Chrysler Motors Corp. v. Graham, 34A04-9308-CV-294

• Decision Date: 22 March 1994
• Docket Number: No. 34A04-9308-CV-294,34A04-9308-CV-294
• Citation: Chrysler Motors Corp. v. Graham, 631 N.E.2d 7 (Ind. App. 1994)
• Parties: CHRYSLER MOTORS CORPORATION, Appellant-Defendant, v. Martha Alice Padgett GRAHAM, Appellee-Plaintiff. 1
• Court: Indiana Appellate Court

Page 7

631 N.E.2d 7

CHRYSLER MOTORS CORPORATION, Appellant-Defendant, v.Martha Alice Padgett GRAHAM, Appellee-Plaintiff.

No. 34A04-9308-CV-294. ¹

Court of Appeals of Indiana First District.

March 22, 1994.

Rehearing Denied May 27, 1994.

Transfer Denied Sept. 30, 1994.

Susan B. Tabler, Michael L. Tooley, Ice Miller Donadio & Ryan, Indianapolis, for appellant.

Edward S. Mahoney, Corbin K. King, Lacey, O'Mahoney, Mahoney, Sager & King, Kokomo, for appellee.

BAKER, Judge.

Appellant-defendantChrysler Motors Corporation seeks a determination of whether statements made in an affidavit filed in an attachment proceeding constitute privileged communication upon which no action for defamation will lie.

FACTS

Appellee-plaintiffMartha Alice Padgett Graham is the widow of former Chrysler employee Emmett Padgett.Upon Padgett's death, Chrysler began paying Graham spousal benefits pursuant to certain retirement plans.Under the plans, a surviving spouse is entitled to benefits if the spouse was married to the Chrysler employee on the date of his death and for one continuous year prior thereto.Chrysler failed to notice from Graham's benefit application that she did not meet the one-year marriage requirement.After paying a lump-sum benefit and over three years of monthly benefits, Chrysler's benefit plan administrator Ronald Gurdak learned from one of Padgett's children from a former marriage that on the date of Padgett's death, he and Graham had been married for less than one year.Padgett and Graham were married on October 14, 1984, and Padgett died on October 5, 1985.

Upon discovering that Graham was mistakenly paid benefits to which she was not entitled, Gurdak sought advice from Chrysler's legal department on how to proceed.Deborah Hunter told Gurdak that he had a fiduciary duty under the Employee Retirement Income Security Act of 1974,29 U.S.C. § 1001 et seq.("ERISA"), to seek recovery of the funds and restore them to the rightful beneficiaries, Padgett's children.Accordingly, Gurdak sent Graham a letter explaining the error and advising her that her monthly pension benefits were being terminated.Hunter sent Graham a second letter asking that she repay $72,000 in benefits that were mistakenly paid to her.Graham telephoned Hunter and told her that she would be unable to repay the money because she no longer had it, and that she was living off the pension.

Chrysler subsequently conducted an investigation into Graham's assets.The investigation revealed that Graham had received $40,000 in pension benefits from her own employer, and was expected to receive $22,000 from Padgett's estate.Chrysler also learned that Padgett's obituary listed the marriage date as September 14, 1984, and that Graham had testified under oath in an unrelated proceeding that her marriage to Padgett occurred on September 14, 1984, rather than the true date of October 14, 1984.

Chrysler filed a complaint against Graham in an effort to recover the funds mistakenly paid to her.In connection with that proceeding, Chrysler sought to attach Graham's assets under IND.CODE 34-1-11-1(1983).²In compliance with IND.CODE 34-1-11-4.1(1983), Chrysler filed an affidavit executed by Gurdak which stated in part:

5.That affiant believes that [Graham] has sold, conveyed or otherwise disposed of her property subject to execution with the fraudulent intent to cheat, hinder or delay [Chrysler's] collection of said monies.

6.That as affiant is informed and verily believes, the Defendant is about to sell, convey or otherwise dispose of her property subject to execution with the fraudulent intent to cheat, hinder or delay [Chrysler's] collection of said sums of money.

Recordat 13.³Six days after Chrysler filed the affidavit, Graham brought this separate action for defamation based upon the above statements, seeking both compensatory and punitive damages.

Chrysler twice moved for summary judgment, and at the jury trial, twice moved for judgment on the evidence, claiming that the affidavits were entitled to an absolute privilege because they were filed in connection with a judicial proceeding.In turn, the trial court denied each motion.The jury found in favor of Graham and awarded her $65,000 in compensatory damages.After filing a mandatory motion to correct errors challenging the excessiveness of the damages, which the trial court denied, Chrysler now appeals.

On cross-appeal, Graham challenges the trial court's determination that the affidavit did not accuse Graham of the commission of felony fraud, and the propriety of withdrawing the issue of punitive damages from the jury.

Because the dispositive issue in this case is whether the absolute privilege applies to Gurdak's affidavit, we need not reach the other issues raised.

DISCUSSION AND DECISION

Indiana law affords an absolute privilege to statements made in the course of a judicial proceeding.Wilkins v. Hyde(1895), 142 Ind. 260, 261, 41 N.E. 536, 536.This privilege, however, is abrogated when the statements are not relevant and pertinent to the litigation or do not bear some relation thereto.Stahl v. Kincade(1963), 135 Ind.App. 699, 707, 192 N.E.2d 493, 497, trans. denied.As both parties recognize, whether a particular communication is relevant and pertinent to the litigation is purely a legal determination for the court.Briggs v. Clinton County Bank & Trust Co. (1983), Ind.App., 452 N.E.2d 989, 997, trans. denied.

The absolute privilege is grounded in the idea that:

[P]ublic interest in the freedom of expression by participants in judicial proceedings, uninhibited by the risk of resultant suits for defamation, is so vital and necessary to the integrity of our judicial system that it must be made paramount to the right of the individual to a legal remedy when he has been wronged.50 Am.Jur.2dLibel & Slander§ 231.

Id. at 997.To further this policy, courts favor a liberal application of the privilege.Id.;Stahl, 135 Ind.App. at 707, 192 N.E.2d at 497.

Our analysis begins with a determination of whether Gurdak's affidavit was absolutely privileged in the first instance.We are guided by our supreme court's original adoption of the privilege in Wilkins.There, Marion County officials filed a statutorily prescribed petition seeking to obtain custody of Wilkins' minor children.In finding that the petition was entitled to an absolute privilege, our supreme court stated:

No actual malice is shown in the complaint, but it appears that the words were written and published in a petition expressly authorized by statute, to be filed in a proceeding in court, and that the alleged libelous words were but the statutory grounds, which if found to exist, would warrant the court, under this statute, to award the custody of appellant's children to said board.

Wilkins, 142 Ind. at 261, 41 N.E. at 536.Just as the county board's petition was authorized by statute, so too was Gurdak's affidavit.

Graham makes the very valid point that we should avoid interpreting Wilkins in a manner that would permit litigants to hide behind the absolute privilege by merely reciting statutory language without regard to whether the allegations as made against a particular person are true.We can avoid such an interpretation because the statutory framework is designed to protect against such instances without disturbing the absolute privilege.IND.CODE 34-1-11-5(1983) provides:

The plaintiff, or some one in his behalf, shall execute a written undertaking, with sufficient surety, to be approved by the clerk, payable to the defendant, to the effect that the plaintiff will duly prosecute his proceeding in attachment, and will pay all damages which may be sustained by the defendant, if the proceedings of the plaintiff shall be wrongful and oppressive.

(Emphasis added).The statute unequivocally states that plaintiffs may properly seek and recover all damages arising out of wrongful attachment proceedings.Properly interpreted, the term "all" includes those damages to a person's reputation arising out of a wrongful attachment proceeding.The legislature has preserved inviolate the absolute privilege afforded affidavits filed in attachment proceedings by requiring plaintiffs to post a bond and by further providing injured parties the right to recover thereon.Given this statutory framework, Graham's ability to recover for any damage to her reputation is adequately protected.

Our analysis is not yet complete because we must still decide whether the affidavit was relevant and pertinent to the litigation.If it was, then there is no basis for a defamation action.If it...