Williams v. Burns

• Decision Date: 29 January 1979
• Docket Number: Civ. A. No. 78-K-260.
• Citation: 463 F. Supp. 1278
• Parties: David G. WILLIAMS, Plaintiff, v. Thomas M. BURNS, Peter J. Wall and the Anschutz Corporation, Defendants.
• Court: U.S. District Court — District of Colorado

463 F. Supp. 1278

David G. WILLIAMS, Plaintiff, v. Thomas M. BURNS, Peter J. Wall and the Anschutz Corporation, Defendants.

Civ. A. No. 78-K-260.

United States District Court, D. Colorado.

January 29, 1979.

Felix M. Licini, Boulder, Colo., Franklin R. Navarro, Houston, Tex., for plaintiff.

William J. Madden, Madden & Strate, Lakewood, Colo., John E. Burrus, Morrato, Gueck & Colantuno, Denver, Colo., for defendants.

ORDER

KANE, District Judge.

This is an action for defamation. Jurisdiction is based on diversity of citizenship. A motion to dismiss the complaint was denied on March 21, 1978. On the same date defendants' motion for a more definite statement was granted. After filing the more definite statement, plaintiff was permitted to file an amended complaint. Upon receipt of the amended complaint, defendants filed motions to dismiss and to strike. Briefs were ordered and received after various requests for extensions of time. The motions are now ripe for determination.

The second amended complaint alleges that plaintiff was negotiating the sale of certain workover drilling rigs and barges to defendant The Anschutz Corporation in late February and early March, 1977. He claims that the U.S. Bankruptcy Court in Lafayette, Louisiana encouraged plaintiff to make this sale since plaintiff was offering this equipment for a sales price of $1,700,000 plus his commission; and that if plaintiff did not find a buyer in the immediate future the court would approve an auction sale bid on this same equipment for a price of $970,000.

Plaintiff alleges that on or about March 4, 1977 defendant Burns made defamatory statements of and concerning plaintiff which were directly communicated and published to Mr. Phil Anschutz, president of defendant The Anschutz Corporation, "in a manner which evidenced malice and reckless disregard for the truth of the statements, and was destitute of heed or concern for consequences, especially foolishly heedless of danger, headlong, rash, and without thought or care of consequences." The statements allegedly made by defendant Burns are set forth with specificity in the second amended complaint: (a) That plaintiff was unable to sell the rigs and barges to defendant The Anschutz Corporation because a completed sale of the rigs had already been made to other parties, and thus the rigs and barges were no longer available for sale; (b) That plaintiff's proposed sale of the rigs and barges to defendant The Anschutz Corporation was fraudulent; (c) That plaintiff had misled defendant The Anschutz Corporation in his negotiations over the sale. As alleged, the actual words used were:

a. "That these rigs were not owned by Mr. Williams and had been sold at the bankruptcy sale."

b. "The fraud was that Mr. Williams was going to get this $450,000 as a part of this transaction and put it in his own pocket to the detriment of about $400-600,000 worth of unsecured creditors who were going to get nothing."

c. "Good Lord, I have just found out that these drilling barges are subject to the bankruptcy court and that they have been sold by order of the bankruptcy court; and I have also found out there is a whole bunch of unsecured creditors in that bankruptcy."

d. "I don't understand what Williams is trying to do, but my advice as your attorney is to have no more dealings with him."

e. "That is the frosting for the cake."

f. "It looked to me like there was fraud."

g. "Leasco and the First National Bank of Chicago had bought them on February 10, 1977, on the courthouse steps."

Plaintiff claims that defendant Burns was retained, one day prior to making the statements, by defendant The Anschutz Corporation for the purpose of providing the corporation with information on plaintiff and plaintiff's ability to produce the rigs and barges for sale. Defendant Burns allegedly made statements which attributed fraud and misrepresentations on the part of plaintiff. Plaintiff claims that said statements were "attended by circumstances of malice and insult as well as a wanton and reckless disregard of plaintiff's rights and feelings."

In the second claim for relief plaintiff alleges that defendant The Anschutz Corporation specifically authorized the acts complained of herein, and, hence, that The Anschutz Corporation is vicariously liable for damages to be assessed against defendant Burns.

In the third claim for relief plaintiff alleges that defendant Wall is liable as a general partner of defendant Burns for damages to be assessed against defendant Burns.

In the fourth claim for relief plaintiff alleges that on or about March 4, 1977, defendant Burns made defamatory statements of and concerning plaintiff, specifically concerning plaintiff's business reputation and reputation for veracity, and that he published them to Mr. Warren Rush, the "bankruptcy lawyer." Plaintiff claims that "these statements were published with circumstances of malice and insult as well as a wanton and reckless disregard of plaintiff's rights and feelings."

The statements are:

a. "He's a crook."

b. "He's trying to defraud the creditors."

c. "He lied to me."

d. "He's trying to screw the creditors."

In the fifth claim for relief plaintiff alleges that defendant The Anschutz Corporation is vicariously liable for damages to be assessed against defendant Burns for statements made to Mr. Warren Rush. Similarly, his sixth claim alleges that defendant Wall is liable as a general partner for damages to be assessed against defendant Burns as a result of statements made to Warren Rush.

The first, second and third claims for relief of plaintiff's second amended complaint relate to the alleged defamatory statements made by defendant Burns to Mr. Phil Anschutz on or about March 4, 1977. We are not presently concerned with determining whether the alleged statements are defamatory or true. Rather, the issues are: (1) Was this communication a publication, and (2) if so, was it "qualifiedly privileged"?

Defendant The Anschutz Corporation argues that the second claim for relief fails to state a claim since "a corporation does not publish a slander when one employee or agent of the corporation communicates with another employee or agent of the corporation." Defendant's reliance on M. F. Patterson Dental Supply Co. v. Wadley, 401 F.2d 167 (10th Cir. 1968), is misplaced. In that case the Tenth Circuit, in applying Oklahoma law, held that "defamatory words regarding a discharged employee spoken by a supervisory employee in the presence and hearing of a fellow employee did not constitute a publication.... The rationale is that when one corporate employee relates a defamatory statement to a fellow employee, the corporation is but communicating with itself." Id. at 171. In that case the court recognized that there is confusion among the jurisdictions whether to treat such a defamatory communication as unactionable for lack of publication or because it is a qualifiedly privileged occasion. Determining that Oklahoma had adopted the lack of publication concept, the court ruled accordingly. Such is not controlling here. Since the statements were allegedly made in Colorado, the lex loci delictus applies.

Since the Supreme Court of Colorado has not definitively resolved the question, but in comparable matters has shown preference for the Restatement, the view of the Restatement of Torts 2d § 577(i) will be followed. It provides:

Communication by one agent to another agent of the same principal. The communication within the scope of his employment by one agent to another agent of the same principal is a publication not only by the first agent but also by the principal and this is true whether the principal is an individual, a partnership or a corporation. On the conditions under which the communication is privileged, see § 596.

The communication between defendant Burns and the president of The Anschutz Corporation was a publication not only by defendant Burns but also by defendant The Anschutz Corporation. See Arvey Corporation v. Peterson, 178 F.Supp. 132 (D.Pa. 1959); Kelly v. Loew's Inc., 76 F.Supp. 473 (D.Mass.1948). See also Denver Public Warehouse Co., et al. v. Holloway, 34 Colo. 432, 83 P. 131 (1905).

Plaintiff's fourth, fifth and sixth claims for relief are based upon statements allegedly made to Mr. Warren Rush. Mr. Rush was the "bankruptcy lawyer" for plaintiff Williams, president of Atchafalaya Workover Contractors, Inc., a Louisiana Corporation. The statements address plaintiff's business reputation and his reputation for veracity, which plaintiff claims "were published with circumstances of malice and insult as well as a wanton and reckless disregard of plaintiff's rights and feelings." The statements are set out with specificity in the complaint.

Defendant The Anschutz Corporation argues that the communication to Mr. Rush was not such a publication as to support an action for slander since he was the agent representing the plaintiff in the matter discussed in the communication. I can not agree. The Restatement of Torts 2d § 577, Comment "e" provides:

e. Publication to agent. The fact that the defamatory matter is communicated to an agent of the defamer does not prevent it from being a publication sufficient to constitute actionable defamation. The publication may be privileged, however, under the rule stated in § 593. So too, the communication to a servant or agent of the person defamed is a publication although if the communication is in answer to a letter or a request from the other or his agent, the publication may not be actionable in defamation. (Emphasis added.)

Defendant's reliance on Millsaps v. Bankers Life Company, 35 Ill.App.3d 735, 342 N.E.2d 329 (1976), is misplaced. The defendant's report in that case had been requested by plaintiff's attorney. The court concluded, "that letter is equivalent to a publication to plaintiff himself and therefore is privileged and is not actionable." Id. at 335. It has not been alleged in the case at bar...