Oesterle v. Wallace

• Decision Date: 14 September 2006
• Docket Number: Docket No. 267591.
• Citation: 725 N.W.2d 470,272 Mich. App. 260
• Parties: Michael Howard OESTERLE, Plaintiff-Appellant, v. Keith D. WALLACE, Isackson & Wallace, P.C., Andrew J. Broder, and Payne, Payne, Broder & Fossee, P.C., Defendants-Appellees.
• Court: Court of Appeal of Michigan — District of US

725 N.W.2d 470

272 Mich. App. 260

Michael Howard OESTERLE, Plaintiff-Appellant, v. Keith D. WALLACE, Isackson & Wallace, P.C., Andrew J. Broder, and Payne, Payne, Broder & Fossee, P.C., Defendants-Appellees.

Docket No. 267591.

Court of Appeals of Michigan.

Submitted September 7, 2006, at Lansing.

Decided September 14, 2006, at 9:00 a.m.

Released for Publication December 27, 2006.

COPYRIGHT MATERIAL OMITTED

Lipson, Neilson, Cole, Seltzer & Garin, P.C. (by Joseph P. Garin and C. Thomas Ludden), Bloomfield Hills, for Keith D. Wallace and Isackson & Wallace, P.C.

Fraser Trebilcock Davis & Dunlap, P.C. (by Peter L. Dunlap and Ryan K. Kauffman), Lansing, for Andrew J. Broder and Payne, Payne, Broder & Fossee, P.C.

Before FORT HOOD, P.J., and BANDSTRA and DONOFRIO, JJ.

BANDSTRA, J.

In this defamation action, plaintiff appeals as of right the trial court's grant of summary disposition in favor of defendants under MCR 2.116(C)(8). We conclude that the absolute privilege applicable to allegedly defamatory statements made during judicial proceedings applies to the statements made in the settlement letter at issue here. We affirm.

I. Facts and Procedural History

This case arises from litigation in which plaintiff and defendants were opposing counsel. Defendant Andrew Broder and his law firm, defendant Payne, Payne, Broder & Fossee, P.C., represented Patricia Grugen, who was going through a divorce from Ernest Grugen. Plaintiff Michael Oesterle initially represented Debra Grugen, Ernest's daughter, when she was served with a subpoena duces tecum by defendant Broder and his law firm. When Debra allegedly failed to provide oral testimony during the divorce proceedings, defendant Broder moved for contempt sanctions against plaintiff and Debra. Debra then hired the law firm of Honigman, Miller, Schwartz & Cohn, L.L.P. (Honigman), to represent her in connection with the motion, and plaintiff represented himself.

When Ernest died during the pendency of the divorce proceedings, the case was closed and a probate case was opened. Defendant Broder and his law firm and defendant Keith Wallace and his law firm, defendant Isackson & Wallace, P.C., represent Patricia in the probate matter. Debra and her siblings are represented by Honigman. During the probate proceedings, defendant Wallace, on behalf of Patricia faxed a letter to Francis O'Donnell, a Honigman attorney, in response to a settlement proposal made by Debra and her siblings. The letter conveyed a counteroffer and listed a number of Ernest's assets and the proposed distribution. The portion of the letter at issue here provides:

Your paragraph 7 is somewhat ambiguous and needs clarification. From Patricia Grugen's standpoint, all of the other property which is not mentioned earlier in this letter (as being conveyed to your clients), should be deemed to be the property of Patricia Grugen, except for the monies in the Fifth Third Bank account and the social security payments that are on hand, totaling $10,769.00. Those items, presumably, are probate assets and should be used to pay proper claims in the probate proceedings. It may also be the case that Ernest's truck, referenced in paragraph 3 of your letter, ought to be considered a probate asset against which claims are paid. It is unclear to me whether your proposal seeks to include any other property, such as "untitled equipment" of some $40,000 and "untitled personal property" of some $6,000, as being within the probate estate. Frankly, you will find that, as to many of those items, Patricia Grugen has receipts showing that the items were purchased from joint assets during the marriage. This counter-offer assumes that the children will keep the monies removed by Debra Grugen (and Mike Oesterle) from Ernest's and Patricia's safes, notwithstanding my belief that the removal of those funds was improper. However, I ask that you disclose to me the amount of monies that were taken (so I may determine if it is consistent with what my client believes is the case). [Emphasis added.]

Plaintiff informed defendant Wallace that he was upset by the allegation of improper conduct, and, in response, Wallace retracted any allegations of wrongdoing. Defendant Broder, however, refused to make such a retraction. Plaintiff filed a defamation suit against defendant Wallace and his law firm, alleging that the language in the letter contained a false accusation that he committed a crime or otherwise stole or took money. Plaintiff further alleged that defendant Broder and his law firm were liable for the statement under a concert-of-action theory because defendant Broder drafted the letter and instructed defendant Wallace to send it on Isackson & Wallace letterhead.

Defendants Broder and Wallace and their respective law firms moved for summary disposition under MCR 2.116(C)(8), maintaining that, as attorneys, they held an absolute privilege for statements made in connection with judicial proceedings and accordingly could not be held liable for such statements, even if they were defamatory. The trial court held that an absolute privilege existed with respect to the allegedly defamatory statement because defendants' letter related to the subject matter of the judicial proceeding and granted summary disposition in favor of defendants.

II. Standard of Review

We review de novo a trial court's decision on a motion for summary disposition under MCR 2.116(C)(8). Johnson-McIntosh v. Detroit, 266 Mich.App. 318, 322, 701 N.W.2d 179 (2005). MCR 2.116(C)(8) tests the legal sufficiency of the pleadings alone, and the motion must be granted if no factual development could justify the plaintiff's claim for relief. Id. We also review de novo as a question of law the applicability of a privilege. Couch v. Schultz, 193 Mich.App. 292, 294, 483 N.W.2d 684 (1992).

III. Analysis

"The elements of a defamation claim are: (1) a false and defamatory statement concerning the plaintiff, (2) an unprivileged communication to a third party, (3) fault amounting at least to negligence on the part of the publisher, and (4) either actionability of the statement irrespective of special harm (defamation per se) or the existence of special harm caused by publication." Mitan v. Campbell, 474 Mich. 21, 24, 706 N.W.2d 420 (2005). Certain statements are absolutely privileged. Couch, supra at 294, 483 N.W.2d 684. "An absolutely privileged communication is one for which no remedy is provided for damages in a defamation action because of the occasion on which the communication is made." Id. "A privileged occasion is an occasion where the public good requires that a person be freed from liability for the publication of a statement that would otherwise be defamatory." Id. If a statement is absolutely privileged, it is not actionable even if it was false and maliciously published. Id.; Tocco v. Piersante, 69 Mich.App. 616, 629, 245 N.W.2d 356 (1976). However, absolute privilege against a defamation action is limited to narrowly defined areas. See Timmis v. Bennett, 352 Mich. 355, 89 N.W.2d 748 (1958); Raymond v. Croll, 233 Mich. 268, 206 N.W. 556 (1925); Froling v. Carpenter, 203 Mich.App. 368, 512 N.W.2d 6 (1993).

Statements made by judges, attorneys, and witnesses during the course of judicial proceedings are absolutely privileged if they are relevant, material, or pertinent to the issue being tried. Mundy v. Hoard, 216 Mich. 478, 491, 185 N.W. 872 (1921); Couch, supra at 294-295, 483 N.W.2d 684.

"An attorney at law has . . . a conditional privilege to make, during the progress of a trial, such fair comments on the circumstances of the case and the conduct of the parties in connection therewith as, in his judgment, seem proper. . . . But the privilege does not extend to slanderous expressions against counsel, parties, or witnesses, when the expressions have no relation to or bearing upon the issue or subject matter before the court." [Timmis, supra at 365, 89 N.W.2d 748, quoting 33 Am. Jur., Libel and Slander, § 179, pp. 172-173.]

"`Judicial proceedings' may include any hearing before a tribunal or administrative board that performs a judicial function." Couch, supra at 294, 483 N.W.2d 684. Further, "immunity extends to every step in the proceeding and covers anything that may be said in relation to the matter at issue, including pleadings and affidavits." Id. at 295, 483 N.W.2d 684. See also Sanders v. Leeson Air Conditioning Corp., 362 Mich. 692, 695-696, 108 N.W.2d 761 (1961). At issue here is whether settlement negotiations constitute judicial proceedings such that an allegedly defamatory statement made in a letter proposing an offer of settlement is entitled to absolute privilege.¹

The purpose of absolute immunity under the judicial proceedings privilege, as it applies to attorneys, is to promote the public policy "of securing to attorneys as officers of the court the utmost freedom in their efforts to secure justice for their clients." 3 Restatement Torts, 2d, § 586, comment a, p. 247. In Couch, supra at 295, 483 N.W.2d 684, this Court stated that "[t]he judicial proceedings privilege should be liberally construed so that participants in judicial proceedings are free to express themselves without fear of retaliation." This Court demonstrated an expansive view of the scope of the privilege by concluding that it extends to a statement in a prison misconduct report made in connection with a prison disciplinary hearing. Id. at 296, 483 N.W.2d 684. In Timmis, supra at 359-361, 89 N.W.2d 748, however, the allegedly libelous statements were made in a letter written and distributed by an attorney before any complaint was filed on behalf of his client involving the subject matter of the letter. While the letter was arguably in furtherance of the client's interests, our Supreme Court reasoned that the letter was "not a part of any case in court, or of any other judicial proceeding," that "[t]he fact that such a case was in contemplation does not alter the situation in this...