Rees v. O'Malley

• Decision Date: 17 October 1990
• Docket Number: No. 89-1030,89-1030
• Citation: 461 N.W.2d 833
• Parties: Dennis E. REES, Appellee, v. Bernard J. O'MALLEY, Appellant.
• Court: Iowa Supreme Court

Page 833

461 N.W.2d 833

Dennis E. REES, Appellee, v. Bernard J. O'MALLEY, Appellant.

No. 89-1030.

Supreme Court of Iowa.

Oct. 17, 1990.

Jack W. Rogers, West Des Moines, for appellant.

Thomas P. Hyland and Robert H. Laden of Hyland, Laden & Pearson, P.C., Des Moines, for appellee.

Considered by McGIVERIN, C.J., and LARSON, SCHULTZ, SNELL and ANDREASEN, JJ.

McGIVERIN, Chief Justice.

Plaintiff Dennis E. Rees sued defendant attorney Bernard O'Malley, alleging that O'Malley slandered him while making a presentation to the Des Moines city council. After trial, the jury returned a verdict of $250,000 against defendant. O'Malley appeals. We affirm on all issues except damages. We find the damages excessive and order a new trial on the issue of damages.

I. Background facts and proceedings. Dennis E. Rees was interested in purchasing a parcel of realty owned by the City of Des Moines. The city property bordered realty that he owned. On April 15, 1986, Rees made an offer to purchase the property. Charles and Patricia Punelli operated an iron business on land also abutting the city lot. Punellis were notified of Rees' offer to buy the property. Punellis had asked to be notified of any offers to buy the parcel of land because they also had an interest in acquiring the property as they had been using it for some time in their business.

Bernard O'Malley, attorney for Punellis, arranged an informal meeting on July 2, to discuss the proposed sale of the property. Present at the meeting were Rajesh Jain of the city planning and zoning commission staff, Rees, O'Malley, and Punellis. The meeting resulted in a preliminary agreement between Rees and Punellis. Rees agreed to withdraw his offer to purchase the city property if Punellis agreed to grant Rees an option to purchase a parcel of real estate that Punellis owned in the same area.

Following the meeting, Rees sent a letter to Punellis stating what he believed to be the agreement between the parties, and reiterating that their attorney was to be drawing up papers to effectuate the agreement. In the letter, Rees indicated his desire to complete the agreement by July 17. In addition, Rees also forwarded a letter to the planning and zoning commission stating that he had no further interest in the city property.

Thereafter, Punellis did not follow through with the purchase of the property from the city, and did not draw up the papers necessary to grant Rees an option to buy the parcel of land owned by Punellis. Because there had been no progress, on October 2 Rees renewed his efforts to purchase the city property that he was originally interested in buying.

The property sale came before the Des Moines city council on August 24, 1987. O'Malley, in behalf of Punellis, was given the floor at the city council meeting to express his views regarding the proposed sale of the city property. The meeting was televised on the cable network into 68,000 Des Moines area homes. During his presentation showing Punellis' need for the city lot in Punellis' iron business, O'Malley made the following statement:

These trucks that are large trucks [used in connection with Punellis' business] and when they come around as you can see, they need space. If you sell that property to Mr. Rees and what the devil he will use it for with that situation, I don't know, other than for extortion. As you can see there is no way we can use our property, for all purposes you killed it.

Later in the meeting, while the city attorney was trying to determine whether Rees was still interested in the property, O'Malley made the following statement:

Well he has written me a letter and kinda says you can have it, that is why I politely used the word extortion, I probably shouldn't have used the word extortion, but the only thing I can think of is he will probably sell it back, ...

Based on the statements made at the city council meeting by O'Malley, Rees filed suit alleging that he was slandered when O'Malley accused him of committing extortion, and, that under Iowa Code section 659.1 (1987), O'Malley's comments constituted slander per se. O'Malley asserted, in response, that his use of the word extortion was not slander per se, and, even if his statements were slanderous per se, he possessed a qualified privilege that immunized him from any liability that might result from the statements.

At the trial's conclusion, the district court instructed the jury that O'Malley's statements constituted slander per se, and ruled that as a matter of law O'Malley was not entitled to a qualified privilege. The jury returned a verdict for plaintiff in the amount of $250,000.

O'Malley appeals, contending, (1) that his statements did not constitute slander per se, (2) that he was entitled to a qualified privilege which shielded him from liability, and (3) that the jury verdict was excessive.

II. Were O'Malley's statements concerning Rees slander per se? Rees alleged that O'Malley accused him of extortion, a class D felony punishable by a jail sentence in Iowa. See Iowa Code §§ 711.4 and 902.9(4). The trial court agreed and ruled that O'Malley's accusation of extortion constituted slander per se under Iowa law.

Language charging a person with the commission of a crime is slanderous per se when the crime charged is indictable, and it must be a crime that involves moral turpitude or one which subjects the party charged to a sentence of incarceration. Amick v. Montross, 206 Iowa 51, 57, 220 N.W. 51, 54 (1928). O'Malley charged Rees with extortion. Extortion is a criminal charge that both involves moral turpitude and subjects the party charged to a prison sentence. Therefore, applying our test as stated in Amick, O'Malley's statements are slanderous per se.

O'Malley does not contend that charging a person with the crime of extortion is not slander per se, rather, O'Malley contends that he did not accuse Rees of committing the crime of extortion.

A. The application of O'Malley's statements. We conclude for the following reasons that O'Malley's statements were not speculation that Rees might commit extortion in the future, rather, they accused Rees of extortion. For words to be slanderous per se, they must import a charge of a crime. Bays v. Hunt, 60 Iowa 251, 253, 14 N.W. 785, 786 (1882). O'Malley claims his statements were speculation that if the city property were sold to Rees it would be used in the future by Rees for purposes of extorting Punellis. O'Malley argues that Rees will not be in a position to commit the crime of extortion until Rees acquires the city property, and only at that future time can Rees utilize the property for extortion.

Rees responds that the district court correctly ruled that O'Malley's statements accused him of a crime, therefore, constituting slander per se. His argument finds support in the statutory definition of extortion. Iowa Code section 711.4 states that a person commits extortion if the person does:

the following with the purpose of obtaining for oneself or another anything of value....

4. Threatens to harm the credit or business or professional reputation of any other person.

In simple language, extortion is defined for present purposes as threatening to harm the business of another person.

We have previously been asked to determine whether a statement was the accusation of a crime, or only speculation that a crime would occur in the future. In Bays, we set forth the principles to apply in making this determination. We stated:

If the words only imply the purpose or intention on the part of the person spoken of to commit a crime, or describe him as possessing a disposition, or as wanting moral qualities which would prompt him to commit the crime, or amount to an allegation that, if opportunity offers, he would commit it, they are not actionable per se.

Id. In determining whether a statement refers to the past or ongoing commission of a crime, we stated:

[I]f the surroundings and circumstances then known to speakers and hearers gave the words reference to any specific transaction or occurrence, so that the hearers would naturally understand the speaker to impute to the plaintiff the actual commission of [a crime], instead of merely expressing the defendant's opinion or belief as to plaintiff's moral character, then the words should be considered as actionable....

Id.

The alleged slanderous statements were made during a discussion at a Des Moines city council meeting concerning who should be allowed to buy city property desired by both Rees and Punellis. The discussion was lengthy and covered all the facts previously stated. It was apparent that O'Malley was present to represent Punellis in the dispute over who would receive the property.

During the meeting, O'Malley stated: "If you sell the property to Mr. Rees and what the devil he will use it for with the situation, I don't know, other than extortion." Viewing O'Malley's words under the circumstances known to the speaker and the audience, it appears that O'Malley was asserting that Rees had already committed extortion by threatening to harm Punellis' business. This viewpoint is supported by the series of events which surround the dispute over the city property.

O'Malley's presentation to the city council suggested that Rees had no business use for the property, and that the only reason he wished to obtain it was to hurt Punellis' business operations. O'Malley attempted to discredit Rees in an effort to convince the council that the property should be sold to his clients. His methods included creating the impression that Rees was using the property for extortion of Punellis.

Extortion only requires that threats are made to injure a business. See Iowa Code § 711.4(4). Extortion does not require actual harm to have taken place.

O'Malley's presentation gave the impression that Rees had already threatened to injure Punellis' business. The audience would understand O'Malley to mean that Rees had threatened to harm Punellis'...