Newspaper Holdings, Inc. v. Crazy Hotel Assisted Living, Ltd.

• Decision Date: 19 December 2013
• Docket Number: No. 01–12–00581–CV.,01–12–00581–CV.
• Parties: NEWSPAPER HOLDINGS, INC., IntegraCare of Texas, LLC, and Charlotte Patterson, Appellants v. CRAZY HOTEL ASSISTED LIVING, LTD., Crazy Hotel Assisted Living, GP, LLC, Leisure Life Senior Apartment Housing II, Ltd., and Charles V. Miller, Jr., Appellees.
• Court: Texas Court of Appeals

416 S.W.3d 71

NEWSPAPER HOLDINGS, INC., IntegraCare of Texas, LLC, and Charlotte Patterson, Appellants

v.CRAZY HOTEL ASSISTED LIVING, LTD., Crazy Hotel Assisted Living, GP, LLC, Leisure Life Senior Apartment Housing II, Ltd., and Charles V. Miller, Jr., Appellees.

No. 01–12–00581–CV.

Court of Appeals of Texas, Houston (1st Dist.).

Oct. 24, 2013.

Rehearing En Banc Overruled Dec. 19, 2013.

James M. McCown, Patrick P. Sicotte, Nesbitt, Vassar & McCown, L.L.P., Addison, TX, Robert Parke Latham, Amanda Z. Patrick, Jackson & Walker L.L.P., Dallas, TX, for Appellants.

David Nathaniel Harvey, Harvey & Associates, P.L.L.C., Houston, TX, W. Barry Montgomery, Kalbaugh, Pfund & Messersmith, Richmond, VA, Matthew J. Kita, Dallas, TX, for Appellees.

Panel consists of Chief Justice RADACK and Justices BLAND and HUDDLE.

OPINION

JANE BLAND, Justice.

This defamation case arises from a series of articles published in the Mineral Wells Index (the Index), a newspaper owned by Newspaper Holdings, Inc. (NHI). The articles reported regulatory compliance problems and official investigations into the Crazy Water Retirement Hotel, a local Mineral Wells assisted living facility, and examined the conduct of Charles Miller, president of the Hotel's corporate owner.¹ Charlotte Patterson, the Chief Compliance Officer of IntegraCare, a home health and hospice agency, was a source for some of the information contained in some of the articles. She contacted the newspaper after she learned that Miller had attempted to bar the Hotel's residents from using IntegraCare for their home health care.

The Hotel and Miller sued Patterson, IntegraCare, and NHI (“the newspaper defendants”) for defamation, business disparagement, and tortious interference with contract. The Hotel alleged that NHI, and in some instances, Patterson, who was a managerial employee of IntegraCare, published false and defamatory statements about Miller and the Hotel and interfered with the Hotel's contractual relationships with its residents. Patterson, IntegraCare, and NHI responded to the suit by moving to dismiss it under the newly-enacted Texas Citizens' Participation Act (TCPA). SeeTex. Civ. Prac. & Rem.Code Ann. §§ 27.001–27.011 (West Supp.2012). The trial court denied the motion.

NHI, IntegraCare, and Patterson appeal, contending that they have met the requirements for dismissal under the TCPA—namely, that they have showed that the allegedly defamatory statements constitute the exercise of protected free speech, and that the Hotel and Miller have failed to make a prima facie case for each of their claims. IntegraCare and Patterson also claim that Miller and the Hotel failed to provide any evidence that the published statements were false or made with negligence or actual malice, or that Miller and the Hotel incurred damages as a result of the challenged publications. For their part, Miller and the Hotel respond that we lack jurisdiction to consider the appeal. We grant rehearing, withdraw our earlier opinion, and issue this one in its stead. We vacate our earlier judgment. Our disposition remains unchanged. We hold that we have appellate jurisdiction, and we reverse.

Background

Events leading to suit

From 2010 through 2011, the Index published articles about problems encountered at the Hotel. In an end-of-the-year article reviewing its major stories in 2010, it summarized the articles as follows:

Month after month in 2010 complaints from residents and employees at the Crazy Water Retirement Hotel kept city and state inspectors returning to the building, investigating complaints of unsafe conditions, building disrepair, failure to provide services and verbal abuse of residents.

After going without air conditioning, hot water and gas to cook food and dry clothes for days at a time in August, residents of the Crazy Water Retirement Hotel had significant amounts of water come through the ceilings during the first week of September after a roofing job was left incomplete for several weeks.

As the roof remained unrepaired into September, the Department of Aging and Disability Services pulled the facility's assisted living license and attempted to close that portion of the facility.

However as residents were fed in the lobby of the building because of rainwater coming through the dining room ceiling that weekend, owner Charles Miller was granted a temporary restraining order against the case by a judge in Austin which essentially nullified any [e]ffect of license suspension.

A nurse in the assisted-living portion of the building was also accused of verbal abuse of a resident and was terminated.

State investigators cited a myriad of problems throughout the building and its management.

Though the roofing work was completed in October, the state and the city continued to respond to complaints at the facility through December.

In the first half of 2011, the Index also reported on

• the Hotel's five-month lapse in payment of its water bill, which put it on the verge of having the water turned off;

• Miller's negotiations with the city of Mineral Wells to pay the past due water bill;

• the Hotel's failure to fully meet its negotiated payment obligations to the city in a timely manner;

• Texas Department of Adult and Disabled Services' investigations, which revealed licensing violations stemming from uncorrected problems with the physical plant; and

• the Hotel's hiring of a management company to rehabilitate the Hotel and that company's decision to sever its ties with the Hotel just a few months later due to delays and paperwork problems in connection with the Hotel's state license application.

In early August 2011, Miller authored a letter to the Hotel's residents informing them that the Hotel would no longer allow IntegraCare home health or hospice workers into the building. The letter advised patients that they were limited to choosing between two other service providers: Health Care Partners at Home or Beyond Faith. A resident who was an IntegraCare patient called Patterson to complain about the Hotel's decision. Patterson contactedMiller in an attempt to resolve the issue. They quickly reached an impasse, so Patterson called the county district attorney, the Texas Department of Aging and Disability Services, and the Mineral Wells city manager to inform them of the Hotel's actions.

The Index named Patterson as a source for its next article about the Hotel, entitled, “Miller target of fraud probe,” which it published on August 31. The Hotel and Miller's original petition focuses on that article, which we reproduce below in its entirety:

District Attorney Mike Burns said Tuesday he will be meeting with investigators from the State Attorney General's office concerning an investigation into the Crazy Water Retirement Hotel and its owner, Charles Miller.

“Their Medicaid Fraud unit is opening a case on it,” he said. Burns said his office has been in contact with the AG's office, though he did not provide specific details discussed in their correspondence.

Thomas Kelley with the Texas AG's press office said in an e-mail, “We can only confirm that this is an ongoing investigation.”

“I should hear from them and have a meeting with them in a few days,” Burns noted, adding the investigation was in its infancy and a decision on what, if any, future action will be taken against Miller will likely not be made anytime soon.

While Burns did not elaborate on the scope of this case, the DA's office has been busy over the past few weeks investigating the legality of demands made by Miller that residents of the Crazy Water choose one of two preferred home health providers.

The first such letter, sent to residents Aug. 5, listed the two remaining choices for home health care, specifically stating the facility would “no longer be allowing IntegraCare Home Health or Hospice in our building.”

When IntegraCare's chief corporate compliance officer, Charlotte Patterson, contacted Burns, the threat of a grand jury subpoena from the DA's office reportedly led to Miller's decision to rescind that demand, Patterson noted.

At that time, Patterson said her concern was that Miller would try to achieve the same result by including the home health care restrictions in a future lease agreement, citing a statement in Miller's rescission letter stipulating residents can retain their current provider “under your current lease.”

Her fears were realized when, about two weeks later, Miller sent residents a subsequent letter informing those unwilling to choose one of the two preferred providers to “consider this letter to you to be Crazy Water's advance written notice of its intent to terminate your current agreement effective September 30, 2011.”

While the letter refers to lease terms allowing either the hotel or its residents to “terminate the agreement, without cause, by giving written notice to the other party 30 days in advance of the effective termination date” Burns confirmed he is currently investigating whether the eviction notice is in violation of any law.

Also included in the eviction notice was a section informing residents that today is the last day the hotel will operate as a licensed assisted-living facility.

In response to the latest development, Patterson said IntegraCare has not been made aware of the details of the case but, as with any investigation, is willing to assist in any way possible.

“I've been told that they might contact us for information or statements,” she said, “but that has not occurred yet.”

Patterson said this case involves a number of possible areas of focus for prosecutors, such as “varying issues of patient choice and, I think, the question of elderly abuse.”

In the meantime, she said, IntegraCare employees remain dedicated to assisting Crazy Water residents however they can, as evidenced on Aug. 22, when three workers volunteered their time to assist two residents in their move to a facility in Jacksboro.

“On our own, [IntegraCare is] continuing to try to find...