In the

United States Court of Appeals

For the Seventh Circuit

No. 07-2800

GIANT SCREEN SPORTS, doing business as,

GIANT SCREEN FILMS LLC, and GIANT SCREEN 

FILMS VIKINGS LLC,

Plaintiffs-Appellants,

v.

CANADIAN IMPERIAL BANK OF COMMERCE,

Defendant-Appellee.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 05 C 7184—Samuel Der-Yeghiayan, Judge.

ARGUED SEPTEMBER 9, 2008—DECIDED JANUARY 20, 2009

Before BAUER, CUDAHY, and WOOD, Circuit Judges.

BAUER, Circuit Judge. This is an appeal from a grant

of summary judgment in favor of the defendant in a

suit claiming defamation per se in written statements

made by the defendant concerning business dealings of

the plaintiff.
2 No. 07-2800

In October 2001, Giant Screen Sports (doing business as

Giant Screen Films LLC) and Sky High entered into an

agreement which called for Giant Screen Sports to distribute two films produced by Sky High entitled “Adrenaline

Rush” and “Ultimate Gs.” A year later, Sky High

entered into a similar agreement for a subsidiary of

Giant Screen Sports, Giant Screen Films Vikings LLC

(collectively “Giant Screen”), to distribute Sky High’s

film entitled “Vikings: Journey to New Worlds.” As part of

this Vikings agreement (Distribution Agreement), Giant

Screen agreed to pay Sky High a total of $3 million during

the three-year period following the distribution of the

Vikings film.

To finance the production of “Vikings,” Sky High

negotiated a credit agreement with Canadian Imperial

Bank of Commerce (CIBC). As security for the loan, Sky

High was required to assign CIBC the $3 million expected

from Giant Screen under the Distribution Agreement. CIBC

also required Sky High to obtain insurance from Export

Development Canada (EDC), covering the payments due

if Giant Screen defaulted. EDC would not insure the

payments underthis agreement. EDC would only issue the

policy if several provisions were altered to reflect a new

Distribution Agreement (Falsified Distribution Agreement), particularly to require that Giant Screen pay the

$3 million in $500,000 installments and Giant Screen

guarantee Sky High’s financial obligations.

EDC would issue the insurance policy only if it

approved the Credit Agreement, and the new provisions

reflected in the Falsified Distribution Agreement, between
No. 07-2800 3

CIBC and Sky High. The insurance policy would not

cover non-payments if Giant Screen’s non-payment was

the result of fraud on the part of Sky High. Giant Screen’s

signature was required on the Falsified Distribution

Agreement since it was becoming a guarantor and its

contractual obligations were being altered; EDC would

not issue its policy and CIBC would not fund the loan to

Sky High if Giant Screen’s signature was not present. No

party, including CIBC, ever contacted Giant Screen regarding the proposed modifications. In a correspondence

to CIBC and Sky High, EDC acknowledged that the

modifications would probably be difficult for Giant

Screen to accept, since they accelerated the payments due.

On November 29, 2002, Sky High sent CIBC a contract,

representing the new changes required to issue the loan,

and seemingly bearing the appropriate signatures of Sky

High and Giant Screen. Giant Screen maintains that it

was unaware of the changes reflected in the Falsified

Distribution Agreement and that its signature on this

agreement was forged to obtain the loan.

Also, as part of the Credit Agreement, which incorporated the Falsified Distribution Agreement, CIBC required

that Giant Screen make the $3 million in installment

payments directly to CIBC under a Notice of Security,

Direction of Payment and Distributor Acceptance (Notice

of Security). Sky High sent CIBC a signed copy of the

Notice of Security, again bearing the appropriate signatures of Sky High and Giant Screen. Giant Screen maintains

that it was unaware of the Notice of Security and that its

signature on this document was also forged.
4 No. 07-2800

On October 6, 2004, CIBC sent a letter to Giant Screen,

together with a copy of the Notice of Security, that the

payments under the Notice of Security should thereafter

be paid to CIBC. Giant Screen maintains that this was

the first time it became aware of the Notice of Security.

After the letters were received, Giant Screen responded

that it was not familiar with the Notice of Security and that

CIBC should address the issue with Sky High. After several

later communications denying familiarity with the Notice

of Security, Giant Screen stated to CIBC that in Giant

Screen’s belief, it had no obligation to CIBC since it was not

a party to that agreement.

On November 12, 2004, Giant Screen informed CIBC

that the signature on the Notice of Security was not the

signature of its president, Donald Kempf. CIBC acknowledged that it had not received any documents directly

from Giant Screen, but rather through Sky High. CIBC

expressed concerns regarding Sky High’s offer to

obtain Giant Screen’s signature, which CIBC initially

expected to gather directly.

On November 15, 2004, CIBC sent Giant Screen copies

of the Falsified Distribution Agreement, the Notice of

Security, and various pledgeholder agreements to determine whether all of Donald Kempf’s signatures were

forgeries. The following day, Giant Screen informed

CIBC that it would cooperate with the forgery investigation, but needed the protection of legal process before

doing so. Although Giant Screen did not answer as to

whether the signatures were forgeries, Giant Screen did

state that CIBC would not like the answers about the

signatures’ authenticity.
No. 07-2800 5

On November 24, 2004, CIBC sent Sky High a letter

requesting an explanation of Giant Screen’s forged signature on the Notice of Security. Sky High did not respond.

CIBC declared Sky High in default and sued under the

Credit Agreement. In an affidavit, CIBC stated that it

feared the Notice of Security was false and the disbursement of the loan provided by the Credit Agreement

was based on false representations.

In April 2005, CIBC settled its claim with Sky High,

providing that Sky High would cooperate with CIBC in

requiring Giant Screen to abide by the Notice of Security.

Giant Screen and EDC received a letter from CIBC indicating that the matter was settled and that the Credit Agreement between Sky High and CIBC had been reinstated.

On June 7, 2005, CIBC filed an insurance claim with

EDC. The claim stated that CIBC had sustained a loss as a

result of Giant Screen’s failure or refusal to pay the

first installment of $500,000 under the Falsified Distribution Agreement.

EDC inquired into the insurance claim by asking CIBC

about Giant Screen’s default and whether there were any

disputes with Sky High that would impede payment of

the first installment. CIBC stated that, to its knowledge,

Giant Screen was still in default and that it was unaware

of any disputes that would impede payment and did not

know of any reason why Giant Screen had not paid.

Giant Screen then filed a diversity action against Sky

High and its president Samson, and later added CIBC as

a defendant. Giant Screen asserted that it was per se

defamed by CIBC in CIBC’s letters to EDC about Giant
6 No. 07-2800

Screen’s lack of payment. CIBC filed cross-claims

against Sky High and counterclaims against Giant

Screen. The district court granted in part and denied in

part both Giant Screen’s and CIBC’s motions for sanctions against Sky High for the forgery; granted summary

judgment in favor of both Giant Screen and CIBC against

Sky High; and granted summary judgment in favor of

Giant Screen on CIBC’s counterclaims. The district court

granted summary judgment in favor of CIBC on Giant

Screen’s defamation per se claim, finding that the communications were not defamatory since they were subjective opinions, subject to innocent constructions, and

made for a legitimate business purpose. Giant Screen

filed this timely appeal only as to its defamation per se

claim.

DISCUSSION

Giant Screen claims that the statements made about

its contractual failures to pay a legal debt and its “default” status were so serious that its reputational injury

may be presumed as defamation per se. Giant Screen

also argues that CIBC abused its qualified privilege to

make such statements since CIBC either knew of the

forgery or displayed a reckless disregard for the truth

or falsity of the statements before filing the insurance

claim. We review de novo the district court’s decision to

grant summary judgment, construing all the facts and

inferences in favor of Giant Screen. See Republic Tobacco Co.

v. N. Atl. Trading Co., 381 F.3d 717, 726 (7th Cir. 2004).
No. 07-2800 7

Summary judgment is appropriate when the pleadings,

depositions, answers to interrogatories, and admissions

on file, together with any affidavits, show that there is no

genuine issue of material fact and the movant is entitled

to judgment as a matter of law. Fed. R. Civ. P. 56(c). “The

initial burden is on the moving party . . . to demonstrate

that there is no material question of fact with respect to

an essential element of the non-moving party’s case.” Cody

v. Harris, 409 F.3d 853, 860 (7th Cir. 2005). If the moving

party meets this burden, the non-moving party must

submit evidence that there is a genuine issue for trial. Fed.

R. Civ. P. 56(e); Ptasznik v. St. Joseph Hosp., 464 F.3d 691, 694

(7th Cir. 2006). The existence of merely a scintilla of

evidence in support of the non-moving party’s position

is insufficient; there must be evidence on which the jury

could reasonably find for the non-moving party. Id. We

apply the substantive law of Illinois, the state in which

this diversity case was filed, to each of Giant Screen’s

claims. See Global Relief Found., Inc. v. New York Times Co.,

390 F.3d 973, 981 (7th Cir. 2004).

A. Defamation Per Se

Giant Screen claims that CIBC’s statements made to

EDC imputed an inability to perform or a want of

integrity; that the statements, taken as a whole, express a

failure of Giant Screen to uphold contractual obligations,

and that these statements prejudice its reputation in the

industry. We agree.

Defamation actions provide redress for false statements of fact that harm a plaintiff’s reputation. Brennan
8 No. 07-2800

v. Kadner, 814 N.E.2d 951, 956 (Ill. App. Ct. 2004). A

statement is defamatory if its publication “tends to cause

such harm to the reputation of another that it lowers

that person in the eyes of the community or deters

third persons from associating with [the plaintiff].” Kolegas

v. Heftel Broad. Corp., 607 N.E.2d 201, 206 (Ill. 1992). To

prove a defamation claim, the evidence must show

that a defendant made a false statement concerning the

plaintiff, that there was an unprivileged publication of

the defamatory statement to a third party by the

defendant, and that the plaintiff suffered damages as a

result. Seith v. Chicago Sun-Times, Inc., 861 N.E.2d 1117,

1126 (Ill. App. Ct. 2007). Illinois recognizes two types

of defamation: defamation per se and defamation per quod.

Knafel v. Chicago Sun-Times, Inc., 413 F.3d 637, 639 (7th Cir.

2005). This case is based on a claim of defamation per se.

Some statements are considered defamatory per se

because they are “so obviously and materially harmful” to

a plaintiff that his injury may be presumed and he does

not need to prove actual damages to recover, as the

defamatory character is apparent on its face. Tuite v.

Corbitt, 866 N.E.2d 114, 121 (Ill. 2006). Illinois recognizes

five categories of statements which are considered actionable per se; two are pertinent to this case: (1) those imputing an inability to perform or want of integrity in the

discharge of one’s duties of office or employment; and

(2) those that prejudice a party, or impute lack of ability, in

his or her trade, profession or business. Bryson v. News

America Publications, Inc., 672 N.E.2d 1207, 1214 (Ill. 1996).

Although a statement may fit into one of these

categories, this fact, standing alone, “has no bearing on
No. 07-2800 9

whether the alleged defamatory statement is actionable,”

because certain factors may render defamatory statements non-actionable as a matter of law. Hopewell v. Vitullo,

701 N.E.2d 99, 102 (Ill. App. Ct. 1998). For example, as

CIBC argues, if a defendant’s statements are reasonably

capable of an innocent, nondefamatory construction, a

plaintiff cannot maintain action for defamation per se.

Bryson, 672 N.E.2d at 1215. The innocent construction

rule “requires courts to consider a written or oral statement in context, giving the words, and their implications,

their natural and obvious meaning.” Id. If the “complained-of statement may reasonably be innocently interpreted, it cannot be actionable per se.” Harrison v. Chicago

Sun-Times, Inc., 793 N.E.2d 760, 772 (Ill. App. Ct. 2003).

Illinois courts emphasize that the interpretation must

be reasonable. Bryson, 672 N.E.2d at 1215. Illinois courts

and our court have held that whether a statement is

reasonably capable of an innocent construction is a question of law for the court to decide. See Muzikowski v.

Paramount Pictures Corp., 322 F.3d 918, 924 (7th Cir. 2003);

See also Anderson v. Vanden Dorpel, 667 N.E.2d 1296, 1302

(Ill. 1996). The First Amendment also affords protection

from liability to a speaker expressing an opinion that

does not misstate actual facts. See Milkovich v. Lorain

Journal Co., 497 U.S. 1, 20 (1990); see also Moriarty v.

Greene, 732 N.E.2d 730, 739 (Ill. App. Ct. 2000).

There are three disputed statements in this case: (1) that

Giant Screen’s failure or refusal to pay resulted in CIBC’s

loss; (2) that Giant Screen was still in default of its

payment obligations; and (3) that CIBC was unaware of

any Sky High disputes that would impede Giant Screen’s
10 No. 07-2800

payment. CIBC principally argues that the district court

was correct in finding that these statements are not per se

defamatory because they are capable of reasonable,

innocent constructions.

In considering allegedly defamatory statements under

the innocent construction rule, courts must interpret the

words “as they appeared to have been used and

according to the idea they intended to convey to the

reasonable reader.” Bryson, 672 N.E.2d at 1217. The rule

“does not require courts to strain to find an unnatural

innocent meaning for a statement when a defamatory

meaning is far more reasonable.” Tuite, 866 N.E.2d at 123

(quoting Bryson, 672 N.E.2d at 1217). It also does not

require courts “to espouse a naïveté unwarranted under

the circumstances.” Id. Thus, “when a defamatory

meaning was clearly intended and conveyed, [Illinois

courts] will not strain to interpret allegedly defamatory

words in their mildest and most inoffensive sense in

order to hold them nonlibellous under the innocent

construction rule.” Bryson, 672 N.E.2d at 1217.

Our inquiry, then, is whether there is a reasonable,

innocent construction of CIBC’s words: an interpretation

other than that of Giant Screen’s purposeful delinquency

in its financial obligations. In making this determination, the context of the statements is critical in determining their meaning. See Bryson, 672 N.E.2d at 1215.

CIBC argues that the three statements do not imply

that Giant Screen deliberately disregarded its obligation

to pay a lawful debt for an improper reason. Rather, the

refusal or failure to pay could have resulted from a mis-
No. 07-2800 11

take, a breach by Sky High, a good faith dispute over

liability, or other innocent constructions, to support

summary judgment in CIBC’s favor. See Muzikowski v.

Paramount Pictures, 477 F.3d 899, 904 (7th Cir. 2007) (“If a

statement is capable of two reasonable constrictions, one

defamatory and one innocent, the innocent one will

prevail.”). We disagree. There is no reasonable construction of the statements other than that Giant Screen was

unable to perform or willfully refused to meet its

financial obligations.

CIBC disparaged Giant Screen’s ability and integrity as

a business by telling EDC that, in essence, Giant Screen’s

contractual word to meet an obligation is meaningless.

The natural and obvious response of anyone contemplating entering an agreement with Giant Screen,

upon being told that Giant Screen had either refused or

failed to pay a legal obligation, is to not transact with

Giant Screen, but take his business elsewhere. See Action

Repair v. American Broadcasting Companies, 776 F.2d 143, 148

(7th Cir. 1985). More importantly, CIBC’s second letter

expressly stated that Giant Screen was “still in default.”

Such an express statement about Giant Screen’s lack of

financial integrity is not intended to put EDC on notice

of a future claim, but to inform EDC that Giant Screen

had purposely disregarded payments it was legally

obligated to make. With such an intentional breach, CIBC

argued it was entitled to the insurance proceeds.

It was the district court’s job to decide whether, in light

of the summary judgment record, the statements made to

EDC could reasonably, without undue strain, be inter-
12 No. 07-2800

preted innocently. However, the district court’s decision

puts an undue strain on the meaning behind CIBC’s

statements. CIBC intended to convey, and indeed expressly stated, that Giant Screen was in default of a

payment legally due. CIBC reinforced this negative

portrayal of Giant Screen by stating that Giant Screen was

“still in default,” suggesting that Giant Screen couldn’t or

wouldn’t make payments that were due. Moreover, CIBC

communicated to EDC that it knew of no dispute with

Sky High that would impede Giant Screen’s payment.

This statement strengthened CIBC’s message that there

was no justification for Giant Screen’s non-payment,

implying only that Giant Screen purposely failed or

willfully refused to uphold its end of the bargain.

Illinois law rejects attempts to imagine innocent explanations of plainly defamatory statements. Tuite, 866 N.E.2d at

123. Upon reading these statements, EDC’s reaction would

not be that “failure or refusal to pay” or “still being in

default” were innocent statements. See Action Repair, 776

F.2d at 148. “Default,” when used to describe the status of

a transacting business, is the willful refusal to pay an

obligation. The word alone triggers notions of collection

and bankruptcy proceedings. Although the district court

decided that the letters’ purpose was to put EDC on notice

of a potential claim, we conclude that both letters were

actually a claim on the insurance company for the respective proceeds. In addition to stating that Giant Screen

breached its contractual duty, the August 26, 2005 letter

concludes with CIBC advising EDC that any potential

investigation into the claim should not preclude “prompt

payment” of the insurance proceeds. CIBC’s intent was
No. 07-2800 13

to collect the proceeds under the insurance policy, and

to do so, CIBC expressly stated that Giant Screen purposely welshed on its financial obligations. To the reasonable reader, the statements, taken as a whole, convey

the untrue imputation that Giant Screen is an intentionally dishonest business entity, which purposely

disregards its financial contracts.

The district court also decided that the statements

cannot be reasonably interpreted as actual facts, but only

as subjective opinions, thereby protecting the statements

as non-actionable opinions. Statements of opinion, although defamatory, do not give rise to a defamation

claim. See Bryson, 672 N.E.2d at 1220 (quoting Milkovich,

497 U.S. at 20) (a defamatory statement is protected under

the First Amendment and rendered non-actionable only

if the remark “cannot be reasonably interpreted as

stating actual facts.”). If it is plain that the speaker is

expressing a subjective view, an interpretation, a theory,

conjecture, or surmise, rather than claiming to be in

possession of objectively verifiable facts, the statement is

not actionable. Wilkow v. Forbes, 241 F.3d 552, 555 (7th

Cir. 2001). To be actionable, the allegedly defamatory

statement must contain an objectively verifiable factual

assertion. See Lifton v. Bd. of Educ. of the City of Chicago, 416

F.3d 571, 579 (7th Cir. 2005). Although “in one sense

all opinions imply facts, the question of whether a statement of opinion is actionable as defamation is one of

degree; the vaguer and more generalized the opinion, the

more likely the opinion is non-actionable as a matter of

law.” Wynne v. Loyola Univ., 741 N.E.2d 669, 676 (Ill. App.

Ct. 2000).
14 No. 07-2800

The statements at issue are not non-actionable statements of opinion; they contain objectively verifiable

factual assertions. A speaker’s remarks cannot be divorced

from the context in which they occur. Although the

circumstances under which a remark was made may

“negate the impression that the statement had factual

content,” the statements here were made to an insurance

company to collect proceeds, giving the greatest impression that each statement had factual content and was not

merely a generalized, vague statement. Hopewell, 701

N.E.2d at 103. CIBC could not collect, and certainly EDC

would not pay, unless it had been factually stated, not

subjectively opined, that Giant Screen was in default.

Although the district court decided that the statements were mere suppositions, characterizations such as

“failure or refusal” to pay and “still in default” convey

that Giant Screen, as a matter of fact, intentionally did

not pay what it was legally obligated to. The reasonable

reader would understand CIBC to be informing him of

events that already have occurred, namely that Giant

Screen inexcusably did not pay what it should have.

Expressing that a party delinquently failed to meet a

contractual obligation, particularly that it “did not pay” or

“refused to pay” or remains “in default,” is an objectively

factual assertion, clearly capable of being verified as a

statement of fact, and does not fall within the protective ambit of the Constitution.

Furthermore, CIBC’s per se defamatory statements are

not saved from being actionable as non-actionable

opinion by the prefatory term, “[t]o CIBC’s knowledge,”
No. 07-2800 15

when stating that Giant Screen remained in default.

Prefatory language does not control whether the statement

is defamatory. See Milkovich, 497 U.S. at 17-21; see also

Wilkow, 241 F.3d at 555. This court has held that statements of fact are not shielded from an action for defamation even if prefaced with the words “in my opinion.”

Haynes v. Alfred A. Knopf, Inc., 8 F.3d 1222, 1227 (7th Cir.

1993). As previously discussed, CIBC’s statements are

not expressing a subjective view.

Again, context is key, and here, CIBC was making a

claim for insurance proceeds by factually stating that

Giant Screen breached its obligation. To hold that CIBC

was making a claim for insurance proceeds by expressing its subjective opinion is unreasonable.

As noted, courts will not strain to find an innocent

meaning for words when a defamatory construction is

far more reasonable. Bryson, 672 N.E.2d at 1217. CIBC’s

statements about Giant Screen are not reasonably susceptible to an innocent construction. They are not non-actionable statements of opinion; they are so harmful to Giant

Screen that they constitute defamation per se. Summary

judgment on Giant Screen’s defamation per se claim

was improperly granted.

B. Qualified Privilege

The district court also decided that there was a qualified

privilege in CIBC’s communication to EDC. Although

Giant Screen does not question the existence of such a

privilege, Giant Screen argues and we conclude that
16 No. 07-2800

there are triable issues of material fact as to whether

the privilege had been abused.

Even if a qualified privilege exists, the communication

can still be defamatory and actionable if the privilege

has been abused. “In general terms, overcoming the

qualified privilege requires a showing that the defendant

either intentionally published the material while

knowing the matter was false, or displayed a reckless

disregard as to the matter’s falseness.” Smock v. Nolan, 361

F.3d 367, 372 (7th Cir. 2004) (citing Kuwik v. Starmark Star

Mktg. and Admin., Inc., 619 N.E.2d 129, 133 (Ill. 1993)).

To prove such abuse, a plaintiff must show “a direct

intention to injure another, or a reckless disregard of

[the defamed party’s] rights and of the consequences

that may result to him.” Kuwik, 619 N.E.2d at 135. Importantly, a defendant acts with reckless disregard when

it makes a statement “despite a high degree of awareness

of probable falsity or entertaining serious doubts as to

its truth.” Id. at 133 (citation omitted). Reckless disregard

of a plaintiff’s rights can also include the failure to properly investigate the truth of the matter. Id. at 136. Although

whether a qualified privilege exists is a question of law

for the court, the issue of whether the privilege was

abused is a question of fact for the jury. Id. at 133.

The question of whether CIBC abused its privilege in

making any of the defamatory statements involves only

one factual dispute: whether CIBC knew of the forgery or

had reason to know of the forgery when it made its insurance claim. We conclude that genuine issues of material

fact exist as to whether CIBC knew of or had reason to
No. 07-2800 17

suspect the forgery, which indicate that CIBC’s behavior

in sending the letters to EDC may have been in

reckless disregard of Giant Screen’s rights.

Although CIBC acknowledged the Notice of Security’s

forgery, CIBC argues that it neither knew nor should

have known that Giant Screen’s signature on the

Falsified Distribution Agreement was forged. Because

of this, CIBC argues that a reasonable jury could not

conclude that CIBC directly intended to injure Giant

Screen or recklessly disregarded Giant Screen’s rights

when making its insurance claim. Specifically, CIBC asserts

that in November 2004, it sent Giant Screen a copy of the

Falsified Distribution Agreement to examine the signature’s authenticity. In response, Giant Screen did not tell

CIBC that the document was forged, leading to CIBC’s

belief that nothing was wrong with the document.

Also, CIBC argues that it was unaware of any dispute

involving Sky High, since it had settled its suit with Sky

High prior to making its claim with EDC. With these

undisputed facts, CIBC argues it was entitled to

summary judgment since no jury could reasonably conclude that it had a direct intention to injure Giant Screen

or that it recklessly disregarded Giant Screen’s rights.

We are not satisfied, especially in viewing the record

in Giant Screen’s favor, that nothing in this record could

have justified a jury finding that the privilege had been

abused. There are disputes of material fact as to whether

CIBC made the statements to EDC knowing either they

were false or highly likely to be false. When Sky High

defaulted on the CIBC loan, CIBC sought payment from
18 No. 07-2800

Giant Screen, attaching the Notice of Security to the

payment request. In response, Giant Screen repeatedly

denied familiarity with the document. On November 12,

2004, Giant Screen expressly stated to CIBC that it had not

signed the Notice of Security. At this point, CIBC would

have had reason to suspect that Giant Screen’s

signatures might not have been authentic.

CIBC argues that the Notice of Security’s forgery does

not raise a genuine issue of material fact regarding the

Falsified Distribution Agreement. We disagree; the Falsified Distribution Agreement encompassed the Notice of

Security and neither of the forged documents could be

viewed in isolation. In the first defamatory letter to EDC,

CIBC stated that it suffered a loss as a result of Giant

Screen’s failure or refusal to pay under the Distribution

Agreement, “as defined by the policy.” The policy defines

the agreement “as being amended by the Notice” of

Security. EDC therefore issued the policy reflecting both

the Notice of Security and the Falsified Distribution

Agreement. Moreover, Section Two of the Notice of

Security obligates Giant Screen to make the guaranteed

payments due under the Falsified Distribution Agreement directly to CIBC. Thus, the Falsified Distribution

Agreement incorporated the Notice of Security. We

reject CIBC’s argument that the documents are independent of each other and that knowledge of a forgery on the

Notice of Security does not give rise to knowledge, or

reason to know, of forgery on the Falsified Distribution Agreement. If one was acknowledged as forged, there

are genuine issues of material fact as to whether the

other’s authenticity should at least have been in doubt.
No. 07-2800 19

Importantly, three days after Giant Screen stated that

the Notice of Security had been forged, CIBC acknowledged the forgery, and inquired whether other documents, such as the Falsified Distribution Agreement, had

also been forged. A jury could conclude that CIBC knew

or, at a minimum, had reason to know that the Falsified

Distribution Agreement had been forged. By asking

whether the Falsified Distribution Agreement had been

forged, there are genuine issues present as to whether

CIBC entertained serious doubts as to the authenticity

of its signature. The request alone establishes factual

disputes regarding the suspicion raised as to the signature’s genuineness. Further, Giant Screen informed CIBC

that it would not “like the answers,” cementing triable

issues of fact concerning whether Giant Screen provided

notice to CIBC that the document had been forged.

Forgeries of Giant Screen’s signature prompted CIBC to

send a letter to Sky High requesting an explanation for

the Notice of Security’s lack of authenticity. When Sky

High failed to respond, CIBC filed suit against Sky High,

stating in an affidavit that it “feared” the Notice of

Security was false and based on false representations.

CIBC then filed its insurance claim with EDC. A reasonable

jury could conclude that CIBC “feared” the forgery because, as CIBC’s internal communications reflect, a

forgery would preclude receipt of the insurance proceeds. The factual disputes, taken favorably on Giant

Screen’s behalf, suggest that CIBC’s failure to investigate

the truth prior to its claim may have been reckless.

All of these events lead to triable issues of material fact

as to whether CIBC knew or had reason to know of the
20 No. 07-2800

Falsified Distribution Agreement’s forged signature. A

triable issue of fact exists as to whether CIBC recklessly

disregarded Giant Screen’s rights by failing to properly

investigate the truth behind the signature before

making the insurance claim.

CONCLUSION

The district court held that CIBC’s statements to EDC

were not per se defamatory and that CIBC’s qualified

privilege rendered them non-actionable. We conclude,

however, that the statements amounted to defamation

per se and genuine issues of material fact exist as to

CIBC’s abuse of its privilege. Therefore, we REVERSE

and REMAND for further proceedings. Rule 36 is to apply.

CUDAHY, Circuit Judge, dissenting. After Giant Screen

and Sky High executed an agreement to co-produce an

IMAX film about Vikings, Sky High sought and obtained

additional financing by perpetrating a fraud on the defendant CIBC: it forged signatures on a series of documents

through which Giant Screen appeared to guarantee CIBC’s

loan to Sky High. Not surprisingly given these rather

inauspicious beginnings, things did not end well. Sky

High failed to deliver the film on time, CIBC sent Giant
No. 07-2800 21

Screen a letter demanding repayment and Giant Screen

disclaimed knowledge of the fraudulent documents by

means of which Giant Screen appeared to have

guaranteed the loan. CIBC made some preliminary inquiries into Giant Screen’s allegations of fraud, but gave up

when Giant Screen said it would answer CIBC’s questions

only if ordered to do so by a court. Without inquiring

further, CIBC made a series of statements to its insurer

that lie at the center of this dispute. Most pertinently, it

stated that Giant Screen was “still in default of its payment obligations.”

As I read this statement, and the other statements that

are at issue here, I find myself incapable of the sort of

indignation that seems to animate the majority opinion.

According to the majority, CIBC’s statement suggests

that “Giant Screen’s contractual word to meet an obligation is meaningless” (Maj. Op. at 11), and “triggers

notions of collection and bankruptcy proceedings.” (Maj.

Op. at 12.) To my ear, the statement does no such thing.

CIBC has not said that Giant Screen is incapable of

paying; it has not even stated that Giant Screen lacked an

excuse for nonpayment. It has said only that Giant Screen

simply has not paid, and that payment was due. What,

then, has led my colleagues to conclude that this is defamatory?

It seems safe to say that my colleagues have not based

their decision on specific Illinois precedent. Indeed,

given that we are sitting in diversity, one can’t help but

be struck by the majority’s indifference to the fact that

Illinois courts have stated that “[a]llegations of out-
22 No. 07-2800

standing debts and the failure of a business venture are

neither necessarily injurious to a person’s business reputation nor indicative of a lack of integrity in business dealings.” Makis v. Area Publ’ns Corp., 395 N.E.2d 1185, 1189 (Ill.

App. Ct. 1st Dist. 1979). It appears to be widely accepted,

both in Illinois and elsewhere, that the mere statement that

someone has failed to perform under an agreement does

not, without more, implicate one’s ability, business integrity or solvency. See, e.g., Springer v. Harwig, 418 N.E.2d

870, 872 (Ill. App. Ct. 1st Dist. 1981) (lawsuit charging

a person with failure to perform under an agreement

“does not, in itself, charge him with lack of ability or

integrity in his business.”); Am. Needle & Novelty, Inc. v.

Drew Pearson Mktg., Inc., 820 F. Supp. 1072, 1075-76 (N.D.

Ill. 1993) (statement that plaintiff has knowingly

breached an agreement and is delinquent in payments

“while discourteous . . . do[es] not, in obviously and

naturally harmful words, constitute a serious charge of

incapacity or misconduct.”); Union Pac. R.R. Co. v. Vill. of

S. Barrington, 958 F. Supp. 1285, 1300 (N.D. Ill. 1997)

(allegation that plaintiff breached contract is not a

serious charge of incapacity or misconduct that would

support an action for defamation per se); see also Makofsky

v. Cunningham, 576 F.2d 1223, 1236 (5th Cir. 1978) (assertion

that buyer was “in default” of purchase agreement is not

defamatory per se, “especially when, as here, [the words]

are employed merely to claim a deposit made as a security

for contractual performance.”); Williams v. Gulf Coast

Collection Agency Co., 493 S.W.2d 367, 369 (Mo. Ct. App.

1973) (the general rule is that it is not defamatory per se to

state that a person owes a debt which is long past due
No. 07-2800 23

In Quality Granite Constr. Co., Inc. v. Hurst-Rosche Eng’rs, Inc.,

1

632 N.E.2d 1139 (Ill. App. Ct. 5th Dist. 1994), an Illinois court

refused to overturn a jury’s finding that a letter stating that

the plaintiff “may be considered in default” was defamatory.

Id. at 1143. However, in that case, the defendant also accused

the plaintiff of failing “to complete the project in a timely

manner, substandard workmanship, reluctance to complete

punch list items and inability to interpret the contract documents, plans and specifications as bid.” Id. at 1141. It is probably

not irrelevant that the jury also found that the defendant’s

statement was made to pressure the plaintiff into forfeiting

its claims for additional compensation. Id.

where this charge does not affect the person in his business); Patton v. Jacobs, 78 N.E.2d 789, 790-91 (Ind. App. Ct.

1948) (statement that a person who is not a merchant

owes a debt and refuses to pay is not defamatory per se);

Demmel v. Triumph of Europe, Inc., 208 N.Y.S.2d 463 (N.Y.

Sup. Ct. 1960) (assertion that plaintiff failed to perform

his contracts would not tend to hold plaintiff to ridicule

or aversion and was not calculated to prejudice him in

seeking a livelihood).1

The majority’s decision is no more compelled by the

general principles of the law of defamation than it is

required by specific Illinois precedent. The law of defamation in Illinois is unremarkable: defamation tends to

cause such harm to the reputation of another that it

lowers that person in the eyes of the community or deters

third persons from associating with him. See Tuite v.

Corbitt, 866 N.E.2d 114, 121 (Ill. 2006). Statements are

defamatory per se when they impute inability or want of
24 No. 07-2800

integrity in business, or in one’s performance of employment duties. Id. The mere recitation of this definition,

however, does not settle much. At most, CIBC’s statements

are agnostic with respect to Giant Screen’s “integrity” and

its “business ability.” Thus, it seems to me that we are

required under Illinois’ “innocent construction rule” to

hold the statement to be non-defamatory. See Tuite, 866

N.E.2d at 121 (a statement is not defamatory if it is “reasonably capable of an innocent construction.”).

The majority pays lip service to the innocent construction rule, but dismisses as “unreasonable” any innocent

interpretation of CIBC’s statements. (Maj. Op. at 11.)

I disagree. It seems to me that CIBC’s statements are

obviously (and reasonably) capable of innocent construction. The innocent construction of its statements would

be as follows: Giant Screen did not perform an action

required by contract; it may subjectively believe that

performance wasn’t due, and this belief may even be reasonable,

or at any rate, excusable; however, its nonperformance has

resulted in a loss to CIBC for which CIBC is entitled to insurance

compensation. Again, one doesn’t have to strain to see this

interpretation—this is more or less what CIBC actually

said.

The innocent construction rule seems to embody the

principle that courts should, where reasonable, strive to

minimize the set of statements that can give rise to potential tort liability. This makes a great deal of economic

sense. The risk of taking unavailing breach of contract

claims to be defamatory is that we will make it harder,

rather than easier, for people in business to interact. Even
No. 07-2800 25

when the prospect of ultimately being found liable

seems remote, as seems to be the case here, our law

unnecessarily increases the cost of business if ordinary

business communications have the potential to foist on

speakers the cost of standing trial to prove that their

statements were true, or were not reckless in their

possible falsity.

In the light of all this, I think our decision today is illadvised. It seems to me very likely that harsher words

than the ones at issue here have passed between

business associates without the parties coming to blows

or contacting their lawyers. Again, because parties apparently rarely see the need to litigate over such trivialities,

it is hardly clearly established as a matter of law that

the words like “default” give rise to tort liability when

they are embedded in sentences that might conceivably

be false. In spite of this, the majority today holds what, to

my knowledge, no court has ever held: namely, that one

defames a business associate as a matter of law by saying

that this associate is “in default.” In assigning such treacherous consequences to the use of this rather bloodless

and at any rate unremarkable word, the majority has dug

a new and hidden pitfall for civil discourse among

businesspeople. This result, in other words, is both imprudent and unnecessary. I respectfully dissent.

1-20-09