Fountain v. First Reliance Bank

• Decision Date: 11 July 2012
• Docket Number: No. 27141.,27141.
• Citation: 730 S.E.2d 305,398 S.C. 434
• Court: South Carolina Supreme Court
• Parties: Mark FOUNTAIN, Appellant, v. FIRST RELIANCE BANK, Thomas C. Ewart, and Ernest Pennell, Defendants, of Whom First Reliance Bank and Thomas C. Ewart are, Respondents.

398 S.C. 434

730 S.E.2d 305

Mark FOUNTAIN, Appellant,

v.FIRST RELIANCE BANK, Thomas C. Ewart, and Ernest Pennell, Defendants, of Whom First Reliance Bank and Thomas C. Ewart are, Respondents.

No. 27141.

Supreme Court of South Carolina.

Heard May 3, 2012.

Decided July 11, 2012.

Robert Norris Hill, of Newberry, and William P. Hatfield, of Hyman Law Firm, of Florence, for Appellant.

Jeffrey L. Payne, of Turner Padget Graham & Laney, of Florence, for Respondents.

Justice HEARN.

Mark Fountain brought this action for defamation based on a statement by Thomas C. Ewart, chief banking officer for First Reliance Bank, as to why the bank would not make a loan on a business venture between Fountain and Ernest Pennell. The circuit court granted summary judgment in favor of Ewart and First Reliance (collectively, Respondents), finding that the statement was not defamatory, and even if it was, Respondents were protected by a qualified privilege. We affirm.

FACTUAL/PROCEDURAL BACKGROUND

In late 2008, Pennell, with encouragement and assistance from Fountain, sought to refinance or obtain a new loan in order to satisfy a $1.2 million delinquent mortgage held by Carolina First Bank on a convenience store owned by Pennell. The purpose of the loan was also to buy out Pennell's existing corporate partner, and to pay off a delinquent fuel supply charge. Fountain and Pennell also entered into an employment agreement whereby Fountain would be the store's manager.

This was not Fountain's first experience with a convenience store, as he previously had been a member of a failed business venture involving a combination convenience store and fast food restaurant (BoJo Tim venture). Although he was not the on-site manager, Fountain went to the store on a daily basis to supervise its operation. The BoJo Tim venture had given Carolina First a mortgage on some of its property, and Ewart, a Carolina First employee, was involved closely with Fountain in the venture. The BoJo Tim venture eventually had difficulty repaying the loan, and Fountain was sued, resulting in one judgment against him in favor of Tokyo Leasing for a debit card machine.¹

With at least some of Fountain's financial background known to Pennell, ² Fountain and Pennell approached First Reliance to request funds after two other lending institutions denied their loan requests. At this point in time, Ewart was the chief banking officer at First Reliance, and he called Pennell in for a meeting to discuss the matter. Fountain was not present. At that meeting, Ewart stated that First Reliance would not be making the loan if Fountain was involved in the business.³ Pennell subsequently relayed Ewart's statement to Fountain, and told him to “tear up” the agreement between the two of them. Fountain later requested Pennell to meet him at his lawyer's office, where Pennell repeated the statement in front of Fountain's attorney.

Fountain filed a complaint against First Reliance, Ewart, and Pennell for defamation and intentional infliction of emotional distress. All three defendants filed motions for summary judgment.⁴ The circuit court granted the motions, finding the statement was not defamatory, the publication of the statement was privileged, and no intentional infliction of emotional distress claim was established. Fountain appeals only the grant of summary judgment in favor of First Reliance and Ewart on his defamation claim.

ISSUES PRESENTED

I. Was Ewart's statement to Pennell defamatory?

II. Are Respondents entitled to a qualified privilege?

STANDARD OF REVIEW

“When reviewing the grant of summary judgment, the appellate court applies the same standard applied by the trial court pursuant to Rule 56(c), SCRCP.” Fleming, 350 S.C. at 493, 567 S.E.2d at 860 (citing Peterson v. West Am. Ins. Co., 336 S.C. 89, 94, 518 S.E.2d 608, 610 (Ct.App.1999)). “Summary judgment is appropriate when there is no genuine issue of material fact such that the moving party must prevail as a matter of law.” Id. In order to withstand a motion for summary judgment “in cases applying the preponderance of the evidence burden of proof, the non-moving party is only required to submit a mere scintilla of evidence.” Hancock v. Mid–South Mgmt. Co., Inc., 381 S.C. 326, 330, 673 S.E.2d 801, 803 (2009).

LAW/ANALYSIS

I. DEFAMATION

Fountain first argues the circuit court erred in holding Ewart's statement was not defamatory. We disagree.

A person makes a defamatory statement if the statement “tends to harm the reputation of another as to lower him in the estimation of the community or deter third persons from associating or dealing with him.” Fleming, 350 S.C. at 494, 567 S.E.2d at 860. The tort of defamation therefore permits “a plaintiff to recover for injury to his or her reputation as the result of the defendant's communications to others of a false message about the plaintiff.” Erickson v. Jones St. Publishers, L.L.C., 368 S.C. 444, 464, 629 S.E.2d 653, 664 (2006). We therefore require a plaintiff to prove the following four elements to state a claim for defamation: “(1) a false and defamatory statement was made; (2) the unprivileged publication was made to a third party; (3) the publisher was at fault; and (4) either actionability of the statement irrespective of special harm or the existence of special harm caused by the publication.” Id. at 465, 629 S.E.2d at 664.

“To render the defamatory statement actionable, it is not necessary that the false charge be made in a direct, open and positive manner. A mere insinuation is as actionable as a positive assertion if it is false and malicious and the meaning is plain.' ” Tyler v. Macks Stores of S.C., Inc., 275 S.C. 456, 458, 272 S.E.2d 633, 634 (1980) (quoting Timmons v. News & Press, Inc., 232 S.C. 639, 644, 103 S.E.2d 277, 280 (1958)). Statements therefore may be either defamatory on their face, or defamatory by way of innuendo. “Innuendo is extrinsic evidence used to prove a statement's defamatory nature. It includes the aid of inducements, colloquialisms, and explanatory circumstances.” Parrish v. Allison, 376 S.C. 308, 325 n. 1, 656 S.E.2d 382, 391 n. l (Ct.App.2007) (internal citations omitted).

Moreover, defamation is classified as either actionable per se or not actionable per se. Slander, which is involved here, “is actionable per se when the defendant's alleged defamatory statements charge the plaintiff with one of five types of acts or characteristics: (1) commission of a crime of moral turpitude; (2) contraction of a loathsome disease; (3) adultery; (4) unchastity; or (5) unfitness in one's business or profession.” Goodwin v. Kennedy, 347 S.C. 30, 36, 552 S.E.2d 319, 322–23 (Ct.App.2001). Whether the statement is actionable per se is a matter of law for the court to resolve. Erickson v. Jones Street Publishers, L.L.C., 368 S.C. 444, 465, 629 S.E.2d 653, 664 (2006). If the statement is actionable per se, then the defendant “is presumed to have acted with common law malice and the plaintiff is presumed to have suffered general damages.” Id. If the statement is not actionable per se, then “the plaintiff must plead and prove both common law malice and special damages.” Id.

We turn first to the import of the statement on its face, which is that First Reliance would not make the loan so long as Fountain was involved in the venture. This is a true statement; First Reliance did refuse to make the loan to Pennell because of Fountain's involvement, and there is no evidence to the contrary. Thus, Respondents have a complete defense to defamation based on the statement's literal meaning. See Parrish, 376 S.C. at 326, 656 S.E.2d at 392 (“Truth is an affirmative defense....”). Nevertheless, Fountain also argues the statement insinuated that he was an unfit businessman, which would be actionable per se if it did so. However, we do not believe the statement is capable of any reasonable defamatory construction.

In support of his argument, Fountain relies primarily on Adams v. Daily Telegraph Co., 292 S.C. 273, 356 S.E.2d 118 (Ct.App.1986). In Adams, the court of appeals reversed the circuit court's grant of summary judgment in favor of two TV stations after broadcasting a press conference where the family of two murdered stepbrothers invited other members of the family to come forward and take “truth serum” or undergo “truth testing” regarding the unsolved murders. Id. at 275, 279–80, 356 S.E.2d at 119–20, 122. The family further encouraged the public to “draw their own conclusion” from the other family member's alleged refusal to cooperate. Id. at 276, 356 S.E.2d at 120. The father of one of the murdered boys sued for defamation, alleging the broadcasts implied he murdered the boys or was guilty of a misprision of a felony. Id. The circuit court granted summary judgment by disregarding the allegedinnuendo and finding the facts stated in the two broadcasts were true. Id. at 278, 356 S.E.2d at 121. The court of appeals reversed, holding that a motion for summary judgment “will only be sustained where the court can affirmatively say that the publication is incapable of any reasonable construction which will render the words defamatory.” Id. at 279, 356 S.E.2d at 122 (emphasis added).

Fountain reads Adams broadly to hold that words with any defamatory meaning are sufficient to avoid summary judgment, ignoring that part of the decision which states the construction must be “reasonable.” Adams therefore does not extend to purely conjectural interpretations. Under the proper standard, we believe Fountain failed to adduce facts sufficient to withstand summary judgment that Ewart's statement was defamatory by innuendo. During his deposition, Fountain claimed the statement was “inappropriate” and “he just wouldn't say it being a banker,” but this falls far short of establishing an implied defamatory meaning. Moreover, even assuming that Fountain did present sufficient evidence to establish a defamatory meaning through innuendo, the alleged defamation—that Fountain had...