Fillmore v. Maricopa Water Processing Systems, Inc.

• Decision Date: 19 September 2005
• Docket Number: No. 1 CA-CV 04-0523.,1 CA-CV 04-0523.
• Citation: 120 P.3d 697
• Parties: RODNEY J. FILLMORE, Plaintiff/Appellant, v. MARICOPA WATER PROCESSING SYSTEMS, INC., an Arizona corporation d/b/a Kinetico Quality Water Systems; and John Owen, individually, Defendants/Appellees.
• Court: Arizona Supreme Court

120 P.3d 697

RODNEY J. FILLMORE, Plaintiff/Appellant, v. MARICOPA WATER PROCESSING SYSTEMS, INC., an Arizona corporation d/b/a Kinetico Quality Water Systems; and John Owen, individually, Defendants/Appellees.

No. 1 CA-CV 04-0523.

Court of Appeals of Arizona, Division One, Department D.

September 19, 2005.

Appeal from the Superior Court, Maricopa County, Cause No. CV 2004-090070, Mark Santana, J.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Rodney J. Fillmore, St. David, Appellant In Propria Persona.

The Dergo Law Group, P.L.L.C. by Ivan Kolesik, Scottsdale, Attorneys for Defendants/Appellees.

OPINION

EHRLICH, Judge.

¶ 1 In his complaint, Rodney Fillmore sought damages due to allegations made by business competitors regarding his employer's product and practices. The superior court dismissed the complaint for want of a viable claim. See Ariz. R. Civ. P. 12(b)(6). Because Fillmore sufficiently alleged colorable theories of injurious falsehood, tortious business interference and defamation, we reverse the judgment and remand for further proceedings.

BACKGROUND¹

¶ 2 Fillmore is an independent contractor for ASK/H20 Technologies & Consulting, Inc., a distributor of whole-house water-treatment systems, including the "H2O Concepts System." John Owen is employed by Maricopa Water Processing Systems, a competitor that sells Kinetico Quality Water Systems (collectively "Kinetico").

¶ 3 On January 3, 2003, Fillmore made a sales presentation to David and Angie Schmitt at their home. Immediately thereafter, Owen visited the Schmitts to promote Kinetico's system. The Schmitts told Owen of Fillmore's proposal.

¶ 4 In both his initial and amended complaints, Fillmore alleged that, after learning that the Schmitts had spoken with Fillmore, Owen made several pejorative statements regarding the quality of ASK/H20's water-treatment system and its business practices. Fillmore specifically asserted that Owen had told the Schmitts that:

1. the ASK/H2O technology is "bogus, a fraud and does not work";

2. the certification of the ASK/H2O technology represented to exist by Fillmore is "a fraud";

3. the H20 Concepts water-filtration unit is "nothing but a large carbon filter";

4. "The people at H20 Technologies & Consulting are out and out crooks and rip people off";

5. ASK/H20 Technologies & Consulting "had been kicked out of the local [B]etter [B]usiness [B]ureau because of its `shady' business practices and in fact is not currently a member"; and 6. ASK/H20 Technologies & Consulting "kept changing its name whenever the authorities were about to catch up with them and reveal the fraud of their systems."

¶ 5 Fillmore contended that Owen either knew that the alleged statements were false or recklessly disregarded the need to determine their truth. Fillmore also asserted that Owen had made these statements in order to derail Fillmore's negotiations with the Schmitts. In that regard, Fillmore claimed that, before hearing Owen's presentation, the Schmitts either had been "considering purchasing" or "had pretty much made up their minds to buy" a water system from Fillmore but "could not" do so after speaking with Owen, at least not until the allegations had been "cleared up." Fillmore requested injunctive relief as well as compensatory and punitive damages against Kinetico.

¶ 6 In response, Kinetico filed a Rule 12(b)(6) motion, asserting that Fillmore lacked standing to assert claims on behalf of ASK/H20. It also argued that Fillmore's claims were "derivative" of allegations against ASK/H20, and, therefore, that Fillmore had no basis for personal relief.

¶ 7 Before the superior court ruled on the motion, Fillmore amended his complaint. See, e.g., Graham v. Goodyear Aerospace Corp., 120 Ariz. 275, 276, 585 P.2d 884, 885 (App.1978) ("prior to the filing of any answer by the defendant[s] ... and prior to any ruling by the trial court on the pending motion to dismiss, [plaintiff] could amend his complaint as a matter of right ..."). He made minor changes to the factual allegations, but he added two sections labeled "Cause[s] of Action." In the first of these sections, Fillmore claimed that Kinetico had "disparag[ed][his] product" and "interfer[ed] with [his] business expectations ... with the Schmitts...." See, e.g., Aldabbagh v. Ariz. Dep't of Liquor Licenses & Control, 162 Ariz. 415, 421, 783 P.2d 1207, 1213 (App.1989) ("injurious falsehood is the publication of a matter derogatory to the plaintiff's business ... calculated to prevent others from dealing with him"); Wagenseller v. Scottsdale Mem'l Hosp., 147 Ariz. 370, 386, 710 P.2d 1025, 1041 (1985) (recognizing tort of improper interference with "valid contractual relationship or business expectancy"). In the second section, he asserted that Owen's fourth alleged statement, i.e., the "crooks/rip-off" statement, constituted "defamation and slander per se." Godbehere v. Phoenix Newspapers, Inc., 162 Ariz. 335, 341, 783 P.2d 781, 787 (1989) ("A defamation action compensates damage to reputation or good name caused by the publication of false information.") (citing Time, Inc. v. Hill, 385 U.S. 374, 384 n.9, 87 S.Ct. 534, 17 L.Ed.2d 456 (1967)).

¶ 8 The superior court dismissed Fillmore's complaint, concluding that he had failed to state a viable claim for relief, and it awarded Kinetico its attorneys' fees, noting that Fillmore had filed similar complaints against other competitors, all of which had been dismissed. Fillmore timely appealed.

ANALYSIS

¶ 9 Dismissing a complaint for its failure to state a viable claim is "not favored under Arizona law," Maldonado, 129 Ariz. at 167, 629 P.2d at 1003, and this court will reverse such a dismissal unless we are "certain that the plaintiff would not be entitled to relief under any state of facts susceptible of proof under the claim stated." Sun World Corp. v. Pennysaver, Inc., 130 Ariz. 585, 586, 637 P.2d 1088, 1089 (App.1981). Thus,

the question is whether enough is stated ... [to] entitle the plaintiff to relief [through] some theory to be developed at trial. The purpose of the rule is to avoid technicalities and give the other party notice of the basis for the claim and its general nature.

Guerrero v. Copper Queen Hosp., 112 Ariz. 104, 106-07, 537 P.2d 1329, 1331-32 (1975).

¶ 10 Kinetico urges this court to afford greater deference to the dismissal, claiming that actions for libel and slander are "traditionally disfavored." See Andrews v. Stallings, 119 N.M. 478, 892 P.2d 611, 624 (App.1995) (citing 5A Charles A. Wright & Arthur R. Miller, Federal Practice & Procedure § 1357, at 359 (2d ed.1990)). Even if Andrews did not differ significantly from this case,² we would not follow New Mexico's example. In addition to Arizona's strong constitutional protections of the right to bring common-law tort claims and to receive full compensation for any damages, see Cronin v. Sheldon, 195 Ariz. 531, 538-41 ¶¶ 33-51, 991 P.2d 231, 238-41 (1999) (discussing "anti-abrogation" clause, Art. XVIII, § 6, and "non-limitation" clause, Art. II, § 31); Boswell v. Phoenix Newspapers, Inc., 152 Ariz. 9, 17, 730 P.2d 186, 194 (1986) (holding that Article XVIII, § 6 "protects the right to recover damages for injury to reputation"), we are bound by this pronouncement from the Arizona Supreme Court:

One's reputation is a significant, intensely personal possession that the law strives to protect. The entire common law of defamation attests to the importance we attach to an individual's right to seek compensation for damage to his reputation. Not even the critical need for open and robust public debate on issues of public concern is sufficient to completely shield malicious defamations.

Chamberlain v. Mathis, 151 Ariz. 551, 555, 729 P.2d 905, 909 (1986) (citations omitted).

¶ 11 We also reject the contention that Fillmore lacks standing to bring this action. Citing In re Gosnell Development Corp. of Arizona, 221 B.R. 776 (D.Ariz.1998), the superior court concluded that Fillmore lacked standing to bring an action on behalf of ASK/H20. Not only does the Arizona Constitution lack the "case and controversy" requirement of the United States Constitution at issue in Gosnell, an Arizona court is not bound by a federal bankruptcy decision on this point of law.³ To have standing to sue in an Arizona court, a plaintiff need only

"plead damage from an injury peculiar to him or at least more substantial than that suffered" by the community at large. Allegations of general economic or aesthetic losses in an area, without instances of injury particular to the plaintiff, are generally not sufficient to create standing.

Blanchard v. Show Low Planning & Zoning Comm'n, 196 Ariz. 114, 118, ¶ 20, 993 P.2d 1078, 1082 (App.1999) (quoting Buckelew v. Town of Parker, 188 Ariz. 446, 452, 937 P.2d 368, 374 (App.1996)).

¶ 12 Fillmore is clearly seeking recovery for his own losses. He identified his commission from the potential sale to the Schmitts and his "humiliation" as recoverable damages. See Boswell, 152 Ariz. at 17, 730 P.2d at 194 (anti-abrogation clause protects recovery of damages for emotional injury for defamation). Thus, none of the authority that Kinetico cites regarding the standing needed to assert a corporate claim for relief supports the dismissal of Fillmore's complaint, and the superior court's cited authority on standing is inapposite.⁴

¶ 13 Fillmore attempted to identify three legal theories for recovery: injurious falsehood, tortious business interference and defamation. These theories provide relief for distinct types of damages and do not permit "double recovery" as suggested by Kinetico. See Restatement (Second) of Torts ("Restatement") § 623A, cmt. g. Rather, when a plaintiff's action is based on several alleged fraudulent misrepresentations, as in this case, the plaintiff may have a viable claim for relief under each of the three theories:

In some circumstances one who is liable to another for intentional interference with...