Boydston v. Chrysler Credit Corp.

• Decision Date: 04 August 1987
• Docket Number: No. 49A02-8608-CV-279,49A02-8608-CV-279
• Citation: 511 N.E.2d 318
• Parties: Richard BOYDSTON, Appellant (Plaintiff Below), v. CHRYSLER CREDIT CORPORATION, Appellee (Defendant Below).
• Court: Indiana Appellate Court

Page 318

511 N.E.2d 318

Richard BOYDSTON, Appellant (Plaintiff Below), v. CHRYSLER CREDIT CORPORATION, Appellee (Defendant Below).

No. 49A02-8608-CV-279.

Court of Appeals of Indiana,

Second District.

Aug. 4, 1987.

Irwin B. Levin, David J. Cutshaw, Cohen Malad & Hahn, Indianapolis, for appellant.

Charles F. Robinson, Jr., John W. Hammel, Yarling, Robinson, Hammel & Lamb, Indianapolis, for appellee.

SHIELDS, Presiding Judge.

Richard Boydston appeals the trial court's grant of summary judgment in favor of Chrysler Credit Corporation in his defamation suit. We affirm.

FACTS

On March 4, 1982, Boydston purchased a new Plymouth Reliant from Eastgate Chrysler Plymouth (Eastgate). In order to finance the purchase of the car, Boydston executed a retail installment contract with Eastgate which was subsequently assigned to Chrysler Credit. After the purchase, Boydston experienced serious difficulties with the car. He took it to the dealer for service several times but continued to have problems. Three months later Boydston returned the vehicle to Eastgate, and on June 10, 1982, he formally notified Eastgate he was revoking his acceptance of the car pursuant to Ind. Code Ann. Sec. 26-1-2-608 (Burns 1974). On July 30, 1982, Boydston brought suit against Eastgate for breach of warranty.

Boydston made two payments to Chrysler Credit on the installment contract in April, pursuant to the contract terms. However, when he began having difficulties with the car, Boydston stopped paying Chrysler Credit. On June 16 and 17, 1982, Boydston's attorney notified Chrysler Credit Boydston had voluntarily returned the car to Eastgate and had revoked his acceptance of the vehicle. Eastgate subsequently repurchased Boydston's installment contract from Chrysler Credit. On June 24, 1982 Chrysler Credit reported Boydston's transaction to Merchants Association, a credit reporting association of which Chrysler Credit is a member. The transaction was coded "RVD". ¹ According to Merchant's Beginning about July 19, 1982, Boydston experienced difficulties in obtaining credit and was denied credit with several financial institutions and retailers in subsequent years. In November of 1983, the American Fletcher National Bank's credit card department refused to approve Boydston's credit application because it interpreted the reported credit transaction as a repossession. By that time, the Merchants report coded the subject transaction as "RVD" or "Returned voluntarily. Paid by dealer."

                reporting forms, "RVD" means "Returned voluntary.  Paid by dealer."   On March 28, 1983, a credit report issued by Merchants Association to Boydston at his request reported the loan transaction as having a zero balance, one payment delinquent 30-59 days, and coded "RVN".  According to Merchants' reporting forms, "RVN" means "Returned voluntarily."
                

On May 16, 1984, Boydston filed suit against Chrysler Credit seeking a permanent injunction preventing Chrysler Credit from reporting the credit transaction without explaining the circumstances, and also seeking damages for publishing a false and defamatory credit report to Merchants Association. On April 24, 1986, the trial court granted summary judgment in favor of Chrysler Credit. Boydston appeals this judgment.

ISSUES

On appeal Boydston argues that the trial court erroneously granted summary judgment because the following material issues of fact exist: whether the credit report information submitted by Chrysler Credit is defamatory; whether Chrysler Credit has a qualified privilege to disseminate defamatory credit information; whether, if such a privilege exists, Chrysler Credit abused the privilege; and, whether the alleged defamatory statement was made with malice or reckless disregard for the truth so as to negate any defense of privilege.

DISCUSSION

Summary judgment is proper only when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Indiana Rule of Trial Procedure 56 (C); Allstate Insurance Company v. Meek (1986), Ind. App., 489 N.E.2d 530. In order to determine whether a genuine issue of fact exists, the court accepts as true all facts alleged by the nonmoving party and resolves any doubt as to the existence of a genuine issue of fact against the nonmoving party. Gibbs v. Douglas M. Grimes P.C. (1986), Ind.App., 489 N.E.2d 638. The party seeking summary judgment has the burden of establishing the lack of disputed material facts. Thiele v. Faygo Beverage Inc. (1986), Ind. App., 489 N.E.2d 562. Although Boydston alleges material facts are in dispute on several issues, we address only those related to privilege because they are dispositive of this case.

The principle of qualified privilege has its origins in the common law and has long been recognized in Indiana. Indiana National Bank v. Chapman (1985), Ind.App., 482 N.E.2d 474; Elliot v. Roach (1980), Ind.App., 409 N.E.2d 661; Weenig v. Wood (1976), 169 Ind.App. 413, 349 N.E.2d 235; Henry v. Moberly (1892), 7 Ind.App. 490, 33 N.E. 981. Within the rule of qualified privilege our courts have recognized a "common interest" privilege. A communication is protected as privileged if made in good faith on any subject in which the communicator has an interest or in reference to which he has a public or private duty, and if the communication is made to a person having a corresponding interest or duty. Indiana National Bank, 482 N.E.2d at 479; Puckett v. McKinney (1978), 175 Ind.App. 673, 373 N.E.2d 909. The protection arises from the need for full and unrestricted communication regarding matters on which the parties have a common interest or duty. Shallenberger v. Scoggins-Thomlinson Inc. (1982), Ind.App., 439 N.E.2d 699; 50 Am.Jur.2d Libel and Slander Sec. 195, at 698-99 (1970). Chrysler Credit argues the common interest privilege protects the credit reports it sends to Merchants Association; Boydston argues a qualified privilege does not attach to such reports.

The existence of a qualified privilege is a matter of law for the court, unless facts giving rise to the privilege are disputed. Lawson v. Howmet Aluminum Corp. (1983), Ind.App., 449 N.E.2d 1172; Shallenberger, 439 N.E.2d at 707. Although our courts have previously upheld the defense of qualified privilege in a variety of situations, including communications between employers and employees, business partners, and members of fraternal or social organizations, an Indiana court has not addressed the applicability of a qualified privilege to statements made by creditors to credit agencies. For the reasons stated below, we hold a privilege exists with regard to such statements.

We live in a credit society. Consumers, businesses, and governmental agencies operate on credit; credit is a major component of our nation's economic system. Borrowers desire to establish a credit history to facilitate future credit. Financial institutions require credit information on prospective borrowers to assess credit worthiness and to make informed lending decisions. Lenders obtain credit information on prospective customers by agreeing to report credit information on their existing customers. Because credit reports, such as the one Chrysler Credit provided to Merchants Association, are part of a system which facilitates the flow of credit information, a necessary component of credit financing, we hold a privilege generally attaches to credit reports. However, because of the important role credit information plays in the creditor's decision-making process, the debtor has an equally important interest in the accuracy of the credit report. For that reason, we hold the privilege which generally attaches to credit reports is a qualified privilege.

With regard to the specific reports at issue, it is undisputed the credit report on Boydston was issued by Chrysler Credit as a part of its regular reports to Merchants Association. As a member and subscriber of Merchants Association, Chrysler Credit had an interest in and private duty to submit credit information regularly on its customers to Merchants and Merchants had a common interest in receiving such information. The subject matter of the report, Boydston's credit with Chrysler Credit, was information Chrysler had a private duty to report to Merchants. Thus, Chrysler made a prima facie showing it had a qualified privilege to publish the allegedly defamatory statement to Merchants.

Having determined a qualified privilege arose, however, does not end our inquiry. A qualified privilege does not change the actionable quality of the words published but only rebuts the element of malice implied by law from the making of a defamatory statement. Shallenberger, 439 N.E.2d at 707. The protection afforded by a qualified privilege may be lost (i.e., the elements of the defense are not established) if there is a showing the communicator was primarily motivated by feelings of ill will, if there is excessive publication of the...