# FILED

Au gust 1, 1997 Cecil W. Crowson Ap pellate Cou rt Clerk IN THE COU RT OF A PPEA LS OF TENN ESSEE WESTERN SECTION AT NA SHVILLE
ROBERT E. EVAN S, ) ) Plaintiff/Appellee, ) Dav idson Circu it No. 94C -257 ) VS. ) A ppeal No. 01A 01-9608-CV-003 86 ) AMCASH MORTGAGE COMPANY, ) INC., ) ) Defendant/Appellant. )
APPEAL FROM THE CI RCUI T COUR T OF DA VIDSO N COU NTY AT NASHVILLE, TENN ESSEE THE HONORABLE THOMAS W. BROTHERS, JUDG E

PHILIP D. I RWIN PAMELA

KING NEAL & H ARWELL Nashvil le, Tennessee Attorneys for Appellant
ROBERT E. EVAN S, pro se Nashvil le, Tennessee

REVERSED

ALAN E. HIGHERS , J.

CONCUR: DAVID R. FA RMER, J. HOLLY K IRBY LIL LA RD, J.1 In accordance wi th an agr eement m ade by the parti es, Frankl in America n Corporat ion was

su bs titut ed as a d ef en da nt in the pla ce of F ra nk lin A m er ica n L ife Ins ur an ce Co m pa ny. 2 In this defamation a ction, Ro bert E vans (“Plaintiff”) filed suit against Amca sh Mortgage Company, Inc. (“Defendant”) and Frankli n American Life Insurance C ompany 1 foran alleged defamator y statement madeby Defendant’s attorney to one of Defendant’s emplo yees. In granting the Defendant’s moti on for partial s ummary judg ment, the trial court dismissed F ranklin Amer ican Corporation from the su it, di smiss ed Plai ntiff’sclai ms against Defendant under a theor y of “slander

by action, ” and held that a genuine issue of material fact existed as to whether the statement

made by Defendant’ s attorney to one of Defendant’s employees regarding the reason for Pla intiff’s employmen t termination is subject to a qualifie d privi lege. Defendant appeals the judg ment of the court below arguing that the trial court erred in deny ing Defendant’s motion for

summary judg ment regardi ng the statement made by

Defendant’s attor ney to one of Defendant’s employees concerning the reason for Plai ntiff’s employment t ermination becaus e the statement is subject to a qualified privilege and is not defamatory i n nature. For th e rea sons stat ed he reaf ter, we reverse the judgment of the trial cour t and hold that thestatement made by Defendant’s attorney to one of Defendant’s empl oyees reg arding the r eason for Plainti ff’s employment term inat ion is subj ect t o a qua lifi ed pr ivileg e and is not def ama tory.

FACTS

On March 1, 19 93, P lain tif f be gan h is em ploym ent with t h e Defendant as the manager of Defendant’s Nashvil le office.

On August 16, 1993 at approximat ely 9:00 p.m., an e mp loyee of the Defendant , Tina R eynolds ( “Reynolds ”), telephoned Defendant’s chief executive officer , J ohn Hackne y (“Hackney”), at his home and all ege d that Pl aint iffhad fondled and sexually battered her. Hackney i mmediately cal led one of Defendant’s at torneys, J ohn Jordan (“Jordan” ), an d told Jordan of Reynold’s allegatio ns against t he Plaintiff. Jor dan then called R eynoldsand arranged to meet her at his office the followi ng morning

.3

On August 17, 1993 at approximat ely 8:00 a.m., Reynolds arrived at the office of Anderson & Jordan, attor neys for the D efendant. Jordan g reeted Reyn olds atthe door and arranged for his law

partner, C harles An derson (“Ander son”), to i nterview

Reynolds reg ardi ng h er s exu al b atte ry all ega tion s ag ainst thePla inti ff.

Followi ng Anderson’s interview with Reynold s, H ackney, Jordan, Taylor Moore (“Moore”), one of Defend ant’s officers, and Gary Atnip, Def endant’s chief f inancial officer, decided that Plainti ff’s employment w ith the Defendant shou ld be terminated. Hackney then instruct ed Jordan and Moor e to inform Plaint iff that he was fired.

Around 10:00 a.m. on August 17, 1993, Jordan and Moore went to Plaintif f’s office to inform him that his employment with the Def endant had termina ted. Two of Defend ant’s employees, Stev e Carr (“Ca rr”) and Par ker J udd (“Judd”) , wer e in th e office at the t ime Jordan and Moore came t o tell Plai ntiff that he wasfired. Jordan asked Carr and Judd to step outside. After Carr and Judd lef t the office, Jo rdan and Moore told P laintiff that he
was fired and that he s hould pack his belonging s and leave immediately. Plaintiff then packed his bel ongi ngs, and Jor dan and Moore escorted Plainti ff to his car. J ordan and Moore did not tell Plaint iff the reason his empl oyment was terminated.

Prior to Plaintiff’s employment ter mination, Anders on’s interv iew w ith Reynol ds was the only investigation that Defendant undertook in evaluat ing the truthfulness of Reynold’s allegations

against the Plaintiff. Defendant never discusse d with Pl aintiff the allegatio ns that Reynol ds had made against him.

After Plaintiff was

f ired, Jordan acted as the tem porary manager of Defend ant’s Nashville office. The followi ng wee k a fter Plaintiff’s ter mination whi le Jordan, Ca rr, and Judd were working i n Defendant’s office sor ting through files, Carr

stepped back to p ick up the file cabinets, and Judd asked Jor dan the reason Pl aintiff was fired. Jordan responded that Plaintiff was fired because hehad inappropri ately touche d Reynold’ s blouse.4

In an affidavit, C arr stated that he was nev er told by

the Defendant or any

ag e nt acting on behalf of the Def en dant that the reason Pla intiff was fired was because of his sexual harassment of another employee. Carr further stated that the specific reasons for Plaintiff’s termi nation were never dis cussed wi th him.

LAW

The sole issue befo re this Court is as follows: Whether the trial court erred in denyingDefendant’s motion for summary judg ment regarding the statement Defendant’ s attorney mad e to o ne of Defendant’s employees concerning the reason Plai ntiff was fired.

The standards governi ng our rev iew of a tri al court’s action on a motion forsummary judgmentare well settled. Since our inquiry involves p ure ly a que stion of law , no presumption of correctness attaches to the t rial court ’s judgment, and our task i s confined to review ing the record to determine wh ether the req uirements of Rule 56 of the Tennessee Rules of Civ il Procedure have been met. Carvell v. Bo ttoms , 900 S.W.2d 23, 26 (Tenn. 19 95); Cowden v . Sovran Bank /Central South , 816 S.W.2d 741, 744 (Tenn. 1991); Foley v . St. Thomas Hosp. , 906 S.W.2d 448, 452 (Tenn. Ct. App . 1995); Brenner
v. Textron Aerostructures, A Division of Textron, Inc. , 874 S.W.2d 579, 582 (Tenn. Ct. App. 1993). Tennessee Rule of Civil Procedure 56.0 3 provides that summary judgmentis only appropria te where : (1) there is no genuin e issue of materia l fact relevant to the clai m or defense contained in th e motion , and (2) the moving party is entitled to a judgment as a matter of law on the undisputed fact s. Carvell , 900 S.W.2d at 26; Byrd v. Hall , 847 S.W.2d 208, 210 (Tenn. 1993); Anderson v. Standard Regi ster Co. , 857 S.W.2d 555, 559 (Tenn. 1993)

. The moving party has t he burden of prov ing that the mot ion satisfies th es e requirements

. Downen v . Allstate In s. Co. , 811 S.W .2d 523, 524 (Tenn . 1991).

W hile the summary j udgment proc edure is nota substitute for trial, i t goes to the merits ofthe complaint and should not be taken lightly

. Byrd , 847 S.W.2d at 210; Jones5

v. Home Indem. Ins. Co. , 651 S.W.2d 213, 214 (Tenn. 1983); Fowler v. Happy Goodman Fam ily , 575 S .W.2d 496, 498 (Tenn. 1978); Foley , 906 S.W.2d at 452. It has been repeatedly stated by t he appellate cour ts of this state that the purpose of a summary judgmentproceeding is not the findingof facts, the resol ution of disputed factual i ssues or the determination of co nflicting inferences reasonably to be draw n from the facts. Bella my
v. Federal Ex press Corp. , 749 S.W.2d 31, 33 (Tenn. 1988). Rathe r, the purpose of summary judg ment is to res olve contr olling i ssues of law

. Id

.

In evaluatingthe propriety of a motion for summary judgment, we view the evidence in the light most f avo rable to the nonmoving party and draw all reasonable inf erences in the nonmoving party’s favor. Byrd , 84 7 S.W.2d at 210-11. A motion fo r summary judgmentshould only

be granted w hen both the facts and t he conclusions drawn from the facts permit a reasonable person to reach only one conclusio n. Id

.

In order topre vai l in a def amat ion acti on, a pla inti ff must demonstrate s ome level of fault on the part of the defendant. Memphis Pub. Co. v. Nichols , 569 S.W.2d 412, 418 (Tenn. 1978). The Tennessee S upreme Court i n Nichols decided that neg ligence i s the requisit e level of fault that must be establ ished by a p rivatefigure plai ntiff who is bring ing a defamation action. Id . The supreme cour t in Nichols stated: In determining the i ssue of liability , the conduct of the defendant is to be measured against what a reasonably pru de nt person wou ld, or would not, havedone under the same or similar

circumstanc es. This is the ordinary negligence test that we adopt , not a “journali stic malprac tice” test whereby liability is based upon a d eparture from supposed standards of care set by publishers themselves. In o ur op inion , the ap propr iate q uesti on to bedeter mined fr om a preponderance o f the evidence i s whether the defendant exerc ised reasonable care and caution in ch ecking on the truth or falsity and the defamatory charac

ter of the communicati on before publishi ng it. Nichols , 569 S.W .2d at 418 (citations omitte d).

In Press, Inc. v. Verran , 5 6 9 S

. W. 2d 435, 442 (Tenn. 1978 ), our Supreme Court adopted the Restatement ( Second) of Torts ( 1977) standards for liabili ty in a defamatio n suit. The court

stated:2 Restatement (Second) o f To rts § 5 80A (197 7) de als w ith the de fa m atio n o f a p ub lic o ffic ial o r pu blic

fi gure. In t his case, ther e is n o dispu te t hat t he pla int if f i s a pri vate f igur e. 6 We are impresse d with Stan dards 580A 2 and 580B, Restatement ( Second) of Torts (1977). The y read as follows: * * * § 580B. Defamatio

n of a Private

Person. One who publi shes a false and defamator y communicati on concerning a privat e person, or concerning a public official or public figure in relation toa purely private matt er not affecting his conduct, fit ness or rol e in his publi c capacity , is subject to liability , if, but only

if, he (a) knows that the statement is f alse and that it defa mes th e other, (b) acts i n reckless disregar d of these matters, or (c) a cts ne glig ently

in fail ing t o ascer

tain t hem. W e bel ieve that the se s tand ards meet the c rit eri a of o u r federal and state constit utions and w e adopt them as thelaw of this juris diction. Press, Inc. , 569S.W.2d at 442 . Thu s, l iabi lity i s onl y i mpos ed i f the defendant acts negligentlyin fail ing to ascer tain the truth or falsity

of the alleged de famatory statement. Id

.

In the pr es ent case, Plai ntiff claims that theDefendant acted neg ligently in failing to ascertain w hether Reyn olds’ alleg ations of sexual harassment were true or fal se. Plai ntiff argue s tha t bec ause Ande rson ’s int ervie w with Re yn olds wa s the only investig ation that Defendant und ertook in evaluating the truthfulne ss of Reynold’s allegations against Plai ntiff prior to Plaintiff’s employment terminatio n, Defendant was neglige nt in inve stigating Rey nold ’s c lai ms of sex ual hara ssme nt ag ainst Pl aint iff.

W e believe Defendant exercised reason able care and caution in i nvestig ating the veracity of Reynold’s allegations of sexual harassme nt against Plaintiff bef ore Plaintiff was terminated. Reynolds

called Hack ney at home one evening and compl aine d that Pl aint iff had fondle d and ha d sexually battered her. Hackney t hen called Jor dan and apprised Jordan of Reynold’ s allegati ons against Plaintiff. Jordan arranged to meet Reynolds the following morning in his law office. Reynold s wasintervi ew ed by one of Defend ant’s attorneys, Anderson, the mor ning a fter Reynolds complained to Hackn ey of Plaintiff’s conduct. After interv iewing Reynoldsregardingher alleg ations again st Plaintiff, Defendant7

formed the belief that Reynold’s allegat ions wer e we ll- gro unde d in fact and t hat P lai ntiff should be terminated. B ecause we find that the Defendant exercised reas onable care and caution in inves tigating the truth or falsity of Rey nold’s alleg ations, an essen tial element of Plaintiff’s def amation claim fails. A reason able and prudent person would rely upon their attorneys’ observati ons and insig hts into a si tuation. Defendant, therefore, ac ted reasonably in relying upon its attorneys’ judgment that Reynold’s allegations were sincere and true and in r

elying upon its attor neys’ adv ice to fire Pl aintiff.

Nonetheless, it is an ele men tary rule in thi s state that publ ication is an essential element of a defam ation action without which a complaint must be dismissed. Applewhite v. Memphis

State Univers ity , 495 S.W.2d 190, 192-93 (Tenn. 1973); Freeman v. D ayton Scale Co. , 19 S.W.2d 255, 256 (Tenn. 1929) ; Woods v. He lmi , 758 S.W.2d 219, 222-23 (Tenn. Ct. App. 1988). Freeman and its progeny stand for the proposition tha t inasmuch as the gravamen of the act of defamation is pecuniary damage to the character or credit of the party

defamed, an action for defamatio n cannot arise without publ ication. Woods , 758 S.W .2d at 223. W e, therefore, do no t re ach the matter of priv ilege, mali ce or any other questi on until there is a publication. Id

.

In Freeman , the supreme cour t held that the communication of a defamatory matter between the agents and officers of a corporation in the or dinary co urse of business was not a publication

. Freeman , 19 S.W.2d at 258. The Freeman court quoted the follow ing annotation from 18 ALR 772, 778 which states:

The more liberal rule, and the on e which s eemingly has the support of the weig ht of modern authorit y, is that , w here the communication is made to a servant or business associate in the ordinary

and n atural course of busines s, there is no actionable libel. Freeman, 19 S.W.2d at 257.

In Woods v. Hel mi , 758 S .W.2d 219 (Tenn. Ct. App. 1988), a nur se filed a defamation and intentional interf erence with employment suit ag ainst certai n doctors and her immediate superv isor follow ing her employment termination. The nurse’s defamation8

action was based u pon a memorandum wr itten by her supervis or an d circu lated to her superiors r egarding h er operating room behavior. This mem orandum led to the nu rse’s termination. I n h olding that the supervi sor’s memorandum w as not published for defamation purposes and that the contents of thememorandum, even if published, di d not sustain a cau se of actio n fo r def ama tion beca use o f th e sup ervi s or’s lack of malice in preparing the memorandum, this C ourt stated:

We interpret Freeman and it s progeny t o mean that communication among agent s of the same corporation made within the scope and c ou rse of their empl oyment relat ive to duties performed for that corporation are not to be cons idered as statements comm unicated or publicized to third persons. Woods , 758 S.W.2d at 223.

The communicationsin the present case, like those in Woods v. He lmi , were made “among agents of the same corporation . . . withi n th e scope an d course of their employment

relative to duties performed for that corporation,” or were made to those “in the ‘need to know’ channel.” See Woods , 758 S.W.2d at 224. Under the r ationale of Woods , we are compelled to find that th e communicati ons “are not t o be considered as statements communicated or pu bliciz ed to third persons.” Id

. at 223. Because there was no publication, the action of the tr ial court mus t be rever sed.

Furthermore, even if the st atements made by D ef en dant’s attorney regardingthe
reason for Plaintiff’s empl oyment terminat ion are defamatory , we beli eve that the Defendant is entitled to summary j udgment becaus e this st atement is conditionally privil eged under a co mmon interest pr ivileg e.

A cond itio nal p rivi le ge is recognized where the interest which the defendant is seeking to vindicate or

further is regarded as su fficiently i mportant to justify s ome latitude formaking mistakes. W. Page Keeton et al ., Prosser and Ke eton on the Law of Torts , § 115, at 825 (5th ed. 19 88). The Tennessee Supr eme Court authori zed conditi on a l privil eges in Southern Ice Co. v. Black , 189 S.W. 861, 863 (Tenn. 1916), and st ated:

Qualified priv ileg e ext ends toall c ommu nicat ions made in good faith upon any s ubject-matter in w hi ch the party9 communicating has an interest, or in reference to which he has a duty to a per

son having a correspondi ng interest or duty; a nd the privil ege embraces cases where the duty i s not a legal one, but where it

is of a moral or

social char

acter of imper

fec t obligation.

. . . The rule announced i s necessary in order that full and unrestricted commun ication concerning a matter in which the parties have an interest or a duty may be had. It is grounded in pub lic polic y as w ell as reas on. See also Price v. Sale , 8 Tenn. App. 382 , 392-93 (1918).

Conditional privileges m ay cover man y diffe rent type s of int erests in cluding a
common interest and a public inter

est. Keeton et al ., supra , at 826-31. The c ommon interest pr ivileg e has been recog nized in Tennes see to cover communications be tween employ ees or agents of thesame business or corporation. See Woods v. He lmi , 75 8 S.W.2d 219 (Tenn. Ct. App. 1988); Southern Ice Co. , 189 S.W. at 863; Dickson v . Nissan Motor Mfg. Corp. , No. 87-289-ll, 1988 Tenn . App. LEXIS 80 (Feb. 10, 1988 ).

In Southern Ice Co. v. Black , 189 S.W. 861 (Tenn. 1916), an employee, Black, file d
a defam atio n act ion for a n al leg ed sl ande rous sta teme nt ma de by

a fo reman of th e Defendant corporation where Blac k worked. The foreman stated that Bl ack had s tolen
some tickets and t hat Black was a thief. In hol ding thatthe statements made by the foreman were pr

otected by qual ified priv ilege and were notactionable unl ess malice was shown, the court stated that the f oreman was well warranted in beli ev ing that Bl ack had stolen a coupon book and that all of the parties to whom the publication was made were interested in the transac tion. Id . at 863. Because Black was unable to prove mal ice, the alleged slanderous s tatements were not actionable based upon quali fied privi lege. Id . at 864.

In Freeman v. Dayton Scale Co. , 19 S .W.2d 25 5 (Te nn. 1 929) , thepla inti ff, a former employee of th e def endant company, fil ed suit based upon an alleged l ibelous communication which pas sed from an agent of the defendant corporation to the attorney forthe plaintiff. Pl aintiff sued, in par t, based upon the di ctation of an alle gedly l ibelous letter by an agent

of th e defendant to a stenog rapher of the defendant cor poration. In holding that the dictat ion of a letter cont aining li belous matter to a stenographer does not10

constitute publ ication in t he sense ofthe law of libel, our supreme court stated: “[W ]here the communication i s made to a servant or business a ssociate in the ordinary and natural course of business, the re is no actionable libel.” Id . at 257.

In Dickson v. Nissan Motor Mf g. C orp. , No. 87-289-l l, 1988 Tenn. App. LEX IS 80 (Tenn. Ct. App. Feb. 10, 1988), an employee, Dickson, fil ed suit agai nst his employer for alleged slanderous s tatements mad e to hi s superiors . Dickson was fired from the Defendant corporation for insubordina tion and for speaking to his superior i n an obscene and threatening manner. In holding that the Defendants’ st atements were protected under a qualified pr ivileg e, this Cour t stated: One is entitled to learn from hi s associates what is being done in a matter in which he has an inte rest i n common wit h them. This interest i n their common affairs entitles him to information as to how they are conducted, or to in form ation that affects theircommon interest, even thoug h he is not personally concerned with the information. Rest atem ent of Torts 2d. 1977 - 596, commen t c. * * * This Court agrees with t he a rgument of defendants that, wher e a plant employee is dischar

ged, the employer has a pri vilege d right to state and the other employees have a privileged righ t to hea r that th e discha rge has taken place and the g rounds therefor, stated in gene ral terms. Id . at *8-9.

Simi larly, in Perry v . Fox , No. 01A01-9407- CV-00337, 1994Tenn. App. LEXIS 7 63 (Tenn. Ct. App. December 21, 1994), plaintiff was fired from his job at South Cent ral Bell Telephone Company (“ SC B ”) after being accused of wor k related mis conduct includ ing maliciousdestruction of property , impe rsonation of anoth er SCB employee, incorrectly documenting time, and maki ng u naut hori zed rep res entation s toa SC B custome r. P lai ntiff filed a defamation suit ag ainst Fox , an employee of SC B, and SCB based up on a memorandum Fox prepar ed and distri buted which stated that plai ntiff had been terminated formaliciousdestruction of property and that in th e futureplain tiff wo uld not be we lcome
on comp any propert

y. Plain tiff further alleg ed that SCB failed to make a reason abl e investig ation into the allegations against him bef ore te rminating hi s employment. In upholding the trial court’s grant of summary judgment in favor of the defendants’, th is court stated:11 It is an ele mentary rule in thi s state that publ ication is an essential elemen t of a li bel ac tion w ithout

whi ch a co mp lain t must be dismiss ed. Applewhite v. Memphis State U niversi ty , 495 S.W.2d 190 (Tenn. 1973); Woods v. Helm i , 758 S.W.2d 219 (Tenn. Ap p . 1988). Taken in the light most favorable t o the plaintiff, th e m emorandum was disseminat ed to certain fellow employees of the plaintif f. This a ction falls sh ort of publication within the ambit of the rule. As stated in Freeman v. Dayton Sca le C o. , 159 Tenn. 413, 19 S.W.2d 255 (Tenn. 1929), “where communication is made to a servant or business associate in the ordinary or natural course of business there is no actionable libel.” See also , Woods , supra . Perry , 1994 Tenn. App. LEX IS 763, at *3.

The privil ege can be lost, however , if the defendant doesnot act wi th good faith or acts with act ual malice. When a communication i s conditional ly priv ileged, it is not actionable unless actual or express malice is s hown by the plaintiff. Woods v. He lmi , 758 S.W.2d 219, 224 (Tenn. Ct. App. 1988); Southern Ice Co. , 189 S.W . at 863-64. Once privil eged, the statement is presumed to have been made wit hout malice, and the burden is on th e pl aint iffto prove express malice. Langford v. V anderbilt Uni versity , 318 S.W.2d 568, 576 (Tenn. Ct. App . 1958). To prove actual malice, there must be sufficien t evidence to permit the concl usion that the defendant in fact entertained ser ious doubts as t o the truth of his p ublicat ion, an d that p ublishin g, with suc h doubt, shows reckless dis regard for truth or falsity

and demonstrates ac

tual malice. Moore v. Bailey , 628 S.W.2d 431, 433-34 (Tenn. Ct. App. 198 1).

The record does n ot reveal t hat the Defendant enter tained serious doubts

as to the veracity of Reynold’s

allegatio n of sexual batt ery agai nst the Plainti ff or that the Defendant acted with act ual malice. As stated above, the record does not i ndicate that the D efendant acted negli ge ntly in i nvestig ating Rey nold’s alleg ations. We hold that the statement b y Defendant’s attorney t o one of Defendant’s employees regardi ng the reason forPlaintiff’s employment

termination is conditionally privileged under a common interest privilege and, therefore, is not

actionable.

The action of the trial court denyin g summary judgment to Defendant regardingthe statementDefendant’s attor ney made to one of Defen dant’s employ ees concerningthe12

rea son for Pl aintiff’s emplo yment termination is hereby reversed. Costs on appea l are taxed to Pla inti ff for wh ich e xecut ion m ay issu e if n eces sary.

HIGHERS, J.

CONCUR:

FARMER, J.

LILLARD, J.