960540•Price v. Armour
Full text
This opinion is subject to revision before final publication in the Pacific Reporter.
IN THE SUPREME COURT OF THE STATE OF UTAH
----oo0oo----
Jeffery R. Price, an individual,
Plaintiff and Appellant,
v.
Edward B. Armour, an individual,
and Sheet Metal Workers
International Association
Local Union No. 312, a labor organization,
Defendants and Appellees.
No. 960540
F I L E D December 9, 1997
Third District, Salt Lake Div. I
The Honorable William A. Thorne
Attorneys: Robert F. Babcock, Darrel J. Bostwick, Salt Lake
City, for plaintiff
Mary J. Woodhead, Salt Lake City, for defendants
---
RUSSON, Justice:
Jeffery Price appeals from the trial court's grant of summary judgment to
defendants Edward B. Armour and the Sheet Metal Workers International Association
Local Union No. 312 ("the Union"). Price's suit alleged that defendants had made
defamatory statements. In granting summary judgment, the trial court ruled that
the statements in question were privileged against Price's claims of libel, libel
per se, and intentional interference with business relations. We affirm.
BACKGROUND
Armour, a member of the Union, sought employment in March of 1995 with Madsen
Mechanical ("Madsen"), a sheet metal contractor. Madsen rejected his employment
application. In April of 1995, Armour filed charges against Madsen with the
National Labor Relations Board ("NLRB"), alleging that Madsen refused to hire
Armour because of his union membership, in violation of the National Labor
Relations Act. See 29 U.S.C. §§ 151 to 191. On June 9, 1995, the NLRB issued a
complaint against Madsen based on the allegation of discrimination. Armour
represented himself in this action, while Madsen was represented by attorney
Jeffery Price.
In an attempt to encourage settlement of the pending NLRB matter, Armour tried to
contact Price by telephone on June 12, 1995. Price, unaware that Armour was
representing himself, did not respond to Armour directly, believing that the Utah
Rules of Professional Conduct prohibited him from directly contacting a party.
Instead, Price faxed his response that same day to an attorney, Kathy Sure, who he
believed was representing Armour. In a letter dated June 19, 1995, Sure informed
Price that she did not represent Armour.
On that same day, Armour sent a letter to Madsen on Union letterhead that
contained the heading "RE: Settlement of NLRB cases . . . ." In that letter,
Armour sought settlement of the case and in doing so made comments about Price and
his representation of Madsen. In part, he wrote:
I attempted to contact your attorney, Mr. Jeffery Price . . . . Mr. Price refused
to answer my calls. He has instead chosen to fax a letter to an attorney in
California who does not in any way represent our interests. . . . It is my
understanding that Mr. Price represents, and has represented in the past a number
of companies who have lost cases before the NLRB, and lost big. I would hope that
Mr. Price truly represents your wishes, as delay on your part to settle will
result in a dramatic increase in the damage awards with regards to backpay should
the ALJ rule against you at the hearing in March. While it may or may not be in
Mr. Price's best financial interest to prolong such matters, it is my belief that
these matters could be settled far in advance of the March, 1996 hearing.
Mr. Price's delay, or attempt at obfuscation will only result in higher costs to
you should the ALJ rule against you.
It is my duty, and experience to inform you that the National Labor Relations
Board does not typically issue complaint [sic] unless it believes there to be
sound evidence of Unfair Labor Practices. It is also my experience that the
National Labor Relations Board encourages the interested parties to settle before
the hearing.
Price filed a civil complaint based on these comments in state court on June 18,
1996, against Armour and the Union, alleging libel, libel per se, and intentional
interference with business relations. He sought damages of not less than $20,000
plus punitive damages. In response, Armour and the Union(1) moved to dismiss and
for summary judgment, with a supporting memorandum. Armour argued that the
comments in the letter were privileged because they were made in the course of,
and in reference to, a judicial proceeding. He also argued that Price's claims
should be dismissed for failure to plead essential elements. Finally, Armour
requested a hearing on the matter.
On July 30, 1996, Price filed a memorandum in opposition to Armour's motion to
dismiss and for summary judgment, arguing that the comments were not privileged as
to defamation because they were not relevant to the proceeding at hand. He
further argued that the privilege did not apply against a claim of intentional
interference with business relations.(2)
The trial court granted Armour's request for hearing and set the hearing for
November 25, 1996. However, on November 8, 1996, prior to the scheduled hearing,
the trial court ruled on the matter, granting Armour's motion for summary
judgment. The trial court held that the privilege applied inasmuch as the
comments in the letter were in reference to the pending judicial proceedings and
that the privilege applied to both the claims of libel and the claim of
intentional interference with business relations. Price appealed to this court.
Price argues on appeal that the trial court erred in granting summary judgment
without a hearing. He states that the court granted a hearing pursuant to rule 4-501(3) of the Utah Code of Judicial Administration and then, without holding the
hearing or explaining why it did not hold a hearing, granted Armour's motion.
Price points out that rule 4-501(3) requires the court to grant a request for a
hearing if the motion before the court involves an issue that has not been
authoritatively decided. He argues that a hearing was necessary because the issue
of whether the judicial proceeding privilege protects against a claim of
intentional interference with business relations is an issue of first impression
and therefore inappropriate for summary judgment without hearing.
Price also argues on appeal that the court erred in granting the motion for
summary judgment on the merits. He argues that the comments in the letter were
not relevant to the NLRB proceeding in that they were not made in reference to, or
in the course of, a judicial proceeding and therefore were not privileged. He
contends that the statements were "couched in an alleged settlement letter but not
related to settlement." Instead, he claims the letter was an "attempt to defame
Price and intimidate Madsen," having nothing to do with the allegations of
discrimination and therefore not related to settlement.
Price further argues that even if the statements are privileged, the court erred
in ruling that the privilege protects against a cause of action for intentional
interference with business relations. Price claims that there is no Utah case law
that supports the trial court's ruling and, consequently, it erroneously relied on
a California case that is distinguishable on the facts. He contends that the
privilege simply does not apply to the intentional interference claim.
In response, Armour argues that Price waived his right to a hearing inasmuch as he
failed to request one in the first place. Armour requested the hearing, and
therefore, he contends, he is the only party who can object for failure to hold a
hearing. He also argues that the comments were absolutely privileged because they
were made in the course of a judicial proceeding. He asserts that the
communication in question need not be relevant as an evidentiary matter but need
only have some relation to the proceeding. The letter, Armour claims, was clearly
an attempt to settle the NLRB matter, and comments as to the opposing counsel's
record and his lack of incentive to settle were clearly related to settlement and
therefore "in reference to the proceeding."
Armour further argues that the privilege applies to both the libel claims and the
claim of intentional interference with business relations.
In the alternative, Armour claims that summary judgment was also appropriate on
grounds other than those relied upon by the trial court. He argues that Price's
complaint should be dismissed because Price failed to properly plead damages with
respect to his intentional interference with business relations claim.
The first issue before us is whether the trial court erred in granting summary
judgment without holding a hearing. The second issue is whether the court erred
in ruling that the privilege applied to this communication and, if it applied,
whether it protects against a claim of intentional interference with business
relations as well as a claim of libel. The third issue is whether summary
judgment should be affirmed on the alternative ground of insufficient pleadings.
Since we decide this case on the first two issues, we do not reach the third
issue, concerning insufficient pleadings.
THE STANDARD OF REVIEW
The question of whether the court erred in granting summary judgment without a
hearing is governed by rule 4-501(3) of the Utah Code of Judicial Administration
and is therefore a matter of statutory construction which is reviewed for
correctness. State v. Petersen, 810 P.2d 421, 424 (Utah 1991). The existence of
a privilege is a question of law for the court, which we review for correctness,
giving no deference to the trial court's determination. Russell v. Thomson
Newspapers, Inc., 842 P.2d 896 (Utah 1992).
ANALYSIS
Rule 4-501(3) governs whether a hearing shall be granted on a motion before the
court. In relevant part, it states:
(a) A decision on a motion shall be rendered without a hearing unless ordered by
the Court, or requested by the parties as provided in paragraphs 3(b) or (4)
below.
(b) In cases where the granting of a motion would dispose of the action or any
issues in the action on the merits with prejudice, either party at the time of
filing the principle memorandum in support of or in opposition to a motion may
file a written request for a hearing.
(c) Such request shall be granted unless the court finds that (a) the motion or
opposition to the motion is frivolous or (b) that the dispositive issue or set of
issues governing the granting or denial of the motion has been authoritatively
decided.
(d) When a request for a hearing is denied, the court shall notify the requesting
party. When a request for a hearing is granted, the court shall set the matter
for hearing or notify the requesting party that the matter shall be heard and the
requesting party shall schedule the matter for hearing and notify all parties of
the date and time.
Utah Code of Judicial Admin. Rule 4-501(3) (emphasis added).
In the case at hand, the trial court granted Armour's request for a hearing in
accordance with rule 4-501, cited above, and set the hearing date for November 25,
- On November 8, before the scheduled hearing, however, the trial court
granted summary judgment in favor of Armour, basing its ruling only on the
memoranda and affidavits of the parties.
The language of rule 4-501(3)(c) clearly required that the trial court grant
Armour's request for a hearing unless either of the two exceptions applied. The
exceptions provided that if the dispositive issues governing the granting or
denial of the motion had been authoritatively decided or the request for a hearing
was frivolous, then a hearing was not required. Nothing in the record indicates
that the court found any aspect of the motion frivolous. Likewise, the relevant
issues had not been authoritatively decided. Indeed, the issue of whether the
judicial proceeding privilege applies against a claim of intentional interference
with business relations is one of first impression in this state. Because neither
of the two statutory exceptions was present in this case, the trial court was
required to grant a hearing before ruling on this issue.
The trial court did, indeed, grant Armour's request and set the matter for hearing
in compliance with rule 4-501. However, it did not actually hold the hearing.
Instead, it ruled on the motion before the hearing date. This was a clear
violation of the rule. This rule, which requires that a hearing be granted,
necessarily includes the requirement that the hearing actually be held. Any other
interpretation would render this rule meaningless and without effect.
But Armour argues that he, not Price, requested the hearing and he is not
objecting to the court's failure to hold it. However, rule 4-501 states that if
the granting of a motion would dispose of the action, "either party . . . may file
a written request for hearing" and the same shall be granted and set for hearing.
Once a request for hearing by one of the parties has been granted and the matter
set for hearing, the other party has a right to rely upon such setting regardless
of whether it made its own request. The trial court erred in not holding the
hearing it had granted pursuant to rule 4-501.
For such error to compel reversal of the trial court's substantive ruling,
however, it must have been prejudicial. If the error was harmless, that is, if
the error was sufficiently inconsequential that there is no reasonable likelihood
that it affected the outcome of the case, then a reversal is not in order. State
v. Robertson, 932 P.2d 1219, 1227 (Utah 1997).
The substantive issue before the trial court was purely one of law, i.e., was the
letter written by Armour to Madsen written in the course of and in reference to a
judicial proceeding and therefore privileged. Price has not shown that he was
prejudiced by the trial court's ruling on the motion without a hearing. He has
not shown that he would have made new or additional arguments at the hearing that
were not covered by his memorandum of points and authorities. Indeed, on appeal
to this court the arguments made by Price in his appellate brief and during oral
argument are the same arguments that he made in his memorandum before the trial
court. We conclude that the failure of the trial court to hold a hearing in this
case was harmless.
The issues before the court are (1) whether Armour's statements in the letter were
privileged as to claims for libel, and (2) whether the privilege applies to claims
for intentional interference with business relations.
A privilege protects those who make otherwise defamatory statements from legal
liability. Absolute privileges are granted to those whose position or status
requires that they be free from liability stemming from their actions. An
absolute privilege is granted to participants in judicial proceedings. The policy
behind such privilege is to encourage full and candid participation in judicial
proceedings by shielding the participant from potential liability for defamation.
In Allen v. Ortez, 802 P.2d 1307, 1311 (Utah 1990), we stated:
One of the absolute privileges is that granted to participants in judicial
proceedings. The general rule is that judges, jurors, witnesses, litigants, and
counsel in judicial proceedings have an absolute privilege against defamation.
See 50 Am.Jur.2d Libel & Slander § 231 (1970); W. Prosser & P. Keeton, [The Law of
Torts] § 114. This privilege is premised on the assumption that the integrity of
the judicial system requires that there be free and open expression by all
participants and that this will only occur if they are not inhibited by the risk
of subsequent defamation suits.
That case, which dealt with absolute privilege as it pertained to participants who
were witnesses in judicial proceedings, stated:
"A witness is absolutely privileged to publish defamatory matter concerning
another in communications preliminary to a proposed judicial proceeding or as a
part of a judicial proceeding in which he is testifying, if it has some relation
to the proceeding."
Id. at 1311 (quoting Restatement (Second) of Torts § 588 (1977)). An earlier
case, Beezley v. Hansen, 4 Utah 2d 64, 286 P.2d 1057 (1955), dealing with the
scope of an attorney's absolute privilege, also quoted the Restatement:
"An attorney at law is absolutely privileged to publish false and defamatory
matter of another in communications preliminary to a proposed judicial proceeding,
or in the institution of, or during the course and as part of a judicial
proceeding in which he participates as counsel, if it has some relation thereto."
Id. at 1058 (quoting Restatement of the Law of Torts, vol. 3, § 586, at 229-30).
The case before us pertains to the scope of a litigant's absolute privilege. The
Restatement sets forth the scope of a litigant's absolute privilege as follows:
A party to a private litigation or a private prosecutor or defendant in a criminal
prosecution is absolutely privileged to publish defamatory matter concerning
another in communications preliminary to a proposed judicial proceeding, or in the
institution of or during the course and as a part of, a judicial proceeding in
which he participates, if the matter has some relation to the proceeding.
Restatement (Second) of Torts § 587 (1977).
In Ortez, we set out the necessary elements for the application of the judicial
proceeding privilege. 802 P.2d at 1313. Three elements must be satisfied for
allegedly defamatory statements to qualify for an absolute privilege: (1) The
statement must have been made during or in the course of a judicial proceeding;
(2) the statement must have some reference to the subject matter of the
proceeding; and (3) the statement must have been made by someone acting in the
capacity of judge, juror, witness, litigant, or counsel. Id.
The first element requires examination of whether the statement was made during or
in the course of a judicial proceeding. The Restatement of Torts states that the
absolute privilege to publish a defamatory matter can occur in communications
preliminary to a proposed judicial proceeding as well as during the course of or
as part of a judicial proceeding if the matter has some relation to the
proceeding. As stated in 50 Am. Jur. 2d Libel and Slander § 302 (1997):
The doctrine of absolute privilege applies to defamatory statements made in the
institution or conduct of litigation or in conferences or other communications
preliminary to litigation.
Indeed, many courts have specifically held that attempts at settlement, including
defamatory statements made in settlement letters, are privileged as part of the
judicial proceeding privilege. Petty v. General Accident Fire & Life Assurance
Corp., 365 F.2d 419, 421 (3d Cir. 1966) (in context of privilege, "the negotiation
of a settlement is a part of a judicial proceeding"); Larmour v. Campanale, 96
Cal. App. 3d 566, 158 Cal. Rptr. 143 (1979) (judicial proceeding privilege was
applicable to letters demanding settlement of claim); Pape v. Reither, 918 S.W.2d
376, 380 (Mo. Ct. App. 1996) (holding that "defamatory statement in the
'Settlement' letter is also privileged as a statement made in an ongoing judicial
proceeding"); Romero v. Prince, 513 P.2d 717, 720 (N.M. Ct. App. 1973) (settlement
letter is privileged, even though it does not invoke any function of the court or
its officers and is not contained in pleadings or briefs); Zirn v. Cullom, 63
N.Y.S.2d 439, 440 (Sup. Ct. 1946) (where letter encouraging settlement was deemed
privileged).
In the case before us, Armour's letter to Madsen was not merely preliminary to a
proposed judicial proceeding but was specifically written in regard to the pending
NLRB proceeding between Armour and Madsen. The letter specifically referred to
the NLRB case by number and name. The text of the letter dealt with the pending
proceedings and a desire to settle. Clearly, the statement was made in the course
of a proceeding before the NLRB.
The requirement that the proceeding at hand be "judicial" has been commonly
interpreted to include all proceedings of a judicial or quasi-judicial nature.
Indeed, we acknowledged in Mortensen v. Life Insurance Corp., 6 Utah 2d 408, 315
P.2d 283 (1957), that the judicial proceedings privilege includes statements made
during or in the course of administrative proceedings:
"The 'judicial proceeding' to which the immunity attaches has not been defined
very exactly. It includes any hearing before a tribunal which performs judicial
function, ex parte or otherwise, and whether the hearing is public or not. It
extends to the proceedings of administrative officers, such as boards and
commissions so far as they have powers of discretion in applying the law to the
facts which are regarded as judicial or 'quasi-judicial' in character."
Id. at 284 (emphasis added) (quoting Prosser, The Law of Torts 609 (2d ed.); see
50 Am. Jur. 2d Libel and Slander § 303 (1995); William L. Prosser & W. Page
Keeton, The Law of Torts § 114 (5th ed. 1984); see also Thompson v. Community
Nursing Serv. & Hospice, 910 P.2d 1267, 1268 (Utah Ct. App. 1996). Therefore,
even though the matter was pending before the NLRB in an administrative
proceeding, the judicial proceeding privilege still applies. Since the settlement
letter was written in the course of a judicial proceeding, the first element of
Ortez was satisfied. Price does not argue this point.
The second element requires that the statement have some reference to the subject
matter of the proceeding. Price contends that Armour's comments about Price's
ability to adequately represent his client are irrelevant to the proceeding and
therefore are not "in reference" to the subject matter of the case. Instead, he
argues, Armour's comments were intended to injure "Price's business reputation"
and to "intimidate and defraud Madsen into settlement."
Armour's letter to Madsen was clearly an attempt to settle the NLRB case. It was
entitled "Settlement of NLRB Cases 27-CA-13753, -2, -3, -4, . . . Sheet Metal
Workers International Association, Local 312 VS. Madsen Mechanical Inc. . . . ."
The last sentence of the first paragraph states, "It is my wish to settle these
matters in a manner agreeable to both of us, so that we might both move on to our
respective endeavors." The rest of the letter is an attempt by Armour to show the
strength of his position vis-a-vis the weakness of Madsen's position which
included his perceived weakness of Madsen's lawyer. The letter pointed out the
advantage to Madsen if the case were to settle immediately. Discussions of the
likelihood of success are very common in settlement negotiations. The statements
in the letter were intended to bring about immediate settlement of the pending
NLRB matter and were relevant to that end. They were made in "reference to the
subject matter" and therefore met the second privilege element.
The third and final element of the judicial proceeding privilege requires that the
party claiming the privilege was acting in the capacity of judge, juror, witness,
litigant, or counsel. The trial court held that Armour was a litigant in the NLRB
proceeding and therefore his statements in the settlement letter were privileged.
The trial court also held that the same privilege applied to the Union because it
had been represented as a party to the proceeding in all documents pertaining to
the case. This issue was not raised on appeal. Thus, the third element is met.
Having met all three elements of the judicial proceedings privilege, Armour's
statements in the settlement letter were privileged and thus immune from Price's
libel actions. The trial court was correct in so holding.
Having determined that the comments were privileged as to the defamation claims,
Ortez, 803 P.2d at 1311, the question remains as to whether the privilege applies
against the claim of intentional interference with business relations.(3)
The whole purpose of the judicial privilege is to ensure free and open expression
by all participants in judicial proceedings by alleviating any and all fear that
participation will subject them to the risk of subsequent legal actions. There is
no reason to distinguish statements that may defame a person from statements that
may interfere with that person's business relations. The purpose of the judicial
privilege remains the same. Holding that a defamatory statement made during a
judicial proceeding is absolutely privileged but then holding that the privilege
does not apply to the claim that the statement interfered with a business relation
would defeat the very purpose of the privilege and would chill free and open
expression in the judicial setting.
In Russell, 842 P.2d at 896, a case involving claims of defamation, invasion of
privacy, and intentional infliction of emotional distress against a newspaper, we
stated:
An additional concern is whether the qualified privilege of [the statute] applies
only to a claim for defamation or whether it also applies to other claims based on
the same operative facts such as emotional distress and invasion of privacy.
Joining several courts that have directly dealt with this issue, we think that the
privilege does apply to other claims that are based upon defamatory publication.
Id. at 896 n.37.
That reasoning is sound and applicable here. Participation in a judicial
proceeding will be inhibited unless all claims arising from the same statements
are protected. It is essential that the privilege apply to all claims arising
from the same allegedly defamatory statements in order to encourage full and free
participation in judicial and administrative proceedings. We therefore hold that
the judicial proceeding privilege protects against Price's claim for intentional
interference with business relations.
CONCLUSION
We conclude that the statements in question were made in the course of a judicial
proceeding and in reference to the subject matter of that proceeding and therefore
were absolutely privileged. We further conclude that the privilege extends to the
claim of intentional interference with business relations as well as to the claim
of defamation. We also conclude that the failure of the trial court to conduct a
hearing did not constitute prejudicial error.
We affirm.
---
Chief Justice Zimmerman, Justice Howe, and Justice Durham concur in Justice
Russon's opinion.
Associate Chief Justice Stewart concurs in the result.
1. Armour and the Union were represented by the same attorney with regard to Price's suit and hereinafter are collectively
referred to as Armour.
2. Price also argued in his memorandum before the trial court that the Union could not claim the protection of the privilege
because it was not a party to the proceeding at the time the comments were made. The trial court held that the Union was a
party to which the privilege applied. This was not raised as an issue on appeal, nor was it argued in plaintiff's brief.
3. We do not determine whether a claim of intentional interference with business relations has been properly pled. We
decide only the application of the absolute privilege to the tort of intentional interference with business relations where it
has been properly pled.
Continue your research in ChatGPT or Claude
Connect Omnilex to search the legal corpus from your AI assistant.