Park v. Hill, C 03-3044MWB.
| Decision Date | 08 August 2005 |
| Docket Number | No. C 03-3044MWB.,C 03-3044MWB. |
| Citation | 380 F.Supp.2d 1002 |
| Parties | Richard R. PARK, Plaintiff, v. David HILL, Defendant. |
| Court | U.S. District Court — Northern District of Iowa |
George A Lamarca, Lamarca & Landry, West Des Moines, IA, for Plaintiff.
Nicholas V Critelli, Jr, Nicholas Critelli Assoc, Des Moines, IA, for Defendant.
TABLE OF CONTENTS
I. INTRODUCTION ...................................................................1005
A. Factual Background .........................................................1005
1. Hill's offer to buy the Bank ...........................................1005
2. The board response .....................................................1006
3. Hill's further attempts to buy the Bank ................................1006
4. The board's decision not to negotiate with Hill ........................1008
5. Hill's "fresh approach" ................................................1008
6. The allegedly defamatory letter ........................................1009
B. Procedural Background ......................................................1011
1. The Complaint and Answers ..............................................1011
2. The motions for summary judgment .......................................1011
C. Arguments Of The Parties ...................................................1012
1. Hill's opening argument ................................................1012
2. Park's resistance ......................................................1013
3. Hill's reply ...........................................................1013
4. Oral arguments .........................................................1013
II. LEGAL ANALYSIS .................................................................1014
A. Standards For Summary Judgment .............................................1014
B. Defamation And Qualified Privilege .........................................1015
1. Defamation .............................................................1015
a. Definition and rationale ...........................................1015
b. Requirements for proof .............................................1016
2. "Opinion" and "truth" ..................................................1017
3. Qualified privilege ....................................................1017
a. Invoking the qualified privilege ...................................1018
b. Defeating the qualified privilege ..................................1018
C. Were Hill's Statements Qualifiedly Privileged? .............................1019
1. Privileged "occasions" .................................................1019
a. The "protection of the publisher's interest" privileged occasion....1020
i. Section 594 ...................................................1020
ii. Applicability here ............................................1021
b. The "common interest" privileged occasion ..........................1023
i. Section 596 ...................................................1023
ii. Applicability here ............................................1024
2. Abuse of the privilege .................................................1025
a. Bad faith ..........................................................1026
b. Actual malice ......................................................1026
III. CONCLUSION .....................................................................1028
Is the plaintiff, the former president and chief executive officer of a rural bank, attempting to make a defamation claim out of statements that did no more than hurt his feelings, or did the defendant make statements about the plaintiff that were defamatory per se, when the defendant's tender offer for the shares of the bank was thwarted? The plaintiff contends that the defendant defamed him when the defendant stated in a letter to shareholders, written after the defendant learned that the bank's board had accepted another buyer's offer to buy the bank, that the plaintiff had, "in an apparent abdication of his fiduciary duty," impeded the defendant's access to shareholders and directors. On a motion for summary judgment, the defendant contends that whether his statements were defamatory or defamatory per se, they were, as a matter of law, subject to a qualified privilege. He contends, further, that the plaintiff cannot generate a genuine issue of material fact that the statements were made with actual malice to show that he abused the qualified privilege. The plaintiff contends, however, that a reasonable juror could find that the defendant abused the qualified privilege, if it applied at all, by making statements in bad faith and knowing disregard of their falsity, so that the plaintiff is entitled to a jury trial on his defamation claim. The court must decide whether the plaintiff's defamation claim should go to a jury or whether the defendant is, instead, entitled to summary judgment.
This diversity litigation arises from defendant David Hill's unsolicited offer, sent directly to shareholders on May 23, 2002, to buy a controlling interest in the Hancock County Bank & Trust in Garner, Iowa (the Bank), and the response by plaintiff Richard Park, who was the president, chairman of the board, and a shareholder of the Bank, to that unsolicited offer. The court will not attempt here an exhaustive dissertation of the undisputed and disputed facts in this case or every twist and turn in the process that led to the eventual sale of the Bank to another buyer. Rather, the court will identify the core of undisputed facts and sufficient of the disputed facts to put in context the parties' arguments for and against summary judgment.
On May 23, 2002, Hill Investment Company, an Iowa corporation controlled by Hill, sent an unsolicited tender offer to the Bank's shareholders to purchase up to 100% of the outstanding shares of the Bank for $4,000.00 net per share. The offer stated that it would expire on June 3, 2002, at 5:00 p.m. The offer was expressly contingent upon gaining a controlling interest in the bank. See Defendant's Appendix, Exhibit 1. At the time of the offer, Hill had only slight contact with Garner, Iowa, where the Bank was located. Hill determined the book value of the Bank's stock from "call reports," to which he had access at the time. Such "call reports" are public records that, as Hill explained in deposition, are filed with bank regulators on a quarterly basis and provide "information relative to assets, liabilities, and the composition of earnings of the bank." As Hill also explained in deposition, he wanted the tender offer to move "rather quickly and force decisions on people who might be slow to make decisions"; hence, the short period of time for shareholders to respond to the offer. Plaintiff's Supplemental Appendix at 17. After making his tender offer, Hill spent many days in Garner attempting to talk to shareholders and directors about his offer.
Hill's tender offer was not well received by the Bank's board of directors. By letter dated May 29, 2002, and signed by Park in his capacity as chairman of the board, the board notified shareholders that it "unanimously recommend[ed] that stockholders reject the Offer and urge[d] [shareholders] not to tender any of [their] shares." Defendant's Appendix, Exhibit 3. The board stated that it believed Hill's offer was, inter alia, "inadequate," would result in a loss of local ownership, provided an "excessively short" time to respond, and was "excessively conditional." Id. The May 29, 2002, letter also outlined the board's course of action in response to Hill's offer:
At a meeting of the Board held on May 29, 2002, the Board authorized and directed management to explore various possible alternatives that would be designed to maximize the value of shares in the Bank, including without limitation, possible sales of Bank stock to third parties, possible repurchases of shares by the Bank, possible dividends to the Bank's stockholders and possible acquisitions. At the meeting the Board also authorized and directed management to seek and retain the assistance of an independent professional firm to assist it in exploring these alternatives. Of course, there can be no assurances that any transaction will be recommended or consummated.
Id. On June 5, 2002, the board held another meeting to discuss strategies in response to Hill's hostile tender offer. According to the minutes of that meeting, the board "decided the best possible strategy would be to ask shareholders to sign an agreement whereby they would agree not to tender their shares to David Hill and [to] act cooperatively in marketing their stock for fair market value." Defendant's Appendix, Exhibit 5. The board also decided to keep this effort confidential, to prevent Hill from responding to it. Id.
Thereafter, Howard Hagen, the attorney hired by the board to assist with attempts to find other buyers for the Bank, assembled a "bid book," consisting of the Bank's performance and financial data, which was intended to assist potential bidders in formulating a bid. Some of the information in that "bid book" was confidential, although much of it came from public records. The Bank required potential bidders to sign a confidentiality agreement to obtain the "bid book." However, Hill was never offered the "bid book"; indeed, Hagen testified that he was "inst...
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