Morrison v. Profanchik

• Decision Date: 22 May 2019
• Docket Number: NO. 03-17-00593-CV,03-17-00593-CV
• Citation: 578 S.W.3d 676
• Parties: Kenneth W. MORRISON ; and StoneCoat of Texas, LLC, Appellants v. John D. PROFANCHIK Jr., Appellee
• Court: Texas Court of Appeals

578 S.W.3d 676

Kenneth W. MORRISON ; and StoneCoat of Texas, LLC, Appellants

v.John D. PROFANCHIK Jr., Appellee

NO. 03-17-00593-CV

Court of Appeals of Texas, Austin.

Filed: May 22, 2019

Ms. V. Blayre Pena, Austin, for Appellee.

Mr. William C. Bundren, for Appellants.

Before Chief Justice Rose, Justices Goodwin and Kelly

OPINION

Jeff Rose, Chief Justice

This is an interlocutory appeal from the district court's order denying a motion to dismiss under the Texas Citizens Participation Act (TCPA). Tex. Civ. Prac. & Rem. Code § 27.001 –.011 (provisions of TCPA); id. § 51.014(a)(12) (authorizing interlocutory appeal from order denying TCPA motion to dismiss). John D. Profanchik Jr. sued Kenneth W. Morrison and StoneCoat of Texas, LLC (collectively, "StoneCoat") for defamation in connection with an allegedly fake online review by StoneCoat of its competitor, ProCal Stone Design, LLC. Based on our determination that Profanchik Jr.'s suit against StoneCoat falls under the TCPA's "commercial speech" exemption, see id. § 27.010(b), we will affirm the district court's order.

Background

ProCal and Appellant StoneCoat are Dallas-area competitors in the business of spray-on limestone. Appellant Morrison is a principal of StoneCoat. Appellee Profanchik Jr. is the son of John D. Profanchik Sr., who is a principal of ProCal.

In December 2016, "Don Henley" of Plano, Texas posted the following review on the website ripoffreport.com:

Pro Cal Stone John Profanchik They Are Rip Off Artists Beware of This Man and Anyone Associated With Him Including His Son Addison Texas

Beware of John Profanchik with Pro Cal Stone. He claims to be the inventor of this spray on stone product. After Hiring him to redo the front of my house with spay on stone John Profanchik quickly began to show his true colors. He kept asking for more money and the work they performed was aweful. After some online Investigating I discovered that Stone Coat of Addison Tx was the inventor of this product. I fired John Profanchik with Pro Cal Stone and Thank God for Stone Coat. They did exactly what they said and at a better price plus the work was amazing. Beware of John Profanchik with Pro Cal Stone he lies and will try to take your money.

(Errors in original.) The ripoffreport.com review and other allegedly fake reviews of ProCal prompted Profanchik Sr. and ProCal to sue StoneCoat for defamation, business disparagement, deceptive trade practices, and fraud in Dallas and Collin counties. See Morrison v. ProCal Stone Design, LLC , No. 05-17-00696-CV, 2018 WL 4090637, at *1 (Tex. App.—Dallas Aug. 28, 2018, pet. denied) (mem. op.); Morrison v. Profanchik , No. 05-17-00680-CV, 2018 WL 4090635, at *1 (Tex. App.—Dallas Aug. 28, 2018, pet. denied) (mem. op.).¹

The ripoffreport.com review also spawned the underlying defamation case against StoneCoat, which Profanchik Jr. filed in Travis County district court. Profanchik Jr.'s petition alleged that StoneCoat published the ripoffreport.com review; the review is false; the review constitutes libel per se because it tended to injure Profanchik Jr.'s reputation and impeached his honesty, integrity, and reputation; StoneCoat knew the review was false or acted with reckless disregard concerning the review's truth; and Profanchik Jr. was injured by the fake review. See Tex. Civ. Prac. & Rem. Code § 73.001 (setting forth elements of claim for libel).

StoneCoat generally denied Profanchik Jr.'s claim and asserted several affirmative defenses. StoneCoat also filed a motion to dismiss Profanchik Jr.'s suit under the TCPA, arguing that Profanchik Jr. filed his defamation claim based on or in response to StoneCoat's exercise of the right of free speech in the ripoffreport.com review. See id. § 27.003(a) (authorizing a motion to dismiss an action that "is based on, relates to, or is in response to a party's exercise of the right of free speech"). In response, Profanchik Jr. argued that StoneCoat did not establish that his defamation claim against StoneCoat was based on its exercise of the right of free speech and that, even if it had, the "commercial speech" exemption applies to Profanchik Jr.'s claim. See id. §§ 27.005(b) (allowing trial court to dismiss action if movant "shows by a preponderance of the evidence that the legal action is based on, relates to, or is in response to" the movant's exercise of certain rights), .010(b) ("commercial speech" exemption); Castleman v. Internet Money Ltd. , 546 S.W.3d 684, 688 (Tex. 2018) (explaining applicability of commercial-speech exemption). Alternatively, Profanchik Jr. argued that he had established a prima facie case of the elements necessary to recover for defamation. See id. § 27.005(c). After an evidentiary hearing, the district court denied the motion to dismiss without explanation. StoneCoat filed this interlocutory appeal. See id. § 51.014(a)(12) (authoring appeal from interlocutory order that denies TCPA motion to dismiss).

TCPA

The TCPA establishes a multi-step process for the expedited dismissal of legal actions that are "based on, relate[ ] to, or [are] in response to a party's exercise of the right of free speech, right to petition, or right of association." Id. § 27.003(a). First, the party who brings such a motion to dismiss must show "by a preponderance of the evidence that the legal action is based on, relates to, or is in response to" the movant's exercise of the above-enumerated protected rights. Id. § 27.005(b). If the movant meets that burden, then under the second step, the burden shifts to the nonmovant to establish "by clear and specific evidence a prima facie case for each essential element of the claim in question." Id. § 27.005(c). If the nonmovant fails to satisfy its burden under section 27.005(c) to present a prima facie case, the trial court must dismiss the action within the TCPA's expedited time frame. See id. § 27.005(c)–(d); see also id. §§ 27.003(b), .004, .005(a), .007(b), .008 (establishing deadlines). If the nonmovant establishes the required prima-facie case, the movant may still obtain dismissal by establishing "by a preponderance of the evidence each essential element of a valid defense to the nonmovant's claim." Id. § 27.005(d). In determining whether TCPA motions to dismiss should be granted, courts are to consider the pleadings and supporting and opposing affidavits on which the claim or defense is based. Id. § 27.006(a).

Intertwined with and overlying this multi-step dismissal process is the TCPA provision exempting certain actions from the TCPA's application. See id. § 27.010 (establishing four exemptions). Specifically at issue here, section 27.010 provides that the TCPA—

does not apply to a legal action brought against a person primarily engaged in the business of selling or leasing goods or services, if the statement or conduct arises out of the sale or lease of goods, services, or an insurance product, insurance services, or a commercial transaction in which the intended audience is an actual or potential buyer or customer.

Id. § 27.010(b) (commonly referred to as the "commercial speech" exemption). This and the other section 27.010 exemptions are "wholly unnecessary unless the TCPA applies" and, as discussed above, "the TCPA only applies when the claim is based on the defendant's exercise of the right of free speech, association, or to petition." Castleman , 546 S.W.3d at 688 (citing Tex. Civ. Prac. & Rem. Code §§ 27.001(1) – (4), .003(a)). Thus, when invoked, the trial court must consider an exemption's applicability after and in the context of the movant having met its initial burden under the first step of the dismissal process. See id. (construing "commercial speech" exemption). If an action falls under a TCPA exemption, the TCPA does not apply and may not be used to dismiss the action. See Tex. Civ. Prac. & Rem. Code § 27.010 ; Best v. Harper , 562 S.W.3d 1, 11 (Tex. 2018) (noting that if TCPA exemption applies, movant cannot invoke TCPA's protections).

Analysis

In one issue, StoneCoat asserts on appeal that the district court erred in denying its TCPA motion to dismiss because Profanchik Jr. failed to meet his TCPA burden of establishing by clear and specific evidence a prima facie case for each essential element of his defamation claim—i.e., the second step in the TCPA dismissal process. See Tex. Civ. Prac. & Rem. Code § 27.005(c). Before we reach this issue, however, we must first address Profanchik Jr.'s assertions that denial was proper because (1) StoneCoat did not meet its initial burden of showing by a preponderance of the evidence that Profanchik Jr.'s legal action is based on or was in response to StoneCoat's exercise of the right of free speech, see id. § 27.005(b) (establishing movant's initial burden); or (2) if StoneCoat met its initial burden, Profanchik Jr.'s legal action is exempted from the TCPA under the "commercial speech" exemption, see id. § 27.010(b) ; see also Castleman , 546 S.W.3d at 688 (discussing steps in TCPA analysis).²

StoneCoat's initial burden under the TCPA

With regard to its initial burden under the TCPA, StoneCoat asserted in its motion to dismiss that, "The statement complained of by [Profanchik Jr.] clearly involve[s] a matter of public concern because among other things the statement concerns ‘goods, products or services in the marketplace[.]’ " StoneCoat makes no other references in its motion to whether Profanchik Jr.'s suit against it is a legal action that is based on, relates to, or in response to StoneCoat's exercise of one of the TCPA's protected rights. See Tex. Civ. Prac. & Rem. Code § 27.005(b). Nevertheless, because the phrase "matter of public concern" is part of the TCPA's definition of "exercise of the right of free speech" and because StoneCoat is asking for dismissal under the TCPA, we can infer that StoneCoat is asserting that Profanchik Jr.'s defamation claim is subject to dismissal under the TCPA because that claim is based on or in response to StoneCoat's alleged publication of the...