Tennenbaum v. Arizona City Sanitary Dist.

• Decision Date: 29 July 2011
• Docket Number: No. CV–10–2137–PHX–GMS.,CV–10–2137–PHX–GMS.
• Citation: 799 F.Supp.2d 1083
• Parties: Michael E. TENNENBAUM, Plaintiff, v. ARIZONA CITY SANITARY DISTRICT; Francis J. Slavin PC; Francis J. Slavin, Carol J. Slavin, Defendants.
• Court: U.S. District Court — District of Arizona

799 F.Supp.2d 1083

Michael E. TENNENBAUM, Plaintiff,

v.ARIZONA CITY SANITARY DISTRICT; Francis J. Slavin PC; Francis J. Slavin, Carol J. Slavin, Defendants.

No. CV–10–2137–PHX–GMS.

United States District Court, D. Arizona.

July 29, 2011.

David A. Weatherwax, Dewain D. Fox, Jamey Green Anderson, Sherman & Howard LLC, Phoenix, AZ, for Plaintiff.

Milton W. Hathaway, Jr., Murphy Schmitt Hathaway & Wilson PLLC, Prescott, AZ, James K. Kloss, Lewis Brisbois Bisgaard & Smith LLP, Phoenix, AZ, for Defendants.

ORDER

G. MURRAY SNOW, District Judge.

Pending before the Court are the following: (1) Motion to Dismiss (Doc. 9) filed by Defendants Francis J. Slavin PC, Francis J. Slavin, and Carol J. Slavin (collectively “Slavin Defendants”); (2) Motion for Summary Judgment declaring A.R.S. § 12–752 unconstitutional (Doc. 13) filed by Plaintiff Michael E. Tennenbaum; and (3) Motion for Attorneys' Fees and Costs under A.R.S. § 12–752 (Doc. 18) filed by Tennenbaum. For the reasons discussed below, all three motions are denied.

BACKGROUND

Plaintiff was the principal of Arizona City Development Corporation (“ACDC”), which was the developer of a real estate community known as “Arizona City,” located in Pinal County, Arizona. The City has approximately 4,500 permanent residents. The Arizona City Sanitary District (“District”), a political subdivision of the State, is governed by and through a Board of Directors (the “Board”). Pursuant to an Effluent Disposal Agreement entered in 1979, the District provides reclaimed water for the irrigation of the community's golf course and other community amenities in exchange for the developer's operation and maintenance of the community's public or semi-public facilities, including a golf course, lake, racquet club, and park. On or about April 7, 1998, ACDC was liquidated and Plaintiff became the successor to ACDC.

Defendant Francis Slavin, an attorney with the firm Francis J. Slavin PC, is legal counsel for the District and its Board. The Board consists of five elected members, one of whom is the Chairman. At the time the present cause of action arose, Mr. William Miller was the Chairman. Mr. Slavin represented the District in an earlier lawsuit filed by the District against Arizona City Golf, LLC and AM Golf, LLC in Pinal County challenging the validity of the 1979 Effluent Disposal Agreement. Apparently, the three majority members of the Board disagreed with the two minority members regarding the lawsuit. As a result of these disagreements, two recall elections—taking place in May 2009 and May 2010—were aimed at the three-member majority. Slavin also represented the three majority Board members that were the subject of the recall elections in a lawsuit that was filed in Pinal County in an effort to stop the May 2010 recall. Neither recall election was successful in displacing the three Board members. A general election was scheduled for November 2, 2010.

The present lawsuit arises out of allegedly defamatory statements made by Slavin in his capacity as legal counsel for the District/Board. Plaintiff alleges that Mr. Slavin drafted a letter, dated December 30, 2009, which was printed on District letterhead and signed by Mr. Miller in his capacity as Chairman of the Board. The letter was mailed, with Defendants' knowledge, to all customers of the District by including a copy in their monthly billing statement. Plaintiff alleges that the letter “contains false statements about plaintiff, and (i) brings plaintiff into disrepute, contempt or ridicule, and/or (ii) impeaches plaintiff's honesty, integrity or reputation.” (Doc. 1, ¶ 9). Plaintiff contends that the letter, among other things, falsely accuses him of profiteering and gouging. ( Id. at ¶ 12). The letter was subsequently published twice by the Arizona City Independent TriValley newspaper on January 13, 2010 and January 20, 2010. (Doc. 1, Ex. 3, 4). Plaintiff believes that at least one, or perhaps both, of the newspaper publications were produced at the direction, advice, and/or with the knowledge of Slavin. (Doc. 1, ¶ 23). Plaintiff further asserts that Slavin, with the approval and/or at the direction of the Board, made the same or similar statements at an open forum held at a Board meeting on January 20, 2010. ( Id. at ¶ 29).

Plaintiff commenced this defamation action against the District and the Slavin Defendants on October 6, 2010, alleging that Defendants are liable for defamation per se. (Doc. 1). The Slavin Defendants move to dismiss the complaint pursuant to A.R.S. § 12–752, Arizona's SLAPP (“Strategic Lawsuits Against Public Participation”) statute. (Doc. 9). Plaintiff challenges the constitutionality of Arizona's SLAPP statute through a motion for summary judgment (Doc. 13) and seeks an award of attorneys' fees pursuant to the statute (Doc. 18).

DISCUSSION

I. Slavin Defendants' Motion to Dismiss

The Slavin Defendants move to dismiss Plaintiff's suit on grounds that it constitutes a SLAPP suit within the meaning of A.R.S. § 12–752. A SLAPP suit is one in which the plaintiff's alleged injury results from petitioning or free speech activities by a defendant that are protected by the federal or state constitution. The first step in evaluating an anti-SLAPP motion is to determine whether the statements at issue involve an exercise of the right of petition, as defined by the statute. See § 12–752(A) (“In any legal action that involves a party's exercise of the right of petition, the defending party may file a motion to dismiss the action under this section.” (emphasis added)); see also Zamos v. Stroud, 32 Cal.4th 958, 12 Cal.Rptr.3d 54, 87 P.3d 802, 806 (2004) (in the context of California's broader statute, the party filing the anti-SLAPP motion has the initial burden of establishing that the plaintiff's claim arose from protected activity). Thus, to qualify for protection under the statute, Slavin's written or oral statements must “fall [ ] within the constitutional protection of free speech,” and (1) “[be] made as part of ... [a] recall effort”, § 12–751(1), and/or (2) “[be] made before or submitted to a legislative or executive body or any other governmental proceeding”, “in connection with an issue that is under consideration or review” by that body or proceeding, and “for the purpose of influencing a governmental action, decision or result,” § 12–751(1)(a)–(c). See Backus v. State, 220 Ariz. 101, 104, 203 P.3d 499, 502 (2009) (Arizona courts apply “fundamental principles of statutory construction, the cornerstone of which is the rule that the best and most reliable index of a statute's meaning is its language and, when the language is clear and unequivocal, it is determinative of the statute's construction.” (quoting Deer Valley Unified Sch. Dist. No. 97 v. Houser, 214 Ariz. 293, 296, 152 P.3d 490, 493 (2007)) (internal quotation marks omitted)).

A. Recall Effort

Defendants contend that “the ongoing dispute between the Board and the developer has led to repeated recall efforts,” and “[t]he letter to District customers and the subsequent informational Board meeting both on their face and as admitted in the Complaint relate to a matter under consideration before the Board, i.e., possible modification of the developer/District contract.” (Doc. 9 at 5). Defendants ask the Court to consider Slavin's letter and presentation as part of a recall effort because the ongoing dispute between the Board and the developer, which was the subject of the lawsuit, is what led to the repeated recall efforts. Nevertheless, neither the content of the letter nor any description afforded of the content of the presentation support such an inference. The letter makes no mention of any recall. Rather, the opening line of the letter states: “[t]his letter is intended to clear up the misconception surrounding the current lawsuit between the Arizona City Sanitary District and Arizona City Golf.” (Doc. 1, Ex. 1). According to Slavin's own affidavit, “[t]he letter was to report to the District's taxpayers the acts of the Developer which breached the Developer's obligations and the District's position and expectations under the Agreement. It also was in response to the continued criticism and misinformation being leveled at the Board by golf course lot owners, organized by the golf course owner in opposition to the Lawsuit.” (Doc. 9, Ex. E, ¶ 19).¹ Mr. Miller's admitted testimony further confirms that from his perspective the purpose of the letter was to “educate” the District's customers about the lawsuit. (Doc. 16, Ex. 2 at 137).

Similarly, with respect to the presentation, Slavin admits that it was the same one made in 2009 during oral arguments before the Pinal County Superior Court in Arizona City Sanitary District v. Arizona City Golf, LLC. (Doc. 9, Ex. E, ¶ 14). Slavin states that the presentation dealt with “the history of the Agreement between the District and [ACDC], which is the subject of the Lawsuit” and that “[t]he presentation included the sell-off of various recreational amenities by the Developer, Michael Tennenbaum, and by AM Golf, a company owned by his sons.” (Doc. 9, Ex. E, ¶¶ 14, 21).² To the extent Slavin contends that the lawsuit between the District and Arizona City Golf concerning the Agreement is what led to the two recall elections, Defendants have not made an adequate showing that the statements are entitled to protection as “part of ... [a] recall effort” pursuant to the statute.

The statements at issue were made in late December 2009, and mid-January 2010. Three to four months later, on April 16, 2010, the Court of Appeals in Arizona City Sanitary Dist. v. Olson held that the petitioners who sought a second recall election of the three Board members were required to pay the costs of the prior unsuccessful May 2009 recall election before filing a petition for the second recall, which was eventually held on May 18, 2010. 224 Ariz. 330, 334, 230 P.3d 713, 717 (App.2010). Thus, it is not apparent that any...