Harris v. NCNB Nat. Bank of North Carolina, 8615SC1134

Citation85 N.C.App. 669,355 S.E.2d 838
Decision Date19 May 1987
Docket NumberNo. 8615SC1134,8615SC1134
CourtCourt of Appeal of North Carolina (US)

Cheshire & Parker by Lucius M. Cheshire, Hillsborough, for plaintiff-appellant.

Bell, Davis & Pitt, P.A. by William Kearns Davis and Stephen M. Russell, Winston-Salem, for defendant-appellee.

MARTIN, Judge.

Plaintiff filed this civil action claiming damages for defamation, "attempted extortion," intentional infliction of mental distress, and unfair and deceptive practices in commerce in violation of G.S. 75-1.1. Defendant moved, pursuant to G.S. 1A-1, Rule 12(b)(6), that the complaint be dismissed for its failure to state a claim for relief. The trial court granted defendant's motion and dismissed the action. Plaintiff appealed. We affirm the decision of the trial court.

A motion to dismiss made pursuant to G.S. 1A-1, Rule 12(b)(6) tests the legal sufficiency of the complaint. Sutton v. Duke, 277 N.C. 94, 176 S.E.2d 161 (1970). In order to withstand such a motion, the complaint must provide sufficient notice of the events and circumstances from which the claim arises, and must state allegations sufficient to satisfy the substantive elements of at least some recognized claim. Hewes v. Johnston, 61 N.C.App. 603, 301 S.E.2d 120 (1983). The question for the court is whether, as a matter of law, the allegations of the complaint, treated as true, are sufficient to state a claim upon which relief may be granted under some legal theory, whether properly labeled or not. Stanback v. Stanback, 297 N.C. 181, 254 S.E.2d 611 (1979). In general, "a complaint should not be dismissed for insufficiency unless it appears to a certainty that plaintiff is entitled to no relief under any state of facts which could be proved in support of the claim." Id. at 185, 254 S.E.2d at 615, quoting 2A Moore's Federal Practice, § 12.08, pp. 2271-74 (2d ed. 1975) (emphasis original). Such a lack of merit may consist of the disclosure of facts which will necessarily defeat the claim as well as where there is an absence of law or fact necessary to support a claim. Sutton v. Duke, supra.

In the present case, plaintiff alleged in his complaint that defendant had caused its attorney, M. Leann Nease, to prepare a document which accused plaintiff of obtaining property by false pretense and that the defamatory statement had been published by transmittal of the document, together with a letter from Ms. Nease, to Lawson Brown, an attorney representing plaintiff's employer, North Central Production Credit Association (NCPCA). A copy of Ms. Nease's letter to Mr. Brown, together with a copy of the document containing the alleged defamatory statement, was attached as an exhibit to plaintiff's complaint. The letter from Ms. Nease to Mr. Brown concerned defendant NCNB's legal position with respect to a dispute with NCPCA over the proceeds of a sale of certain farm equipment in which both NCNB and NCPCA claimed a security interest. The document referred to in plaintiff's complaint was an unfiled complaint which Ms. Nease had prepared captioned:






DOUG HARRIS, individually and as an employee and agent of


The unfiled complaint also alleged facts relating to the dispute existing between NCNB and NCPCA and alleged that plaintiff had made false statements to the debtor, the owner of the equipment, and to NCNB concerning the sale of the equipment and the disbursement of the proceeds thereof, and had committed unfair or deceptive acts affecting commerce in violation of G.S. 75-1.1. The unfiled complaint alleged that NCPCA had engaged in unfair trade practices and had converted $20,500.00 to which NCNB was entitled from the sale of the equipment. The letter from Ms. Nease to Mr. Brown concluded with the following paragraph:

I have enclosed for your review a copy of the complaint that NCNB plans to file in this matter. Unless it receives from Central, by March 26, 1986, the sum of $20,500.00 plus interest, at the legal rate, from September 6, 1985, NCNB will file this complaint.

Plaintiff contends that the allegations of the unfiled complaint are defamatory as to him, and that defendant caused the defamatory material to be published by sending it to the attorney for NCPCA, his employer. He asserts that his complaint was, therefore, sufficient to state a claim for relief for defamation. We disagree.

It is now well-established that defamatory statements made in the course of a judicial proceeding are absolutely privileged and will not support a civil action for defamation, even if made with malice. Scott v. Statesville Plywood & Veneer Co., 240 N.C. 73, 81 S.E.2d 146 (1954); Jarman v. Offutt, 239 N.C. 468, 80 S.E.2d 248 (1954). In determining whether or not a statement is made in the course of a judicial proceeding, the court must decide as a matter of law whether the alleged defamatory statements are sufficiently relevant to the issues involved in a proposed or ongoing judicial proceeding. Annot., 36 A.L.R.3d 1328 (1971). With respect to the question of whether a communication or statement is relevant to litigation, our Supreme Court has stated:

While statements in pleadings and other papers filed in a judicial proceeding are not privileged if they are not relevant or pertinent to the subject matter of the action, the question of relevancy or pertinency is a question of law for the courts, and the matter to which the privilege does not extend must be so palpably irrelevant to the subject matter of the controversy that no reasonable man can doubt its irrelevancy or impropriety.

If it is so related to the subject matter of the controversy that it may become the subject of inquiry in the course of the trial, the rule of absolute privilege is controlling.

Scott v. Statesville Plywood & Veneer, supra, 240 N.C. at 76, 81 S.E.2d at 149 (emphasis added).

In North Carolina, the phrase "judicial proceeding" has been defined broadly, encompassing more than just trials in civil actions or criminal prosecutions. Jarman v. Offutt, supra. The scope of the accompanying absolute privilege has been held to include not only statements made by judge, counsel and witnesses at trial, Ramsey v. Cheek, 109 N.C. 270, 13 S.E. 775 (1891); but also statements made in pleadings and other papers filed in the proceeding, Scott v. Statesville Plywood & Veneer Co., supra; out-of-court affidavits or reports submitted to the court and pertinent to the proceedings, Bailey v. McGill, 247 N.C. 286, 100 S.E.2d 860 (1957); Williams v. Congdon, 43 N.C.App. 53, 257 S.E.2d 677 (1979); communications in administrative proceedings where the officer or agency involved is exercising a quasi-judicial function, Angel v. Ward, 43 N.C.App. 288, 258 S.E.2d 788 (1979); and out-of-court statements between parties to a judicial proceeding, or their attorneys, relevant to the proceedings. Burton v. NCNB National Bank of North Carolina, 85 N.C.App. 702, 355 S.E.2d 800 (1987). The question of whether the absolute privilege extends to out-of-court communications between attorneys preliminary to proposed or anticipated litigation, however, appears to be one of first impression in North Carolina.

Plaintiff argues that the statements made on defendant's behalf by its attorney, Ms. Nease, are not absolutely privileged because no judicial proceedings were pending at the time the statements were made and because the statements were not pertinent to any proposed judicial proceeding. Rather, plaintiff asserts that, at most, defendant is protected by a qualified privilege. A qualified privilege exists with respect to those communications which, even though defamatory, are made in good faith and without actual malice upon a subject in which the communicating party has an interest or with respect to which he has some duty. R.H. Bouligny, Inc. v. United Steelworkers of America, 270 N.C. 160, 154 S.E.2d 344 (1967); Alexander v. Vann, 180 N.C. 187, 104 S.E. 360 (1920); Alpar v. Weyerhaeuser Co., 20 N.C.App. 340, 201 S.E.2d 503, cert. denied, 285 N.C. 85, 203 S.E.2d 57 (1974). Plaintiff contends that if only a qualified privilege exists, his allegations that defendant acted in bad faith and with malice in causing the allegedly defamatory document to be published are sufficient to state a claim for relief. We hold, however, that an absolute privilege exists not only with respect to statements made in the course of a pending judicial proceeding but also with respect to communications relevant to proposed judicial proceeding.

We find support for our holding in the Restatement (Second) of the Law of Torts, Section 586, which states:

An attorney at law is absolutely privileged to publish defamatory matter concerning another in communications preliminary to a proposed judicial proceeding, or in the institution of, or during the course and as a part of, a judicial proceeding in which he participates as counsel, if it has some relation to the proceeding.

The absolute privilege extends to parties to the litigation. Section 587 of the Restatement provides:

A party to a private litigation ... is absolutely privileged to publish defamatory matter concerning another in communications preliminary to a proposed judicial proceeding ... if the matter has some relation to the proceeding.

The comments to the above-cited sections indicate that the privilege is based upon the public interest of securing to all persons freedom of access to the courts to settle their private disputes, and of securing to attorneys, as officers of the court, the freedom to fully represent their clients. Both sections extend the absolute privilege to statements preliminary to proposed litigation when the statement is relevant to a...

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