Burton v. Fountainhead Dev., Inc.

• Decision Date: 17 March 2017
• Docket Number: Supreme Court No. S-15990
• Citation: 393 P.3d 387
• Parties: Ronald M. BURTON, Appellant, v. FOUNTAINHEAD DEVELOPMENT, INC., Appellee.
• Court: Alaska Supreme Court

393 P.3d 387

Ronald M. BURTON, Appellant,

v.FOUNTAINHEAD DEVELOPMENT, INC., Appellee.

Supreme Court No. S-15990

Supreme Court of Alaska.

March 17, 2017

As Amended on Granting of Rehearing May 9, 2017

James M. Hackett, Law Office of James M. Hackett, Fairbanks, for Appellant.

David H. Bundy, David H. Bundy, P.C., Anchorage, for Appellee.

Before: Stowers, Chief Justice, Winfree, Maassen, Bolger, and Carney, Justices.

OPINION

MAASSEN, Justice.

I. INTRODUCTION

A tour company hired an employee to work the tourist season as one of its representatives at a Fairbanks hotel where he had worked seasonally in the past. During training, hotel management recalled that the employee had been difficult to work with. They told the tour company they did not want him working at their hotel and, in explaining their decision, made several unfounded statements about him. When the tour company was unable to place the employee at a different hotel because of his limited transportation, it terminated his employment.

The employee sued the hotel for defamation and for tortious interference with his prospective business relationship with his employer. Following a bench trial the superior court rejected the tortious interference claim based on lack of causation but found that several of the hotel's statements were defamatory per se, justifying an award of general damages but not special or punitive damages. The court also denied the employee's motion to amend his complaint to add a new defamation claim based on events that arose mid-trial. The employee appeals.

We conclude that: (1) the superior court did not abuse its discretion in denying the employee's post-trial motion to amend his complaint; (2) the court did not clearly err in its application of a conditional business privilege or in its finding that the defamation did not cause the employee's damages; and (3) the court did not clearly err in its award of damages. We therefore affirm the judgment of the superior court.

II. FACTS AND PROCEEDINGS

A. Facts

Princess Tours hired Ronald Burton to work the 2011 tourist season as a "guest service host." Guest service hosts are stationed at hotels where Princess houses its tour groups; they help hotel employees greet and serve the large numbers of Princess guests as they arrive and require various services. Burton was hired to work primarily at Bear Lodge, owned by Fountainhead Development, Inc., because it was within walking distance of his home and he lacked alternative transportation; however, he also agreed to work as needed at other Princess-affiliated hotels in Fairbanks. Burton had worked seasonally for Princess Tours before, from 1999 to 2004, and at Bear Lodge from 2000 to 2003.

Burton completed several weeks of training in the spring of 2011, including a visit to Bear Lodge. There, in the presence of his Princess supervisor, Jonathan Bradish, and a Fountainhead manager, Stuart Campbell, Burton criticized the traffic flow in the hotel's parking lot. Campbell relayed the criticism to Fountainhead's general manager, Shane Arnold, who passed it on to the personnel and operations manager, Kathleen Lanning. The criticism reminded the management team of other complaints Burton had made while working on Fountainhead's property years before. Lanning and Timothy Cerny, Fountainhead's president, decided they did not want Burton as a guest service host at Bear Lodge, and they asked Arnold to speak to Princess about their decision.

Arnold told Bradish of Fountainhead's decision on May 13. The two men later recalled the conversation differently, but the superior court found that Arnold told Bradish that Burton was "not allowed" on Fountainhead's property. When Bradish asked why, Arnold said that Burton had once been involved in an altercation with a guest and that he had "defaced" Fountainhead property.¹

Burton was scheduled to begin work at a different hotel on May 16. Bradish pulled Burton from the schedule and told him about Fountainhead's allegations. Burton denied them, and Bradish granted him a "grace period" to sort things out with Fountainhead. Over the next several days Burton exchanged emails and phone calls with Lanning, and on May 24 she sent him a letter "to recap [a] phone conversation of last week." According to the letter, Burton was not "banned" from Fountainhead's property; he was welcome there "anytime as a guest," but he would not be welcome as an employee. Fountainhead's decision was based on its impression that Burton was "never happy with [the hotel's] policies and procedures" when working there in the past. Lanning also mentioned a different incident when Burton "had not been supportive of a management decision while in the presence of guests," though she had heard the story second-hand and lacked any other details. Lanning's letter concluded that employing Burton at Bear Lodge would not be "in the best interest of [Fountainhead] or that of Princess's guests."

On May 28 Burton emailed Bradish, reminding him that he could not easily "work at any other location than Bear Lodge except on rare occasions" because of his transportation issues. Anticipating that this meant the end of his Princess employment, he asked "that any action for [his] separation from employment be in writing and address the cause." Bradish emailed back, confirming that Princess had hired Burton "hoping to place [him] at Bear Lodge" and that it could "no longer have [him] on [its] team [due] to schedule parameters." Princess documented Burton's termination internally with a note that said he "[w]as banned from Fountainhead Properties by their management, which meant he couldn't work where we wanted him to." Princess also marked Burton as ineligible for rehire.

B. Proceedings

In May 2012 Burton filed a complaint against Fountainhead alleging two causes of action: (1) tortious interference with a prospective business relationship, for causing Princess to terminate his employment; and (2) defamation based on Arnold's statements to Bradish about "Burton's past performance as a [Fountainhead] employee." Fountainhead raised defenses of truth and privilege, among others. The superior court held a bench trial over three days in December 2014, then scheduled closing arguments for February 2015.

Before closing arguments, Burton moved pursuant to Alaska Civil Rule 15(b) to amend his complaint to add an additional defamation claim based on conduct that "occurred ... during the course of the court trial." The court had suggested mid-trial that Fountainhead talk to Princess and attempt to correct any misimpression Princess might have about why Burton was barred from working at Bear Lodge. That evening Fountainhead wrote a letter to Princess asking the company to correct the "termination paperwork" in Burton's personnel file to reflect that he "was never ‘banned’ from [Fountainhead's] properties." To help explain why it had not wanted Burton to work at Bear Lodge, it attached a copy of Lanning's 2011 letter to Burton. Burton's amended complaint alleged that this mid-trial correspondence was a separate publication and libel that caused him additional harm and entitled him to additional damages. Fountainhead did not oppose Burton's motion to amend, and it filed an answer to the amended complaint.

In February 2015, while hearing the parties' closing arguments, the superior court noted that Burton's motion to amend was not yet ripe for decision. But the court said it would take Fountainhead's mid-trial letter into consideration in crafting any damages award.

A few weeks later the court issued its written decision on the merits. It found against Burton on his claim for tortious interference with a prospective business relationship on the ground that his employment ended because of his "refusal to work at Princess locations besides Bear Lodge," not because of what Fountainhead said about him to Princess. The court concluded that Fountainhead had a "conditional privilege to publish defamatory statements" because of its shared business relationship with Princess, but that it abused this privilege with two statements to Princess that were defamatory per se: "that [Burton] had an altercation with a guest, and that [Burton] defaced [Fountainhead's] property." The court awarded Burton $ 15,000 in general damages on the defamation claim but denied special and punitive damages. In a separate written order the court denied Burton's motion to amend his complaint, though it reiterated in its decision that it had taken Fountainhead's mid-trial letter into account "in fashioning [Burton's] award in this case."

Burton requested a new trial or additur, both of which were denied. The court awarded attorney's fees to Fountainhead as the prevailing party because Burton had failed to accept an Alaska Civil Rule 68 offer of judgment in an amount greater than the award of damages.²

Burton appeals. He argues that the superior court abused its discretion when it denied his post-trial motion to amend his complaint; that it erred in determining that Fountainhead was privileged to interfere with his employment relationship; that it misstated the legal standard for causation and erred in finding that he failed to prove this element of his tortious interference claims; that it erred in failing to include lost wages and benefits in its award of general damages; and that it erred in failing to award punitive damages.³

III. STANDARDS OF REVIEW

We review a trial court's "decision to permit or deny an amendment to the pleadings ... for abuse of discretion."⁴ Abuse of discretion exists "when the decision on review is manifestly unreasonable."⁵

"In a bench trial, the judge is the trier of fact...."⁶ We review the trial court's factual findings for clear error, as "[i]t is the function of the trial court, not of this court, to judge witnesses' credibility and to weigh conflicting evidence."⁷ Clear error exists "when ‘after a thorough review of the record, we come to a definite and firm conviction that a mistake has been made.’ ...