Close It! Title Servs., Inc. v. Nadel

• Decision Date: 08 April 2021
• Docket Number: 19-CV-646,Nos. 19-CV-195,s. 19-CV-195
• Citation: 248 A.3d 132
• Court: D.C. Court of Appeals
• Parties: CLOSE IT! TITLE SERVICES, INC., d/b.a. Federal Title & Escrow Co., et al., Appellants, v. Michael S. NADEL, et al., Appellees.

248 A.3d 132

CLOSE IT! TITLE SERVICES, INC., d/b.a. Federal Title & Escrow Co., et al., Appellants,

v.Michael S. NADEL, et al., Appellees.

Nos. 19-CV-195

19-CV-646

District of Columbia Court of Appeals.

Argued December 10, 2020

Decided April 8, 2021

Stacey G. Evans, Atlanta, GA, with whom Jeffrey N. Williams, Los Angeles, CA, and Andrew J. Lawrence, Washington, were on the brief for appellants.

Bryan A. Carey, attorney for Sean Smith and Erin Wrona, were on the brief, for appellees.

Roger E. Warin with whom Michael E. Stoll, Washington, attorneys for McDermott Will & Emery LLP and Michael S. Nadel, were on the brief, for appellees.

Before Blackburne-Rigsby, Chief Judge, Thompson, Associate Judge, and Ferren, Senior Judge.

Ferren, Senior Judge:

A local radio station published statements by attorney Michael Nadel, a partner at McDermott Will & Emery LLP ("McDermott Will"), about appellant, Federal Title & Escrow Co. ("Federal Title"),¹ in connection with his firm's representation of Sean Smith and Erin Wrona in a lawsuit against Federal Title for the loss of $1.57 million held in escrow. Considering these statements to be defamatory and otherwise tortious, the appellants (Federal Title and its owner, Todd Ewing) sued the appellees (Nadel, McDermott Will, Smith, and Wrona) for damages, as well as a published retraction of Nadel's statements and their removal from all websites. Appellees filed a motion to dismiss for failure to state a claim under Super. Ct. Civ. R. 12(b)(6), as well as a special motion to dismiss under the District of Columbia Anti-Strategic Lawsuits Against Public Participation Act ("Anti-SLAPP Act").²

The trial court granted appellees’ 12(b)(6) motion to dismiss based on its determination that appellants failed to plead any viable claim. The court also granted appellees’ anti-SLAPP motion to dismiss, concluding that they had made the required prima facie showing that Nadel's statements comprised "an act in furtherance of the right of advocacy on issues of public interest[,]"³ unrebutted by appellants, and thus that appellants’ claims could not succeed on the merits. The trial court then awarded appellees their attorneys’ fees under the Anti-SLAPP Act fee-shifting provision.⁴

We conclude that the trial court correctly dismissed appellants’ claims for defamation and false light invasion of privacy but erred in dismissing their claim for tortious interference with business relations. Furthermore, the trial court erred in granting appellees’ anti-SLAPP motion to dismiss and awarding them attorneys’ fees. Accordingly, we affirm in part, reverse in part, and remand for further proceedings.

I. Factual Background and Procedural History

In May 2017, appellees Smith and Wrona hired Federal Title to assist them with closing on the purchase of a home in the Cleveland Park neighborhood, and they wired $200,000.00 to Federal Title as an earnest-money deposit. A few days later, they received an email from the email address of Melina Schifflett, the Federal Title employee with whom they had been working, requesting that they wire the remaining $1.57 million of the home's purchase price. Smith and Wrona complied, despite being wary that the receiving bank account was different from the one used for the earlier wire and was associated with an unfamiliar entity designated JMZ Equities, LLC ("JMZ"). At the scheduled closing in June 2017, Ewing informed Smith and Wrona that Federal Title never received the $1.57 million wire. The closing was postponed, and Ewing promptly notified the FBI. Several days later, appellant Ewing told Smith that Federal Title's computer system had been hacked and Schifflett's email address had been commandeered to intercept the funds from the second wire.

In August 2017, Smith and Wrona filed a federal RICO suit against appellants Federal Title and Ewing, as well as against Schifflett, JMZ, and Jeff Zorbo (JMZ's owner). Shortly after the suit was filed, Nadel was interviewed by a reporter from the local public radio station, WAMU, resulting in publication of the following statements carried both on the air and on WAMU's website:

"Federal Title either caused our money to be stolen or stole it, and we need to get our money back," said Michael Nadel, the couple's attorney. "We don't have any evidence that it happened because of hackers other than Federal Title's say-so." Nadel also says Federal Title, which has offices in Friendship Heights and Logan Circle, failed to effectively communicate with Smith and Wrona ahead of the closing—a situation he attributes to the company being involved in the scheme. "Federal Title never called Sean Smith and said, ‘Bring your money to closing,’ and didn't even bring it up until the middle of closing. So if they weren't responsible for helping steal the money, it certainly seems like they knew well in advance of that closing that the money was gone. Their conduct shows that," he said.

McDermott Will published on its website a link to the WAMU story and repeated on the website Nadel's statements that Federal Title had "either caused our money to be stolen or stole it," and that "if they weren't responsible for helping steal the money, it certainly seems like they knew well in advance of that closing that the money was gone." Several days later, Federal Title notified Nadel and McDermott Will by letter that the statements were defamatory, causing it "immediate and irreparable harm," and should be retracted. Nadel and McDermott Will acknowledged receipt of the letter but refused a retraction.

In June 2018, the district court dismissed Smith and Wrona's federal suit because they had failed to plead facts sufficient for a RICO claim.⁵ The court declined to exercise supplemental jurisdiction over the remaining District-law claims. Smith and Wrona promptly filed a complaint in Superior Court alleging, inter alia , a conspiracy to commit theft or, alternatively, negligence by Federal Title associated with JMZ's alleged hack of its computer system. The case was referred to mediation, and in April 2019 a joint stipulation was filed that dismissed with prejudice all of Smith's and Wrona's claims against appellants and Schifflett.

Meanwhile, in July 2018, Federal Title and Ewing had filed a complaint in Superior Court against appellees alleging defamation, false light invasion of privacy, and tortious interference with business relations, all based on Nadel's statements to WAMU. Appellees moved to dismiss the complaint for failure to state a claim under both Rule 12(b)(6) and the Anti-SLAPP Act.

In October 2018, the trial court granted appellees’ motions to dismiss on both grounds. As to Rule 12(b)(6), the court ruled that: (1) Nadel's statements were not reasonably susceptible of a defamatory meaning in the context of WAMU's article and, in any event, were protected by the fair-report and judicial-proceedings privileges; (2) the false light claim necessarily failed because the defamation claim was deficient; and (3) as to alleged tortious interference, the complaint failed to specify the business or contractual relationships allegedly damaged by Nadel's statements. Moreover, as to appellees’ anti-SLAPP motion to dismiss, the trial court concluded that the statute applied because the case "arises from privileged statements made ... to a WAMU reporter after the filing of the ... federal lawsuit[ ]," and it concerns an "issue of public interest," namely, "the importance of cybercrime." The trial court further found that the Rule 12(b)(6) shortcomings prevented appellants from demonstrating that they were likely to succeed on the merits of their claims, and thus that dismissal was required under the Anti-SLAPP Act. Appellees then filed motions for attorneys’ fees under that statute.

In November 2018, the trial court granted appellants’ timely motion to reconsider the dismissal because the court had failed to acknowledge appellants’ filed oppositions and also had failed to conduct the required hearing on an anti-SLAPP motion to dismiss. On February 5, 2019, after the required hearing the previous month, the trial court affirmed its October 2018 dismissal order. Appellants timely appealed the February 5 order in Case No. 19-CV-195.

On February 25, 2019, the trial court granted Smith's and Wrona's motion for attorneys’ fees under the Anti-SLAPP Act and awarded them $24,340.00. In June 2019, Smith and Wrona filed a motion for an amended order, nunc pro tunc , to require payment of the fee award to appellants jointly and severally, because omission of that requirement had prevented them from registering the order as a judgment in Maryland. Appellants filed an opposition, arguing that the February 25 order was not a final, appealable order because Nadel's and McDermott's attorneys’ fee motion was unresolved and, in any event, because Smith's and Wrona's requested addition was a substantive change inappropriate for a nunc pro tunc order. Smith and Wrona filed a reply arguing that the February 25 order was appealable because it had been issued after the February 5 dismissal order. On July 2, 2019, the trial court issued an amended fees order granting Smith's and Wrona's requested addition. Also on July 2, 2019, the trial court granted, in part, Nadel's and McDermott Will's motion for attorneys’ fees under the Anti-SLAPP Act, halving their requested amount to $85,402.85. Appellants timely appealed the July 2 orders in Case No. 19-CV-646. On December 19, 2019, this court, consolidated the appeals.

II. Standard of Review

A complaint is subject to dismissal under Super. Ct. Civ. R. 12(b)(6) for failure to state a claim on which relief can be granted if it does not satisfy the requirement, set forth in Super. Ct. Civ. R. 8(a)(2), that it contain a "short and plain statement of the claim showing that the pleader is entitled to relief."⁶ The plaintiff is not required, however, to include "detailed factual allegations."⁷ All factual allegations in a complaint challenged under Rule 12(b)(6) must be...