Marks One Car Rental, Inc. v. Auto Club Grp. Ins. Co.
| Decision Date | 18 January 2019 |
| Docket Number | No. 18-1386,18-1386 |
| Parties | MARKS ONE CAR RENTAL, INCORPORATED; MARKS ONE, LLC, dba Marks One Collision; MAHER WAAD, Plaintiffs-Appellants, v. AUTO CLUB GROUP INSURANCE COMPANY, et al., Defendants, FARMERS INSURANCE EXCHANGE, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Sixth Circuit |
SUHRHEINRICH, Circuit Judge. Maher Waad, Marks One Car Rental, Inc., and Marks One Collision (collectively, "Plaintiffs"), sued Defendant Farmers Insurance Exchange ("Farmers"), for statements Farmers' employees allegedly made regarding fraudulent insurance claims from Plaintiffs' businesses. The district court granted summary judgment to Farmers on all claims because Plaintiffs did not prove any actual damages stemming from the alleged statements. On appeal, the sole issue is whether the alleged statements, accusing Waad and Marks One Collision of insurance fraud and forgery, are defamation per se that do not require Plaintiffs to prove damages. Because Plaintiffs have not set forth evidence that these statements are defamatory per se under Michigan law, we AFFIRM.
Maher Waad owns Marks One Collision, which repaired vehicles insured by Farmers. Waad also owns Marks One Car Rental, which as the name implies, rents cars. Put simply, there is no love lost between Waad and his businesses and Farmers. Waad alleges that Farmers' adjusters criticized him with racial epithets and tried to engage him in a physical altercation at Marks One Collision. Waad claims that this racial animus was the basis for the events leading to this appeal.
In late 2013, Farmers' employees Allen Keller and Scott Wood began investigating Marks One Collision. They inspected nine vehicles repaired at Marks One Collision and compared the repairs performed with the estimates submitted to Farmers for reimbursement. For example, Marks One Collision submitted estimates that it would replace certain parts on customers' cars—side door panels, a radiator, an AC condenser, and a hood, among others—but investigation revealed that Marks One Collision left the original, broken parts on the cars and still collected payment from Farmers. In January 2014, Keller and Wood published an 81-page report containing their findings entitled "Investigation into the Matter of Marks One Collision" (the "Report"). The Report concluded that Plaintiffs were engaging in insurance fraud by charging Farmers, on average, 36% above the estimated amount for repairs. The Report also concluded that five vehicle owners said their names were forged on checks by Marks One Collision, and that two other owners were not sure if the signatures on these checks were, in fact, their signatures.
While preparing the Report, Keller and Wood interviewed at least nine customers from Marks One Collision. Plaintiffs alleged that, because of this racial animus, Farmers' employees made statements during the interviews accusing Plaintiffs of "engag[ing] in fraudulent insuranceschemes and the criminal act of forgery." In their complaint, Plaintiffs attached affidavits from four customers to whom these statements were made.
One customer, Melody Garvin, said that two detectives came to her home and told her that Waad "was ripping off paying customers by writing enhanced damage estimates." Garvin also stated that a Farmers' agent visited her place of work and "insisted that [she] sign an affidavit alleging that a check [she] had written was forged, even though this was untrue." Another customer, Sherell Jones, stated that Farmers' employee Tom Berry told her "that Maher Waad had a reputation of committing insurance fraud and was under investigation for his business practices." Jones also stated that Berry "insinuated that Maher Waad had forged my name on a t[wo]-party check" and told her that she was a "crime victim." A third customer, Linda Green, stated that Berry and Keller came to her home because they had been receiving "lots of complaints" about Marks One Collision and that they had inspected another customer's car and determined "the wheels and tires were dangerous and defective." A fourth customer, Catherine Jackson, stated that a Farmers' insurance adjuster called her and "alleged Marks One Collision was engaging in fraud and dishonest business practices."
Farmers eventually submitted the Report to Macomb County law enforcement under MICH. COMP. LAWS § 500.4507. On April 23, 2014, Channel 4 - WDIV in Detroit reported that Marks One Car Rental had been "busted for insurance fraud." Waad was arrested and later charged as part of the raid.1 Plaintiffs believe that someone from Farmers tipped off Channel 4. After theReport and Channel 4 news coverage, a deal for Marks One Car Rental to expand at Detroit Metro Airport fell through.
Based on these alleged statements made during the interviews with Plaintiffs' customers, Plaintiffs brought six claims against Farmers: (1) tortious interference with business relationship; (2) defamation (including defamation per se); (3) violation of the Michigan Consumer Protection Act; (4) civil conspiracy; (5) unlawful discrimination under 42 U.S.C. §1981; and (6) conspiracy under 42 U.S.C. §1985(3).2 The gravamen of Plaintiffs' complaint was that, under MICH. COMP. LAWS § 500.4501 et seq., Farmers was allowed to investigate insurance fraud and release the information to any "authorized agency,"3 but that the comments to its customers and the alleged tip to Channel 4 were false accusations of criminal conduct that caused them to lose business. In support of their complaint, Plaintiffs provided the aforementioned affidavits and asserted that these customers would stop using their businesses because of Farmers' statements.
The district court granted Farmers' motion for summary judgment on all claims. On the defamation claim, the district court held that Plaintiffs did not suffer any damages due to the alleged statements. During their depositions, Jones and Green testified that they would continue to use Marks One Car Rental and Marks One Collision, respectively. Garvin testified that she wassatisfied with the work done on her car, but that she would not go to Plaintiffs' businesses again because of what she saw about the police raid on television. The district court found that Plaintiffs did not produce any evidence connecting the police raid with any statements made by Farmers. Finally, Jackson testified that she would not return to Plaintiffs' businesses because their rental car prices had increased, and that her boyfriend's car was repaired there and "is falling apart now." For these reasons, the district court ruled that Plaintiffs had not demonstrated any actual damages to their business related to the disputed statements, a requirement for defamation under MICH. COMP. LAWS § 600.2911(2)(a).
Further, the district court held that Plaintiffs failed to provide evidence of other business damages, including a general loss of business and the loss of the Detroit Metro Airport contract. The record was also devoid of any evidence—sans speculation—that Farmers re-published the Report or the disputed statements to any other person. Additionally, the district court pointed to unrebutted testimony from Berry that he did not tip Channel 4 as to the raid on Plaintiffs' businesses. Waad even admitted that he had no evidence that anyone from Farmers informed Channel 4.
Finally, the district court granted summary judgment to Farmers on the defamation per se claims for three reasons. First, the district court held that the allegations of Waad's criminal activity concerned his business, so he had to prove actual damages. Second, the district court held that the alleged statements did not even rise to the level of defamation per se because they were merely "[e]xaggerated language used to express an opinion, such as 'blackmailer,' traitor' or 'crook'" that did not become actionable defamation "merely because it could be taken out of context as accusing someone of a crime." See Kevorkian v. Am. Med. Ass'n, 602 N.W.2d 233, 237 (Mich. Ct. App. 1999) (alteration in original) (citation omitted). Third, the district court held thatthe allegations of forgery were not defamatory because Plaintiffs' customers testified at their depositions—contrary to their initial affidavits—that they did not give Plaintiffs permission to sign their checks.
The district court did not address Farmers' defense that the statements were true, which also would have been a basis for defeating Plaintiffs' defamation claim.4
The sole issue Waad and Marks One Collision present in their statement of issues is whether the district court erred by granting summary judgment on Maher Waad's claim of defamation per se when the alleged statements at issue are accusations of crimes that do not require proof of actual damages under MICH. COMP. LAWS § 600.2911(1). Therefore, Marks One Collision forfeited review of all of its claims, and Maher Waad forfeited review of all claims but his defamation per se claim. See Fed. R. App. P. 28(a)(5); United States v. Calvetti, 836 F.3d 654, 664 (6th Cir. 2016). Marks One Car Rental did not appeal.
We review de novo the district court's grant of summary judgment. Luna v. Bell, 887 F.3d 290, 297 (6th Cir. 2018). Summary judgment is appropriate only where "there is no genuine dispute as to any material fact and the movant is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(a). "For this determination, we review all facts in a light that is most favorable to, and draw all reasonable inferences in favor of, the nonmoving party." Byrd v. Tenn. Wine & Spirits Retailers Ass'n, 883 F.3d 608, 613 (6th Cir.) (citation omitted), cert. granted, 139 S. Ct. 52 (2018).But the nonmoving party may not use ...
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