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### STATE OF MICHIGAN

COURT OF APPEALS

FJN LLC, GINO’S SURF, FRANK’S HOLDINGS, LLC, FRANK NAZAR, SR, and FRANK NAZAR, JR,

Plaintiffs-Appellants, UNPUBLISHED June 22, 2017

v No. 331889
Macomb Circuit Court
VIJAY PARAKH and CHARTER TOWNSHIP of HARRISON, LC No. 2012-002006-CZ

Defendants-Appellees.

Before: J ANSEN , P.J., and M URPHY and B ORRELLO , JJ.

P ER C URIAM

.
Plaintiffs appeal by right a February 9, 2016, trial court ord er granting summary disposition in favor of defendant Vijay Parakh pursuant to MCR 2.116(C)(10). For the reasons in this opinion, we affirm.

I. FACTUAL BACKGROUND

Plaintiffs Frank Nazar, Sr, and Frank Nazar, Jr, through their corporate entities, owned and operated a restaurant and ba nquet hall known as Gino’s Surf or Gino’s Surf Lounge in Harrison Township. In 2006, the Township Planning Commission a pproved a site plan for a Phase 1 renovation of the prope rty. In the Phase I renovation, plaintiffs planned to construct an outdoor patio and tiki bar. Duri ng the Phase I construction, p laintiffs submitted plans for a Phase II renovation, which was described as an antique car museum and restaurant. In the spring of 2007, the Planning Commission approved plans for the Phase II r enovation. Plaintiffs procured all of the necessary permits a nd started work on Phase II.

On January 10, 2008, the Township issued a certificate of occu pancy for the Phase I renovation. By February 6, 2009, construction on Phase II was complete and plaintiffs alleged that they were entitled to a certificate of occupancy at that p oint pursuant to the Harrison Township Zoning Ordinance. Pla intiffs planned to hold a grand opening event at the new facility
and advertised the event in the local newspaper. However, defe ndant Parakh, who at the time was the Township’s building offi cer, informed plaintiffs that t hey did not have a certificate of occupancy for the Phase II facility, and therefore Phase II cou ld not be opened to the public. Plaintiffs proceeded with the pl anned event and scheduled it fo r the evening of February 6, 2009.-2- According to plaintiffs, the Phase II section of the facility w as not opened. Plaintiffs alleged Parakh and two ordinance officers appeared at the event to ensu re that plaintiffs were not using Phase II portions of the property. Plaintiffs alleged that Par akh attempted to shut down the event, informing customers that they had to leave and that the business was about to be shut down. Plaintiffs alleged that Par akh defamed their business to the customers.

After the grand opening, Parakh drafted a report for the Towns hip Board of Trustees’ (the Board) February 9, 2007, meeti ng. In the report, Parakh indica ted that he informed plaintiffs prior to the grand opening that they could not use Phase II and directed an ordinance officer to post a “Danger” placard at the site. Parakh stated that plaint iffs did not have a certificate of occupancy for Phase II, did not have liability insurance and ha d “outstanding building violations.” Nevertheless, according to Parakh, he learned tha t plaintiffs would disregard his directive and use Phase II portions of the building without a c ertificate of occupancy. Parakh indicated that on the night of the grand opening he went with t wo ordinance officers to investigate and noted that, “Upon approaching Gino’s Surf, it w as clear pandemonium and the scene was horrifying-it was clearly ‘out of control’ in the wor ds of many.” Parakh reported that there were vehicles parked everywhere including on both sides o f the street and in the ditch and people were crossing the street “ with oncoming traffic, limited visibility and poor lighting with no cross walk or safe passageway in icy, slippery conditions.” Parakh noted that there were 250 patrons in the Phase II area and “hundreds more” in the old are a. Parakh indicated that the notices he placed at the scene were covered up and that he lear ned that plaintiffs “were making people go through a plastic flammable and combustible passage w ay with 3-4 large free-standing propane heaters.” Parakh reporte d that the “plastic passageway ” was a serious safety violation.

Parakh indicated that the scene was “no different than that of the Chicago Night Club Fire and the Rhode Island Night C lub Fire where hundreds of peo ple lost their lives due to overcrowding.” Parakh indicated that he contacted the sheriff’ s office and the fire department. The sheriff’s deputies arrived at the scene, but they “cleared” the scene and left without issuing any citations. The fire chief instructed a deputy to create a lane to allow access for emergency
vehicles.

Other parts of the report indicated that plaintiffs did not have an accurate headcount of how many people or vehicles were at the scene and that exits an d exit signs were blocked.
Parakh indicated that he would have been “derelict in his dutie s” and exposed the Township to liability by allowing the grand opening to take place in an “un safe portion of a building under
construction.” Parakh indicated t hat plaintiffs’ prior conduct with other matters led to “hundreds of resident complaints about ove rcrowding, parking, safety and noise.” Parakh stated that plaintiffs had multiple other prior building violations and not ed that plaintiff Frank Nazar, Sr, had a “history” of non-compliance.

On October 30, 2009, plaintiffs commenced suit in the U.S. Dis trict Court for the Eastern District of Michigan, alleging th at defendants violated their s ubstantive due pro cess rights in denying them a certificate of occ upancy. That suit eventually went to a jury trial and on June 10, 2014, the jury found in favor of pl aintiffs, awarding approxima tely $800,000 in economic damages against defendants jointly and $400,000 in punitive dam ages against Parakh individually. The federal proceedings are not at issue in this case.-3- In the meantime, on May 2, 2012, plaintiffs filed a 67-page, 3 49-paragraph complaint commencing this state court suit in the circuit court; plaintif f alleged four counts: Count I sought a declaratory order compelling defendants to issue a certificat e of occupancy, in Counts II-IV plaintiffs alleged claims for libel and slander based on the al legedly false statements Parakh made concerning plaintiffs’ busin ess and the Nazars personally.

On July 6, 2012, defendants moved for partial summary disposit ion with respect to Counts II-IV on grounds that the claims were barred by governme ntal immunity. The trial court granted the Township’s motion, holding that plaintiffs did not allege facts to show that the Township was vicariously liable for any wrongful conduct on the part of Parakh. The court denied Parakh’s motion, holding that there were factual questio ns regarding whether Parakh’s conduct amounted to gross negligen ce that was the proximate cau se of plaintiffs’ injuries. Parakh then moved for reconsideration, and the court denied the motion. In denying the motion, the court noted that, “plaintiffs’ claims for libel and slander will be limited to defendant Parakh’s statements unrelated to the use of the facility without a certi ficate of occupancy for the Phase II improvements.”

On November 13, 2012, Parakh app ealed the trial court’s denial of his motion for summary disposition and plainti ffs cross-appealed the court’s o rder granting summary disposition in favor of the Township. Plaintiffs also appealed the court’s holding that their libel and slander claims against Parakh were limited to statements “u nrelated to the use of the facility without a certificate of occupanc y.” The trial court stayed th e proceedings pending the appeal.

On March 21, 2014, in a 2-1 decision, this Court, (J ANSEN , P.J., O WENS and S HAPIRO
, JJ)
affirmed the trial court’s order . FJN, LLC v Parakh , unpublished opinion per curiam of the Court of Appeals, issued March 21, 2014 (Docket No. 313294). T he panel held that the trial
court reached the correct result albeit for the wrong reasons, explaining that the trial court erred in applying a negligence analysi s to plaintiffs’ intentional to rt claims. Slip op. at 3-4. This Court explained as follows:

The court ruled that “Parakh acted within the scope of his auth ority in writing the Report” and that this general activity related to “his inspecti on/investigation of possible violations of the Zoning Ordinance” and therefore, he “was involved in a governmental function.” But the c ourt ruled that defendant Par akh was not entitled to summary disposition because “the allegedly damaging statements in defendant Parakh’s Report and his other alleged verbal statemen ts are not limited to those connected to the lack of a certificate of occupancy” a nd “these other statements can be the proximate cause of plaintiffs’ damages.” Therefore, the court implicitly concluded that there was a genuine issue of ma terial fact with respect to whether defendant Par akh was grossly negligent and w hether his gross negligence was a proximate cau se of plaintiffs’ damages.

The problem with the trial court’s analysis is that plaintiffs did not plead a negligent tort, but rather plead ed claims for libel and slander , which are intentional torts. []-4- The trial court erred by analyz ing defendant Parakh’s request f or immunity under the test for a negligent tort set forth in MCL 691.1407(2) rath er than the test set forth in [ Ross v Consumers Power Co (On Reh) , 420 Mich 567, 633-634; 363 NW2d 641 (1984).], which governs entitlement to immunity for an intentional tort. [ Id . at 3-4.]

A majority of this Court 1 proceeded to hold that the trial court nevertheless arrived at the correct result with respect to Parakh because there was a genui ne issue of fact with respect to whether Parakh acted “in good faith and without malice.” Id . at 4. This Court explained:

The trial court’s implicit gross negligence determination was b ased on the fact
that defendant Parakh’s statem ents went beyond the certificate of occupancy issue
and defendant Parakh failed to con tradict plaintiffs’ falsity c laims. The same reasoning shows that there is al so a question of fact regarding whether defendant Parakh acted in good faith. [] Plaintiffs alleged in their co mplaint that defendant
Parakh made statements he knew were false with the intent to de stroy plaintiffs’ business, and defendant Parakh did not offer any evidence to su pport the truth of any of the statements except the lack of occupancy certificate and the advertised grand opening party. As the trial court recognized, defendant Parakh’s report included numerous allegations of dangerous conditions that wentwell beyond opening without an occupancy cer tificate. Accordingly, we agre e that there is an
issue of fact whether defendantParakh acted in good faith and without malice. Therefore, the trial court reached the correct result in denyin g defendant Parakh’s motion for summary disposition. [ Id . at 4.]

Similarly, this Court held that the trial court arrived at the correct result with respect to the Township, reasoning that the Township “was not liable for d efendant Parakh’s alleged libel
and slander.” This Court also concluded that the trial court d id not err in limiting plaintiffs’
defamation claims to “defendant P arakh’s statements unrelated t o the use of the facility without a certificate of occupancy for the Phase II improvements,” but no ted that the trial court “will need to determine which alleged state ments” were subject to the defa mation claims. Id . at 5-6.

After this Court affirmed the trial court, the trial court ent ered an order identifying which statements from Parakh’s report w ere subject to the defamation claims. Thereafter, on March 23, 2015, Parakh moved for summary disposition pursuant to MCR 2.11 6(C)(10). Parakh argued that the report was “absolutely privileged” because it was prep ared for the Board in the course of Parakh’s duties as building offici al. Parakh also argued that plaintiffs’ defamation claims failed because the statements were not defamatory, the statements were not published to a third party,
and because there was no evidence that the statements caused an y damages.

1 J ANSEN , P.J., dissented in part, reas oning that Parakh’s report was a bsolutely privileged and therefore plaintiffs’ defamation claims failed as a matter of l aw. FJN, LLC v Parakh

, unpublished opinion per curiam of the Court of Appeals, issued March 25, 2014 (Docket No. 313294) (J ANSEN , P.J., concurring in part, d issenting in part).-5- Plaintiffs responded, and filed a counter-motion for summary d isposition as to Claim I, requesting that the court order t he Township to issue a certifi cate of occupancy for the Phase II development. With respect to the defamation claims, plaintiffs argued that the report was not entitled to an absolute privilege. Plaintiffs argued that ther e was evidence to show that information from the report app eared in an article posted on th e Macomb Daily’s website before the Board held its meeting. In addition, plaintiffs attached a printed newspaper article from the Macomb Daily that contained information from the report. Plain tiffs also cited the Board’s meeting minutes from February 9, 2009, that did not make any me ntion of the report or incident. In addition, Frank, Sr., testified at a deposition that members of the community came to him and indicated that the report had appeared in their mail. Plaintif fs argued that this evidence showed that Parakh made unprivileged communications with third parties and that he published the defamatory statements to a third party.

With respect to damages, plaintiffs argued that they did not n eed to prove damages at the summary disposition stage. Moreover, plaintiffs argued that th e report was not introduced in the federal trial and therefore they did not recoup damages arising from the defamatory statements in the federal trial. Plaintiffs attached a report from a forensi c accountant that allegedly showed that Parakh’s report resulted in $688,000 to $1.0 million in da mages.

On February 19, 2016, the trial court entered an opinion and o rder granting Parakh’s motion for summary disposition as to Counts II-IV and granting plaintiffs’ summary disposition and declaratory relief as to C ount I. With respect to Counts I I-IV, the court reasoned those plaintiffs’ ”objections to defenda nt Parakh’s assertion of abso lute immunity lack merit,” explaining:

The [trial court] Opinion and Order dated September 20, 2012, d etermined defendant Parakh had acted within the scope of his authority in writing the Report. Given the public safety aspect of the inspections and defendant Parakh’s obligation to advise of his offici al acts, the Report clearly c oncerned ongoing matters of public interest. Indeed, the Report ended with a re quest that sought
‘direction from the Board of Trustees on how to handle similar situations in the future’ . . . Therefore, defendant Parakh is entitled to absolu te immunity for the Report. []

Furthermore, plaintiffs have not proffered any evidence that de fendant Parakh provided the Report to a third party. Plaintiffs’ timing argum ent is nothing more than unsupported conjecture and sp eculation; the Report could j ust as likely have been disseminated by the township clerk, a trustee, another tow nship employee, a
Freedom of Information Act re quest or plainti ffs. In this rega rd, defendant Parakh has no obligation to prove how third parties obtained the Report; plaintiffs bear the burden of proving an unprivileged communication to a third party as an element of their defamation claims.

With respect to Count I, the request for declaratory relief, t he trial court granted plaintiffs declaratory relief and ordered the Township to issue a certific ate of occupancy. That aspect of the court’s order is not at issue on appeal. Plaintiffs appeal the trial court’s order with respect to its disposition of Claims II-IV.-6- II. STANDARD OF REVIEW

“We review de novo a trial court’s decision on a motion for su mmary disposition to determine whether the moving party is entitled to judgment as a matter of law.” Cuddington v United Health Servs, Inc , 298 Mich App 264, 270-271; 826 NW2d 519 (2012). “In reviewin g a motion brought under MCR 2.116(C)(10), we review the evidence s ubmitted by the parties in a light most favorable to the nonmoving party to determine whethe r there is a genuine issue regarding any material fact.” Id

.

III. ANALYSIS

The trial court held that plaintiffs’ defamation claims failed as a matter of law because Parakh’s report was absolutel y privileged. Plaintiffs argued t hat this amounted to legal error.

“A communication is defamatory if, under all of the circumstan ces, it tends to so harm the reputation of an individual that it lowers the individual’s reputation in the community or deters others from associating or dealing with the individual.” Kefgen v Davidson , 241 Mich App 611, 617; 617 NW2d 351 (2000). The elements of a defamatio n claim are as follows:

(1) a false and defamatory statement concerning the plaintiff, (2) an unprivileged communication to a third party, (3) fault amounting at least to negligence on the part of the publisher, and (4) either actionability of the stat ement irrespective of special harm (defamation per se) or the existence of special ha rm caused by publication. [ Id . (quotation marks and citations omitted).]

However, certain statements are absolutely privileged and ther efore not subject to a
defamation claim. Couch v Schultz , 193 Mich App 292, 294; 483 NW2d 684 (1992). “An absolutely privileged communication is one for which no remedy is provided for damages in a
defamation action because of the occasion on which the communic ation is made.” Id. “A privileged occasion is an occasion where the public good requir es that a person be freed from liability for the publication of a statement that would otherwi se be defamatory.” Id. “If a statement is absolutely privileg ed, it is not actionable even i f it was false and maliciously published.” Oesterle v Wallace , 272 Mich App 260, 263-264; 725 NW2d 470 (2006). “The absolute privilege has generallybeen applied to communications made during legislative and judicial proceedings and to communications by military and nava l officers.” Kefgen , 241 Mich App at 618. In addition, in Froling v Carpenter , 203 Mich App 368; 512 NW2d 6 (1994), this Court extended the doctrine to “communications made by a public official in furtherance of an official duty during proceedings of subordina te legislative and quasi-legisl ative bodies.” Kefgen

, 241 Mich App at 618, citing Froling , 203 Mich App at 368 (emphasis added).

This Court previously left open the issue of what statements w ere subject to plaintiffs’ defamation claims. On remand, the trial court parsed out aspec ts of Parakh’s report that were subject to the defamation claims. Necessarily, this Court did not address whether those statements were absolutely privileged. However, we can now gle an from the record that Parakh was acting within the scope of his authority when he prepared t he report for the Board. Parakh, as building official, had aut hority under the zoning ordinance to issue certificates of occupancy, which necessarily included the authority to inspect establishme nts before issuing the certificates.-7- In addition, Parakh had authority to administer and enforce var ious ordinance provisions. By inspecting plaintiffs’ premises and preparing a report for the Board with the observations of his inspection, the report was of a public concern and was prepared “in furtherance of an official duty” and for a quasi-legislative proceeding. Kefgen , 241 Mich App at 618. Accordingly, the report was absolutely privileged. Id

.
Plaintiffs argue that Parakh distributed the report to the med ia and attached copies of a Macomb Daily News article that addressed the contents of Parakh ’s reports, contained a photograph of Parakh, and quoted P arakh. However, plaintiffs d o not cite, and we cannot glean any evidence from the record to support that Parakh prepared th e report for the purposes of disclosing it to the media. Instead, the record shows that the report was prepared in furtherance of Parakh’s official duty as bui lding officer for purposes of d issemination at a quasi-legislative proceeding. Accordingly, the report was absolutely privileged 2 and, where “a statement is absolutely privileged, it is not actionable even if it was fals e and maliciously published.”
Oesterle , 272 Mich App at 263-264. Plaintiffs’ defamation claims there fore failed as a matter of law and the trial court did not err in granting Parakh’s motionfor summary disposition as to
Counts II-IV. 3 Couch , 193 Mich App at 294.

Affirmed. Defendants having pr evailed may tax costs. MCR 7.2 19(A).

/s/ Kathleen Jansen /s/ William B. Murphy /s/ Stephen L. Borrello

2 Plaintiffs argue that Parakh failed to raise the affirmative d efense of privilege in his answer; however, Parakh asserted the affirmative defense of immunity, a nd privilege is a form of immunity. Therefore, plaintiffs were on notice of the privileg e defense. MCR 2.111(F).

3 Given our resolution of this issue, we need not address the ot her issues raised by plaintiffs on appeal.