553 F.3d 527 (7th Cir. 2009), 07-2800, Giant Screen Sports v. Canadian Imperial Bank Of Commerce

Docket Nº:07-2800.
Citation:553 F.3d 527
Party Name: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.
Case Date:January 20, 2009
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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553 F.3d 527 (7th Cir. 2009)

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.

No. 07-2800.

United States Court of Appeals, Seventh Circuit

January 20, 2009

Argued Sept. 9, 2008.

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[Copyrighted Material Omitted]

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Joel D. Bertocchi (argued), James M. Lydon, Hinshaw & Culbertson, Chicago, IL, for Plaintiffs-Appellants.

James C. Schroeder (argued), T. Mark McLaughlin, Mayer Brown, Chicago, IL, for Defendant-Appellee.

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.

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 under this agreement.

EDC would only issue the policy if several provisions were altered to reflect a new Distribution Agreement (Falsified

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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 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.

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.

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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 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. A. Trading Co., 381 F.3d 717, 726 (7th Cir.2004).

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

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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...

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