Story v. Shelter Bay Co.

Decision Date06 September 1988
Docket NumberNo. 19486-1-I,19486-1-I
Citation760 P.2d 368,52 Wn.App. 334
Parties, 15 Media L. Rep. 2338 Jeanne STORY and John C. Story, her husband and the marital community composed thereof, Appellants, John Barrie and Agnes Barrie, his wife, and the marital community composed thereof; John Bergstrom and Henrietta Bergstrom, his wife and the marital community composed thereof; Charles Stocker and Gertrude Stocker, his wife and the marital community composed thereof; and the class composed of all Members of Shelter Bay Community, Inc., similarly situated, Plaintiffs, v. SHELTER BAY COMPANY, a Washington corporation, Respondent. Osberg Construction Company; Allan Osberg and John Osberg, Intervenors. John J. Perrin, et ux., et al., Additional Intervenors.
CourtWashington Court of Appeals
Robert W. McKisson, Lisa E. Schuchman, McKisson & Sargent, Seattle, for appellants Jeanne and John Story

Joel Gordon, Brent Carson, Buck & Gordon, Seattle, for respondent Shelter Bay Co.

Paula Selis, Tina E. Kondo, Asst. Atty. Gen., Seattle, amicus curiae.

Eduardo Munoz, Riddell, Williams, Bullitt & Walkinshaw, Seattle, amicus curiae.

Bruce Bell, Bell & Ingram, Everett, for defendant Shelter Bay Community.

WINSOR, Judge.

Jeanne Story appeals from a judgment entered against her on the defamation counterclaim of Shelter Bay Company [Shelter Co.], Allen Osberg and John Osberg. 1 We affirm in part and reverse in part, remanding this matter to the trial judge for entry of additional findings and a redetermination of damages.

Shelter Bay is a Skagit County residential housing development and marina developed in the 1970's by Shelter Co. Certain common areas of Shelter Bay are owned and managed by Shelter Bay Community, Inc. and its board of resident directors.

Story and her spouse leased or purchased a Shelter Bay lot in 1978. By approximately 1980, Story was embroiled in numerous community disputes centered upon perceived misdeeds of the developers. Story became the leading investigator for the dissident group of community residents. Her investigations led her to believe that Shelter Co. and its sales agents had acted improperly in a number of matters. She communicated her findings and beliefs orally and by letter to the community board of directors, other community residents, the Land Sales Enforcement Division of the Department of Housing and Urban Development (HUD), the Real Estate Division of the State Department of Licensing, and the Consumer Protection Division of the In 1983, Story and several other Shelter Bay residents filed an action for specific performance and/or damages against Shelter Co. Shelter Co. and intervenors Osberg Construction, John Osberg and Allan Osberg filed a defamation counterclaim against Story.

                State Attorney General's Office.   Story also advised these parties that she had taken a "theft loss" deduction on her 1981 income tax return for losses alleged to be the result of Shelter Co.'s acts and that this deduction had been allowed by the Internal Revenue Service
                

Story filed a jury demand in November 1984. The trial court found plaintiffs' claims to be predominately equitable in nature, and ruled that all liability questions would be resolved without a jury and that, if appropriate, a jury would determine plaintiffs' damages.

The trial court entered judgment for Shelter Co. and the Osbergs on both the principal case and their defamation counterclaim. Damages totalling $3,000 were awarded the counterclaimants. Story appeals, assigning error to numerous factual findings made by the trial court, to its rulings in the areas of absolute privilege, conditional privilege, and damages, and to its denial of her request for a jury trial. The State of Washington and American Civil Liberties Union of Washington Foundation [ACLU] filed amicus briefs in Story's behalf.

ABSOLUTE PRIVILEGE

Story first assigns error to the trial court's refusal to find her initial complaints to and subsequent communications with HUD, the State Department of Licensing, and the Attorney General, to be protected by an absolute privilege. 2 She argues that her statements to these agencies are absolutely privileged as statements made in the context of a quasi-judicial proceeding.

An absolute privilege protects the maker of an otherwise defamatory statement from all liability for libel or slander, and applies to statements made during the course of and relevant to quasi-judicial administrative proceedings. Twelker v. Shannon & Wilson, Inc., 88 Wash.2d 473, 475, 564 P.2d 1131 (1977); Hurst v. Farmer, 40 Wash.App. 116, 117, 697 P.2d 280, review denied, 103 Wash.2d 1038 (1985). The privilege does not extend to proceedings which, although official and public, are not judicial in substance, as a nonjudicial forum may lack safeguards to prevent abuse of the privilege. Engelmohr v. Bache, 66 Wash.2d 103, 106, 401 P.2d 346, cert. dismissed, 382 U.S. 950, 86 S.Ct. 431, 15 L.Ed.2d 463 (1965); Hurst v. Farmer, supra. An absolute privilege is therefore allowed only in "situations in which authorities have the power to discipline as well as strike from the record statements which exceed the bounds of permissible conduct." Twelker, 88 Wash.2d at 476, 564 P.2d 1131; accord Moore v. Smith, 89 Wash.2d 932, 937, 578 P.2d 26 (1978); Engelmohr, 66 Wash.2d at 105-06, 401 P.2d 346; see also King v. Borges, 28 Cal.App.3d 27, 104 Cal.Rptr. 414, 416-17 (1972) (because statute authorizes State Division of Real Estate to require the complainant to submit a written, verified complaint, adequate safeguard is available through perjury sanctions).

Under the Interstate Land Sales Act, 15 U.S.C. §§ 1701-20, HUD can require sworn written statements, administer oaths and affirmations, subpoena witnesses, and conduct hearings. Implicit in these powers is the power to invoke perjury sanctions against those who testify falsely. King v. Borges, supra. Hearings conducted by HUD under the act must adhere to the requirements of the Administrative Procedure Act (APA), 5 U.S.C. §§ 551-59. 15 U.S.C. § 1715(b). The APA empowers hearing officers to strike evidence from the record. 5 U.S.C. § 556; Calhoun v. Bailar, 626 F.2d 145, 150 (9th Cir.1980), cert. denied, 452 U.S. 906, 101 S.Ct. 3033, 69 L.Ed.2d 407 (1981).

Similarly, the Land Development Act of 1973, RCW 58.19, allows Washington's director of licensing to administer oaths or affirmations, require sworn written statements and subpoena witnesses. RCW 58.19.190-.240. Hearings under RCW 58.19 must be conducted in accord with the state Administrative Procedure Act, RCW 34.04. RCW 58.19.200(4). That act expressly provides for excluding "incompetent, irrelevant, immaterial, and unduly repetitious evidence", RCW 34.04.100(1), and permits hearing officers to strike evidence. See WAC 10-08-140 (a witness' refusal to answer a proper question is grounds for striking all of that witness's prior testimony on related matter).

We conclude that both HUD and the Department of Licensing have authority to discipline citizen complainants for false or malicious statements and to strike improper statements from the record. We hold that HUD and the Department of Licensing can adequately safeguard against abuse of an absolute privilege. We do not extend this holding to statements made to the Attorney General's office as the Consumer Protection Act, RCW 19.86, does not grant that agency authority comparable to that of HUD and the Department of Licensing. The Attorney General argues that nevertheless, it can adequately safeguard against abuse of an absolute privilege by its impartial investigations, and by the low probability that a file will be made public. These are not sufficient safeguards to prevent abuse of an absolute privilege. See Moore, 89 Wash.2d at 937, 578 P.2d 26 (absolute privileges limited to situations in which authorities have the power both to discipline and to strike improper statements from the record); Twelker, 88 Wash.2d at 476-77, 564 P.2d 1131 (absolute immunity should be limited to cases where proceedings are under control of one who may reprimand, fine and punish as well as expunge improper statement from the record); Engelmohr, 66 Wash.2d at 105, 401 P.2d 346 (the absolute privilege will be extended to administrative proceedings conducted with safeguards similar to a judicial proceeding).

Shelter Co. argues that even if HUD and the Department of Licensing can adequately safeguard against abuse of an absolute privilege, that privilege still should not protect Story's statements, as they were not made in the course of a quasi-judicial proceeding. Story's communications to these agencies consisted of her initial complaints and additional explanatory information.

Washington courts have not definitively ruled on whether defamatory statements made before the formal initiation of a lawsuit or administrative proceeding can be absolutely privileged. In Twelker v. Shannon & Wilson, Inc., supra, the court considered extending an absolute privilege to an allegedly defamatory pre-litigation insurance report and concluded:

Respondent has cited no case where absolute privilege has been extended to statements made prior to the initiation of a lawsuit nor has he presented public policy arguments of such a compelling nature as to justify such an extension. In the absence of such arguments we decline to apply the absolute privilege accorded statements made in the course of or preliminary to judicial proceedings to the circumstances of this case.

Twelker, 88 Wash.2d at 478, 564 P.2d 1131.

Since Twelker was decided, authority has developed for extending the absolute privilege to initial complaints and statements made during the investigative phase of a judicial or quasi-judicial proceeding. The Restatement (Second) of Torts, §§ 587-88 (1977), provides that a party or witness to a judicial or quasi-judicial proceeding "is absolutely privileged to publish defamatory matter concerning another in communications preliminary to...

To continue reading

Request your trial
184 cases
  • Moe v. Wise
    • United States
    • Washington Court of Appeals
    • November 19, 1999
    ... ... MacDonald, 74 Wash.App. 733, 738, 875 P.2d 697 (1994) ; Story v. Shelter Bay Co., 52 Wash.App. 334, 341-42, 760 P.2d 368 (1988) ; Hardy v. Saliva Diagnostic Sys., Inc., 995 F.Supp. 258, 267 (D.Conn.1997) ... ...
  • Wood v. Battle Ground School Dist.
    • United States
    • Washington Court of Appeals
    • July 27, 2001
    ... ... Further, "a trier of fact cannot presume damages under the libel per se doctrine unless liability is based upon malice." Story v. Shelter Bay Co., 52 Wash.App. 334, 346, 760 P.2d 368 (1988) ... See also Caruso v. Local Union No. 690 of Int'l Bhd. of Teamsters, 100 Wash.2d ... ...
  • Valdez-Zontek v. Eastmont School Dist.
    • United States
    • Washington Court of Appeals
    • January 12, 2010
    ... ... Id. Instruction No. 20 also comported with Washington law. See Herron v. KING Broad. Co., 109 Wash.2d 514, 523, 746 P.2d 295 (1987); Story v. Shelter Bay Co., 52 Wash.App. 334, 341-42, 760 P.2d 368 (1988) ...         ¶ 36 The District argues for the first time on appeal that ... ...
  • In re Detention of Halgren
    • United States
    • Washington Supreme Court
    • April 13, 2006
    ... ... , 115 P.3d 381 (2005) (When an appellant fails to meet the burden of providing an adequate record, "the trial court's decision stands") (citing Story v. Shelter Bay Co., 52 Wash.App. 334, 345, 760 P.2d 368 (1988)), review granted, No. 77534-6 (Wash. Apr. 6, 2006); State v. Firven, 22 Wash.App ... ...
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT