Court Opinion

ID: 9585346
Source: CourtListenerOpinion
Date Created: 2023-08-21 22:59:29.383029+00
Date Added: 2024-06-11T15:39:01.583523
License: Public Domain

Armstrong, A.C.J.
(dissenting) — I respectfully dissent from the majority’s decision holding, as a matter of law, that the “common interest” qualified privilege protected Robbins’ defamatory communication and that Robbins did not abuse this qualified privilege.
A qualified privilege to make an otherwise defamatory statement arises when the statement is made to one with a common interest in a particular subject matter. Ward v. Painters’ Local Union No. 300, 41 Wn.2d 859, 865, 252 P.2d 253 (1953); Restatement (Second) of Torts, § 596. Under Washington law, however, “a common interest has been recognized only when the communication at issue is made to someone with whom the speaker is allied.” Demopolis v. Peoples Nat’l Bank, 59 Wn. App. 105, 115 n.10, 796 P.2d 426 (1990) (citing Ward, 41 Wn.2d at 865-66; Parry v. George H. Brown & Assocs. Inc., 46 Wn. App. 193, 197, 730 P.2d 95 (1986)) (emphasis added). The majority now extends this limited privilege and holds that a Chapter 11 bankruptcy debtor and its creditors share a common interest in *972the business’ future financial viability.8 But the majority position assumes that the debtor and creditors in a Chapter 11 bankruptcy proceeding share the same interests and goals. I believe this result is inconsistent with the bankruptcy code and that a jury must decide both whether the recipients of the letter shared a common interest and, if so, whether the privilege was abused.
Bankruptcy cases frequently involve parties who share common commercial interests, but whose interests in other respects may be very different. “This is especially true when the parties at issue are a debtor in possession under [Cjhapter 11 and a committee of creditors. The debtor in possession and the committee of creditors share a duty to maximize the debtor’s estate.” In re Mortgage & Realty Trust, 212 B.R. 649, 653 (Bankr. C.D. Cal. 1997) (citing In re Kaiser Steel Corp., 84 B.R. 202, 205 (Bankr. D. Colo. 1998)). But if creditors are dissatisfied, the committee may move to replace the debtor-in-possession with a Chapter 11 trustee, to convert the Chapter 11 case to one under Chapter 7, to dismiss the Chapter 11 case, or petition the court to compel the debtor-in-possession to act or to gain court permission to institute action itself. In re Curry & Sorensen, Inc., 57 B.R. 824, 828 (B.A.P. 9th Cir. 1986). Accordingly, the creditors’ committee is purposely intended to represent the necessarily different interests and concerns of the creditors it represents and must be a partisan— aiding, assisting and monitoring the debtor pursuant to its own self-interest. In re Daig Corp., 17 B.R. 41, 43 (Bankr. D. Minn. 1981).
The bankruptcy code, 11 U.S.C. § 1102, provides for the appointment of one or more committees of creditors to negotiate the formulation of the plan of reorganization. But because one class of creditors may not sufficiently represent the interests of another class of creditors, the bankruptcy code authorizes the court to appoint additional committees to ensure the adequate representation of all creditors. 11 U.S.C. § 1102(a)(2). The standard of “ade*973quate representation” for purposes of determining whether additional creditor’s committees should be appointed, lies not in the uniqueness of a single claim, but in the nature of the case and the composition of the committee. In re Drexel Burnham Lambert Group, Inc., 118 B.R. 209, 212 (Bankr. S.D.N.Y. 1990). “[T]he chief concern of adequacy of representation is whether it appears that different classes of debt and equity holders may be treated differently under a plan and need representation through appointment of additional committees.” Id. at 212.
In the case of In re Mansfield Ferrous Castings, Inc., 96 B.R. 779 (Bankr. N.D. Ohio 1988), the court considered a motion for the appointment of an additional creditor’s committee filed on behalf of debtor’s employees. In granting the employees’ motion, the court noted: “Additionally, the Committee has raised the issue of whether the Employees are in fact true equity security holders or even creditors of the debtor. This stance of the Committee hardly indicates that it is in a position adequately to represent the interests of the Employees.” Id. at 781. Thus, bankruptcy law recognizes that not all creditors have the same interest in a bankruptcy proceeding.
The record before us contains evidence that the trade creditors and hull owners did not have a common interest with regard to Hoquiam Boat’s bankruptcy action. At trial, Robbins testified that the hull owners opposed the Chapter 11 action. But Robbins also testified that he believed the hull owners and trade creditors had a common interest in the bankruptcy proceeding. The language of the letter to the trade creditors illustrates the respective positions of the parties:
At the present time, certain purchasers of boats have attempted to gain an advantage by making UCC-1 filings after Hoquiam became insolvent. We are taking steps to prevent this and I will keep you advised of the status. Our request to cancel certain of the boat contracts is being heard in Federal Court.... You may wish to be present or to have a representative present to urge the court to authorize cancellation of the contracts. . . .
*974The beneficiaries of Hoquiam Boat Shop’s activities over the past two years are Moe and those that have taken delivery of completed boats at below cost prices without the owner’s awareness, and those with boats in varying degrees of completion who would have us continue performing on sub-standard contracts. . . . Additionally, the trade creditors of Hoquiam Boat Shop have also sufferred [sic]. Their reward for being a loyal supplier of equipment and components, under unsecured conditions, has been late payments and broken promises.
Clearly, the letter blames the hull owners, in part, for the financial difficulties and accuses them of attempting to gain an advantage over the trade creditors in the bankruptcy action. The letter also urges the outside creditors to join the debtor in seeking to cancel the hull owners’ contracts. Thus, the language of the letter alone supports the inference that the trade creditors and hull owners did not have a “common interest” in the bankruptcy action. In fact, the letter suggests that as to at least one issue, the hull owners and the trade creditors were adversaries with antagonistic interests. While the outside creditors and the debtor may have shared a common interest in maximizing the boat Shop’s assets, the hull owners were interested in getting the boats they had contracted for. And the pursuit of this interest could well deplete the assets of Hoquiam Boat. The letter recognized this conflict and accordingly urged the outside creditors to support canceling the contracts.
In holding as a matter of law that the common interest privilege applies, the majority ignores this conflict in the evidence and our duty to construe the evidence in favor of Moe, the nonmoving party. See Bender v. City of Seattle, 99 Wn.2d 582, 587, 664 P.2d 492 (1983) (appellate court reviews ruling on directed verdict in the light most favorable to the nonmoving party). I would hold that the trial court erred in deciding, as a matter of law, that there was a common interest between the trade creditors and hull owners. Because of the conflicting evidence, the trial court should have submitted the issue to the jury. See Restate*975ment, supra, § 619(1) cmt. a (although the existence of a privilege is ordinarily a question for the court, if the facts are in dispute, the jury considers the evidence and passes upon the issues raised); Pate v. Tyee Motor Inn, Inc., 77 Wn.2d 819, 822-23, 467 P.2d 301 (1970) (Neill, J. concurring); Getchell v. Auto Bar Sys. Nw., Inc., 73 Wn.2d 831, 837, 440 P.2d 843 (1968).
I also disagree with the majority’s conclusion that, as a matter of law, Robbins did not abuse the common interest qualified privilege. The question of whether a speaker abused a privilege is for the jury to determine “unless the facts are such that only one conclusion can reasonably be drawn.” Restatement, supra, § 619(2) cmt. b.
Acting to Erotect Interest Underlying Frivilege
The majority concludes that there is no evidence Robbins abused the privilege by acting for an improper purpose. “The evidence indicates that Robbins believed the purpose of the letter was to enlist support for the reorganization plan and that he edited it in an attempt to make it more ‘palatable’ and, thus, more effective in protecting the pecuniary interests of Hoquiam Boat and its creditors.”9 But Robbins actually testified that the “underlying objective” of the letter was to enlist the trade creditors’ support for the reorganization plan. And when asked if there was an additional reason he advised against sending the letter, “other than [its] invective and incendiary nature,” Robbins testified that “I didn’t think that the sending of that kind of a letter was going to accomplish what the underlying objective was.”
“[F]ublication to improper persons may justify the conclusion, as a matter of fact, that the defendant has not acted for the purpose for which the privilege is given, but by reason of some other motive not within the privilege.” Restatement, supra, § 604 cmt. c. As Robbins testified that the purpose of the letter was to enlist trade creditors’ support, the publication of the letter to the hull owners clearly *976supports a finding that Robbins did not act for the purpose for which the privilege was given. Further, because the letter was sent to a newspaper reporter, a jury could reasonably infer an ulterior purpose.10
Excessive Publication
The majority summarily concludes that because the hull owners were “creditors” in the broad sense of the term, Robbins’ act of sending the letter to the hull owners did not constitute excessive publication. This reasoning cannot be reconciled with Robbins’ testimony that the purpose of the letter was to enlist trade creditors’ support for the reorganization plan. If this was in fact the purpose of the letter, the publication of the letter to the hull owners constitutes an abuse of the privilege. See Restatement, supra, § 604 cmt. c.
Further, the majority’s reasoning ignores the plain language of the letter. Although the letter blames the hull owners for the business’s financial difficulties and accuses them of attempting to gain an advantage over the trade creditors in the bankruptcy action, the majority concludes that the purpose of the letter was to enlist the support of all creditors. But the letter’s inflammatory accusations against the hull owners make it difficult to conclude that its purpose was to enlist their support. At least a jury could so conclude. Accordingly, I would hold that the issue of abuse by excessive publication should have been submitted to the jury.
In conclusion, I would remand for the submission of these issues to the jury. If the jury determines the hull owners and trade creditors shared a common interest, the qualified *977privilege would protect Robbins’ communication, assuming the jury also finds Robbins did not abuse this privilege.
Review denied at 140 Wn.2d 1025 (2000).

See Majority op. at 960-61.

Majority op. at 966.

Moe does not challenge the trial court’s finding that Robbins had no knowledge the letter would be sent to the press. Nevertheless, the fact that the letter was sent to the press is relevant in determining whether Moe presented clear and convincing evidence of an ulterior purpose.