Rupert v. Sellers

• Decision Date: 15 December 1978
• Citation: 65 A.D.2d 473,411 N.Y.S.2d 75
• Court: New York Supreme Court — Appellate Division
• Parties: Philip D. RUPERT, Jr. and Rupert & Lutz Agency, Inc., Respondents, v. Charles J. SELLERS, Jr. and Charles J. Sellers and Co., Inc., Appellants.

Page 75

411 N.Y.S.2d 75

65 A.D.2d 473

Philip D. RUPERT, Jr. and Rupert & Lutz Agency, Inc., Respondents, v. Charles J. SELLERS, Jr. and Charles J. Sellers and Co Inc., Appellants.

Supreme Court, Appellate Division, Fourth Department.

Dec. 15, 1978.

Paul, Weiss, Rifkind, Wharton & Garrison, New York City, Watson, McGarvey, Hetzlet & Bennett, Buffalo (Lewis A. Kaplan, Richard Kurnit, of counsel), for appellants.

Harris, Beach, Wilcox, Rubin & Levey, Rochester (James Hartman, Rochester, of counsel), for respondents.

Before MOULE, J. P., and CARDAMONE, SIMONS, DILLON and HANCOCK, JJ.

SIMONS, Justice:

The members of this court are unanimous in their opinion that the plaintiffs are entitled to recover in this action, and the opinion of Justice Cardamone ably sets forth our resolution of the several issues presented by the parties. Three of us, however, do not find it necessary to predicate our decision upon the Supreme Court's ruling that there may be no liability without fault in certain defamation actions as enunciated in Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789. Indeed, for the reasons which follow we find it inappropriate to do so.

This action was tried two years after the Supreme Court decided Gertz and defense counsel in this case was familiar with it. Notwithstanding that earlier decision, counsel in this case requested the court to charge the jury on the traditional common law rules of libel Per se and the court did so without further request or exception. The law as charged thus became the law of the case not open to review in this court. Defendants now urge, for the first time, that the trial court should have applied a fault standard. Obviously the action was not tried or submitted to the jury on that theory and we should not try now to sort out the evidence and isolate statements of the charge to fit the case within some unspecified and amorphous rule unsolicited at the time of trial.

Moreover, we disagree with Justice Cardamone's belief that Gertz, as implemented by the Court of Appeals' decision in Chapadeau v. Utica Observer-Dispatch, 38 N.Y.2d 196, 379 N.Y.S.2d 61, 341 N.E.2d 569, established a rule which binds us in this case and that there may be no liability in Any defamation action without proof of fault. The court in Gertz held that the states "so long as they do not impose liability without fault, . . . may define for themselves the appropriate standard of liability for a Publisher or Broadcaster of defamatory falsehood injurious to a private individual." (418 U.S. at 347, 94 S.Ct. at 3010, emphasis added.) Responding to that decision New York's highest court decided in Chapadeau that in matters "arguably within the sphere of legitimate public concern," a plaintiff allegedly defamed could recover from a publisher or broadcaster but only upon a showing that defendant's conduct was grossly irresponsible (Chapadeau v. Utica Observer-Dispatch, supra).

Logically, it may be contended that these decisions should be extended because a private individual's right to free speech is no less valuable than that of a publisher or broadcaster and therefore it should be protected by similar standards of proof (see, e. g., Restatement, Torts 2d, § 580B). Neither the Supreme Court nor any New York court, however, has required proof of fault before recovery is permitted in cases such as this which involve private communications by private individuals about private matters. It is particularly inappropriate for an intermediate appellate court to do so upon this record. The Court of Appeals stated well the dangers:

"(I)n any defamation case it is perilous, and may be misleading, to generalize about rules unless their consideration is necessary to the disposition of the individual case. The hazard is both tempting and particularly to be eschewed when the applicable law, as in this field, is subject to fluctuating change, due in large measure to the struggles of modern courts in delineating the scope of First Amendment rights." (Moran v. Hearst Corp., 40 N.Y.2d 1071, 392 N.Y.S.2d 253, 360 N.E.2d 932.)

It may be that some higher court will think that this case is a suitable vehicle to modify New York's common law of private defamation. Foreseeing that possibility, we exercise our power to review the facts (CPLR 5501(c); and see Time, Inc. v. Firestone, 424 U.S. 448, 96 S.Ct. 958, 47 L.Ed.2d 154) and find that there is evidence in the record sufficient to meet any predictable burden of proof, be it negligence, actual Judgment modified on the law and facts and as modified affirmed without costs.

malice or some intermediate degree of fault.

DILLON and HANCOCK, JJ., concur.

MOULE, J. P., not participating.

CARDAMONE, J., concurs in the following opinion.

CARDAMONE, Justice (concurring):

This is a libel suit between private individuals. With the several exceptions noted, we affirm the substantial jury verdicts awarded plaintiffs after a lengthy jury trial.

STATEMENT OF THE CASE

The plaintiffs are Philip D. Rupert, Jr. (Rupert) and Rupert & Lutz Agency, Inc. (Rupert & Lutz) an insurance agency of which Mr. Rupert is president. The defendants are Charles J. Sellers, Jr. (Sellers) and Charles J. Sellers & Company, Inc. (Sellers & Co.) an insurance agency of which Mr. Sellers is president. The defendants appeal from a Monroe County Supreme Court verdict in favor of the plaintiffs, following a jury trial, and judgment in the amount of $575,842.53.

Rupert & Lutz was the administrator of the health and accident group plan of the Monroe County Medical Society (Medical Society), a voluntary organization of physicians offering insurance to its members at reduced group rates. Continental Insurance Company (Continental) was and is the carrier of the group health and accident insurance plan. In March, 1971 the Medical Society changed administrators, naming Sellers & Co. in place of Rupert & Lutz to serve as administrators of the group plan. This lawsuit alleging libel and tortious interference with a contractual relationship concerns the circumstances surrounding the switching of the endorsement by the Medical Society from Rupert & Lutz to Sellers & Company.

Plaintiffs originally alleged six causes of action. Only two the second and sixth are the subject of this appeal, the others having been withdrawn, dismissed or no-caused. Plaintiffs' second cause of action claims that each was libeled in a March 10, 1971 letter from Charles J. Sellers to Donald M. Irish, then Executive Director of the Medical Society, but deceased at the time of the 1977 trial. Plaintiffs' sixth cause of action alleges that defendants Sellers and Sellers & Company commenced a systematic campaign to induce the Medical Society to terminate the Society's written contractual relationship with plaintiffs. With respect to the second cause of action, the jury returned verdicts in favor of Rupert individually for $22,000 special damages and $200,000 general damages and in favor of Rupert & Lutz Agency for $208,000 special damages and $1 general damages. In the same cause of action the jury further found that both plaintiffs were entitled to punitive damages. After hearing further proof on the issue, the jury returned a verdict for $1 punitive damages for Rupert and $1 punitive damages for Rupert & Lutz. With respect to the sixth cause of action, the jury rendered verdicts in favor of Rupert for $20,000 compensatory damages and for Rupert & Lutz in the amount of $1 compensatory damages. As to the sixth cause of action, the jury also found defendants liable for punitive damages in the amount of $1 for Rupert and $15,000 for Rupert & Lutz.

Rupert & Lutz had been the administrator of the Medical Society's group health and accident insurance program since 1945. Under the original plan doctors who were members of the Medical Society could enroll in a group disability plan cancellable at will by the insurance company. In 1968 Continental began offering a new, vastly different program the mean feature of which was that it is guaranteed group renewable, that is, not cancellable at the option of the insurance company. Under the new program the older physician would be required to pay a substantially greater premium than under the old program. The younger physician It was under these circumstances that Rupert & Lutz requested a meeting with the Medical Society held on December 11, 1970 to discuss, among other things, the loss ratio. Rupert & Lutz recommended to the Society that it voluntarily mass convert all of the policies. No dissatisfaction was expressed by the Society with Rupert & Lutz at the December 11, 1970 meeting, nor in a subsequent letter from the then Executive Director of the Society (Mr. Irish) to plaintiff dated January 19, 1971. In fact, it was not until March 24, 1971 that plaintiff was aware of any dissatisfaction that the Medical Society had with the services being provided by plaintiffs. In the meantime, and unknown to plaintiffs, defendant Charles Sellers, had also attended the same December 11, 1970 meeting at his own request and was present at a time other than when plaintiffs were. He testified that several days after the meeting Mr. Irish called him and told him about the meeting with plaintiffs. This prompted an exchange of correspondence between them.

however, would pay substantially less. From 1968 to 1970 Rupert & Lutz conducted a voluntary conversion of the individual member doctors to the new program with most of the younger doctors converting and most of the older doctors electing to retain their existing coverage. Since the success of the individual voluntary conversion was mixed, the use of other alternatives such as voluntary or compulsory mass conversion was a distinct possibility. A voluntary mass conversion is a conversion of members on a mass basis with permission of the Medical Society, but without consent of the individual doctors. A compulsory mass conversion is accomplished...