Young v. First United Bank of Bellevue, S-92-1001

• Decision Date: 27 May 1994
• Docket Number: No. S-92-1001,S-92-1001
• Citation: 246 Neb. 43,516 N.W.2d 256
• Court: Nebraska Supreme Court
• Parties: , 130 Lab.Cas. P 57,888 John R. YOUNG, Jr., Appellant, v. FIRST UNITED BANK OF BELLEVUE, a Nebraska Banking Corporation, et al., Appellees.

Page 256

516 N.W.2d 256

246 Neb. 43, 130 Lab.Cas. P 57,888

John R. YOUNG, Jr., Appellant, v. FIRST UNITED BANK OF BELLEVUE, a Nebraska Banking Corporation, et al., Appellees.

No. S-92-1001.

Supreme Court of Nebraska.

May 27, 1994.

Jeffrey A. Silver, Omaha, for appellant.

Thomas J. Walsh and Larry A. Jobeun, of Walsh, Fullenkamp & Doyle, Omaha, for appellees.

HASTINGS, C.J., and BOSLAUGH, WHITE, CAPORALE, FAHRNBRUCH, LANPHIER, and WRIGHT, JJ.

BOSLAUGH, Justice.

The plaintiff, John R. Young, Jr., appeals from the judgment of the district court for Douglas County, which granted the defendants' motion for summary judgment. Young had sought damages for alleged libel, but the trial court found that the communication in issue was true, qualifiedly privileged, and made without malice. Young assigns as error the granting of the motion, claiming that the issues of qualified privilege, malice, and the truth of the statements in the letter are questions of fact for the jury.

The defendants in this action are Crown Bancshares, Inc. (Crown), First United Bank of Bellevue (FUB), and Charles R. Clatterbuck. Crown is a holding company for FUB. Both Crown and FUB are Nebraska corporations. Clatterbuck is FUB's current chairman of the board and is Crown's acting chairman of the board.

Young was employed as the president and chief executive officer of FUB from its inception in December 1985 until his resignation in March 1988. During the term of his employment, Young had the authority to make loans of up to $200,000. The board of directors of FUB had the right to approve or disapprove the loans that Young made. FUB made a significant number of bad loans between its inception and the time of Young's resignation. The parties dispute the actual amount of control exercised by each other over the loans that FUB made. A resolution of this dispute is not necessary to the analysis of this case.

Clatterbuck and Robert Doyle, an FUB board member, asked Young to resign in March 1988. He resigned, accepting an offer to act as a consultant to FUB for $3,000 per month over the next 6 months. The board of FUB made three payments and discontinued the payments, alleging that Young had misled the board in his operation of FUB. Young successfully sued FUB for nonpayment. Clatterbuck stated during a deposition taken for the trial that he questioned Young's integrity. Following the lawsuit, Doyle was quoted in The Bellevue Leader newspaper as saying that the ruling of the trial court did not clear Young of any wrongdoing because "Young did not take the stand to rebut anything."

On June 29, 1990, Clatterbuck, as the chairman of Crown, sent the letter which is the subject of this suit to Crown's shareholders. In pertinent part, the letter stated:

Most of you are aware that First United Bank has been plagued with severe problems stemming from decisions made while the bank was being managed by Mr. John Young and Tom Edwards [vice-president of FUB during Young's tenure]. As a result, your company lost over $1.1 million dollars, mostly attributed to poor loan decisions and excessive overhead expense.

Young filed this action in the district court for Douglas County. He sought special and general damages for libel, alleging that the June 29 letter was defamatory and made with malice. He further alleged that within 20 days, he had sent a demand for correction pursuant to Neb.Rev.Stat. § 25-840.01 (Reissue 1989). In answer, the defendants alleged that the statements in the letter were true, qualifiedly privileged, and made without malice.

The defendants moved for summary judgment. The district court found that the statements were true and qualifiedly privileged, but stated that the truth of the statements and the qualified privilege of the communication did not dispose of the case. The district court found that damages would be available regardless of truth or privilege if the communication had been made with actual malice. The court reviewed the allegations made by Young and held that the actions of the defendants did not constitute actual malice. Accordingly, the district court granted summary judgment for the defendants. Young appealed.

The party moving for summary judgment has the burden to show that no genuine issue of material fact exists and must produce sufficient evidence to demonstrate that the moving party is entitled to judgment as a matter of law. Healy v. Langdon, 245 Neb. 1, 511 N.W.2d 498 (1994). After the moving party has shown facts entitling it to a judgment as a matter of law, the opposing party has the burden to present evidence showing an issue of material fact which prevents a judgment as a matter of law for the moving party. Id. In reviewing an order sustaining a motion for summary judgment, an appellate court views the evidence in a light most favorable to the party opposing the motion and gives that party the benefit of all reasonable inferences that may be deduced from the evidence. Id.

Young claims that three issues of material fact exist that preclude summary judgment: (1) whether the statements in the June 29 letter were true, (2) whether the letter is qualifiedly privileged, and (3) whether the statements were made with malice. We will address each of these matters separately.

The district court found that the statements about Young's decisions were true. Young claims that the statements were false because the board, not Young, managed FUB and approved each loan. Young claims that the board made all the major decisions and that he was not responsible for the condition of FUB. The record shows that the board appointed a "loan committee" to review loans made by Young and Edwards after most of the bad loans were made. The vast majority of the bad loans which resulted in the losses to FUB were made when Young was the president of FUB and before the loan committee came into existence. Young admits that he had authority to make loans on behalf of FUB. No evidence was presented that showed that his authority was hindered before the formation of the loan committee. He admits that he alone was in charge of the day-to-day operations of FUB. The trial court correctly found that the truth of the statements was not in issue; FUB's losses were attributable to the decisions that were made while Young was its manager.

The district court also found that the letter was a qualifiedly privileged communication. Whether a qualified privilege exists is a matter of law. Molever v. Levenson, 539 F.2d 996 (4th Cir.1976). The trial court quoted Turner v. Welliver, 226 Neb. 275, 287, 411 N.W.2d 298, 307 (1987), for the following proposition of law:

A communication is privileged if made bona fide by one who has an interest in the subject matter to one who also has an interest in it or stands in such relation that it is a reasonable duty, or is proper, for the writer to give the information.

A remarkably similar situation was addressed by the U.S. Court of Appeals for the Fourth Circuit in Molever v. Levenson, supra. In Molever, a former bank president filed actions for libel and slander against several of the bank's board members who had been critical of his performance during a board meeting. The board members allegedly made statements that the former president had been " 'grossly incompetent in his position as president of the Bank' " and that the former president had " 'wrecked this bank and is responsible for its present financial crisis.' " 539 F.2d at 1004. The jury returned a verdict for the former president, and the trial court entered a judgment notwithstanding the verdict for the board members, which was upheld by the circuit court.

In this case, the trial court noted that no evidence was presented which showed that the June 29 letter was sent to anyone other than the shareholders. The June 29 letter was a communication between the chairman of a corporation and the shareholders of the corporation. Other courts have held that communications between a director of a corporation and the shareholders of the corporation are qualifiedly privileged. See, e.g., Kainz v. Lussier, 4 Haw.App. 400, 667 P.2d 797 (1983); World Oil Co. v. Hicks, 46 S.W.2d 394 (Tex.Civ.App.1932); Lind v. Lynch, 665 P.2d 1276 (Utah 1983).

In Turner v. Welliver, supra, this court held that a qualified privilege existed between an insurer and an...