Little Rock Newspapers, Inc. v. Fitzhugh

• Decision Date: 13 November 1997
• Docket Number: No. 96-1050,96-1050
• Citation: 330 Ark. 561,954 S.W.2d 914
• Parties: , 26 Media L. Rep. 1801 LITTLE ROCK NEWSPAPERS, INC., Appellant, v. J. Michael FITZHUGH, Appellee.
• Court: Arkansas Supreme Court

Page 914

954 S.W.2d 914

330 Ark. 561, 26 Media L. Rep. 1801

LITTLE ROCK NEWSPAPERS, INC., Appellant, v. J. Michael FITZHUGH, Appellee.

No. 96-1050.

Supreme Court of Arkansas.

Nov. 13, 1997.

Rex M. Terry, Fort Smith, Philip S. Anderson, John E. Tull, III, Leon Holmes, Little Rock, for appellant.

Thomas A. Mars, Fayetteville, for appellee.

CORBIN, Justice.

Appellant Little Rock Newspapers, Inc., appeals the judgment of the Sebastian County Circuit Court imposing the jury's verdict awarding $50,000 in damages to Appellee J. Michael Fitzhugh for his defamation claim against Appellant's newspaper, the Arkansas Democrat-Gazette. Our jurisdiction of this appeal is pursuant to Ark. Sup.Ct. R. 1-2(a)(15), as it presents questions concerning the law of torts. Appellant raises four points for reversal. We find no error and affirm.

The record reflects that on Monday, June 20, 1994, the Arkansas Democrat-Gazette printed an article on the front page of its "Arkansas" section entitled, "Whitewater counsel kicks off first prosecution." There were two photographs included in the article--one of Charles Matthews, with the caption "Matthews" beneath it and one of Appellee, with the caption "Fitzhugh" beneath it. The substance of the article is as follows:

Whitewater counsel kicks off first prosecution

The first case to be prosecuted by the office of Robert Fiske Jr., the special counsel in the Whitewater Development Corp. affair, is to start in U.S. District Court at Little Rock today.

But don't look for the prominent political figures usually associated with Fiske's investigation.

The defendants are Charles Matthews and Eugene Fitzhugh. The men are little known outside Little Rock, and their attorneys argue the case doesn't belong under Fiske's jurisdiction.

Matthews, Fitzhugh and former Pulaski County Municipal Judge David Hale were indicted by a federal grand jury last fall for conspiring to defraud the Small Business Administration of $900,000 through Hale's federally licensed lending company, Capital Management Services Inc. of Little Rock.

Capital Management Services was supposed to raise capital to match money from the SBA and then make loans to socially and economically disadvantaged companies and individuals.

Fitzhugh's attorney, Randy Satterfield of Little Rock, said his client's defense is that "he's pretty much a victim of some big scheme that Hale had going on."

Hale helped fuel calls for the Whitewater investigation--and Fiske's eventual appointment in January by Attorney General Janet Reno--by alleging that then-Gov. Bill Clinton pressured him during the 1980s to make a $300,000 loan to Susan McDougal.

The president and first lady Hillary Rodham Clinton were partners with James and Susan McDougal from 1978-92 in Whitewater, a 230-acre residential development along the White River in Marion County.

James McDougal also owned Madison Guaranty Savings & Loan Association, which failed in 1989 at a cost to taxpayers of at least $47 million. Fiske is investigating allegations that money was transferred illegally from Madison accounts to Whitewater accounts.

Hale pleaded guilty to two felonies in March. His sentencing is on hold while the government evaluates his cooperation with Fiske's investigation.

Fitzhugh and Matthews have said that if anybody defrauded the SBA, it was Hale. Yet their link to Whitewater--however small--will ensure national news coverage of their trial.

Satterfield said he has been contacted by reporters from The New York Times, USA Today and other publications.

Fitzhugh has tried unsuccessfully to have Fiske disqualified from the case, arguing the Whitewater connection has turned the trial into a "media event."

The prosecution will be handled by two associate counsels in Fiske's office.

Fitzhugh and Matthews are accused of using a wealthy Shreveport family's money to help Hale misrepresent the amount of private capital held by his company. That misrepresentation allegedly allowed the company to qualify improperly for $900,000 from the SBA.

Matthews and Fitzhugh split $250,000 as their payoff, the government contends.

Fitzhugh, a Little Rock lawyer, represented a member of the Shreveport family.

Matthews, a North Little Rock lawyer and former securities dealer, handled some of the family's investments. Matthews was a state representative and chairman of the Arkansas Democratic Party in the late 1960s.

Court papers filed by the government and defense lawyers recently indicate how the trial may proceed.

The government says it can make its case without testimony from Hale.

Fiske's office, however, said it expects defense attorneys to call Hale as a witness to discredit him.

Prosecutors have asked U.S. District Judge Stephen Reasoner to limit Hale's testimony about his crimes to prevent distracting the jury from the "relevant issues" in the case.

"The obvious ploy is to set up Hale as a straw man," prosecutors argued last week in a motion to limit testimony about Hale's confessed crimes.

Satterfield said he has subpoenaed Hale.

"There's a lot of activity about limiting his testimony, so I don't know" whether to call him, the lawyer said.

The government also has argued that unlimited examination of Hale could damage Fiske's investigation of other matters.

A spokesman for Fiske's office said the prosecution hopes to present its case "within a week" but declined to respond to other questions.

Satterfield said he expects the trial to last no more than a week.

After receiving telephone calls from Appellee, the newspaper printed a correction the following day. The correction, which was printed in the lower left corner of the front page of the "Arkansas" section under the headline of "Getting it straight," included a true photograph of Eugene Fitzhugh. The correction read:

On Monday on the front of the Arkansas section a photo of J. Michael Fitzhugh was run in place of a photo of Eugene Fitzhugh. The correct photo of Eugene Fitzhugh is shown.

Appellee filed his complaint against Appellant on September 2, 1994, alleging that the juxtaposition of his photograph against the headline and accompanying article was defamatory per se and was the result of gross carelessness on the part of Appellant's employees. In its answer, Appellant asserted that Appellee was a public figure and that, as such, it was necessary for Appellee to prove that its employees acted with actual malice in placing Appellee's photograph in the Whitewater article.

I. Sufficiency of the Evidence

For its first two points for reversal, Appellant argues that the trial court erred in denying its motion for summary judgment and for refusing to grant a directed verdict in its favor. Appellant contends that Appellee failed to prove that the article in question was a false statement of fact of and concerning him and that his reputation was actually harmed as a result of the article's publication. Appellant does not challenge the amount of damages awarded to Appellee by the jury; rather, it challenges the award of any damages.

We first note that the denial of a motion for summary judgment is not reviewable on appeal. Pugh v. Griggs, 327 Ark. 577, 940 S.W.2d 445 (1997); White v. Welsh, 327 Ark. 465, 939 S.W.2d 299 (1997). Such review is not available even after a trial on the merits, as the final judgment must be tested upon the record as it exists at the time it is rendered, rather than at the time the motion for summary judgment is denied. Ball v. Foehner, 326 Ark. 409, 931 S.W.2d 142 (1996). Hence, we review only Appellant's argument as it pertains to the trial court's denial of its motion for directed verdict.

A motion for directed verdict should only be granted if the evidence is so insubstantial as to require that the jury's verdict be set aside. Dodson v. Dicker, 306 Ark. 108, 812 S.W.2d 97 (1991). In reviewing the denial of a directed verdict, we give the evidence its highest probative value, viewing it in a light most favorable to the party against whom the verdict is sought. Id. The standard of review in cases of defamation, including factual findings, is whether the jury's verdict can be supported by substantial evidence. Thomson Newspaper Publishing, Inc. v. Coody, 320 Ark. 455, 896 S.W.2d 897, cert. denied, 516 U.S. 1008, 116 S.Ct. 563, 133 L.Ed.2d 489 (1995). An action for defamation turns on whether the communication or publication tends or is reasonably calculated to cause harm to another's reputation. Id.; Little Rock Newspapers, Inc. v. Dodrill, 281 Ark. 25, 660 S.W.2d 933 (1983).

In order to establish a claim of defamation, a party must prove the following elements: (1) The defamatory nature of the statement of fact; (2) that statement's identification of or reference to the plaintiff; (3) publication of the statement by the defendant; (4) the defendant's fault in the publication; (5) the statement's falsity; and (6) damages. Minor v. Failla, 329 Ark. 274, 946 S.W.2d 954 (1997) (citing Mitchell v. Globe Intern. Pub., Inc., 773 F.Supp. 1235 (W.D.Ark.1991)).

A. False Statement of and Concerning Appellee

Appellant relies on this court's decision in Pigg v. Ashley County Newspaper, Inc., 253 Ark. 756, 489 S.W.2d 17 (1973), for the proposition that in determining whether an article is libelous, we must construe the article in its entirety. Appellant asserts that in reading the present article as a whole, it cannot reasonably be construed as being a false statement of fact of and concerning Appellee. Appellant asserts that the evidence demonstrated that the article is clearly of and concerning Eugene Fitzhugh, identified in the article as a Little Rock lawyer who is not a prominent figure and is little known outside of Little Rock. We disagree.

Whether the words, taken together with the attendant circumstances, implicate the plaintiff in the commission of a crime is a question of fact for the jury to resolve. Minor, 329 Ark. 274, 946 S.W.2d 954. The question of whether a jury may...