Darvish v. Gohari

²⁶⁹ MURPHY, Chief Judge. In the Circuit Court for Montgomery County, a jury found that appellant John R. Darvish had made false and defamatory statements about appellee Shariar Gohari. The evidence was sufficient to support the jury’s verdict, but appellant contends that he is entitled to a new trial at which he can (1) assert a “qualified privilege” defense, and (2) introduce evidence that his statements about appellee were true. 1 For the reasons that follow, we agree with those contentions and remand for further proceedings. Factual Background Appellant is the owner and chief executive officer of Darcars automotive franchise group.

In January 1987, he hired appel-lee as a comptroller trainee at the Darcars Toyota dealership. In 1988, appellee became vice president of Darcars Toyota, and in 1992 was named senior vice president of Darcars automotive group. In August of 1996, appellee quit his job with Darcars. In November of 1996, appellee entered into an agreement with James Kline for the purchase of Kline’s Toyota franchise. ²⁷⁰ Appellee needed Toyota’s approval in order to own/operate that franchise, and he submitted a franchise application to Central Atlantic Toyota Distributors, Inc. (“CATD”). 2 On December 2, appellee met with Dennis Clements and Roy Arminger of CATD.

Appellee authorized CATD to “inquire, through outside sources, about [his] character, general reputation and credit history” and to “obtain and share information from and with any of its affiliated entities.” The jurors were entitled to accept the following testimony. On December 10, 1996, Clements met with appellant and inquired about appellee’s qualifications to own the Toyota franchise. Following that meeting, Clements drafted a memorandum stating that appellant had told him, among other things, that (1) appellee “did not have the experience or background to be considered qualified to operate a dealership;” (2) “Mr. Gohari had suddenly left the DARCARS organization several months ago in an unprofessional manner and with no notice;” and (3) “there was a questionable financial manipulation by Mr. Gohari to inflate his compensation.” When Clements told Arminger about that December 10 meeting, Arminger prepared a memorandum summarizing Clement’s recollections of appellant’s comments about appel-lee. On December 12, 1996, Arminger called appellant and read to him several “bullets” from the Arminger memorandum.

The bullets summarized the statements that appellant had purportedly made to Clements, including appellant’s opinion that appellee was “dishonest” and had “manipulated financial statements.” Appellant made no response when Arming-er read through the series of bullets and Arminger considered appellant’s silence to be a confirmation that appellant had made the statements at issue. 3 Arminger requested that ²⁷¹ appellant provide a letter confirming the statements appellant made to Clements, and told appellant that Gohari’s approval “would be dependent upon what was contained in the letter.” On December 13, 1996, appellant sent a confirmation letter to CATD. The letter provided in pertinent part: Mr. Gohari was employed at DARCARS ... through August 12,1996, as in house controller ... He had responsibility for overseeing day-to day accounting issues and coordinating all accounting issues with ... DARCARS’ outside accounting firm.

Mr. Gohari’s responsibilities did not include, however, involvement in or supervision over other dealership departments, including New and Used Car Sales, Service and Parts, Leasing, Body Shop, Customer Relations, or Finance and Insurance Programs ... Unfortunately, Mr. Gohari left his employment in a most unprofessional manner ... As a result, there are many unanswered questions concerning the proper allocation of expenses in the dealership and pay plan applications. After reviewing information that it had gathered with respect to appellee’s application, CATD informed appellee that he would have to nominate a qualified general manager in order to be approved as a dealer.

Appellee submitted several names but was unable to procure CATD approval before his contract with Kline expired. Procedural History Appellee filed an amended complaint alleging that appellant had defamed him and tortiously interfered with his contract to purchase the Toyota dealership. 4 Prior to and during the ²⁷² trial, the circuit court made three rulings that are now the subject of this appeal. First, appellee moved in limine to preclude appellant from asserting a qualified privilege defense. According to appellee, because CATD was not appellee’s prospective employer, neither the Maryland Code nor common law afforded appellant a privilege.

Appellant argued that the qualified privilege defense was applicable because the communications arose out of the employer-employee relationship. The circuit court ultimately ruled that appellant was not entitled to assert a qualified privilege. Second, appellant moved to exclude Arminger’s memorandum on the ground that it was inadmissable hearsay. Appel-lee opposed that motion and argued that the memorandum should have been admitted as a business record pursuant to Maryland Rule 5-803(b)(d).

Appellee also argued that the bullets contained within the memorandum were admissible under Maryland Rule 5-803(a)(2). The circuit court excluded “the portion referring to Mr. Clements’ alleged comments, on the ground that [they were] hearsay,” but ultimately allowed Arminger to testify about the bullets he had read to appellant. Finally, appellee moved to preclude appellant from attempting to prove that the statements attributed to appellant were actually true. Appellee argued that appellant could not prove the truth of those statements because appellant had consistently denied making any defamatory statements.

Appellant countered that appellee was required to persuade the jury that the statements were false and that appellant was therefore entitled to introduce evidence that would support a different conclusion. At the motions argument, appellant directed the circuit court to a complaint DARCARS had filed against appellee, alleging that appellee had defrauded the dealership and abused his power by extending interest free loans. After a six day trial the jury found that appellant made false and defamatory statements and deliberately interfered with appellee’s contract. The jury awarded appellee $500,000 in ²⁷³ damages for defamation, and $2,120,000 damages for tortious interference with contract, but declined to award punitive damages.

Discussion The circuit court determined that the following statements were at issue: THE COURT: Bullet 1. “[Appellee] never had operational authority over the dealership even at the time of [appellant’s] illness.” Are you claiming that to be defamatory? [APPELLEE’S TRIAL COUNSEL]: Yes, sir. THE COURT: Okay. “He manipulated financial statement figures to inflate his personal compensation.” [APPELLEE’S TRIAL COUNSEL]: Yes, sir. THE COURT: “He was dishonest.” [APPELLEE’S TRIAL COUNSEL]: Yes, sir. THE COURT: All right. “People did not like him.” [APPELLEE’S TRIAL COUNSEL]: Yes, I think that is because I think that does really go to the heart of being the operator of a dealership.

I think it is borderline, ... it is not something that I am going to spend a lot of time on ... Appellant contends that whatever statements he made were protected by a qualified privilege, and that appellee was never defamed because each statement attributed to appellant was true. A party is entitled to have his or her theory of the case presented to the jury, provided that the theory is legally and factually supported. Therefore, provided there is evi-dentiary support for an instruction requested by a party, the court must instruct the jury on the law, either by giving particular instructions offered by the parties, by crafting its own instructions, or by combining elements of both.

Baltimore Gas & Electric v. Flippo, 112 Md.App. 75, 92 , 684 A.2d 456 (1996), aff'd. 348 Md. 680 , 705 A.2d 1144 (1998)(inter- ²⁷⁴ nal citations omitted). We are persuaded that appellant was entitled to assert the qualified privilege defense, and to present evidence that the statements attributed to him were true. I. Under Maryland law, to establish a prima facie case for defamation, a plaintiff must ordinarily establish that the defendant made a defamatory statement to a third person; that the defamatory statement was false; that the defendant was legally at fault for making the statement; and that the plaintiff thereby suffered harm. Rosenberg v. Helinski, 328 Md. 664, 675 , 616 A.2d 866 (1992), cert. denied, 509 U.S. 924 , 113 S.Ct. 3041 , 125 L.Ed.2d 727 (1993).

Even where those elements are satisfied, a defendant will not be liable if “acting ‘in furtherance of some interest of social importance, which is entitled to protection ... ’ ” Woodruff v. Trepel, 125 Md.App. 381, 391 , 725 A.2d 612 (1999)(quoting, W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 114, at 815 (5th ed.1984)). Conditional or qualified privileges rest upon the notion that a defendant may escape liability for an otherwise actionable defamatory statement, if publication of the utterance advances social policies of greater importance than the vindication of a plaintiffs reputational interest ... [T]he common law recognized that a person ought to be shielded against civil liability for defamation where, in good faith, he publishes a statement in the furtherance of his own legitimate interest, or those shared in common with the recipient or third parties ... Marchesi v. Franchino, 283 Md. 131, 135 , 387 A.2d 1129 (1978)(internal citations omitted). Communications arising “out of the employer-employee relationship clearly enjoy a qualified privilege.” McDermott v. Hughley, 317 Md. 12, 28 , 561 A.2d 1038 (1989).

That privilege is set forth in Maryland Code (1998 RephVol.), Cts. & Jud. Proc. § 5-423, which provides in pertinent part: ²⁷⁵ (а) Liability of employer. — An employer acting in good faith may not be held liable for disclosing any information about the job performance or the reason for termination of employment of an employee or former employee of the employer: (1) To a prospective employer of the employee or former employee at the request of the prospective employer, the employee, or the former employee ... Because CATD is a prospective franchisor and not a prospective employer, appellant’s statements do not fall within the letter of this statutory protection. This statute, however, did not abrogate the common law, and appellant asserts that the circuit court should have found that his statements were protected by the common law.

We agree. According to the Restatement (Second) of Torts § 595(1), a qualified privilege may be claimed where the defendant believes “there is information that affects a sufficiently important interest of the recipient,” and where the publication may be made “within the generally accepted standards of decent conduct.” It is obvious that appellee’s ability to operate in a franchise was of importance to CATD. One factor to be considered in determining whether the publication falls within the standards of decent conduct is whether the publication was made “in response to a request.” Id. at § 595(2). In this case, appellee expressly authorized CATD to seek information about his “character, general reputation and credit history” and to “obtain and share information from and with any of its affiliated entities.” Pursuant to that grant of authority, CATD approached appellant and solicited information about appellee.

Because appellant’s offending publication was made “in response to an [authorized] inquiry and not volunteered,” we are persuaded that he enjoyed “greater latitude about what he may say about [appellee] without incurring liability.” Happy 40, Inc. v. Miller, 63 Md.App. 24, 35 , 491 A.2d 1210 cert. denied, 304 Md. 299 , 498 A.2d 1185 (1985). Moreover, a qualified privilege may arise where the speaker and the recipient have a “common interest in the subject matter,” including “interests in property, business and ²⁷⁶ professional dealings.” Hanrahan v. Kelly, 269 Md. 21, 28 , 305 A.2d 151 (1973). The Court of Appeals has “recognized that qualified privilege arising by reason of common interest in the subject matter can inhere in business dealings between the publisher and the recipient.” Id. n. 2 (citing Deckelman v. Lake, 149 Md. 533 , 131 A. 762 (1926)). When a