Church of Scientology of California v. Blackman

• Decision Date: 15 February 1984
• Docket Number: No. 81-473,81-473
• Citation: 446 So.2d 190
• Parties: The CHURCH OF SCIENTOLOGY OF CALIFORNIA, Appellant, v. Lionel BLACKMAN, M.D., the Committee For the Protection of Patients' Rights, and Laraine Shape, Appellees.
• Court: Florida District Court of Appeals

Page 190

446 So.2d 190

The CHURCH OF SCIENTOLOGY OF CALIFORNIA, Appellant, v. Lionel BLACKMAN, M.D., the Committee For the Protection of Patients' Rights, and Laraine Shape, Appellees.

No. 81-473.

District Court of Appeal of Florida Fourth District.

Feb. 15, 1984.

Rehearing Denied March 26, 1984.

Terry L. DeMeo of DeMeo & Sherman, P.A., Coral Gables, Sanford M. Katz and Charlene M. Weinstein of Katz & Weinstein, P.A., and Joel B. Rudin and Richard Ware Levitt of Rudin & Levitt, New York City, for appellant.

Cone, Wagner, Nugent, Johnson, Hazouri & Roth and Jane Kreusler-Walsh and Larry Klein, West Palm Beach, for appellee-Lionel Blackman, M.D.

HURLEY, Judge.

This appeal arises from a defamation action. It presents a host of issues, but we conclude that appellant's threshold contention is both meritorious and dispositive: the plaintiff below failed to prove that one defendant-corporation dominated another so as to justify piercing the latter's corporate veil. Therefore, the judgment entered against the Church of Scientology of California, Inc., must be reversed.

The plaintiff, Dr. Lionel Blackman, is a psychiatrist who uses electro-convulsive therapy (ECT or shock treatment). He is affiliated with the Banyan Psychiatric Institute in Lake Worth, Florida. One of the defendants, Laraine Shape, is an ordained minister, assistant guardian and president of the Church of Scientology of Florida, Inc., (The Florida Church). Additionally, she is a member of an entity known as the Committee for the Protection of Patients' Rights (CPPR) which was also named as a party-defendant. CPPR functioned for a period of time as a voluntary association and was incorporated on May 5, 1978. It opposes the use of electro-convulsive therapy for the treatment of mental illness. The third defendant, the Church of Scientology of California, Inc. (the California Church), is an incorporated branch of the Church of Scientology. Despite the California reference in its title, it maintains administrative offices in Clearwater, Florida.

The trial below involved two related occurrences. The jury, however, determined that defamatory statements were made on only one occasion: May 8, 1978, the day on which CPPR staged a demonstration at the Banyan Psychiatric Institute. On that day, approximately thirteen people picketed outside the hospital for about an hour. They carried placards, distributed leaflets and engaged in chanting--all condemnatory of Dr. Blackman's use of electro-convulsive therapy. ¹ As a result of this incident, Dr. Blackman instituted suit against Laraine Shape, CPPR and the Church of Scientology of California, Inc. ² His theory was that Laraine Shape made or assisted others in making defamatory statements, that she was an agent of CPPR and that CPPR, in turn, was an instrumentality or alter ego of the California Church. The jury accepted this theory and returned an interrogatory in which it expressly found that Laraine Shape was an agent or employee of the California Church at the time of the demonstration. Based on this finding, the jury returned verdicts against Shape, CPPR and the California Church. The trial court denied repeated motions for a directed verdict and various post-trial motions and, therefore, the California Church instituted this appeal. ³

The evidence at trial established that Laraine Shape is an officer of the Florida Church. The plaintiff, however, adduced no proof to suggest that the Florida Church is dominated or controlled by the California Church. Consequently, the jury's finding that Ms. Shape was an agent or employee of the California Church can be sustained only if the evidence establishes an adequate legal relationship between Ms. Shape and CPPR and, then, between CPPR and the California Church. In other words, the California Church's liability in this case is predicated exclusively on Ms Shape's activity with CPPR and upon the premise that CPPR is an instrumentality or alter ego of the California Church. The record contains abundant evidence to support a finding that Ms. Shape acted as an agent of CPPR but, as detailed hereafter, there is no evidence to link CPPR to the California Church.

Viewing the testimony, as we must, in the light most favorable to the plaintiff, McDaniel v. Great Atlantic & Pacific Tea Co., 327 So.2d 893 (Fla. 3d DCA 1976), we find that Dr. Blackman established the following: (1) CPPR's incorporators are members of the Scientologist faith and attend the Tampa Mission in Tampa, Florida. (The record fails to disclose whether the Tampa Mission is affiliated with the California or the Florida Church or whether it has a separate corporate existence.) (2) When CPPR was formed, the California Church offered instruction on how to do public relations. (3) The California Church is listed as a sponsor on some CPPR material. (4) At one time, CPPR used a mailing address in a hotel owned by the California Church. (5) The California Church and CPPR are in "general agreement" in their opposition to electro-convulsive therapy. The question on appeal is whether the foregoing catalogue of evidence is legally sufficient to sustain the jury's implied finding that CPPR is an instrumentality or alter ego of the California Church so as to justify piercing CPPR's corporate veil.

Dr. Blackman resisted the Church's motion for a directed verdict by citing our decision in International Union of Operating Engineers, Local 675 v. Lassitter, 295 So.2d 634 (Fla. 4th DCA 1974), quashed on other grounds, 314 So.2d 761 (Fla.1975). Lassitter upheld a jury's finding that an international union was responsible for the acts of its local union. In essence, the jury found that the local union was an instrumentality of the international. Our affirmance was partially predicated on the fact that the international's constitution specifically provided for its complete domination over the local. Without becoming enmeshed in the nuances of labor law and, in particular, those instances in which an international will be held accountable for the acts of its local, see generally Carbon Fuel Co. v. United Mine Workers, 444 U.S. 212, 100 S.Ct. 410, 62 L.Ed.2d 394 (1979), we believe that Dr. Blackman was correct in suggesting to the trial court that the concept of domination is critical to the resolution of this case.

Total domination, if established by competent evidence, will justify piercing a corporate veil. Vantage View, Inc. v. Bali East Development Corp., 421 So.2d 728 (Fla. 4th DCA 1982). In Dania Jai-Alai Palace, Inc. v. Sykes, 425 So.2d 594, 598 (Fla. 4th DCA 1982), we held that "when one corporation controls and dominates another corporation to the extent that the second corporation becomes the 'mere instrumentality' of the first, the dominant corporation is liable for the torts of the subservient corporation." More recently, in Sisk v. General Builders Corp., 438 So.2d 65 (Fla. 4th DCA 1983), we stated that "[t]wo ostensibly separate corporations will be treated as one when it is established that one of the corporations totally dominates the other 'to the extent that the subservient corporation manifests no separate corporate interest of its own and functions solely to achieve the purposes of the dominant corporation.' " (citation omitted). Thus, appellee is correct; domination is the central issue in this case.

Normally, the question of whether a corporation is an instrumentality or an alter ego of another corporation is an issue of fact for the jury. Barnes v. Liebig, 146 Fla. 219, 1 So.2d 247 (1941); Dania Jai-Alai Palace, Inc. v. Sykes, supra. However, "it is elemental that at the trial the burden of proof rests on the plaintiff to establish by competent evidence each material fact essential to recovery and that upon failure to do so it is the duty of the trial court upon appropriate motion to take the case from the jury and direct a verdict for the defendant." Smith's Bakery, Inc. v. Jernigan, 134 So.2d 519, 521 (Fla. 1st DCA 1961). Applying these rules to the case at bar, we hold that Dr. Blackman failed to adduce competent evidence from which a jury could reasonably conclude that the California Church dominated CPPR. Indeed, the record is replete with uncontradicted evidence which suggests a contrary conclusion. Several witnesses testified that although the California Church agrees with the goals of CPPR, it does not exercise any actual control over CPPR. Furthermore, they testified that the California Church does not provide any financial support to CPPR and that CPPR has members who are not scientologists.

Viewing this evidence in the light most favorable to the...