Title: Urethane Specialties, Inc. v. City of Valdez

State: alaska

Issuer: Alaska Supreme Court

Document:

620 P.2d 683 (1980) URETHANE SPECIALTIES, INC., Appellant, v. CITY OF VALDEZ and Bonser Company, Inc., Appellees. No. 4451. Supreme Court of Alaska. December 5, 1980. *684 Charles K. Cranston, Cranston, Walters, Dahl & Jarrell, and Robert C. Erwin, Hagans, Smith, Brown, Erwin & Gibbs, Anchorage, for appellant. Kenneth P. Jacobus, Hughes, Thorsness, Gantz, Powell & Brundin, Anchorage, for appellee City of Valdez. David H. Call, Call, Haycraft & Fenton, Fairbanks, for appellee Bonser Co., Inc. Before RABINOWITZ, C.J., CONNOR, BURKE and MATTHEWS, JJ., and DIMOND, Senior Justice. RABINOWITZ, Chief Justice. Appellant, Urethane Specialties, Inc., is an Alaska corporation which distributes urethane foam insulation. It brought a civil action for defamation and disparagement against the City of Valdez and Bonser Company, Inc., owner of Valdez's only newspaper, the Valdez Vanguard, for a warning the city had published in the paper. The superior court granted the motions for summary judgment made by the City of Valdez and Bonser, and this appeal followed. We hold that a portion of the printed warning is protected by the complete defense of truth and, further, that the entire warning is protected by a conditional privilege for comment by inferior administrative officers. Thus, we affirm the superior court's entry of summary judgment. On August 3, 1977, and for four weeks running, the City of Valdez had the following notice placed in the Valdez Vanguard: The decision to publish the notice was made by the then city manager, William Morrice. The notice was drafted by Tom McAlister, the building inspector and fire marshall for the City of Valdez, with the assistance of John Cerutti, the city engineer. These officials stated, in affidavits, that "[t]he publication was made in the exercise of the fire protection, safety and building inspection functions of the City of Valdez." Publication of the warning was motivated by information suggesting that a number of urethane sprayers were operating in Valdez without obtaining building permits. One operator, clearly intending to evade the permit requirement, inadvertently approached Cerutti in his mobile home to ask if he wanted his roof sprayed; Cerutti's suggestion that a permit should be obtained was not acted upon. As to the factual basis for the fire hazard presented by urethane, the city, in response to interrogatories, stated in part: The city submitted documents from the Urethane Safety Group as well as newspaper articles and other materials, all of which emphasized the highly flammable and toxic nature of urethane. Urethane Specialties believed that it had lost substantial business in Valdez as a result of the publication of this warning. Initially, Urethane Specialties made a claim to the city council for its alleged losses; this lawsuit followed the city's refusal to pay that claim. The City of Valdez contends that the warning was true, that it was supported by affidavits, and that these affidavits were uncontroverted. It argues that these facts constitute a complete defense to the suit. Urethane Specialties does not deny that truth as a complete defense to actions for defamation and disparagement, but insists that the truth of the warning was not established. Truth is generally recognized as a complete defense to actions for defamation and disparagement, since those actions depend on the premise that the harmful statements complained of are false.[1] In Fairbanks Publishing Co. v. Pitka, 376 P.2d 190, 192-93 (Alaska 1962) (footnotes omitted), this court said: This holding was qualified in a footnote as follows: Id. at 193 n. 10 (citation omitted). In the present case, as in Fairbanks Publishing, we need not decide whether there is to be a malice exception to this defense since no allegation of malice has been made and no evidence suggesting its presence has been introduced. If every statement in the warning were true, then, this would be a complete defense to Urethane Specialties' allegations and summary judgment would be appropriate. We therefore examine separately the two statements which Urethane Specialties claimed to be defamatory. The first of these statements is: Urethane Specialties, an out-of-town firm, alleged that it was encompassed within the ambit of this statement[2] and that it was harmed by the implication that it had acted in violation of the local building code. We are convinced that there is adequate support in the record for the conclusion that this statement is true. In response to interrogatories, the city stated: Urethane Specialties did not advance any evidence contesting the truth of these statements. It argued before the superior court *687 that the activities described are insufficient to support the statement that there were "many fly-by-night building companies" operating in the area. We disagree. The answer to the interrogatory listed four sprayers by name, none of whom had gotten permits. It noted that the term "fly-by-night" was initially used by a sprayer who approached the city engineer to spray his mobile home. This constitutes sufficient factual support for the statement warning of "fly-by-night" operators. The second statement asserted to be defamatory reads: While Urethane Specialties admits that urethane foam is a hazard when improperly installed, it argues that there is nothing in the record to support the conclusion that when properly installed, urethane is a "time bomb in disguise." We hold that there was insufficient evidence presented to the superior court to support the conclusion that this statement was true. The phrase "time bomb in disguise" was taken from a newspaper article in the Kodiak Daily Mirror in which Alaska State Fire Marshall Andre Schalk was quoted as saying: Urethane Specialties emphasizes that Schalk's reference is to improperly installed urethane only. No other document before the superior court in regard to this motion for summary judgment supports the conclusion that properly installed urethane foam is "a time bomb in disguise." The text of the warning goes beyond informing of dangers inherent in the improper installation of urethane and implies that urethane insulation is so dangerous that it should not be used. Thus, we hold that the defense of truth applies to the first of the allegedly defamatory statements, but that there was insufficient evidence to prove the truth of the second statement. The City of Valdez also argues that the warning in question comes under the protection of both statutory and common law privileges. First, it asserts that the warning is protected as part of the absolute privilege extended under AS 09.65.070(d)(2) to the exercise by a municipal officer of a discretionary function. AS 09.65.070(d)(2) provides: The City of Valdez argues that the city manager's decision to publish the warning was a discretionary function protected by AS 09.65.070(d)(2). Urethane Specialties concedes that the decision to publish a warning concerning the unsafe use of urethane is a policy decision and represents the exercise of a discretionary function, but argues that the city's action in issuing the broad warning under consideration here was negligent and thus unprotected. Alaska's statutes contain a provision concerning state officials that is analogous to AS 09.65.070(d)(2). This statute, AS 09.50.250,[3] which grants immunity for discretionary governmental activities, has been discussed several times in this court's opinions. *688 In State v. Abbott, 498 P.2d 712, 717-22 (Alaska 1972), we addressed the problem of interpretation of the discretionary function exception in a waiver of sovereign immunity context. There we look to a parallel exemption provision contained in the Federal Tort Claims Act, 28 U.S.C.A. § 2680(a), and to the federal case law interpreting that provision. After a review of the various conflicting interpretations of this exception by the federal courts, we determined that our primary concerns should be with the basic policies underlying the exception's creation and the significance of the distinction between planning and operational decisions by government. Our conclusion was that the state's failure to maintain a curve on a highway during treacherous winter conditions subjected the state to liability: Id. at 722 (footnotes omitted). In State v. I'Anson, 529 P.2d 188, 193 (Alaska 1974), we reaffirm the "adoption in Abbott of the planning-operational test, within an analytical framework which is sensitive to the policies underlying the discretionary function or duty exception of Alaska's Tort Claims Act." See also Carlson v. State, 598 P.2d 969, 972-73 (Alaska 1979). In I'Anson, we concluded that the proper marking and striping of a portion of the Seward Highway was an exercise of an operational function and, thus, that it did not fall within the protection of this exception. More recently, in Adams v. State, 555 P.2d 235, 243 (Alaska 1976) (footnote omitted), this court noted: That case concerned a claim that the state failed to abate a serious fire hazard it had discovered during an inspection of the Gold Rush Hotel. We found that: Id. at 244. We agree with the city's view in the present case that the decision by the city manager to issue the questioned warning was an exercise of a discretionary function. However, the fact that issuance of the warning was a discretionary function does not automatically extend discretionary immunity to the city in regard to the warning's content. A recent California decision is analogous to the case at bar. In Toney v. State, 54 Cal. App. 3d 779, 126 Cal. Rptr. 869 (Cal. App. 1976), the court was faced with a press *689 release alleged to have included defamatory statements regarding the plaintiff. After reviewing the California cases construing the discretionary function clause, the court concluded: Id. at 878. We similarly conclude that the City of Valdez is not protected by the discretionary immunity provided in AS 09.65.070(d)(2) as to the content of this particular warning. The City of Valdez makes the further assertion that common law privileges pertaining to matters of public interest protect its issuance of the warning in question. The common law provides for privileges in various situations in which public policy requires that a speaker be accorded immunity for the making of defamatory statements.[4] In this regard, we said in Fairbanks Publishing Co. v. Francisco, 390 P.2d 784, 793 (Alaska 1964): The Restatement (Second) of Torts § 598A (1977) describes the privilege applicable here as follows: We think that the city manager was permitted, if not required, to act in the public interest by taking reasonable action to prevent the creation of safety hazards. Here, city employees were informed of the operations of urethane sprayers in Valdez who were conducting their enterprises without obtaining the necessary permits. It is understandable that such information would cause concern that urethane foam was being improperly installed. Further, the highly flammable character of urethane and its extreme toxicity once ignited are obvious causes for concern on the part of the fire marshall. We hold that this warning to the general populace pertaining to a matter of public health and safety is protected by the privilege extended to administrative officers under Restatement (Second) of Torts § 598A, which we adopt as appropriate to situations like the one under consideration.[5] This privilege is conditional, and its protection can be lost through abuse. Restatement (Second) of Torts § 600 (1977) describes abuse as follows: This is also the definition of "malice" that has been adopted by the United States Supreme Court in the defamation context. National Association of Letter Carriers v. Austin, 418 U.S. 264, 281, 94 S. Ct. 2770, 2779, 41 L. Ed. 2d 745, 760 (1974). In the instant case, there was no evidence before the superior court suggesting that the city's warning was issued with a knowing or reckless disregard for the truth of the statements it contained. Therefore, we hold that summary judgment for appellees was appropriate on the basis of this conditional privilege.[6] Thus, we need not determine whether the City of Valdez is also protected by virtue of a constitutional privilege. The judgment of the superior court is AFFIRMED.[7] BOOCHEVER, J., not participating. [1] See W. Prosser, The Law of Torts § 116, at 796-98 (4th ed. 1971). See also Cox Broadcasting Corp. v. Cohn, 420 U.S. 469, 489-90, 95 S. Ct. 1029, 1043-44, 43 L. Ed. 2d 328, 346 (1975). [2] In its complaint, Urethane Specialties alleged: Although Plaintiff Urethane Specialties, Inc., is not mentioned by name in the `warning,' by failing to specify the corporate names of those companies described as `fly-by-night building companies,' Defendant did include Plaintiff Urethane Specialties, Inc., among those companies so described, and by virtue of its corporate name, Plaintiff is included among the building companies described as `fly-by-night.' Our resolution of the other issues makes it unnecessary to consider whether this was a sufficient showing of colloquium to associate the allegedly defamatory statements with Urethane Specialties. See Restatement (Second) of Torts § 564 (1977). See also W. Prosser, The Law of Torts § 111, at 749-51 (4th ed. 1971); Golden North Airways, Inc. v. Tanana Publishing Co., 218 F.2d 612, 618-20 (9th Cir.1954). [3] AS 09.50.250 provides in relevant part: [N]o action may be brought under this section if the claim (1) ... is an action for tort, and based upon the exercise or performance or the failure to exercise or perform a discretionary function or duty on the part of a state agency or an employee of the state, whether or not the discretion involved is abused.... [4] The common law privileges applicable to actions in defamation are generally also available for actions for disparagement. See generally W. Prosser, The Law of Torts § 128, at 924 (4th ed. 1971). [5] Our adoption of this section of the Restatement is not intended as a signal to every minor state official that he or she is given carte blanche to comment on matters of public interest. [6] If the author of a newspaper article is privileged in making the statement, then the newspaper that publishes it is also protected. Restatement (Second) of Torts § 612(1) (1977) provides: One who provides a means of publication of defamatory matter published by another is privileged to do so if (a) the other is privileged to publish it, or (b) the person providing the means of publication reasonably believes the other is privileged to publish it. [7] The City of Valdez has raised an issue of whether punitive damages can be awarded against it. As Urethane Specialties correctly notes, no punitive damages were awarded against the city and thus the issue is not before the court.