Court Opinion

ID: 4554191
Source: CourtListenerOpinion
Date Created: 2020-08-08 01:14:11.145646+00
Date Added: 2024-06-11T13:16:42.141419
License: Public Domain

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

                                      NO. 03-18-00804-CV

            Christopher Novosad d/b/a Creative Kahuna f/k/a TIKI2, Appellant

                                                v.

                  LSG Vodka LLC d/b/a Perspectv Distilling Co., Appellee

               FROM COUNTY COURT AT LAW NO. 2 OF TRAVIS COUNTY
      NO. C-1-CV-18-006059, THE HONORABLE ERIC SHEPPERD, JUDGE PRESIDING

                            MEMORANDUM OPINION

               In this interlocutory appeal, Christopher Novosad challenges the trial court’s

denial of his Texas Citizens Participation Act (TCPA) motion to dismiss LSG Vodka LLC’s

claims against him. See generally Tex. Civ. Prac. & Rem. Code §§ 27.001–.011; 1 see also id.

§ 51.014(a)(12) (providing for interlocutory appeal from denial of TCPA motion). For the

reasons stated herein, we affirm in part, reverse and render in part, and remand.

       1
           The Legislature amended the TCPA in 2019. See Act of May 17, 2019, 86th Leg.,
R.S., ch. 378, §§ 1–9, § 12, secs. 27.001, 27.003, 27.005–.007, 27.0075, 27.009–.010, 2019 Tex.
Sess. Law Serv. 684, 684–88 (codified at Tex. Civ. Prac. & Rem. Code Ch. 27). Because this
suit was filed before the effective date of the amendments, September 1, 2019, it is governed by
the statute as it existed before the amendments. See id. § 11–12. All citations in this opinion are
to the version in effect before the 2019 amendments.
                                          Background

               This interlocutory appeal arises out of series of events and transactions involving

the creation and development of vodka brands and products. Novosad owns a company that

offers commercial services in graphic and website design and website maintenance. In early

2015, Christopher Greta, through his company Flagrant Brands, hired Novosad to produce logos,

labels, and general marketing designs for a prospective product called “Sh!t Vodka” and to build

a website for that product at “shitvodka.com.” Novosad did so and launched the website in

December 2015.

               Around that same time LSG, through its CEO W. Scott Murray, began negotiating

to buy Flagrant Brands or the “Sh!t Vodka” name, which Flagrant had applied to trademark.

During these negotiations, LSG filed its own trademark application for the name “The Sh!t.” It

did so on the same day that Flagrant Brand’s trademark application for “Sh!t Vodka” was set to

lapse. According to LSG, it filed its application to protect the name after discovering that

Flagrant Brands had allowed its application to lapse. Novosad maintains that LSG encouraged

Greta to allow Flagrant Brands’s application to lapse. Either way, negotiations ended soon after

LSG’s application. Ultimately, after obtaining all the necessary licenses, LSG Vodka began

producing and selling “The Sh!t Vodka” in May 2017. 2

               Meanwhile, Greta, who allegedly remained interested in developing his vodka

brand, directed Novosad to “put up a quick shit vodka web site and offer some shirts . . . to make

it look like” he would soon be producing the vodka. Novosad launched the new content, which

       2
         LSG Vodka’s trademark application for “The Sh!t” was suspended under a “scandalous
advisory refusal” in October 2016. See 15 U.S.C. § 1052(a) (excluding immoral or scandalous
marks from federal trademark registration); see also Iancu v. Brunetti, 139 S. Ct. 2294 (2019)
(holding 15 U.S.C. § 1052 unconstitutional).
                                                2
he describes as “juvenile and provocative,” on the same “shitvodka.com” website around May

2017. Novosad also allegedly purchased and established a website at “theshtvodka.org”—LSG’s

website was “theshtvodka.com”—and had traffic to that website redirected to the

“shitvodka.com” website.

               Later that same year, Novosad posted a comment on LSG’s “The Sh!t Vodka”

Facebook page accusing LSG of being an “IP thief.” 3 This post, which Novosad insists was

taken down after only 10 or 20 minutes, was allegedly in response to LSG’s filing suit against

Greta and Flagrant Brands for damages allegedly incurred during the failed purchase

negotiations and by the “shitvodka.com” website content and redirection tactics. The parties

settled the case in June 2018 and, soon after, LSG filed the underlying suit against Novosad for

damages caused by his Facebook comment and by his participation in the “shitvodka.com”

website-related activities.   Specifically, LSG asserted claims for tortious interference with

business relations, tortious interference with contract and prospective contracts, business

disparagement, injury to business reputation, conspiracy, and defamation. 4

               Novosad filed a motion to dismiss LSG’s claims, asserting that the claims were

subject to dismissal under the TCPA because they were based on Novosad’s exercise of the

rights of association and free speech. See id. § 27.003 (a) (authorizing TCPA motion to dismiss).

LSG Vodka responded to the motion with supporting evidence. A few days later, LSG amended

its original petition to assert claims for tortious interference with prospective business, business

       3
           Based on the pleadings below and the briefs to this Court, the parties agree on the
essential content of the Facebook comment, but they have not included a screenshot or other
evidence showing the exact language used.
        4
          LSG’s original petition describes this claim as “liable [sic], slander, defamation.” For
clarity’s sake and because the distinctions do not affect our analysis, we refer to this as a
defamation claim.
                                                 3
disparagement, injury to business reputation, and conspiracy. LSG’s live petition omitted its

previously asserted claims for tortious interference with contract and defamation, thus nonsuiting

those claims. See FKM P’ship, Ltd. v. Board of Regents of Univ. of Hous. Sys., 255 S.W.3d 619,

632 (noting that filing amended petition that omits a cause of action effectively nonsuits the

omitted claim as of the time the pleading is filed). Novosad then amended his motion to dismiss

by including an assertion that he was entitled to court costs and attorney fees related to the two

abandoned claims even though LSG had nonsuited those claims. Ultimately, Novosad’s motion

was denied by operation of law, see Tex. Civ. Prac. & Rem. Code § 27.008(a), and this

interlocutory appeal ensued.

                                               TCPA

               “The [TCPA] protects citizens who [associate,] petition, or speak on matters of

public concern from retaliatory lawsuits that seek to intimidate or silence them.” In re Lipsky,

460 S.W.3d 579, 584 (Tex. 2015). That protection comes in the form of a motion to dismiss,

subject to expedited review, for “any suit that appears to stifle the defendant’s” exercise of those

rights. Id. Reviewing a TCPA motion to dismiss requires a three-step analysis. As a threshold

matter, the moving party must show by a preponderance of the evidence that the TCPA properly

applies to the legal action against it. Tex. Civ. Prac. & Rem. Code § 27.005(b). The TCPA

applies if the nonmovant’s claim “is based on, relates to, or is in response to the [moving] party’s

exercise of: (1) the right of free speech; (2) the right to petition; or (3) the right of association”

as those phrases are defined in the TCPA. Id. If the moving party meets that burden, the

nonmoving party must establish by clear and specific evidence a prima facie case for each

essential element of its claim. Id. § 27.005(c). If the nonmoving party satisfies that requirement,

the burden shifts back to the moving party to prove each essential element of any valid defense

                                                  4
by a preponderance of the evidence. Id. § 27.005(d). If the nonmovant fails to carry its

burden—or if the movant establishes the essential elements of a valid defense under section

27.005(d)—the trial court must dismiss the suit. Id. § 27.005(b)–(d).

               Intertwined with and overlying this dismissal process is the TCPA provision

exempting certain actions from the TCPA’s application. See id. § 27.010 (establishing four

exemptions). At issue here, section 27.010 provides that the TCPA:

       does not apply to a legal action brought against a person primarily engaged in the
       business of selling or leasing goods or services, if the statement or conduct arises
       out of the sale or lease of goods, services, or an insurance product, insurance
       services, or a commercial transaction in which the intended audience is an actual
       or potential buyer or customer.
Id. § 27.010(b) (commonly referred to as the “commercial speech” exemption). This and the

other section 27.010 exemptions are “wholly unnecessary unless the TCPA applies” and, as

discussed above, “the TCPA only applies when the claim is based on the defendant’s exercise of

the right of free speech, association, or to petition.” Castleman v. Internet Money Ltd., 546
S.W.3d 684, 688 (Tex. 2018) (citing Tex. Civ. Prac. & Rem. Code §§ 27.001(1)–(4), .003(a)).

Thus, when an exemption is invoked, the trial court must consider its applicability in the context

of the movant having met its initial burden under the first step of the dismissal process. See id.

(construing “commercial speech” exemption). If an action falls under a TCPA exemption, the

TCPA does not apply and may not be used to dismiss the action. See Tex. Civ. Prac. & Rem.

Code § 27.010; Best v. Harper, 562 S.W.3d 1, 11 (Tex. 2018) (noting that if TCPA exemption

applies, movant cannot invoke TCPA’s protections).

               In deciding whether a legal action is subject to or should be dismissed under the

TCPA’s burden-shifting process, the trial court “shall consider the pleadings and supporting and

                                                5
opposing affidavits stating the facts on which the liability or defense is based.” Tex. Civ. Prac.

& Rem. Code § 27.006(a). We review de novo the trial court’s determinations that the parties

met or failed to meet their respective burdens of proof under section 27.005. Long Canyon

Phase II & III Homeowners Ass’n v. Cashion, 517 S.W.3d 212, 217 (Tex. App.—Austin 2017,

no pet.).

                                           Discussion

               Novosad raises three issues on appeal. In his first, Novosad asserts that the trial

court erred by not automatically awarding him court costs, attorney fees, and sanctions in

connection with LSG’s claims for tortious interference with contract and defamation once LSG

abandoned those claims. In his second and third issues, Novosad contends that the trial court

erred in denying his motion to dismiss because LSG failed to present a prima facie case for each

essential element of its claims and because the TCPA’s commercial-speech exemption does not

apply to its claims against him. In response, LSG argues that the TCPA does not apply to its

claims, either because Novosad did not meet his burden or because the claims fall under the

commercial-speech exemption, and that, if it does apply, LSG established a prima facie case for

each element of its claims.

Abandoned Claims

               Novosad asserts that the trial court erred in denying him the relief he requested in

his motion to dismiss in connection with LSG’s claims for tortious interference with contract and

defamation because LSG abandoned those claims. LSG does not dispute that it abandoned these

claims but argues that mere abandonment of claims in the aftermath of a TCPA motion to

dismiss does not automatically entitle the movant to costs, attorney fees, and sanctions. We

agree.
                                                6
               The nonsuit of claims challenged in a TCPA motion to dismiss does not “entirely

moot” the TCPA motion because the movant may “continue to pursue their requests for

attorney’s fees incurred in defending those claims prior to their voluntary dismissal, as well as

for the sanctions the Act would prescribe.” Craig v. Tejas Promotions, LLC, 550 S.W.3d 287,

293 (Tex. App.—Austin 2018, pet. denied). But whether Novosad is entitled to the attorney fees

and sanctions depends on the outcome of the TCPA’s burden-shifting process—i.e., it depends

on whether Novosad met his burden of showing that the TCPA applies, whether the claims are

subject to the commercial-speech exemption, and whether LSG failed to present a prima facie

case for each essential element of those claims. See Tex. Civ. Prac. & Rem. Code §§ 27.005

(describing burden-shifting process to determine whether legal action is subject to dismissal),

.009(a) (requiring award of attorney fees, court costs, and other expenses if legal action is subject

to dismissal under TCPA); Amini v. Spicewood Springs Animal Hosp., LLC, No. 03-18-00272-

CV, 2019 WL 5793115, at *5–6 (Tex. App.—Austin Nov. 7, 2019, no pet.) (mem. op.) (applying

burden-shifting process to abandoned claims after holding that non-movant’s abandonment of

claims did not bar movant from seeking TCPA remedies as to those claims). We address these

issues next.

Does the TCPA Apply to LSG’s Claims?

               As noted, Novosad’s initial burden (also described in case law in terms of

demonstrating the TCPA’s “applicability,” see, e.g., ExxonMobil Pipeline Co. v. Coleman, 512
S.W.3d 895, 897–98, 898–902 (Tex. 2017)), consisted of “show[ing] by a preponderance of the

evidence” (1) that LSG has asserted a “legal action” (2) that “is based on, relates to, or is in

response to” (3) either Novosad’s “exercise of the right free speech” or his “exercise of the right

                                                 7
of association.” See Tex. Civ. Prac. & Rem. Code § 27.003(a). There is no dispute that LSG’s

lawsuit seeking money relief, or alternatively each of its component claims for such relief, is a

“legal action,” a term that the TCPA defines to include “a lawsuit, cause of action, petition, or

any other judicial pleading or filing that requests legal or equitable relief.” Id. § 27.001(6)

(defining “legal action”). The remaining elements of Novosad’s initial burden can be established

if LSG’s claims are factually predicated on conduct that falls within either the “exercise of the

right of association” by Novosad or his “exercise of the right of free speech” as the TCPA

defines those terms. See Elite Auto Body LLC v. Autocraft Bodywerks, Inc., 520 S.W.3d 191,

197 (Tex. App.—Austin 2017, pet. denied); see also Tex. Civ. Prac. & Rem. Code § 27.001(2)

(“‘Exercise of the right of association’ means to join together to collectively express, promote,

pursue, or defend common interests relating to a governmental proceeding or a matter of public

concern.”), (3) (“‘Exercise of the right of free speech’ means a communication made in

connection with a matter of public concern.”). As shown in the chart below, the parties do not

dispute that LSG’s individual claims are factually predicated on Novosad’s Facebook comment

and on his work on and related communications regarding the the.shitvodka.com website,

particularly the acquisition of a website similar to LSG’s and the redirection of that website to

www.shitvokda.com (“website-related activities”):

                            Claim                                Predicate for claim

       Tortious interference with prospective business    Facebook comment
                                                          Website-related activities
       Business disparagement                             Facebook comment
                                                          Website-related activities
       Injury to business reputation                      Website-related activities
       Conspiracy                                         Website-related activities

                                               8
        (abandoned) Tortious interference with contract   Website-related activities
        (abandoned) Defamation                            Facebook comment

Novosad contends that he was exercising his right of free speech as defined by the TPCA when

he posted the Facebook comment and that he was exercising his right of association as defined

by the TCPA when he engaged in the website-related activities. We will address each right in

turn.

        “Exercise of the right of free speech”

                The TCPA defines “exercise of the right of free speech” as “a communication

made in connection with a matter of public concern.” Tex. Civ. Prac. & Rem. Code § 27.001(3).

“‘Matter of public concern’ includes an issue related to . . . a good, product, or service in the

marketplace.” Id. § 27.001(7).   LSG does not dispute that the Facebook comment is a

“communication,” but it disputes that the comment involves a “matter of public concern”

because the comment was not “about an actual product that [LSG] sells,” but was “a statement

about the owners of LSG.” But the TCPA does not require that the statement specifically

mention or be about a good or product in the marketplace. Instead, it simply specifies that the

statement be “in connection with” “an issue related to” a good or product in the marketplace.

See Id. § 27.001(3), (7); Coleman, 512 S.W.3d at 901 (adhering to plain text of “matter of public

concern”). A Facebook comment about the business practices of a company that produces,

markets, and sells vodka in the marketplace is, under the TCPA’s text, a statement connected to

an issue related to a product in the marketplace. Thus, with respect to the causes of action

predicated on his Facebook comment, Novosad met his initial burden under the TCPA burden-

shifting framework.     Accordingly, and because LSG does not contend that the TCPA’s

                                                 9
“commercial speech” exemption applies to Novosad’s Facebook comment, we hold that the

TCPA applies to LSG’s claims for tortious interference with prospective business, business

disparagement, and defamation to the extent those claims are predicated on Novosad’s Facebook

comment.

       “Exercise of the right of association”

               The TCPA defines “exercise of the right of association” as “a communication

between individuals who join together to collectively express, promote, pursue, or defend

common interests.” Tex. Civ. Prac. & Rem. Code § 27.001(2). LSG does not dispute that the

website-related activities involved communication between individuals, but it maintains that the

interests of two tortfeasors—i.e., Novosad and Greta—who join together to commit a tort are not

“express[ing], promot[ing], pursu[ing], or defend[ing] common interests.” See Kawcak v. Antero

Res. Corp., 582 S.W.3d 566, 576–77 (Tex. App.—Fort Worth 2019, pet. denied) (rejecting

TCPA argument that two conspirators joining together to commit a tort fall under “exercise of

the right of association” because “common interest” requires sharing by the public or at least a

group). LSG also asserts that, even if Novosad’s website-related activities constitute “exercise

of the right of association,” its claims predicated on this conduct are exempted from the TCPA

under the “commercial speech” exemption. Because it is dispositive of the claims predicated on

the website-related activities, we begin by addressing the “commercial speech” exemption.

               The Texas Supreme Court has construed the “commercial speech” exemption to

apply when (1) the defendant (here, Novosad) was primarily engaged in the business of selling or

leasing goods or services, (2) the defendant made the statement or engaged in the conduct on

which the claim is based in the defendant’s capacity as a seller or lessor of those goods or

services, (3) the statement or conduct at issue arose out of a commercial transaction involving the

                                                10
kind of goods or services the defendant provides, and (4) the intended audience of the statement

or conduct was actual or potential customers of the defendant for the kind of goods or services

the defendant provides. Castleman, 546 S.W.3d at 688. Regarding the first element, there is no

dispute that Novosad is in the business of providing, for a fee, graphic-design and website-

building services to his clients. In an affidavit in the record before us, Novosad states that he is

the owner of a business that provides companies with a variety of services, including “put[ting]

together digital presentations, maintin[ing] websites and help[ing] companies maintain a

presence on social media as well as search engine relevance.” As such, he is “primarily engaged

in the business of selling . . . services.” Novosad argues that he does not meet this first element

because “he did not create or publish the [shitvokda.com] site to sell goods or services at all,

much less that selling or leasing was his ‘primary’ engagement.” This argument does not inform

our analysis and, even if it did, the specifics of the conduct at issue are the subject of the

remaining elements. The first Castleman element simply asks whether the defendant is primarily

engaged in the business of selling or leasing goods or services. See id. And by his own words,

Novosad is primarily engaged in such conduct.

               The second Castleman element asks whether the defendant made the statement or

engaged in the conduct on which the claim is based in the defendant’s capacity as a seller or

lessor of those goods or services. See id. The conduct on which LSG bases its claims here is

Novosad’s website-related activities, which included creating and designing the shitvodka.com

website, acquiring the theshtvodka.com website, and redirecting that similarly named website to

Flagrant Brands’s shitvodka.com website. The record establishes that Novosad engaged in this

conduct at Greta’s direction because he hired Novosad to provide graphic-design and website-

building services for the Sh!t Vodka brand. In fact, Novosad’s affidavit states that he “was hired

                                                11
by Christopher Greta to . . . make logos, labels and general marketing designs” and to “build[] a

website” and that he launched the website at Greta’s direction. Thus, Novosad engaged in the

website-related activities in his capacity as a seller of graphic-design and website-building

services.

               Despite this, Novosad asserts that LSG cannot meet the second Castleman

element because:

               LSG clearly alleges that any business concerns Novosad may have
               had in the past with Greta had terminated months or years before
               any alleged torts, and that the Website was only “forgotten
               remains.” Further, Novosad is not in the liquor business, he did
               not own or the Website, and he was not in competition with LSG.

(Internal citations to clerk’s record omitted.) As we understand this argument, we note that the

relevant inquiry here is not when the alleged conduct occurred, but whether Novosad engaged in

the conduct in his capacity as a seller of website-related services. Further, whether Novosad is in

the liquor business or owns the website is not relevant to the second element.

               The third Castleman element examines whether “the statement or conduct at issue

arose out of a commercial transaction involving the kind of goods or services the defendant

provides.” Id. Because the “sale . . . of . . . services” is a type of “commercial transaction”

contemplated by the exemption, see id. at 690 (explaining that “‘commercial transaction’ is a

catch-all for other commercial transactions not specifically listed” in section 27.010(b)), this

element can be restated as asking, relevant here, whether the statement or conduct at issue arose

out of the sale of services that the defendant provides. Novosad argues that this element is not

established because his conduct related to alleged sale of t-shirts and promotion of vodka. But

regardless of whether that is an accurate characterization of his conduct, the record establishes

                                                12
that LSG’s claims are based on Novosad’s website-related activities and that conduct arose

directly from and as part of his sale of website-design services to Greta.

               Finally, the third Castleman element requires that the intended audience of the

statement or conduct was actual or potential customers of the defendant for the kind of goods or

services the defendant provides. Id. at 688. The intended audience of Novosad’s website-related

activities included Greta and Flagrant Brands because Novosad engaged in the activities at

Greta’s behest and as part of his employment by Greta and Flagrant Brands. Relatedly, Flagrant

Brands was undisputedly an “actual customer” of Novosad’s given that Greta and Flagrant

Brands hired Novosad to perform the website-related activities.              See American Heritage

Dictionary of the English Language 449 (5th ed. 2011) (defining “customer” as “one that buys

goods or services, as from a store or business”); see also Texas State Bd. of Exam’rs of Marriage

& Fam. Therapists v. Texas Med. Ass’n , 511 S.W.3d 28, 34–35 (Tex. 2017) (explaining that

where statute does not define key term, we must apply “common, ordinary meaning unless a

contrary meaning is apparent”). Novosad argues that this fourth element is not established

because the intended audience was Flagrant Brands’s customers. Flagrant Brands’s customers

may be the ultimate intended audience, but Greta and Flagrant Brands were also the intended

audience of Novosad’s work, and Castleman does not require that there be only one intended

audience.

               In sum, without addressing whether the Novosad met his initial TCPA burden, we

hold that LSG has established that its claims predicated on Novosad’s website-related activities

fall under the TCPA “commercial speech” exemption and, as a result, that the TCPA does not

apply to those claims. Accordingly, the trial court did not err in denying Novosad’s motion to

dismiss as to LSG’s claims for tortious-interference, business-disparagement, injury-to-business-

                                                 13
reputation, and conspiracy claims to the extent those claims are predicated on Novosad’s

website-related activities.

Did LSG Establish a Prima Facie Case?

               Having determined that Novosad met his burden of showing that the TCPA

applies to LSG’s claims for tortious interference with prospective business, business

disparagement, and defamation (to the extent that the claims are predicated on Novosad’s

Facebook comment), we must next consider whether LSG met its burden of “establish[ing] by

clear and specific evidence a prima facie case for each essential element of” those claims. See

Tex. Civ. Prac. & Rem. Code § 27.005(c). The words “clear” and “specific” in the context of the

TCPA mean, for the former, “unambiguous,” “sure,” or “free from doubt” and, for the latter,

“explicit” or “relating to a particular named thing.” Lipsky, 460 S.W.3d at 590. A “prima facie

case” “refers to evidence sufficient as a matter of law to establish a given fact if it is not rebutted

or contradicted.” Id. “It is “the minimum quantum of evidence necessary to support a rational

inference that the allegation of fact is true.” Id. (internal quotation marks omitted).      To

determine whether this burden is met, courts are to consider the pleadings and any supporting

and opposing affidavits. Id. § 27.006(a). However, “pleadings that might suffice in a case that

does not implicate the TCPA may not be sufficient to satisfy the TCPA’s ‘clear and specific

evidence’ requirement.” Id. “[M]ere notice pleading—that is, general allegations that merely

recite the elements of a cause of action—will not suffice. Instead, a plaintiff must provide

enough detail to show the factual basis for [his] claim.” Lipsky, 460 S.W.3d at 590–91.

                                                  14
       Tortious interference with prospective business

               The elements of a claim for tortious interference with prospective business

relations are: (1) there was a reasonable probability that the plaintiff would have entered into a

business relationship with a third party; (2) the defendant either acted with a conscious desire to

prevent the relationship from occurring or knew the interference was certain or substantially

certain to occur as a result of the conduct; (3) the defendant’s conduct was independently tortious

or unlawful; (4) the interference proximately caused the plaintiff injury; and (5) the plaintiff

suffered actual damage or loss as a result. Coinmach Corp. v. Aspenwood Apartment Corp., 417
S.W.3d 909, 923 (Tex. 2013). On appeal, Novosad contends that LSG failed to establish, by

clear and specific evidence, a prima facie case that his Facebook comment was the proximate

cause of LSG’s injuries. We agree.

               LSG’s original petition does not include specific facts to support its contention

that Novosad’s Facebook comment prevented any prospective business relations between LSG

and a third party. The petition’s only reference to the Facebook comment in connection with this

cause of action is its allegation that Novosad posted the “IP thief” comment to “hurt LSG’s

pla[c]e in commerce and to prevent future relationships with bars, liquor stores, and consumers.”

And the only reference to the causation element is the conclusory statement that “[Novosad]’s

tortious conduct proximately caused [LSG]’s injury.” LSG’s response to Novosad’s motion to

dismiss lists the elements of the claim but does not even state the conclusory assertion that

Novosad’s Facebook comment caused its injury. And in the affidavit attached to its response,

LSG’s CEO Scott Murray simply avers that Novosad posted the comment and that he received

calls from family members asking him why he was being called a thief on Facebook. The only

causation evidence in the affidavit relates to Novosad’s website-related activities, not to his

                                                15
Facebook comment. In fact, Murray states that “the redirected website was the only possible

marketing [its distributor and sellers] could have seen.” In other words, the affidavit establishes

that any damages it incurred were the result of the website-related activities, not the Facebook

comment. Finally, although not part of the pleadings and affidavits before the trial court, we

note that LSG’s appellate brief does not address how it established this element aside from

making the conclusory statement that Novosad’s “interference proximately caused [LSG]’s

injury.”    Instead, the brief focuses solely on Novosad’s website-related activities without

mentioning the Facebook comment.

                In sum, there is no evidence in the record to show that Novosad’s Facebook

comment prevented any prospective business relations between LSG and a third party.

Accordingly, LSG failed to meet its burden of establishing by clear and specific evidence the

causation element of its claim for tortious interference with prospective business relations

predicated on Novosad’s Facebook comment.            Therefore, the trial court erred in denying

Novosad’s motion to dismiss as to this claim. See Tex. Civ. Prac. & Rem. Code § 27.005(c).

       Business disparagement

                To prevail on a business-disparagement claim, a plaintiff must establish that

(1) the defendant published false and disparaging information about the plaintiff, (2) with malice,

(3) without privilege, (4) that resulted in special damages to the plaintiff. Lipsky, 460 S.W.3d at

592. On appeal, Novosad contends that LSG failed to establish, by clear and specific evidence, a

prima facie case that Novosad’s Facebook comment resulted in special damages to the plaintiff.

We agree.

                Special   damages   are “synonymous        with   economic damages and         are

distinguishable from general damages. General damages are recoverable under a defamation

                                                16
claim for non-economic losses, such as loss of reputation and mental anguish.” Lipsky, 460
S.W.3d at 593 n.11 (citing Hancock v. Variyam, 400 S.W.3d 59, 65 (Tex. 2013)). General

averments of direct economic losses and lost profits, without more, do not satisfy the minimum

requirements of the TCPA. Id. Instead, it is necessary to show specific facts illustrating how the

alleged remarks about LSG actually caused such losses. See id. LSG’s live petition does not

include specific facts to support its contention that the Facebook comment resulted in special

damages to LSG.      The only references to the Facebook comment in connection with the

business-disparagement claim are the conclusory statements that “[Novosad] published the

[comment] on Facebook calling LSG an “IP thief” with malice and intent to disparage and

interfere in the economic interest of the plaintiff” and that “[LSG] suffered actual damages and

special damages due to [Novosad]’s conduct.” The petition’s factual allegations regarding this

claim relate solely to Novosad’s website-related activities: “[LSG]’s distributor shared concerns

it had received from its customer regarding the marketing of the product.” LSG’s response to

Novosad’s motion to dismiss does not address special damages. And in the affidavit attached to

the response, Murray simply avers that Novosad posted the comment and that he received calls

from family members asking him why he was being called a thief on Facebook. Otherwise, the

affidavit focuses on how Novosad’s website-related activities caused damages. In fact, Murray

states that “the redirected website was the only possible marketing [its distributor and sellers]

could have seen.” In other words, the affidavit establishes that any damages it incurred were the

result of the website-related activities, not the Facebook comment. Finally, although not before

the trial court, we note that LSG’s appellate brief only makes the conclusory assertion that it

“was damaged in that it lost potential business. . . . Had [LSG] not interfered, this brand would

have had support from the distributor, been picked up by the chain stores . . . and been even more

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successful. [LSG] was damaged in that in order to mitigate its damages, it was forced to rebrand

at significant cost.” But general averments of direct economic losses and lost profits, without

more, do not satisfy the minimum requirements of the TCPA. Lipsky, 460 S.W.3d at 593 (noting

that plaintiff failed to allege “specific facts illustrating how Lipsky’s alleged remarks about

Range’s activities actually caused such losses.”

               In sum, there is no evidence in the record to show that LSG suffered special

damages as a result of Novosad’s Facebook comment. Accordingly, LSG failed to meet its

burden of establishing, by clear and specific evidence, a prima facie case for the special-damages

element. Therefore, the trial court erred in denying Novosad’s motion to dismiss as to its

business-disparagement claim predicated on the Facebook comment. See Tex. Civ. Prac. &

Rem. Code § 27.005(c).

       Defamation

               The elements of a claim for defamation include: (1) the defendant published a

false statement, (2) that defamed the plaintiff, (3) with the requisite degree of fault regarding the

truth of the statement (negligence if the plaintiff is a private individual, actual malice if the

plaintiff is a public figure), and (4) damages (unless the statement constitutes defamation per se).

D Mag. Partners, L.P. v. Rosenthal, 529 S.W.3d 429, 434 (Tex. 2017) (citing Lipsky, 460
S.W.3d at 593). Novosad contends that LSG failed to establish, by clear and specific evidence, a

prima facie case as to the requisite degree of fault. We agree.

               LSG’s original petition does not include specific facts to support its contention

that Novosad acted negligently or maliciously with regard to the truth of the Facebook comment.

The only reference to the requisite degree of fault in the original petition is the conclusory

statement that “[Novosad] negligently or maliciously published false, defamatory statements of

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fact about (LSG).” General allegations that merely recite the elements of a cause of action are

not sufficient for TCPA purposes. See Lipsky, 460 S.W.3d at 590–91 (“[M]ere notice pleading—

that is, general allegations that merely recite the elements of a cause of action—will not suffice.

Instead, a plaintiff must provide enough detail to show the factual basis for [his] claim.”).

Similarly, LSG’s response to the motion to dismiss does not address the requisite degree of fault

other than to state that the elements of a defamation claim include proving that the defendant

acted with negligence regarding the statement’s truth. Finally, although not before the trial

court, we note that LSG’s brief on appeal does not address whether it established a prima facie

case regarding the requisite degree of fault other than to list the elements of a defamation claim.

Its appellate brief does allege that Novosad posted the Facebook comment intentionally, but it

does so in the context of establishing the malice element of its business-disparagement claim, not

to show that Novosad acted with the requisite degree of fault regarding the truth of the Facebook

comment.

               In sum, there is no evidence in the record to show that Novosad acted with the

requisite degree of fault regarding the truth of the statement that LSG was an “IP thief.”

Accordingly, LSG failed to meet its burden of establishing, by clear and specific evidence, a

prima facie case that Novosad acted negligently or with actual malice regarding the truth of the

“IP thief” statement. Therefore, the trial court erred in denying Novosad’s motion to dismiss as

to its defamation claim predicated on the Facebook comment. See Tex. Civ. Prac. & Rem. Code

§ 27.005(c).

                                           Conclusion

               Based on our holdings above, we reverse in part the trial court’s order denying

Novosad’s TCPA motion to dismiss and render judgment dismissing LSG’s claims for tortious

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interference with prospective business, business disparagement, and defamation to the extent

those claims are predicated on Novosad’s Facebook comment. We affirm the remainder of the

order. We remand the case to the trial court for further proceedings consistent with this opinion.

                                             __________________________________________
                                             Jeff Rose, Chief Justice

Before Chief Justice Rose, Justice Kelly, and Justice Smith

Affirmed in part, Reversed and Rendered in Part, Remanded

Filed: July 31, 2020

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