Dunlap v. Wayne

• Decision Date: 27 March 1986
• Docket Number: No. 51400-3,51400-3
• Citation: 105 Wn.2d 529,716 P.2d 842
• Parties: Marlin DUNLAP and Candace Dunlap, husband and wife, Petitioners, v. Marvin A. WAYNE and Jane Doe Wayne, husband and wife, and the marital community composed thereof, Respondents. En Banc
• Court: Washington Supreme Court

Page 529

105 Wn.2d 529

716 P.2d 842

Marlin DUNLAP and Candace Dunlap, husband and wife, Petitioners, v. Marvin A. WAYNE and Jane Doe Wayne, husband and wife, and the marital community composed thereof, Respondents.

No. 51400-3.

Supreme Court of Washington,

En Banc.

March 27, 1986.

Hindman & Tasker, Michael Tasker, Bellingham, for petitioners.

O'Connor, Ludwigson, Thompson & Hayes, John Ludwigson, Bellingham, for respondents.

UTTER, Justice.

Marlin Dunlap, plaintiff below, brought a defamation action against Dr. Marvin Wayne. The trial court ruled that a qualified privilege protected any communication of the defendant's, and dismissed the action on summary judgment. The Court of Appeals affirmed, holding that the communication at issue was constitutionally protected opinion. Dunlap appeals this adverse determination. Although we decline to reach the constitutional issue, we affirm the decision of the Court of Appeals.

Plaintiff Dunlap, while employed as branch manager for Home Savings and Loan Association (the Bank), relayed information about the potential for a condominium development to Robert Koivisto, a builder-contractor. In the fall of 1977 Koivisto formed a partnership with three other people (including defendant Dr. Marvin Wayne) to develop the project. Both Dunlap and his wife continued to devote time to the project. Koivisto testified that Dunlap spent 80-100 hours helping the partnership, and that Dunlap's wife performed substantial secretarial services for the partnership. Upon Koivisto's suggestion, the four partners agreed to pay Dunlap $10,000. Their contract, notarized in January 1978, provided in part:

WE HEREBY AGREE TO PAY TO MARLIN G. DUNLAP OR CANDACE L. DUNLAP TEN THOUSAND DOLLARS ($10,000.00).... THE TEN THOUSAND DOLLARS ($10,000.00) IS FOR THE CONSIDERATION OF FINDING THE PROPERTY, THE IDEAS AND CONSULTATION REGARDING THE PROJECT....

Deposition of Marvin A. Wayne, Plaintiff's Exhibit 1.

One partner testified that the partnership promised the money to encourage Dunlap to arrange financing. Koivisto testified that Dunlap did help Koivisto prepare loan applications, including one for the Bank. Wayne has introduced into evidence a letter that Dunlap wrote to apply for financing from a California firm; the letter is written on Bank stationery and is dated June 5, 1978.

Prior to completion of the project, the partnership was dissolved and the property sold. Dunlap believed himself entitled to payment on the contract and in 1979 began to seek compensation from Wayne. Dunlap's attorney wrote a series of letters to Wayne, including one that read in part:

My client was surprised and hurt that in view of the partnership contract drawn up at his office and signed and notarized in December of 1977, and based on the mutual understanding between all parties, that my client would be fully compensated for his various services, including finders fee, professional counseling and advice, necessary contacts for condemnation with resulting tax benefits and obtaining possible capital for building condominium, et al.

Wayne C. Booth Deposition, Plaintiff's Exhibit 1. Wayne's attorney had an initial meeting with Dunlap's attorney, and on January 14, 1980 wrote him as follows:

I have now had the opportunity to go over the relevant documents and history of this situation with both of my clients, doctors Wayne and Schayes.... It appears from the background information that they have supplied that this Agreement ... constitutes a solicitation for a "kick-back" to Mr. Dunlap for his services in trying to obtain financing from, among other sources, his own savings and loan association. I respectfully submit that the relevant banking authorities, including Mr. Dunlap's superiors at Highline [sic] Savings and Loan, would not be very happy to learn about this solicitation of kick-backs ...

(Italics ours.) Deposition of Marvin A. Wayne, Plaintiff's Exhibit 2.

When Dunlap persisted in his requests for payment, Wayne called the Bank's president and told him of Dunlap's attempts to collect the $10,000. The president asked Wayne for documentation, and Wayne agreed to provide it. On about March 20, 1980 Wayne and his attorney met in the attorney's office with the executive vice president of the Bank. At that meeting, Wayne detailed the history of his dealings with Dunlap and provided the documentation requested by the Bank president. Included in this documentation were the payment agreement, Dunlap's collection letters, and the letter from Wayne's attorney.

The president met with Dunlap after speaking with the vice president and receiving the documentation. Dunlap maintains that the president told him that Wayne had complained of Dunlap's attempts to solicit kickbacks and engage in shakedowns. Wayne, however, denied using those terms. The president also denied using those terms and did not recall Wayne's use of the terms. The Bank fired Dunlap in March 1980. The Bank president indicated that Dunlap's involvement in the condominium project was a factor contributing to his decision to fire him, but not the principal one.

Dunlap then initiated this action for defamation against Wayne. The trial court dismissed the case on summary judgment, holding that Wayne's communications with the Bank officials enjoyed the qualified privilege of "common interest."

The Court of Appeals concluded in an unpublished opinion that the special relationship necessary to give rise to a qualified privilege did not exist. The court nonetheless affirmed the summary judgment. Relying on Mark v. Seattle Times, 96 Wash.2d 473, 487, 635 P.2d 1081 (1981), cert. denied, 457 U.S. 1124, 102 S.Ct. 2942, 73 L.Ed.2d 1339 (1982), the court concluded that Dunlap had not presented clear and convincing evidence of oral statements constituting defamation. The court also concluded that the attorney's letter was an expression of opinion, and that the statement was protected by the First Amendment as construed by the United States Supreme Court in Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974).

I. Summary Judgment Standard

The standard that controls the defendant's motion to dismiss this defamation case needs clarification. In Mark v. Seattle Times, supra, we concluded that for "policy reasons rooted in the First Amendment," a defamation plaintiff must establish a prima facie case of "convincing clarity" to defeat a defense motion for summary judgment. That decision involved a media defendant, as have other decisions in which the Mark standard was invoked. See, e.g., Chase v. Daily Record, Inc., 83 Wash.2d 37, 43, 515 P.2d 154 (1973); Rye v. Seattle Times Co., 37 Wash.App. 45, 678 P.2d 1282 (1984); Sims v. KIRO, Inc., 20 Wash.App. 229, 237, 580 P.2d 642 (1978).

First Amendment concerns at that time supported the special protection that we extended in Mark v. Seattle Times, supra. ¹ A basic cost of defamation law is its potential chilling effect on the press. Note, The Role of Summary Judgment in Political Libel Cases, 52 So.Cal.L.Rev. 1783, 1793 (1979). However, the balance between First Amendment concerns of free speech and the individual's interest in reputation tips differently when a private individual sues a private individual for a statement about private concerns. This court has recognized that the importance of a private individual's reputation interest can counter First Amendment concerns. Taskett v. KING Broadcasting Co., 86 Wash.2d 439, 444-47, 546 P.2d 81 (1976). Likewise, the United States Supreme Court has restricted First Amendment protection for statements about private affairs.

[T]he Court has frequently reaffirmed that speech on public issues occupies the " 'highest rung of the hierarchy of First Amendment values,' " and is entitled to special protection.

In contrast, speech on matters of purely private concern is of less First Amendment concern.... In such a case,

"[t]here is no threat to the free and robust debate of public issues; there is no potential interference with a meaningful dialogue of ideas concerning self-government; and there is no threat of liability causing a reaction of self-censorship by the press...."

(Citations omitted.) Dun & Bradstreet, Inc. v. Greenmoss Builders, Inc., --- U.S. ----, 105 S.Ct. 2939, 2946, 86 L.Ed.2d 593 (1985), (quoting in part from Connick v. Myers, 461 U.S. 138, 145, 103 S.Ct. 1684, 1689, 75 L.Ed.2d 708 (1983), and Harley-Davidson Motorsports, Inc. v. Markley, 279 Or. 361, 366, 568 P.2d 1359, 1363 (1977)).

For these reasons, this plaintiff should not have to meet the "convincing clarity" burden of proof that Mark v. Seattle Times, supra, imposed. The strict standard of Mark should not protect a nonmedia defendant sued for a statement about private affairs. Instead, the usual rules governing summary judgment should control. Under these rules, the trial court properly dismissed Dunlap's case if no genuine issue of material fact exists when the evidence and all reasonable inferences from the evidence are considered in the light most favorable to Dunlap. CR 56(c); Wendle v. Farrow, 102 Wash.2d 380, 686 P.2d 480 (1984).

II. Evidence of Oral Statements

The Court of Appeals affirmed summary judgment dismissal of the plaintiff's allegations that the defendant made oral defamatory statements to Bank officials. This conclusion is correct even without the strict summary judgment standard of Mark v. Seattle Times, supra. For the following reasons we agree with the courts below that the plaintiff has failed to create a genuine issue of fact.

First, the plaintiff has offered inadmissible hearsay to establish that Wayne made oral defamatory statements. A court cannot consider inadmissible evidence when ruling on a motion for summary judgment. Charbonneau v. Wilbur Ellis Co., 9 Wash.App. 474, 512 P.2d 1126 (1973). The Washington Rules of Evidence define hearsay as an out-of- -court statement offered to prove the truth of the matter asserted. ER 801(c). Plaintiff...