Rodney Wayne Kesanen, Respondent, vs. D & H Construction of Eveleth, Inc., et al., Defendants, East Range Builders & Supply, Inc., et al., Appellants.

Rodney Wayne Kesanen, Respondent, vs. D & H Construction of Eveleth, Inc., et al., Defendants, East Range Builders & Supply, Inc., et al., Appellants. A05-2434, Court of Appeals Unpublished, November 14, 2006.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2004).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A05-2434

 

 

Rodney Wayne Kesanen,

Respondent,

 

vs.

 

D & H Construction

of Eveleth, Inc., et al.,

Defendants,

 

East Range Builders

& Supply, Inc., et al.,

Appellants.

 

 

Filed November 14, 2006

Affirmed
Crippen, Judge*

 

St. Louis County District Court

File No. 69-C9-03-101226

 

William J. Egan, Oppenheimer Wolff & Donnelly, 45 South Seventh Street, Suite 3300, Minneapolis, MN  55402-1609 (for respondent)

 

Louis J. Cianni, Cianni Law Office, 101 West Lake Street, P.O. Box 586, Chisholm, MN  55719 (for appellants)

 

            Considered and decided by Worke, Presiding Judge, Toussaint, Chief Judge, and Crippen, Judge.

U N P U B L I S H E D   O P I N I O N

CRIPPEN, Judge

            Appellants, East Range Builders and Supply, Inc., and its president, David Strope, dispute the factual bases for the jury's determination that they are liable for defamation and tortious interference with contract.  Because the record supports the jury's findings, we affirm.  We also find no merit in the contentions that the statements were non-actionable opinions, that the individual appellant was not personally liable because he was speaking only as a corporate officer, or that appellants should enjoy absolute immunity based on national security grounds.

FACTS

            The Federal Aviation Administration (FAA) offered respondent Rodney Kesanen a position as an air traffic control specialist, contingent, in relevant part, on passing a security clearance.  He did not pass and did not get the job.  Respondent later learned that two former employers had made negative statements about him to the FAA investigator.

            Respondent sued his former employers, including appellants East Range Builders and David Strope for defamation and interference with contract.[1]  The district court denied appellant Strope's motion for summary judgment, holding that he could be held personally liable for his defamatory statements without piercing the corporate veil, and that there were genuine issues of material fact on the defamation claims.

            A jury trial was held and, at the close of respondent's case, appellants moved for a directed verdict, which the district court denied.  The jury subsequently returned a verdict in favor of respondent on both of his claims.  The jury found that appellant Strope made the defamatory statements that respondent had "lied to his supervisors about his work activities"; "I believe Mr. Kesanen stole company tools and materials, this allegation was never proven"; "I have often noticed the smell of alcohol on Mr. Kesanen"; and "I believe Mr. Kesanen has a drinking problem."  The jury awarded damages, and judgment was entered.  Appellants moved for judgment notwithstanding the verdict and a new trial, which the district court denied.  Appellants brought this appeal from the judgment and the orders denying motions for a contrary determination.

D E C I S I O N

1.

            Appellants argue that the district court erred in denying their motion for a directed verdict and posttrial motion for JNOV.  In considering a claim as to the sufficiency of the evidence, the same standard applies to directed verdict and JNOV.  Langeslag v. KYMN Inc., 664 N.W.2d 860, 864 (Minn. 2003).  A district court order denying a motion for directed verdict or JNOV is reviewed de novo.  Pouliot v. Fitzsimmons, 582 N.W.2d 221, 224 (Minn. 1998) (JNOV); Boone v. Martinez, 567 N.W.2d 508, 510 (Minn. 1997) (directed verdict).  The district court must be affirmed if, "in considering the evidence in the record in the light most favorable to the prevailing party, ‘there is any competent evidence reasonably tending to sustain the verdict.'"  Langeslag, 664 N.W.2d at 864 (quotation and citation omitted).

             "For a statement to be defamatory, it must be false, it must be communicated to another, and it must tend to harm the plaintiff's reputation."  Bol v. Cole, 561 N.W.2d 143, 146 (Minn. 1997) (citing Stuempges v. Parke, Davis & Co., 297 N.W.2d 252, 255 (Minn. 1980)).  Nonetheless, a defendant will not be liable if the defamatory statement was made pursuant to a conditional or qualified privilege and the privilege was not abused.  Lewis v. Equitable Life Assur. Soc'y, 389 N.W.2d 876, 889 (Minn. 1986).  To be conditionally privileged, the statement "must be made upon a proper occasion, from a proper motive, and must be based upon reasonable or probable cause."  Id. (quotation omitted).  "In the context of employment recommendations, the law generally recognizes a qualified privilege between former and prospective employers as long as the statements are made in good faith and for a legitimate purpose."  Id.  In that case, the plaintiff must prove actual malice to recover.  Id. 

            Appellant disputes the sufficiency of evidence to support the jury finding of malice.  The topic of malice is a fact question for the jury.  Id. at 890.  Malice is "actual ill-will or a design causelessly and wantonly to injure plaintiff."  Bol, 561 N.W.2d at 150 (citations and quotations omitted.)  It can be proven by "extrinsic evidence of personal spite, as well as by intrinsic evidence such as the exaggerated language of the libel, the character of the language used, the mode and extent of publication, and other matters in excess of the privilege."  Id. (quotation omitted).

            Appellant Strope argues that there was no evidence to support the jury verdict that he abused the qualified privilege or that he made the statements with malice as an individual, rather than in his capacity as president of East Range Builders.  He also contends that submitting the issue of the joint liability as to the individual and corporation on the special verdict form distorted the evidence on malice.

            The district court cautioned the jury that each defendant must be judged separately and instructed it as a matter of law that in making the statements to the FAA investigator, Strope acted in both his personal capacity and corporate capacity.  The court defined defamation and malice, and left it to the jury to decide whether Strope's statements were defamatory, false, and made with actual malice.

            The jury was faced with credibility questions, not only as to facts supporting the malice determination but also to support the defamation claims.  At trial, appellant Strope denied making or qualified most of the defamatory statements attributed to him in a summary by the FAA of a telephone conversation with Strope and found in Strope's signed and sworn statements.  In addition, although respondent testified Strope threatened him, Strope testified that he did not do so.  Thus, the jury had to decide whether to credit appellant's trial testimony or the statements he made as related in the testimony of respondent and the statements to the FAA investigator, and it obviously credited the latter.  "It is the jury's function to determine credibility."  Melina v. Chapman, 327 N.W.2d 19, 20 (Minn. 1982).  The appellate court may not weigh the credibility of the witnesses.  Lamb v. Jordan, 333 N.W.2d 852, 855 (Minn. 1983).

            Contrary to appellant Strope's arguments, the jury had evidence from which it could conclude he had personally acted with malice.  Respondent testified that after he left employment with appellant, the latter went to respondent's worksite, asked whether respondent had some of his equipment, and said that if he ever found out that respondent did, he would have his knees "busted" and that he did not care if it cost him $10,000.  Respondent also testified that either appellant or appellant's partner and vice president told him that he almost caused the company to go into bankruptcy.  Appellant himself testified to his belief that respondent's work resulted in a lawsuit that cost his company a lot of money and that respondent's bids cost the company money.

            It was within the jury's prerogative to find that appellant maliciously told inexplicable lies about respondent, blaming respondent for causing major business losses to his company.  See Bradley v. Hubbard Broad., Inc., 471 N.W.2d 670, 675 (Minn. App. 1991) (jury finding of malice upheld where supervisor accused employee of retrieving personal memo from supervisor's wastebasket, planned to "build an appropriate file" to replace her, and caused an allegation that employee was discharged for gross misconduct to circulate as office gossip), review denied (Minn. Aug. 2, 1991).  And the jury heard evidence sufficient to permit a finding that appellant was personally responsible for these statements.  Finally, the district court's instructions "fairly and correctly" stated the applicable law, and the verdict form was well within its discretion.  See Russell v. Johnson, 608 N.W.2d 895, 898 (Minn. App. 2000), review denied (Minn. June 27, 2000) (addressing challenge to instructions and verdict form).

2.

            Appellants also argue that they were entitled to a directed verdict or JNOV because respondent could not prove a causal connection between the defamatory statements and the FAA's decision that respondent did not pass the security clearance for the position as an air traffic controller.  Appellants argue that even if the FAA used the statements, they were not factors that would have disqualified respondent from employment with the federal government, as indicated by an exhibit detailing the criteria used to determine a person's suitability for FAA employment.  Further, appellants fault respondent for failing to call any FAA witnesses to support his claim.

            The jury found that each of the defamatory statements affected respondent in his business, trade, profession, office, or calling.  As appellants acknowledge, in respondent's non-selection letter, the FAA stated:  "The decision for your non-selection was based on the information provided in your questionnaire for national security positions (SF-86) and your background investigation interviews."  Although the letter did not specifically refer to appellant's statements, the only negative interviews were given by appellant Strope and the defaulting defendant, and these facts support the jury's finding.  Contrary to appellants' arguments, the defamatory statements relate to factors to be considered in determining suitability of applicants for hire by the FAA.  The evidence was sufficient to support the jury's verdict.

3.

            Further addressing the district court's denial of their motions, appellants contend there was insufficient evidence to support the jury's verdict as to appellant's tortious interference with respondent's contract.  The claim of tortious interference with contract has five elements:  "(1) the existence of a contract; (2) the alleged wrongdoer's knowledge of the contract; (3) intentional procurement of its breach; (4) without justification; and (5) damages."  Kjesbo v. Ricks, 517 N.W.2d 585, 588 (Minn. 1994) (quotation omitted). 

            To establish a tortious interference claim, it must be shown that the alleged wrongdoer had knowledge of the contract.  Id.  Appellants argue that the testimony showed that Strope had no knowledge of a contractual relationship or of a benefit that respondent would receive.  Constructive knowledge of the existence of a contract satisfies this element.  Id. at 588 n.3.  "It is enough if the defendant had knowledge of facts which, if followed by reasonable inquiry, would have led to complete disclosure of the contractual relations and rights of the parties."  Id.

            The jury was instructed as to the elements of this tort, including knowledge, and it found intentional interference.  The individual appellant testified that the FAA investigator never told him that respondent had applied for a position as an air traffic controller, but instead told him it had something to do with a security clearance, and that he knew "[i]t had to be something to do with the federal government."  But appellant's signed and sworn statement to the FAA investigator states that "Mr. Kesanen is a very unreliable employee and I would strongly discourage federal employment."  Although appellant testified that this would not have been something that he would have said that way, he also testified that he remembered saying "I certainly would be uncomfortable riding in an airplane I thought he was controlling."  He further stated, "certainly [respondent] wasn't organized and didn't follow any basic criteria.  I mean, it just didn't reflect somebody that could handle a position of that responsibility, but that was my opinion."  This provided the jury with sufficient evidence from which to conclude that appellants had sufficient knowledge, at least with reasonable inquiry, that respondent sought a government employment position.[2]

            Finally, there is nothing to sustain appellants' supplemental argument that, by the time the individual appellant gave his statements to the FAA investigator, appellant's contract had already been breached.  The evidence supports the jury's intentional interference finding.

4.

            Appellants argue that the claimed defamatory statements were incapable of being proven false because they were merely opinions. 

            "[P]rivate plaintiff/private issue defamation actions must be analyzed under state common law principles."  Weissman v. Sri Lanka Curry House, Inc., 469 N.W.2d 471, 473 (Minn. App. 1991) (footnote omitted).  Minnesota common law on defamation calls for examining statements without distinguishing between fact and opinion.  Id.  "Words are defamatory when they tend to injure a plaintiff's reputation and expose the plaintiff to public hatred, contempt, ridicule, or degradation."  Church of Scientology of Minn. v. Minn. State Med. Ass'n Found., 264 N.W.2d 152, 155 (Minn. 1978).  Whether defamation is reasonably conveyed by the language is a question for the court; if words are capable of defamatory meaning, the jury must decide whether they are so understood.  Utecht v. Shopko Dep't Store, 324 N.W.2d 652, 653-54 (Minn. 1982) (holding that notice posted on cash register reading "Shopper's Charge Robert Utecht Do Not Accept" was jury issue as to defamation to determine whether this meant card was not to be accepted due to a loss or a theft, or whether it was due to poor credit).

            The district court held that the statements appellants challenge were all capable of a defamatory meaning.  These statements include that respondent lied to his supervisor about his work activities, that he stole company tools and materials, that he often smelled of alcohol, and that he had a drinking problem.  The district court correctly applied the law and properly gave the issue of defamation based on these statements to the jury.  See Church of Scientology, 264 N.W.2d at 155 (statement charging another with fraud or dishonesty was defamatory); Weissman, 469 N.W.2d at 473 (holding that statement that former employee was dishonest is actionable defamation implying commission of specific acts of dishonesty).  And the evidence supported the jury's conclusion that these were defamatory statements.

5.

            The individual appellant challenges the district court's ruling that he should be held liable individually and in his corporate capacity for his defamatory statements.

            A corporate officer may be individually liable for tortious actions when the officer personally takes part in the commission of the tort.  Stelling v. Hanson Silo Co., 563 N.W.2d 286, 290 n.4 (Minn. App. 1997) (noting negligence cannot be imputed to corporate officer unless officer participated in or directed or was negligent in failing to learn of and prevent the tort); Universal Lending Corp. v. Wirth Cos., 392 N.W.2d 322, 326 (Minn. App. 1986) (noting that officer may be liable for corporation's conversion of another's property if officer actually participated in tortious transaction).  This individual liability of an officer for torts he or she actually commits does not depend on whether the plaintiff can produce sufficient evidence to "pierce the corporate veil."  In re Dougherty, 482 N.W.2d 485, 490-91 (Minn. App. 1992) (holding plaintiff not required to pierce corporate veil where action was not taken against person solely based on his status as stockholder or officer of corporation), review denied (Minn. June 10, 1992).

            Appellant acknowledges that individual liability exists when a corporate officer participates in tortious acts.  But he argues that there are no facts showing that he performed his duties with malfeasance, nonfeasance, or misfeasance; instead, he contends that all acts were based on the employment relationship and his performance as president of the corporation, not on his acts as an individual.  This argument, however, rests on his reconstruction of the facts.  The jury's determination of his malice is supported by the evidence.

6.

            Finally, appellants argue that they should have an absolute privilege against liability for defamation as those who are "put in a special position of giving national security information to federal investigators to protect and defend the American public."

            Absolute privilege will protect a defendant against defamatory statements, even if made with malice.  Bol, 561 N.W.2d at 148.  Whether a privilege exists is a question of law.  Buchanan v. State, Dep't of Health, 573 N.W.2d 733, 736 (Minn. App. 1998), review denied (Minn. Apr. 30, 1998).

            "For absolute privilege to apply, the public interest served must be one of paramount importance, such that it is entitled to protection even at the expense of failing to compensate harm to the defamed person's reputation."  Bol, 561 N.W.2d at 149.  It is "confined within narrow limits."  Mathis v. Kennedy, 243 Minn. 219, 223, 67 N.W.2d 413, 417 (1954) (applying absolute privilege to statements made in course of judicial proceedings).  It is generally agreed that "high level" executive officers in state government "have absolute immunity from suit for defamatory statements made in the course of their duties."  Carradine v. State, 511 N.W.2d 733, 735 (Minn. 1994).  Although this immunity may also apply in some circumstances to "inferior governmental officers," id. (applying to officer for alleged defamatory statements made in arrest report), the supreme court held that it did not attach to the alleged defamatory statements made by a psychologist, even when contained in statutorily mandated reports of child abuse.  Bol, 561 N.W.2d at 148-49.  The immunity has not yet been applied beyond governmental officials.  See id.  Instead, the use of a qualified privilege, as occurred here, is appropriate.  See Bol, 561 N.W.2d at 149-50 (concluding that protection offered by qualified privilege should apply instead).

            Affirmed.

* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.

[1]  Respondent also sued his other former employer and its president, both of whom defaulted.

[2]  Appellants raise several other challenges.  They contend that appellant was justified in making the statements based on the interests of public safety and protection. This argument fails based on the jury's determinations on the defamation issue that he acted with malice in making the statements.  Nordling v. N. States Power Co., 478 N.W.2d 498, 506 (Minn. 1991).  Appellant also argues that he did not initiate the contact with the special agent, but there is no legal significance to this claim.