DAVID M. LAWSON, District Judge.
Painting the Mackinac Bridge is an enormous, labor-intensive task, but it must be done with regularity. The Michigan Department of Transportation (MDOT) outsources that project by means of a
The plaintiff's complaint in this Court alleges defamation, interference with a business expectancy and a contract, "unlawful disparagement," and negligence. Discovery has closed and the defendants have moved for summary judgment. The Court heard oral argument on December 4, 2012 and now concludes that the plaintiff has not offered evidence or argument to support its claims of tortious interference with a contract, "unlawful disparagement," negligence, or respondeat superior, and those claims must be dismissed. However, the record demonstrates that fact questions abound on the counts alleging defamation and interference with a business expectancy, even in light of the shared interest privilege alleged; summary judgment must be denied on those counts.
The crux of the case lies in the relationship of the owners and operators of 360 Construction with another painting company, All State Painting of Brunswick, Ohio, which also is referred to by the parties as Allstate Painting and Contracting Co. Allstate and the Mackinac Bridge Authority had done business previously, with an unsatisfying outcome that resulted in litigation. The defendants' strategy was to establish an affiliation between 360 and Allstate so that the MDOT's bad experience with the latter would sour its attraction to the former as a painting contractor.
Allstate Painting is a defunct bridge painting company that was owned by Elias Kafantaris. Allstate had a contract to paint the "South/Center" span of the bridge around 2003 and 2004, but did shoddy work, failed to honor its warranty, and walked off the job. Allstate wound up being sued by the Mackinac Bridge Authority for $1 million for various breaches. George Roditis worked for Allstate from the late 1990s until 2004 as a "vice president," and by his account presented himself as an "owner" of the company in order to attend preconstruction meetings and other events as a company representative. Elias Kafantaris testified that he passed bribes to an Ohio transportation official between 1999 and 2006, and that in some cases he gave money to George Roditis to pay the bribes. George Roditis also testified
Steve Roditis, George's brother, formed 360 Construction in 2001, but did not begin operations until 2004. Steve and George Roditis both worked in the bridge painting industry. George was never an owner of 360. Steve Roditis worked for Allstate Painting as a laborer in 1995, and again as a certified "competent person" (according to Steve Roditis, he was a certified hazardous material disposal handler) in 2003-04.
Steve Roditis left Allstate in 2004 to start his own bridge painting company, 360 Construction. The defendants have not alleged that Steve Roditis was involved in any of the Kafantaris and Allstate bribery incidents, although they do imply that he was "involved" in the South/Center span project as an on-site supervisor or quality control person.
The defendants collectively filed nearly 1,500 pages of briefs and exhibits in support of their motions for summary judgment, with the Atsalis defendants owning two-thirds of that total — more than 1,000 pages. The Atsalis defendants devote much of their briefing to proving the sordid history of Allstate, Kafantaris, and George Roditis, but the plaintiff disputes none of those facts. Moreover, the parties do not dispute the basic facts that anchor this case, which relate to just four communications: (1) an email and (2) a letter sent by Atsalis employees to MDOT officials; (3) a phone call made by attorney Andrew Richner to Leon Hank at MDOT; and (4) a memo written and circulated by Richner to officials at MDOT, the Bridge Authority, and other state offices. The Atsalis Brothers and Richner do not dispute what they wrote and to whom they sent it. Richner disputes parts of the conversation that Hank attributed to him.
According to the filings in this case, on June 7, 2010, Christos Bakalis of Atsalis Brothers sent an email to Kim Nowack of the Mackinac Bridge Authority, in which Bakalis wrote:
Resp. to Mot. for Summ. J. [dkt. #90], Ex. I, Email dated June 7, 2010. Bakalis referred several times to "Roditis" in the email, but did not state whether the reference was to Steve Roditis or George Roditis.
Bakalis included four internet hyperlinks in his email, to (1) the articles of incorporation for 360 Construction Company, Inc., dated August 5, 2001, which showed George Roditis as an incorporator; (2) a Cleveland.com news article dated November 12, 2009 reporting the conviction of Ohio transit authority construction manager Faisal Alatrash for corruption, based on bribes that Alatrash took from Elias Kafantaris, owner of All State Painting and Contracting Co., between 1999 and 2006; (3) a second Cleveland.com article dated December 11, 2009, reporting the sentencing of Kafantaris to six months on twenty-four counts of tax evasion and four
On June 9, 2010, Garry D. Manous, a project manager for Atsalis Brothers, sent a letter on Atsalis letterhead to Gregory C. Johnson at the Michigan Department of Transportation. Manous wrote:
Resp. to Mot. for Summ. J. [dkt. #90], Ex. J, Letter dated June 9, 2010 at 1-2. The "OhioBiz.com" website is apparently a private search or directory website, which presumably lists businesses in Ohio. The "LocalConstruction.net" website is apparently a similar private directory for construction contractors. The Ohio Court of Claims "document" lists George Roditis in
On June 15, 2010, attorney Andrew Richner, acting on behalf of Atsalis Brothers, called Leon Hank at MDOT and discussed 360 Construction and All State. Hank memorialized the conversation in an email, in which he stated:
Resp. to Mot. for Summ. J. [dkt. #90], Ex. Q, Email thread dated June 16, 2010 at 1.
On June 17, 2010, Gregory C. Johnson of MDOT replied to Manous and wrote that MDOT had reviewed the allegations, contacted references for 360 Construction, and received contractor evaluations of 360 Construction from the Ohio Department of Transportation, all of which indicated that 360 was qualified to do the work on the Mackinac Bridge and had shown "excellent performance" on past projects. Johnson stated: "MDOT's investigation also found that George Roditis was not an owner of Allstate but an employee for one year. He is not a current owner of 360 but a superintendent for the company. George Roditis was never charged in the Cuyahoga River Bridge project bribery incident." Resp. to Mot. for Summ. J. [dkt. #90], Ex. L, Letter dated June 17, 2010 at 1. Johnson concluded by stating, "At this point, MDOT believes that we have completed a thorough investigation of all information provided by Atsalis Bros. Painting, and the information we have on file, and feel confident on moving forward with the award of Contract 86000-M00221 to the confirmed low bidder, 360 Construction Company, Inc." Id. at 2.
On June 23, 2010, Richner wrote a memorandum concerning the "Bid Proposal to Paint Mackinac Bridge," stating:
Resp. to Mot. for Summ. J. [dkt. #90], Ex. M, Memorandum dated June 23, 2010 at 1. Richner wrote in the "Summary" section of his memorandum:
Ibid. Richner went on to catalog "Facts Supporting Disqualification of 360 and Its Bid," writing:
Id. at 2. Richner wrote in the "Conclusion" section of his memorandum:
Id. at 3. Richner listed "Garry Manous (Atsalis Brothers Painting Co.)" in the cc: section of his memorandum. Ibid.
Exhibit B to Richner's memorandum is a LexisNexis search return for "Allstate Painting & Contracting Co" which lists an address of 1256 Industrial Parkway, Brunswick, Ohio for dates from 2007 through 2010. Exhibit L to the memorandum is designated a "Records Search Document Detail" of unspecified origin. It lists a conveyance recorded as "SHER/D
Exhibit B to Richner's memorandum lists George Roditis as "Owner," "President," and "Vice President" of Allstate. Exhibit D lists George Roditis as "Vice President" of Allstate in Michigan foreign corporation filings. Exhibit P lists Steve Roditis as "President" and "Owner" of 360, and Spiros Paterakis as "President." That exhibit does not refer to George Roditis at all. Exhibit Q appears to be a records search of unknown origin that lists Steve Roditis and Paterakis as "Principals" of 360. Exhibit Q does not name George Roditis in any capacity.
Exhibit K to the memorandum is an "SSPC Audit Summary" for an inspection of work done by Allstate on the Mackinac Bridge dated August 5 and 6, 2003, which includes notes that Steve Roditis, "[t]he contractor's QC/competent person" arrived at the job site and spoke to auditors during the inspection." Resp. to Mot. for Summ. J. [dkt. #90], Ex. M, Memorandum dated June 23, 2010 at 26, 28. Exhibit Y to the memorandum includes an "Order and Judgment by Default Against Defendants" dated February 3, 2007 in a lawsuit filed in the United States District Court for the District of Columbia by the International Painters and Allied Trades Industry Pension Fund against Allstate. In its order, the district court found that "Elias Kafantaris (`Individual Defendant'), through his position as officer and sole shareholder of [Allstate] ... possesses ... authority and control and decision-making power over the distribution of [Allstate's] revenues." Id. at 70-71.
Richner sent his memo to Bill Gnodtke at MDOT. Richner also went to a Transportation Commission meeting on behalf of Atsalis, talked about the memo with a number of attendees, and gave a copy of it to at least one person. Richner talked to MDOT and Bridge Authority directors and commissioners Jim Scalici, Ted Wahby, Kirk Steudle, and Myron Frierson. Scalici and Wahby were Bridge Authority commissioners, and Steudle was director of MDOT. Frierson was an auditor with MDOT. Richner sent a copy of the memo to Steve Liedel at the Governor's office. Richner also spoke to Mike Garaviglia and Stu Sandler in the Michigan attorney general's office.
In July 2010, after Richner sent his memo to MDOT officials, the department asked the Office of Commission Audits to look into the charges Atsalis and Richner raised. The auditor carried out a lengthy review, concluding on November 23, 2010 that (1) Allstate was 90% owned by Elias Kafantaris and 10% by Pete Toptsidis; and (2) George Roditis was never an owner of Allstate, but he was an owner of CH-IK
After the inquiry MDOT conducted in response to the letters and lobbying by Atsalis Brothers and Richner, the contract was awarded to 360 six months later than it would have been, leaving 360 with that much less time to complete the twenty-eight month bridge painting job. Kimberly Nowack of MDOT testified that the Bridge Authority would have been amenable to an extension of the completion date due to the time lost during the inquiry, and she would have recommended one be granted. However, Steve Roditis testified that as of May 2012, 360 had not asked for an extension of time to complete the contract, although it might ask for one later.
Plaintiff 360 filed its complaint on May 27, 2011, an amended compliant on January 24, 2012, and a second amended complaint on February 28, 2012. The plaintiff contends that the defendants are liable for defamation, libel, tortious interference with a contract, tortious interference with a business relationship, "unlawful disparagement," and negligence. The defendants filed their motions for summary judgment after discovery closed.
Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). As the Sixth Circuit has explained:
Alexander v. CareSource, 576 F.3d 551, 557-58 (6th Cir.2009).
"The party bringing the summary judgment motion has the initial burden of informing the district court of the basis for its motion and identifying portions of the record that demonstrate the absence of a genuine dispute over material facts." 576 F.3d at 558. (citing Mt. Lebanon Personal Care Home, Inc. v. Hoover Universal, Inc., 276 F.3d 845, 848 (6th Cir.2002)). "Once that occurs, the party opposing the motion then may not `rely on the hope that the trier of fact will disbelieve the movant's denial of a disputed fact' but must make an affirmative showing with proper evidence in order to defeat the motion."
"[T]he party opposing the summary judgment motion must do more than simply show that there is some `metaphysical doubt as to the material facts.'" Highland Capital, Inc. v. Franklin Nat'l Bank, 350 F.3d 558, 564 (6th Cir.2003) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)) (internal quotation marks omitted). A party opposing a motion for summary judgment must designate specific facts in affidavits, depositions, or other factual material showing "evidence on which the jury could reasonably find for the plaintiff." Anderson, 477 U.S. at 252, 106 S.Ct. 2505. If the non-moving party, after sufficient opportunity for discovery, is unable to meet his or her burden of proof, summary judgment is clearly proper. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "Thus, the mere existence of a scintilla of evidence in support of the [opposing party]'s position will be insufficient; there must be evidence on which the jury could reasonably find for the [opposing party]." Highland Capital, 350 F.3d at 564 (quoting 477 U.S. at 252, 106 S.Ct. 2505) (quotations omitted).
Irrelevant or unnecessary factual disputes do not create genuine issues of material fact. St. Francis Health Care Centre v. Shalala, 205 F.3d 937, 943 (6th Cir. 2000). A fact is "material" if its resolution affects the outcome of the lawsuit. Lenning v. Commercial Union Ins. Co., 260 F.3d 574, 581 (6th Cir.2001). "Materiality" is determined by the substantive law claim. Boyd v. Baeppler, 215 F.3d 594, 599 (6th Cir.2000). An issue is "genuine" if a "reasonable jury could return a verdict for the nonmoving party." Henson v. Nat'l Aeronautics & Space Admin., 14 F.3d 1143, 1148 (6th Cir.1994) (quoting 477 U.S. at 248, 106 S.Ct. 2505).
In a defensive motion for summary judgment, the party who bears the burden of proof must present a jury question as to each element of the claim. Davis v. McCourt, 226 F.3d 506, 511 (6th Cir.2000). Failure to prove an essential element of a claim renders all other facts immaterial for summary judgment purposes. Elvis Presley Enters., Inc. v. Elvisly Yours, Inc., 936 F.2d 889, 895 (6th Cir.1991).
This case is before the Court on the basis of diversity jurisdiction under 28 U.S.C. § 1332, and the plaintiff's claims are based entirely on state law. Therefore, the Court must apply the law of the forum state's highest court. Erie R.R. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). All agree that Michigan law applies to this dispute. If the state's highest court has not decided an issue, then "the federal court must ascertain the state law from `all relevant data.'" Garden City Osteopathic Hosp. v. HBE Corp., 55 F.3d 1126, 1130 (6th Cir.1995) (quoting Bailey v. V. & O Press Co., 770 F.2d 601, 604 (6th Cir.1985)). "Relevant data includes the state's intermediate appellate court decisions, as well as the state supreme court's relevant dicta, restatements of the law, law review commentaries, and the majority rule among other states." Ososki v. St. Paul Surplus Lines, 156 F.Supp.2d 669, 674 (E.D.Mich.2001) (internal quotation marks and citation omitted).
The defendants argue in their motions that all counts of the second amended complaint should be dismissed because the plaintiff has not offered evidence on each element of its respective claims. Plaintiff 360 has made no affirmative showing in support of, and therefore has apparently abandoned, its claims for tortious interference with a contract (count I), "unlawful
Concerning the claims of defamation and tortious interference with a business expectancy, the defendants do not argue that Richner exceeded his authority as an agent of Atsalis, and do not appear to contest the claim that Atsalis is liable for his statements under the theory of respondeat superior. They argue instead only that all of the statements made by the individual defendants were either true, substantially true, matters of opinion, or privileged, and that if the statements were subject to the qualified shared interest privilege, the plaintiff has not shown that they were made with malice. Nonetheless, there is no independent cause of action for respondeat superior, which is the label the plaintiff placed on count VII of the second amended complaint. That count will be dismissed as well.
Counts III and IV of the second amended complaint allege defamation. To establish a claim for defamation, the plaintiff must show (1) a false and defamatory statement concerning the plaintiff, (2) unprivileged publication to a third party, (3) fault amounting to at least negligence on the part of the publisher, and (4) either actionability of the statements irrespective of special harm, or the existence of special harm caused by the publication. Wilson v. Sparrow Health System, 290 Mich.App. 149, 154-55, 799 N.W.2d 224, 227 (2010). The defendants argue that all of the statements they made about 360 Construction are true. But they also say that the statements they made are subject to a qualified privilege — the shared interest privilege — so that the plaintiff also must prove that the defendants made the statements with malice. Malice is established when there is proof that a defamatory statement was made "with knowledge of its falsity or reckless disregard of the truth." Prysak v. RL Polk Co., 193 Mich.App. 1, 15, 483 N.W.2d 629, 636 (1992).
It is undisputed that "Michigan law recognizes a qualified privilege as applying to communications on matters of `shared interest' between parties." Rosenboom v. Vanek, 182 Mich.App. 113, 117, 451 N.W.2d 520, 522 (1989). Whether the privilege applies to statements made by a business operator about a competitor vying for the same contract, as in this case, is another matter. The determination that the privilege applies is a question of law for the Court to decide. Lawrence v. Fox, 357 Mich. 134, 139-40, 97 N.W.2d 719, 722 (1959) ("As is true generally with respect to matters of privilege, it is for the court to determine whether or not the external circumstances surrounding the publication are such as to give rise to a privileged occasion."); Prysak, 193 Mich.App. at 14-15, 483 N.W.2d at 636.
The origin of the shared interest privilege in Michigan can be traced to Bacon v. Michigan Cent. Railroad Co., 66 Mich. 166,
Courts have recognized that allowing a qualified privilege comes with a cost to those individuals who are damaged by the spread of false information about them in the public sphere. But private rights must be balanced against the public interest and sometimes must yield to it. "In general, a qualified privilege is recognized where the public interest in activities which presuppose frank communication on certain matters between persons standing in particular relationships to each other outweighs the damage to individuals of good faith but defamatory utterances relevant to the interests of those involved." Merritt v. Detroit Memorial Hospital, 81 Mich.App. 279, 284, 265 N.W.2d 124, 126 (1978).
Courts have recognized that the shared interest privilege does not exist in a vacuum. "This defense rests upon considerations of public policy.... The privilege thus afforded is not, ... as the mathematicians would put it, a constant. It varies with the situation, with what is regarded as the importance of the social issues at stake." Lawrence, 357 Mich. at 137-38, 97 N.W.2d at 721. Similarly, the Bacon court, in emphasizing the public policy grounding for the privilege, recognized that the privilege does not exist for the personal benefit of the defendant, but serves to abrogate the rights of the plaintiff only where silence could lead to public harm.
Inherent in the balancing of private and public interests is the idea that the alleged defamatory communications be made with the intent of advancing the public interest. Courts have used the term "good faith" to describe the statement-maker's proper motive. Because the privilege rests on a foundation of public policy, only communications made in good faith, with the legitimate purpose of advancing that policy, are properly entitled to the shelter it provides. "A vast majority of state rules regarding qualified privilege include a requirement of `good faith.'" A.G. Harmon, Defamation in Good Faith: An Argument for Restating the Defense of Qualified Privilege, 16 Barry L.Rev. 27, 30 n. 16 (2011). Modern iterations of the privilege by Michigan appellate courts make clear that a showing of "good faith" is essential to a defendant's ability to invoke the privilege: "The elements of a qualified privilege are (1) good faith, (2) an interest to be upheld, (3) a statement limited in its scope to this purpose, (4) a proper occasion, and (5) publication in a proper manner and to proper parties only." Prysak, 193 Mich.App. at 14-15, 483 N.W.2d at 636 (emphasis added) (citing Bufalino v.
Michigan courts have declined to apply the shared interest privilege where the interest at stake was a private one. See Sias v. General Motors Corporation, 372 Mich. 542, 127 N.W.2d 357 (1964) (holding that a corporate employer had no interest sufficient to justify its statement that an employee was discharged for "misappropriation of company property," made to remaining employees for the purpose of restoring morale among them); Harrison v. Arrow Metal Products Corp., 20 Mich.App. 590, 174 N.W.2d 875 (1970) (holding that the defendant was not entitled to any qualified privilege for false accusations of theft given under the guise of "employment references," despite earlier holdings by Michigan courts that had extended the privilege to statements of reference from a prior to a prospective employer); see also Haddad v. Sears Roebuck & Co., 526 F.2d 83, 85 (6th Cir.1976) (holding in a case where a store manager announced to disgruntled employees that the plaintiff, a coworker, was fired for gambling, "that in calling in fellow employees of plaintiff and `explaining' the circumstances of his separation, defendant corporation was serving its own particular interest.... No privilege extended to the communication to them and the trial court properly so held").
And in Mid-America Food Service, Inc. v. ARA Services, Inc., 578 F.2d 691 (8th Cir.1978), the Eighth Circuit declined to apply the shared interest privilege to statements made by a disappointed bidder on a public contract. In that case, when the defendant learned that the plaintiff had been awarded the contract, the defendant told the agency that let the contract, which was to furnish food services, that the plaintiff was in financial trouble and "had been `nearly closed down' by the health department." The court stated:
Mid-America, 578 F.2d at 701.
The defendants here place great emphasis on MDOT's published policy of encouraging reports of fraud and abuse. The MDOT "Notice to Contractors" states:
Mot. for Summ. J. [dkt. #80], Ex. 2, Notice to Contractors. Like the "strong policy" of the University of Michigan that the court of appeals noted in Rosenboom v. Vanek, the MDOT policy here does support the conclusion that a contractor could be entitled to a shared interest privilege where, upon a proper occasion, it makes a good faith report of "suspected fraud or abuse."
However, the question of qualified privilege is not settled by the existence of a duty alone, because the defendants must also establish that they acted in good faith to promote the public interest. This they cannot do on the record presented to the Court, for two principal reasons. First, the public policy the defendants cite — preventing the waste of public dollars by incompetent or unreliable contractors, and preventing the corruption of the fair bidding process by public and private graft — is counterbalanced by an equally important policy: avoiding the waste of public resources and delay in carrying out important public works projects, and in ensuring the fair, prompt, and orderly administration of the bidding process. The defendants argue that denial of the privilege would "chill" the reporting of "suspected fraud and abuse." But imprudent extension of the privilege would invite needless waste and delay, by encouraging disappointed runner-up bidders to engage in baseless and unrelenting slander in an attempt to seize for themselves contracts fairly awarded to a competitor. Left unchecked, the blanket extension of the qualified privilege to any communication between a contractor and a public agency would encourage ceaseless rounds of accusation and counter-accusation between competitors following each unveiling of a bid. "Sound public policy and the orderly administration of public contracts are not furthered by eliminating recourse against competitors who negligently feed false information to public officials." A & B-Abell Elevator Co. v. Columbus/Cent. Ohio Bldg. & Constr. Trades Council, 73 Ohio St.3d 1, 18, 651 N.E.2d 1283, 1297 (1995) (Pfeifer, J., dissenting).
The second reason is that the weight of the evidence presented convinces that Court that the interest the defendants sought to advance was their own, not that of the public, and therefore they cannot establish the good-faith component of the qualified privilege. Several factors lead the Court to this conclusion. First, as 360 points out, Atsalis and 360 had bid against each other on other public contracts, but Atsalis never made any suggestion of suspected fraud or abuse by 360 until it had a direct, financial incentive to do so. Atsalis admits that its owner, Nick Atsalakis, had direct knowledge of the substandard work done by Allstate Painting on the South/Center span project in 2003 and 2004, but it offers no explanation why it waited until 2010 to pursue its alleged shared interest in "keeping Allstate and its employees away from the bridge."
Second, Atsalis appears to have disregarded the clear facts suggesting its charges were false, because the unadorned truth did nothing to advance the admitted self-interest Atsalis had in disqualifying 360 and claiming the contract for itself. Instead of merely pointing out that George Roditis, with his sordid past involvement with Allstate, was working for 360 Construction, the defendants made the following assertions, which are objectively false:
Atsalis contends that the "shared interest" was vindicated when MDOT's auditor eventually recommended that George Roditis not be allowed to work on any public project. But Atsalis's lobbying campaign in this case obstructed rather than advanced that interest, because six months were consumed by the agency disposing of all the baseless accusations and drilling down to the only nugget of truth that left it with concern in the end. Had Atsalis and Richner, as they contend, only been focused on ensuring that "bad actors" like George Roditis were excluded from the award of a public contract, then they simply could have reported their valid, objectively verifiable warnings that Roditis had admitted to past corruption and was a key employee of 360. But Atsalis had no motive to make that report, because there was no reward in simply disqualifying a corrupt employee of a competitor; Atsalis stood to gain only if it could eliminate 360 from the competition entirely, leaving Atsalis to win the contract as the presumptive runner-up.
Finally, the record contains ample proof from the defendants' own publications that the charges they brought were baseless. The defendants did not just make the general claim that the companies had "common ownership and management" and 360 was the "de facto successor" to Allstate; they backed up those contentions with specific assertions of material fact, all of which turned out to be false, and all of which were contradicted by documents that the defendants relied on to substantiate those accusations. The defendants asserted that: (1) "Elias Kafantaris owned Allstate with partner George Roditis"; (2) "360 principals were Allstate principals"; and "On July 1, 2008, property was conveyed by Mr. Kafantaris to 360." Exhibits attached to Richner's memorandum show each of those statements to be false. Exhibit Y recites a judicial finding that Kafantaris was the "sole shareholder" of Allstate. Exhibit P to the memorandum lists Steve Roditis as "President" and "Owner" of 360, and Spiros Paterakis as "President"; that exhibit does not refer to George Roditis at all. Exhibit Q lists Steve Roditis and Paterakis as "Principals" of the corporation; it likewise does not mention George Roditis. Richner's contention that "incorporators" should be viewed the same as owners until equity is distributed to shareholders is unpersuasive, because the company was formed in 2001 and began to operate in 2004, six years before the communications and record searches occurred. Despite the clear and direct evidence that Richner himself unearthed showing no overlap of ownership between the companies, Richner forged ahead with claims supported by nothing more than a single unsourced and unverified entry on a private Internet
The Court finds that the defendants are not entitled to the protection of the shared interest privilege. The plaintiff is not required to prove that the defamatory statements were made with malice.
The record contains ample proof of the remaining elements of the defamation claim. The defendants do not dispute that they published the cited statements and that the statements published tended to discourage a third party — MDOT — from dealing with 360. In fact the defendants repeated loudly and often their manifest purpose in making those statements, which in their stated opinion should "require MDOT's disqualification of 360, rejection of its bid, and award of the contract to Atsalis as the lowest responsible bidder."
A jury reasonably could conclude that the statements made were objectively false based on the documents that Richner attached to his memorandum, as discussed above. Richner argues that his statements about common ownership expressed only an opinion, and the "sting" of the truth that George Roditis was a manager at both companies is the same as the assertion of "common ownership." Despite the urging of the defendants, the Court must conclude, viewing the evidence in the light most favorable to the plaintiff, that none of the statements are opinion or substantially true.
"A communication is defamatory if it tends to lower an individual's reputation in the community or deters third persons from associating or dealing with that individual." Ireland v. Edwards, 230 Mich.App. 607, 614, 584 N.W.2d 632, 636 (1998). The sting of the de facto successor and alter ego accusations is materially different from the sting of the truth, as shown by MDOT's reaction to the charges. The agency took six months to investigate the defendants' assertion that 360 and Allstate were "the same company with a different name," and would certainly have declined to award the contract to 360 if it had turned out to be true. But when MDOT determined the truth, the agency awarded the contract to 360, with 360's concession that George Roditis would not work on the project.
Moreover, a jury reasonably could conclude that the defendants acted with fault amounting to at least negligence. Even under the strictest standards cited by the defendants, a jury could reasonably find that Richner engaged in purposeful avoidance of the truth and made a deliberate decision not to acquire knowledge of facts that might confirm the probable falsity of a publication.
The defendants are not entitled to summary judgment on the plaintiff's defamation claim.
Count II of the second amended complaint alleges tortious interference with a business expectancy. To prevail under Michigan law, the plaintiff must plead and prove "the existence of a valid business relationship or expectancy, knowledge of the relationship or expectancy on the part of the defendant, an intentional interference by the defendant inducing or causing a termination of the relationship or expectancy, and resultant damage to the plaintiff." Dalley v. Dykema Gossett, PLLC, 287 Mich.App. 296,
Richner argues that it is not enough merely to establish interference with a business relationship; 360 must also show malice or an act that is "wrongful per se." The defendants contend that they had no improper motive in making statements to MDOT in their attempt to wrest the contract from 360. However, the argument that their actions were motivated purely by business interests "cannot, standing alone, operate as a miracle cure making all that was wrong, right." Jim-Bob, Inc. v. Mehling, 178 Mich.App. 71, 96, 443 N.W.2d 451, 463 (1989). "[T]he defendant's motive is but one of several factors which must be weighed in assessing the propriety of the defendant's actions. Other factors include (1) the nature of the defendant's conduct, (2) the nature of the plaintiff's ... interest, (3) the social utility of the plaintiff's and the defendant's respective interests, and (4) the proximity of the defendant's conduct to the interference." Id. at 96-97, 443 N.W.2d 451, 463. Improper motives include motives that are illegal, unethical or fraudulent. Dolenga v. Aetna Cas. & Sur. Co., 185 Mich.App. 620, 626, 463 N.W.2d 179, 182 (1990).
The Court believes that making demonstrably false statements about a business competitor for the purpose of dissuading prospective customers from doing business with the target of the defamatory statements amounts to an "improper" act of interference. Although, in the Court's view, the defamation counts do not require proof of malice, as discussed above, there is ample evidence from which a jury could conclude that the defendants made disparaging statements about the plaintiff and its association with Allstate Painting with knowledge that those statements were false.
The defendants also argue that the plaintiff cannot establish a valid business expectancy. They cite Cedroni Association, Inc. v. Tomblinson, Harburn Associates, Architects & Planners Inc. for its holding that the disappointed low bidder on a public contract "did not have a valid business expectancy because plaintiff had no reasonable expectation of being awarded the contract, only `wishful thinking.'" Cedroni, 492 Mich. at 45, 821 N.W.2d at 3. In Cedroni, the disappointed low bidder sued an architect who recommended awarding the bid to another company. The Michigan Supreme Court affirmed summary judgment for the architect, and explained: "That plaintiff as the lowest bidder on a public contract had no valid business expectancy is supported by the longstanding rule in Michigan that a disappointed low bidder on a public contract has no standing to sue in order to challenge the award of a contract to another bidder." Id. at 46, 821 N.W.2d at 3.
The Court believes Cedroni is readily distinguishable on several bases. For one, in Cedroni the school district superintendent testified that "there was no communication of any intent to accept [plaintiff's] bid." Cedroni, 492 Mich. at 49, 821 N.W.2d at 5. Here, the plaintiff was not the disappointed low bidder; it had won the contract and would have been given
The plaintiff advances a fair reading of Cedroni and plausibly distinguishes its holding from the present case, based on the affirmative acts taken by MDOT to at least begin the award of the contract to 360 before the interruption of that process by the defendants' accusations. A jury therefore reasonably could conclude that the expectancy held by 360 had passed the point of "wishful thinking" and matured to a "reasonable likelihood or probability," as Cedroni requires. 492 Mich. at 46, 821 N.W.2d at 3.
The defendants are not entitled to summary judgment on Count II of the second amended complaint.
The Court concludes that the plaintiff has not offered evidence or argument to support the claims in counts I (tortious interference with a contract), V (unlawful disparagement), VI (negligence), or VII (respondeat superior) of the second amended complaint, and those counts will be dismissed. The record does not permit summary judgment for the defendants on the remaining counts of the second amended complaint.
Accordingly, it is
It is further
