulk and advised him that she had no knowledge of any missing funds and denied involvement in any theft of funds She did admit to hold back deposits at Ms Liner ing s direction and further admitted that the practice was not normal and was wrong to do During the course of her questioning Ms Liner eventually confessed to having taken approximately 50 to 80 in cash and later that 000 000 day signed a written statement in which she stated 4 Last fall I had a shortage in the safe and I took money from the bank deposit to replace it After that I took money out of the bank deposits five or six hunderd sic dollars at a time It just became a habit I have a gambling habit I didn tgo out and buy a bunch of stuff with it I gambled locally and I went to Mississippi a few times The amount of money that I took may be seventyfive or eighty thousand and I not sure about m that it could be more or less I didn tsee anyone else take money At the time Ms Liner was providing her written statement to Detective Faulk Detective Johnson was obtaining a written statement from Ms Grow The statement signed and initialed by Ms Grow read as follows I have been working for the Casino for approximately 13 months I was employed as the casino manager I was to supervise the employees and to take care of all the money matters from that business during that time Sandra Liner was my supervisor For the past few months the safe was short Sandra would tell me to hold the deposits from the video poker machines back and make deposits at another time For example I would make a drop of the video poker machines and Sandra would have me hold that deposit until Thursday or the following Monday Monday and Thursday are the days of the week that the drop is made from the video poker machines The safe was supposed to hold 200 00 000 Sandra trained me for the manager job At first I would s make the deposit on the day that the drop was made and it would be given to the bank courier For the past few months I have given the courier a deposit that was days to about a week late This was done per Sandra request s I have no knowledge that Sandra was taking any money from the casino I have not taken any money from the store or the casino I also have no knowledge of anyone else taking any money from the store or the casino I do recall a time where Sandra took 25 from the 00 000 casino safe and said she was depositing it into another casino s account This occurred towards the end of September or beginning of October of this year She did bring back a deposit slip for the money A few months ago Sandra told me that she had to take 00 000 20 or 25 out of the safe to deposit it in the 00 000 ATM account She said the account was overdrawn and she 5 had to put money back into it to cover some checks that were outstanding I never seen sic the deposit slip for that money Ms Grow employment with Jalou II was terminated on November s 1 2002 following a telephone conversation between her and Mr Gottardi Her written separation notice provided that she was discharged for Not Following Proper Procedure Resulting in Lost Money sic Ms Liner was arrested on November 4 2002 and charged with felony theft The police investigation of the theft continued and on November 6 2002 Detective Faulk received further information from a Jalou II representative that the amount determined to be missing as of that time was approximately 226 87 231 On November 13 2002 on the advice of counsel Ms Grow voluntarily appeared at the Houma City Police headquarters where she was arrested by Detective Faulk and charged with one count of felony theft theft over 500 under La R 14 00 S 67 On December 15 2002 Mr Hamilton sent a detailed memorandum to the insurance agency that underwrote Jalou II commercial crime policy s issued by Fidelity and Deposit Company of Maryland Fidelity In that memorandum Mr Hamilton set forth Jalou II customary procedures s relating to the daily accounting procedures for the casino convenience store and restaurant the video poker machine drops cash held in the casino safe and scheduled bank deposits He also described the final findings of the internal audit According to the audit two methods were used to accomplish the theft of the missing funds 1 the kiting of the regularly scheduled deposits and 2 direct theft from the casino safe Examination of the daily accounting reports were compared with the deposit records confirming substantial time lags in making the regular deposits for both the convenience store and the casino revenues The kiting of the convenience 0 store deposits began in March 2001 while the kiting ofthe casino deposits began around the end of May 2002 Some deposits from the video poker machine drops were documented as being ten to fifteen days late The actual total amount taken was determined to be 261 consisting of 71 945 96 012 72 from the convenience store deposits 154 from the 75 932 casino deposits and 35 cash from the casino safe line item account 00 000 for ATM automatic teller machine loads On September 5 2003 Jalou II and Fidelity filed a joint petition seeking recovery of the missing funds from Ms Liner and Ms Grow It was alleged that the total loss was in the amount of 261 and was a 71 954 result of the actions of the defendants Sandra L Liner and Debbie sic A Grow On September 24 2003 Ms Liner filed an answer in the form of a general denial of the petition allegations Ms Grow filed her answer on s November 25 2003 generally denying the petition allegations and her s liability and further specially pleading the affirmative defense of error s and mistake and contributory negligence On January 5 2004 the Terrebonne Parish district attorney moved to nolle prosequi the charge of felony theft against Ms Grow on the grounds of insufficient evidence based upon the current investigations by law enforcement On August 30 2004 Ms Grow and her husband Randy Grow plaintiffs filed a reconventional demand against Jalou 11 and Fidelity alleging that the allegations resulting in her arrest were made without probable cause and with malice the criminal charges against her were nolle prosequied and that the defendants were liable to them for damages for 3 Those delays differ substantially from Ms Grow account in her statement and later s deposition in which she expressed her belief that no delay exceeded a week VA malicious prosecution Plaintiffs also alleged that they were defamed by allegations in the defendants civil petition that Ms Grow stole or caused to be stolen the amount of the missing funds claimed and that the defendants malicious prosecution and defamation caused her stress that aggravated her diabetes and kidney disease On October 21 2004 Fidelity filed its answer to plaintiffs reconventional demand generally denying its allegations and incorporating a peremptory exception of no cause of action Jalou II answer to plaintiffs reconventional demand was filed on s December 21 2004 In its answer it admitted that its petition in the principal action alleged that the loss claimed resulted from the actions of both Ms Liner and Ms Grow and that the criminal charges against Ms Grow were nolle prosequied but otherwise denied all of plaintiffs other substantive allegations Jalou II specifically denied that it ever made a false or defamatory statement regarding plaintiffs that there was any unprivileged communication to a third party and that any statement it did make was malicious or negligent Finally it included a dilatory exception of prematurity as to plaintiffs cause of action for defamation On December 1 2008 Jalou II filed a motion for summary judgment together with a supporting memorandum and exhibits contending that it was entitled as a matter of law to judgment dismissing plaintiffs causes of action for both malicious prosecution and defamation a Fidelity filed a similar motion for summary judgment on December 10 2008 4 The motion was mistakenly filed in the names ofboth Jalou II and Fidelity by Jalou II s counsel of record defending the reconventional demand Fidelity later filed its own motion for summary judgment through its own counsel who had previously filed its separate answer to the reconventional demand P1 Both motions for summary judgment were originally fixed for hearing on January 30 2009 On motion of plaintiff Debra A Grow the hearing on the motions was continued to March 27 2009 Jalou II subsequently moved to continue the hearing again and the hearing was re fixed for May 1 2009 At the conclusion of the hearing the trial court took the matter under advisement for decision granting the parties leave to file post hearing memoranda The trial court rendered and signed its judgment on the motions on May 28 2009 granting summary judgment in favor of both defendants and dismissing plaintiffs reconventional demand with prejudice Plaintiffs then moved to amend the summary judgment to certify it as a final judgment for purposes of appeal On July 10 2009 the trial court signed an ex parte order granting the motion to amend the judgment and certifying it as final An amended judgment again granting both motions and certifying the judgment as a final judgment was signed on July 24 2009 On the same date plaintiffs filed a motion for a devolutive appeal ASSIGNMENTS OF ERROR Plaintiffs contend that the trial court erred in 1 granting the defendants motions for summary judgment and dismissing plaintiffs reconventional demand for defamation and malicious prosecution and 2 allowing the defendants to assert the defense of conditional or qualified 5 The trial court certified the summary judgment as final for purposes of appeal pursuant to La C art 1915 relating to partial judgments and partial summary judgments P B A reconventional demand is a civil action or suit within the meaning of La C art P 421 even though asserted in response to a principal action As the summary judgment dismissed plaintiffs reconventional demand or suit against both defendants and adjudicated all of the claims demands issues or theories asserted therein certification of the judgment as final under La C art 1915 was unnecessary and the P B amendment to the original judgment served no actual procedural purpose See La C P art 1915 and 13 La Cart 1911 and Block v Bernard Cassisa Elliott 3 A 1 P Davis 041893 p 7 n La App 1st Cir 11 927 So 339 344 n 4 05 4 2d 4 W privilege in their motions for summary judgment when they did not plead it as an affirmative defense in their answers to the reconventional demand DISCUSSION As later clarified by plaintiffs their claims for defamation and malicious prosecution for statements contributing to the criminal investigation and arrest of Ms Grow are directed against Jalou II only Their claims for defamation for the allegations of the civil petition filed by Fidelity and Jalou II are directed against both of those defendants Summary Judgment Summary judgment is subject to de novo review on appeal using the same standards applicable to the trial court determination of the issues s Peak Performance Physical Therapy Fitness LLC v Hibernia Corp 07 2206 p 5 La App 1st Cir 6 992 So 527 530 writ denied 08 08 2d 1478 La 10 992 So 1018 The summary judgment procedure is 08 3 2d expressly favored in the law and is designed to secure the just speedy and inexpensive determination of non domestic civil actions La C art P 2 A 966 Summary judgment is appropriate if the pleadings depositions answers to interrogatories admissions and affidavits in the record show that there is no genuine issue as to material fact and that the mover is entitled to judgment as a matter of law La C art 966 P 8 The mover has the burden of proof that he is entitled to summary judgment See La C art 966 If the mover will not bear the P 2 C burden of proof at trial on the subject matter of the motion he need only demonstrate the absence of factual support for one or more essential elements of his opponent claim action or defense s La P C art 2 C 966 If the moving party points out that there is an absence of factual support for one or more elements essential to the adverse party claim s 10 action or defense then the nonmoving party must produce factual support sufficient to satisfy his evidentiary burden at trial La C art 966 P 2 C If the mover has put forth supporting proof through affidavits or otherwise the adverse party may not rest on the mere allegations or denials of his pleading but his response by affidavits or otherwise must set forth specific facts showing that there is a genuine issue for trial La C art 967 P B Because of their chilling effect on the exercise of freedom of speech defamation actions have been found particularly susceptible to summary judgment Kennedy v Sheriff of E Baton Rouge 05 1418 p 25 La 06 10 7935 So 669 686 Summary judgment being favored in the law 2d is a useful procedural tool and an effective screening device to eliminate unmeritorious defamation actions that threaten the exercise of First Amendment rights Id The Alleged Defamation and Malicious Prosecution in Reporting the Suspected Theft Plaintiffs contend that Ms Grow was defamed by Jalou II s communications to the police reporting the theft of its funds The particular statements forming the basis of that alleged defamation were allegedly documented in police investigative reports previously described above As described by plaintiffs the particular statements by Jalou II representatives s reported a large theft in which an amount was stolen from the convenience store operation and an additional amount taken from the casino operation and identifying the possible suspects in the theft as Ms Liner and Ms Grow The Alleged Defamation in Defendants Petition In their petition in the principal action Jalou II and Fidelity alleged that Fidelity issued a Commercial Crime Policy to Jalou II and that t he it policy protected the insured from loss resulting from the dishonesty of its employees as defined in the policy They alleged that Jalou II sustained a loss of 261 through the acts of defendants Sandra L Liner and 71 945 Debbie sic A Grow and that Jalou II submitted proof of its loss under s Fidelity policy They further alleged that after investigating Jalou II s claim Fidelity determined that the loss had been sustained and was covered under the policy and accordingly paid its policy limits of 150 to 00 000 Jalou II a a direct result of the conduct of defendants Sandra L Liner s and Debbie sic A Grow Attached as exhibits to the petition were copies of the declarations page and various endorsements of Fidelity spolicy confirming coverage for employee theft with a limit of 150 per occurrence and a 00 000 deductible amount of 2 per occurrence Another exhibit was a 00 500 sworn Fidelity Proof of Loss Form executed by Mr Hamilton the vice president of finance of Jalou II parent corporation attesting to its loss s claimed under the policy The form stated that Jalou II was presenting a claim for loss under Fidelity policy related to Claimant former s s s employee Sandra Liner and Debbie sic Grow employed in the s position of general manager and casino manager said loss being discovered on the date of October 31 2002 The form also required a description of the loss items upon which the Claimant loss and all sums s due and owing because of Claimant sabove named employees were based The loss items were described as cash from bankrolls at location in the amount of 261 Mr Hamilton also executed a sworn verification at 71 945 6 A copy of any written instrument which is an exhibit to a pleading is a part thereof for all purposes La C art 853 P 7 Because the claimed loss exceeded the coverage limits the deductible amount did not apply under the policy terms 12 the bottom of the form that the Claimant former employee named s s herein did convert or cause to be converted misappropriated or otherwise caused a covered loss equal to the amount of claim herein indicated in this statement Finally another exhibit to the petition was a notarized Release and Assignment executed by Mr Hamilton on behalf of Jalou II in favor of Fidelity by which Jalou II acknowledged satisfaction of its claim under the policy and Fidelity subrogation to its right to pursue recovery of the sum s paid under the policy That document also described the proof of loss submitted by Jalou II as alleging that through the acts of employee dishonesty by the Insured employees Sandra Liner and Debbie sic Grow s Insured has sustained a net loss of 261 71 945 The Affirmative Defense of Conditional or Qualified Privilege In Louisiana privilege relating to a communication is a defense to a defamation action Kennedy 05 1418 at p 16 935 So at 681 2d The defense is founded upon the principle that as a matter of public policy in order to encourage the free communication of views in certain defined instances a person is sometimes justified in communicating defamatory information to others without incurring liability Id citing Toomer v Breaux 146 So 723 725 La App 3rd Cir 1962 2d Privileged communications may be either 1 absolute such as statements by judges in judicial proceedings or legislators in legislative proceedings or 2 conditional or qualified Kennedy 05 1418 at p 16 935 2d So at 681 The basic elements of a conditional privilege are 1 good faith 2 an interest to be upheld 3 a statement limited in scope to that interest 4 a proper occasion for the communication of the statement and 13 5 publication in a proper manner and to proper parties only Id citing Madison v Bolton 234 La 997 102 So 433 439 n La 1958 2d 7 The analysis of whether a conditional privilege exists is a twostep process Kennedy 051418 at pp 17 18 935 So at 682 First it must be 2d determined as a matter of law whether the circumstances in which a communication was made satisfy the legal requirements for invoking the conditional privilege Smith v Our Lady of the Lake Hosp 932512 p 18 La 7639 So 730 745 The second step requires a determination 94 5 2d of whether the privilege was abused which requires a factual determination that malice or lack of good faith existed Id Conditional privilege is an affirmative defense to a cause of action for defamation that must be affirmatively or specially pleaded in a defendant s answer See Costello v Hardy 03 1146 p 16 n La 1 864 So 13 04 21 2d 129 142 n and La C art 1005 In their second assignment of error 13 P plaintiffs contend that Jalou II and Fidelity did not affirmatively plead the defense of conditional or qualified privilege in their answers to plaintiffs reconventional demand and that the trial court was therefore precluded from considering that issue for purposes of summary judgment We address this assignment of error first as the determination of that procedural issue will substantially affect our determination of the first and primary assignment of error relating to the merits of the summary judgment In its answer to plaintiffs reconventional demand filed on December 21 2004 Jalou II denied plaintiffs allegations that it defamed her After responding to the allegations of each paragraph of the reconventional demand it set forth the following allegations in an additional paragraph of its answer 14 This defendant specifically denies that it ever made a false or defamatory statement regarding the plaintiffs It further denies that there was any unprivileged publication to a third party Nor was there any maliciousness or negligence in any statement that it did make regarding plaintiffs Emphasis added On its face and in the context of the other sentences the emphasized sentence raised the issue of the privileged nature of any statement Jalou II made and published to a third party By denying that any statement it did make to a third person was unprivileged Jalou II in effect alleged that any such statement was privileged We conclude that such allegation is adequate for purposes of pleading the affirmative defense of conditional privilege and gave plaintiffs fair notice of that defense See Paxton v Ballard 289 So 2d 85 8688 La 1974 and La C arts 865 and 5051 Thus plaintiffs P had notice that the affirmative defense of conditional privilege had been placed at issue by Jalou II almost four years prior to the filing ofdefendants joint motion for summary judgment In addition to the affirmative allegation in its answer Jalou II again expressly and specifically invoked the defense of conditional privilege in its motion for summary judgment In a separate addendum attached to its motion Jalou II listed the material facts that it contended were undisputed including the following 2 There is no material issue of fact that at any time did defendants ever utter a defamatory statement or unprivileged communication to a third parry 5 There is no factual support sufficient to establish that plaintiffs will be able to satisfy their evidentiary burden of proof at trial in that they are unable to show that Jalou 11 report to police was not a qualified s privilege or that the report was made in bad faith or with malice essential elements of recovery 15 In its answer to plaintiffs reconventional demand Fidelity did not assert an affirmative allegation raising the defense of privilege It did however incorporate a peremptory exception of no cause of action in its answer and it later filed its own motion for summary judgment adopting by reference the allegations of Jalou II motion and the argument of its s supporting memorandum both of which specifically addressed the defense of conditional privilege By definition an affirmative defense raises a new matter or issue that will defeat the plaintiffs claim on the merits even assuming that claim is valid and that the allegations of the petition are true See Webster v Rushing 316 So 111 114 La 1975 Fishbein v State ex rel LSU 2d Health Sciences Ctr 06 0549 p 6 La App 1st Cir 3 960 So 67 07 9 2d 71 2 writs denied 07 0730 La 6959 So 495 and 07 0708 La 07 22 2d 07 22 6 959 So 505 Implicit in that definition is the conclusion that a 2d defendant is not required to raise an issue as an affirmative defense if it does not raise a new matter Fishbein 06 0549 at p 6 960 So at 72 The 2d purpose of pleading a special defense is to give fair and adequate notice of the nature of the defense so that the plaintiff is not surprised Webster 316 2d So at 114 It is particularly significant here that the defamation alleged to have been committed by the defendants occurred in the context of their reporting suspected criminal activity and pursuit ofa civil remedy for recovery of their losses attributable to such activity and that such context is self evident from the allegations of plaintiffs own petition In the Kennedy case which thoroughly discussed the legal grounds constitutional implications and 8 An affirmative defense is generally defined as a defendant assertion of facts and s arguments that if true will defeat the plaintiffs claim even if all the allegations in the complaint are true Black sLaw Dictionary 451 8th ed 2004 III social utility of the conditional privilege the supreme court expressly noted that the allegations of the plaintiff petition itself confirmed the s circumstances giving rise to the privilege Kennedy 051418 at p 27 n 18 935 So at 687 n 2d 18 Similarly as emphasized by Fidelity in the trial court and on appeal it has been held that if the existence of an affirmative defense is apparent on the face of the factual allegations of the petition a court may properly consider such a defense at issue for the purpose of determining its applicability even on summary judgment See Rogers v Ash Grove Cement Co 34 p 6 La App 2nd Cir 11 799 So 841 846 writ 934 01 2 2d denied 01 3187 La 2 808 So 351 and Vincent v Miller 03 0759 02 8 2d p 2 La App 3rd Cit 2 867 So 780 783 04 4 2d Under such circumstances the affirmative defense has in effect been placed at issue by the plaintiff himself and it would be unduly technical and pedantic to insist upon rigid adherence to the requirement that the defense be specially pleaded in an answer when it is clear that the defendant has in fact asserted the defense Louisiana Code of Civil Procedure article 1154 provides When issues not raised by the pleadings are tried by express or implied consent of the parties they shall be treated in all respects as if they had been raised by the pleading Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time even after judgment but failure to so amend does not affect the result of the trial of these issues If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings 9 The allegations of plaintiffs own petition thus tend to satisfy the first step in establishing the existence of the conditional privilege as a matter of law by showing the circumstances in which the communications were made See Smith 93 2512 at p 18 639 So at 745 2d 10 This conclusion accords with the liberal construction to be accorded our procedural articles with due regard for the fact that rules of procedure implement the substantive law and are not an end in themselves La C art 5051 See also La C art 865 P P 17 the court may allow the pleadings to be amended and shall do so freely when the presentation of the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that the admission of such evidence would prejudice him in maintaining his action or defense on the merits The court may grant a continuance to enable the objecting party to meet such evidence A trial court has great discretion to admit or to disallow evidence subject to an objection based upon the scope of the issues and pleadings and to determine whether evidence is encompassed by the general issues raised by the pleadings Barabay Prop Holding Corp v Boh Bros Constr Co C L 07 2005 p 5 La App 1st Cir 5 991 So 74 78 writ 08 2 2d granted 08 1185 La 08 10 993 2d So 1270 writ denied as improvidently granted 08 1185 La 3 6 So3d 172 It has likewise 09 17 been generally recognized that a trial court has much discretion under La P C art 1154 to allow a party to amend his pleadings Id At the hearing of May 1 2009 Jalou II counsel argued that the s affirmative defense of conditional privilege was at a minimum implied in its pleadings and that even if it were not the defendants could still seek to amend their answers to plead the defense given the case procedural s posture On that point plaintiffs counsel responded that the deposition of Mr Hamilton was never taken because the defense of conditional privilege was never pleaded In their post hearing memorandum to the trial court plaintiffs similarly argued that they would have the right to object to leave being granted to defendants to amend their answers due to the large amount of time that has passed and that if leave were granted it would only be fair to allow Grow time to do discovery and take depositions on the issue of good faith Significantly however plaintiffs never moved to strike or exclude the defense and did not move for another continuance of the 1 W hearing pursuant to either La C arts 1154 or 967 P C More importantly in light of the fact that plaintiffs were indisputably aware that both defendants were in fact asserting that affirmative defense by December 10 2008 at the latest when Fidelity filed its motion adopting that of Jalou I1 well over four months prior to the hearing they cannot be said to have been surprised or prejudiced as to that issue and plaintiffs clearly had ample opportunity to conduct further discovery and to submit opposing affidavits in the interim between the filing of the defendants motions and the hearing In granting defendants motions the trial court did not expressly rule on the issue of the enlargement or amendment of the pleadings under La P C art 1154 but by implication it obviously permitted the enlargement and treated the issue of conditional privilege as having been raised See Robinson v Benson Motor Co ofNew Orleans 98 203 p 5 La App 5th Cir 8 717 So 1252 1254 and Grant v Boh Bros Constr Co 98 25 2d Inc 00 1227 P 3 La App 4th Cir 4 785 So 1041 1043 In 01 25 2d light of all the foregoing considerations we conclude that the trial court did not abuse its discretion or otherwise err in implicitly permitting enlargement or amendment of Fidelity answer and in considering the issue s of conditional privilege Accordingly plaintiffs second assignment of error 11 Louisiana Code ofCivil Procedure article 967 provides C If it appears from the affidavits of a party opposing the motion that for reasons stated he cannot present by affidavit facts essential to justify his opposition the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as isjust Emphasis added 19 has no merit and all issues bearing upon the merits of the summary judgment are properly before us Was Summary Judgment Appropriate Words that convey an element of personal disgrace dishonesty or disrepute are defamatory Costello 03 1146 at p 13 864 So at 140 The 2d question of whether the words convey a particular meaning that is defamatory is ultimately a legal question Id Four elements are necessary to establish a claim for defamation 1 a false and defamatory statement concerning another 2 an unprivileged publication to a third party 3 fault negligence or greater on the part of the publisher and 4 resulting injury Kennedy 05 1418 at p 4 935 So at 674 Emphasis added The element 2d of fault is generally referred to in the jurisprudence as malice actual or implied Costello 03 1146 at p 14 864 So at 140 Ifeven one of those 2d elements is found lacking the cause of action fails Kennedy 05 1418 at p 16 935 So at 681 2d In Louisiana defamatory words have been classified as either words that are defamatory per se or words susceptible of a defamatory meaning Costello 03 1146 at p 13 864 So at 140 2d Words that expressly or implicitly accuse another of criminal conduct or that by their very nature tend to injure one personal or professional reputation even without s considering extrinsic facts or surrounding circumstances are considered defamatory per se Id 03 1146 at pp 13 14 864 So at 140 When a 2d plaintiff proves publication of words that are defamatory per se the elements of falsity and malice or fault are presumed but may be rebutted by the defendant Id 03 1146 at p 14 864 So at 140 When the words 2d 12 Our present consideration of the issue of conditional privilege which has been fully briefed by the parties also serves the favored goal of judicial economy See Grant 00 1227 at p 4 785 So at 1043 2d 20 are not defamatory per se a plaintiff must prove in addition to defamatory meaning and publication the elements of falsity malice or fault and injury Id A good faith report to law enforcement officers of suspected criminal activity may appropriately be characterized as speech on a matter of public concern Kennedy 05 1418 at p 9 935 So at 677 Louisiana courts have 2d recognized that the public has an interest in possible criminal activity being brought to the attention of the proper authorities and have extended a conditional privilege to reports made in good faith Id 05 1418 at p 19 935 So at 683 2d The conditional privilege is abused if the publisher a knows the matter to be false or b acts in reckless disregard as to its truth or falsity Id 05 1418 at p 22 935 So at 684 2d Plaintiffs emphasize that Jalou II never questioned Ms Grow about the findings of the audit or the facts underlying her delays in making deposits prior to contacting the police or prior to filing the civil petition with Fidelity and that the defendants malice i negligence or reckless e disregard for the truth should therefore be presumed They further argue for the same reason that genuine issue of material fact therefore exists as to the issues of the defendants malice and their good faith required to assert the conditional privilege In a case involving a private individual allegedly injured by a defamatory statement in a matter of public concern the applicable standard of fault or malice is the following One who publishes a false and defamatory communication is subject to liability if but concerning a private person only if he a knows that the statement is false and that it defames the other 21 b acts in reckless disregard ofthese matters or c acts negligently in failing to ascertain them Kennedy 05 1418 at p 15 935 So at 681 citing Restatement Second of 2d Torts 580B To establish reckless disregard of the truth a plaintiff must prove that the publication was deliberately falsified published despite the defendant s awareness of probable falsity or the defendant in fact entertained serious doubts as to the truth of his publication Kennedy 05 1418 at pp 289 935 2d So at 688 Even proof of gross negligence in the publication of a false statement is insufficient to prove reckless disregard under this standard Id 05 1418 at p 29 935 So at 688 Mere negligence in determining the 2d falsity of a statement or lack of reasonable grounds for believing it to be true is insufficient to prove abuse of the conditional privilege for communication of alleged wrongful acts to an official authorized to protect the public from such acts Id 05 1418 at p 22 935 So at 684 2d Louisiana Code of Civil Procedure article 966 provides that B summary judgment is appropriately rendered if the pleadings depositions answers to interrogatories and admissions on file together with the affidavits if any show that there is no genuine issue as to material fact and that mover is entitled to judgment as a matter of law Louisiana Code of Civil Procedure article 967 provides that s and opposing A upporting affidavits shall be made on personal knowledge shall set forth such facts as would be admissible in evidence and shall show affirmatively that the affiant is competent to testify to the matters stated therein Jalou II filed the affidavit of Mr Hamilton in support of its motion for summary judgment In his affidavit Mr Hamilton attested that at the time of the relevant events at issue he was the vice president of finance for Jalou 22 s II parent corporation and ultimately responsible for the supervision of all financial transactions in connection with Jalou II He testified that on October 31 2002 he was informed by Jalou II treasurer of the loss of s funds from the casino and convenience store deposits for the Houma Truck Stop and Casino He was also advised by the treasurer that the two employees responsible for the video poker machine drops and the bank deposits were Ms Liner and Ms Grow and that because they were the only employees in charge of the safe and the deposits there was a strong suspicion that they may have been involved in the defalcation Mr Hamilton further attested that a couple of months later after a full investigation and internal audit was conducted he spoke with Captain John Hogenstadt of the Houma Police Department and provided him with the result of that internal audit suggestive of a kiting scheme utilizing late bank deposits resulting in a loss of 261 71 945 Mr Hamilton testified that when he informed Captain Hogenstadt of the foregoing he did not accuse Debra Grow of theft or misappropriation but simply reported the loss and the supporting documentation to him Although he acknowledged that his statements to the police and to Fidelity attributed the financial losses to the actions of both Ms Liner and Ms Grow Mr Hamilton emphasized that at no time did he make any defamatory comments false accusations disparaging comments statements that he knew to be untrue about Ms Grow or false Finally he affirmed that he never possessed any malice or hatred toward Debra Grow In his affidavit Detective Faulk described the initiation of the criminal complaint and his interviews with representatives of Jalou II and Ms Grow Detective Faulk unequivocally confirmed that a no time did t 23 any representative of Houma Truck Plaza sic accuse Ms Grow of committing a theft that Jalou II representatives simply provided s information that its internal audit showed missing or unaccounted funds from the casino and that Ms Liner and Ms Grow were the two people responsible for the deposits of the casino funds Even if Jalou II representatives described Ms Grow to the police as a possible suspect in the theft and both defendants obliquely alleged that she committed acts of employee dishonesty in the release form attached to the civil petition and even if it is assumed that such statements were defamatory per se they were clearly privileged under the circumstances The pleadings admissions affidavits Ms Grow deposition and s other evidence in the record show that it is undisputed that the theft or conversion of the missing funds occurred that the practice of delayed deposits served to conceal the theft and that the ongoing kiting or lapping scheme was facilitated by Ms Grow acquiescence whether s knowing or negligent to Ms Liner directives s Plaintiffs presented no affidavits in opposition to those of Detective Faulk and Mr Hamilton In her deposition Ms Grow admitted that she had no personal knowledge that any employee agent or other representative of Jalou II advised the police that she personally stole from Jalou IL She further acknowledged that her claim of defamation related to the criminal charge was based solely upon the fact that she was arrested after the police were advised only that she was one of the two employees responsible for handling the missing funds In Costello v Hardy the Louisiana supreme court adopted a negligence standard of liability in defamation actions by private individuals involving matters of private concern Costello 03 1146 at pp 18 19 864 2d So at 143 In Kennedy as previously noted the same standard was 24 adopted for actions by private individuals in matters of public concern Kennedy 051418 at p 14 935 So at 680 Thus in this case the same 2d general legal principles applicable to the alleged defamation related to the criminal action apply to the alleged defamation in the civil action instituted by the defendants In cases of defamation alleged to arise from statements made in pleadings or otherwise in the course of a judicial proceeding the conditional privilege operates to protect minimally offensive allegations necessary to state a cause of action See Costello 03 1146 at p 16 n 13 864 So at 142 n As the supreme court has observed on a number of 2d 13 occasions l be free to allege facts constituting inappropriate itigants must conduct if there is any reasonable basis for such allegations and the misconduct is relevant to the proceeding Id citing Freeman v Cooper 414 So 355 359 La 1982 2d The allegations of the defendants civil petition incorporating the attached proof of loss and release forms plainly can be read as supporting a legally cognizable cause of action against Ms Grow for negligently facilitating and contributing to Ms Liner misappropriation of the missing s funds particularly when viewed in light of her undisputed knowledge of the irregularity of the delayed deposits their violation of established company policy and procedures and her admitted failure over an extended period of time to report Ms Liner violations to management s In light of the undisputed facts in the record the defendants have adequately rebutted plaintiffs conclusory allegations of bad faith malice and abuse of the privilege applicable to allegations in judicial proceedings and we conclude that the privileged allegations of the defendants civil petition are not defamatory as a matter of law 25 With regard to the claim against Jalou I1 for malicious prosecution our prior observations regarding the lack of proof as to the element of malice or negligence are applicable with equal force Malicious prosecution actions have never been favored in our law and the plaintiff in such an action must clearly establish that the forms of justice have been perverted to the gratification of private malice and the willful oppression of the innocent Johnson v Pearce 313 So 812 816 La 1975 An action for malicious 2d prosecution of a criminal proceeding such as that asserted by plaintiffs here requires the following elements 1 the commencement or continuance of an original criminal proceeding 2 its legal causation by the present defendant against the plaintiff who was the defendant in the criminal proceeding 3 the bona fade termination of the criminal proceeding in favor of the present plaintiff 4 the absence of probable cause for the criminal proceeding 5 malice and 6 damage to the plaintiff conforming to legal standards Miller v E Baton Rouge Parish Sheriff Dep s t511 So 446 452 La 2d 1987 In a malicious prosecution action there must be malice in fact Id 511 So at 453 Any feeling of hatred animosity or ill will toward the 2d plaintiff of course amounts to malice Id But malice is also found when the defendant uses the prosecution for the purpose of obtaining any private advantage as for example a means to extort money to collect a debt or to intimidate witnesses in another action Id Malice may also be inferred from lack of probable cause or a finding of reckless disregard for the other s person rights Id In his affidavit Detective Faulk testified that after being supplied the initial information regarding the missing funds from the audit and the identity of the employees responsible for managing and depositing the funds OW he and Detective Johnson conducted additional investigation He confirmed that Ms Grow advised him that she knew it was wrong to hold back the deposits Finally he verified that he made the decision to arrest Ms Grow ased b upon the information gathered his investigation and the statement given to him by Debra Grow Here the defendant employees merely s reported their suspicions to law enforcement personnel and the law enforcement personnel thereupon conducted their own investigation In light of Detective Faulk uncontradicted affidavit any chain of causation s regarding plaintiff subsequent detention was broken because t s he decision to detain plaintiff was made by the independent actions and investigation of Detective Faulk See Kennedy 05 1418 at p 32 n 935 20 2d So at 690 n Thus plaintiffs have further failed to show that they can 20 likely prevail as to the issue of causation See also Mitchell v Villien 08 1470 pp 21 3 La App 4th Cir 8 19 So 557 57273 writ 09 26 3d denied 09 2111 La 12 23 So 923 and Adams v Harrah 09 11 3d s Bossier City Inv Co L 41 pp 5 6 La App 2nd Cir 1 C 468 07 10 948 So 317 320 writ denied 070639 La 5 955 So 1281 2d 07 11 2d Summary judgment was clearly appropriate on the malicious prosecution claim as well as the defamation claims Conclusion Here the plaintiffs presented no direct competent proof of a genuine issue of material fact supporting the existence of bad faith malice or reckless disregard for the truth in the privileged statements made on behalf of Jalou II to a law enforcement agency They have further failed to meet their threshold burden of proof of abuse of the conditional privilege applicable to both Jalou II and Fidelity for those allegations relating to Ms Grow in their civil petition Finally plaintiffs have failed to show that they 27 will be able to meet their corresponding burden of proof of the elements of causation absence of probable cause and malice for their malicious prosecution claim In summary plaintiffs failed to put forth factual support sufficient to establish that they could probably meet their burden of proof at trial on essential elements of their defamation and malicious prosecution claims Based upon our de novo review of the record it is our conclusion that plaintiffs first assignment of error has no merit and that the trial court did not err in rendering summary judgment in favor of the defendants DECREE The summary judgment in favor of the defendants in reconvention Jalou Il Inc and Fidelity and Deposit Company of Maryland dismissing the reconventional demand ofthe plaintiffs in reconvention Debra A Grow and Randy Grow is hereby affirmed All costs of this appeal are assessed to the plaintiffs in reconvention AFFIRMED W
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