NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P

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1 NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P CLARA PETERS, AN INDIVIDUAL AND PATRICIA RAYNOR, AN INDIVIDUAL, IN THE SUPERIOR COURT OF PENNSYLVANIA Appellants v. BEVERLY HAHN, AN INDIVIDUAL; MARLENE FABYONIC, AN INDIVIDUAL; KEVIN EGAN, AN INDIVIDUAL; RUSSELL WALLIS, AN INDIVIDUAL; DENNIS A. MOORE, AN INDIVIDUAL; BRIAN LENART, AN INDIVIDUAL; PAUL FISCHERKELLER, AN INDIVIDUAL; RICHARD BAUGH, AN INDIVIDUAL; REBECCA BRAMMELL, AN INDIVIDUAL; AND MICHAEL SALVATORE, AN INDIVIDUAL, Appellees No WDA 2012 Appeal from the Order Entered October 22, 2012 In the Court of Common Pleas of Westmoreland County Civil Division at No(s): 4928 of BEFORE: DONOHUE, OLSON AND MUSMANNO, JJ. MEMORANDUM BY OLSON, J.: FILED OCTOBER 24, 2013 Appellants, Clara Peters and Patricia Raynor, appeal from the order entered on October 22, 2012 granting summary judgment to Appellees, Beverly Hahn, et al. Upon careful consideration, we affirm. as follows: The facts and procedural history, as summarized by the trial court, are [Appellant] Patricia Raynor (hereinafter Raynor ) was employed by the YMCA as its Chief Executive Officer for approximately 25 years. [Appellant] Clara Peters

2 (hereinafter Peters ) was employed by the YMCA as the Associate Director for approximately eighteen years. Peters was also the president of the YMCA s Oak Hollow Auxillary, [ the Auxiliary ] whose purpose was to solicit funds to support program operations and assist in maintaining the buildings and grounds for the benefit of all program participants of the Oak Hollow Auxiliary. The Auxiliary acted as a funding stream to the YMCA. The Auxiliary had no independent authority to determine how its funds were spent; that authority lay with the YMCA. In August 2005, a dispute arose and controversy ensued among the YMCA Board of Directors and the [] Auxiliary with respect to the management and budget of the Y[MCA] and the use of Auxiliary funds. [Appellants] had segregated certain funds raised by the Auxiliary into a separate bank account, with another bank, and refused to grant control of those monies to the [YMCA] Board. When the [YMCA] Board asked [Appellants] questions about the YMCA s and Auxiliary s finances and recordkeeping, they failed to respond to the [YMCA] Board s satisfaction. As a consequence, and with escalating discord between [Appellants] and the [YMCA] Board, Peters and Raynor were terminated from their at-will employment. On March 13, 2006, Peters and Raynor filed an equity action against the [YMCA] Board. The lawsuit (filed at No of 2006) alleges that disputes have arisen between [Appellants] and the Board with respect to fundraising activities of the YMCA Auxiliary and control over the expenditure of those monies. In addition, the [complaint] references [Appellants ] personal computers, which were used for YMCA business, and [refers] to a lease agreement between Peters and the YMCA for the rental of a three-bay garage and two rooms at the senior center owned by the Y[MCA]. Among other things, the [complaint] seeks injunctive relief to prohibit the [YMCA] Board and its [s]olicitor from interfering with [Appellants ] use of their personal property. The following day, on March 14, 2006, [Appellant] Peters and her husband, Joseph Peters, and three other individuals, all of whom were members of the YMCA, filed another equity action (at No of 2006) against the - 2 -

3 Board, alleging that the Board did not follow the mandatory procedures of the YMCA s [c]onstitution and [b]y-laws, and had abused their discretion with respect to its management and operation. The suit sought injunctive relief in the form of the removal of the Board pursuant to 15 Pa.C.S.A. 5726(c), and asked the [c]ourt to enjoin the Board from suspending or terminating key employees, Peters and Raynor, [Appellants] herein. On May 1, 2006, both suits were discontinued. However, the YMCA was closed and the Board resigned. On June 12, 2006, [Appellants] filed the within lawsuit against nine (9) of the twelve Board members of the YMCA, and against its [s]olicitor. The Complaint alleges that [Appellees] made seven defamatory statements concerning the reasons behind [Appellants ] termination from employment. [Appellees] filed [p]reliminary [o]bjections to the Complaint, and the Honorable Daniel J. Ackerman sustained the objections in part, dismissing three (3) of the alleged defamatory statements as [not ]actionable. Consequently, the remaining four statements [were] the focus of [the] summary judgment motions [at issue.] [Those] statements can be summarized as follows: 1) On March 16, 2006, two days after the second of the two equity actions was filed, at a meeting of the [YMCA] Board and certain YMCA members, the [YMCA] Board presented a proposed press release[. Appellants argue the press release inferred they] were guilty of committing serious accounting errors and that they embezzled or improperly withheld funds belonging to the YMCA. 2) [Appellees] released a statement to the media about [Appellants ] termination from employment, which was published on March 18, 2006, in the Daily News. This statement allegedly made inferences that were capable of a defamatory meaning. 3) A newspaper article published on March 23, 2006, in the Pittsburgh Tribune Review, included allegedly defamatory and untrue remarks by - 3 -

4 [Appellee Rebecca] Brammell, and purportedly insinuated that Peters rented space from the YMCA to store illegal video poker machines, a matter that had been turned over to the authorities. 4) On March 16, 2006, at a meeting of the Y[MCA] membership, [Appellee] Brammell, purportedly at the direction of the [YMCA] Board, is alleged to have accused Peters of possessing and storing illegal gaming devices on YMCA property. [Appellants] allege that these statements damaged their business and professional reputations. They contend that because the defamatory communications constitute defamation per se, they are not required to prove actual damages. Furthermore, they contend that [Appellees ] statements were not privileged. Trial Court Opinion, 10/22/2012, at 2-4 (record citations omitted). On June 29, 2012, Appellee Brammell filed a motion for summary judgment. The remaining Appellees filed a joint motion for summary judgment on July 6, After oral argument on the motions, the trial court granted the requested relief by order, and accompanying opinion, on October 22, This timely appeal ensued. 1 On appeal, Appellants present the following issue for our review: 1. Whether the trial court erred as a matter of law or abused its discretion in granting Appellees[ ] [m]otion[s] 1 Appellants filed a notice of appeal on November 7, On the same day, the trial court ordered Appellants to file a concise statement of errors complained of on appeal pursuant to Pa.R.A.P. 1925(b). Appellants complied timely on November 26, On December 4, 2012, the trial court entered an order and relied upon its prior October 2012 opinion in lieu of issuing another opinion pursuant to Pa.R.A.P. 1925(a)

5 for [s]ummary [j]udgment by an [o]rder of [c]ourt, dated October 22, 2012, when such ruling made several factual determinations that, if viewed in the light most favorable to Appellants, the non-moving part[ies], created genuine issues of material fact that should be decided by the ultimate trier of fact, including the following: a. Whether Appellants segregated certain funds into a separate bank account, with another bank and refused to allow the Appellees control of said funds and refused to respond to Appellees in a satisfactory manner when an accounting was taken of said funds and Appellees had actual knowledge of the separate bank account. b. Whether Appellants opening a separate bank account, allowing [Appellant Peters ] husband to rent a storage space and [Appellants ] eventual termination was a matter of public concern. c. Whether Appellees knowingly made false statements about [Appellants]. d. Whether Appellee Rebecca Brammell is absolutely privileged when she made public accusations in an extrajudicial context that bore no reasonable connection to pending litigation with Appellants. e. Whether Appellees defamatory statements are protected by the fair comment privilege or conditional privilege. f. Whether Appellees[ ] defamatory statements were made with malice or negligence when the trial court held that the record is devoid of such evidence. Appellants Brief at 7. Appellants claim the trial court erred by granting summary judgment because there were material issues of fact left to be resolved. Id. at 16. Appellants claim they set forth evidence proving that the Auxiliary and the Board were wholly separate entities and the fact that the Auxiliary had a - 5 -

6 separate account is not improper[,] and [t]he [YMCA] Board was made aware of the separate account; it did not, however, have an opportunity to approve this action. Id. at 18. Appellants argue that [t]he implication of [the YMCA Board s] public statements is that they were the rightful owners of the funds, and that Appellants had done something improper, illegal or unethical in opening a bank account. Id. at 19. Appellants also assert that it was error to determine the statements at issue were matters of public concern merely because the YMCA had 1,000 members. Id. at Moreover, Appellants contend it was alleged, but unproven, that the YMCA Board was forced to close the North Huntingdon YMCA facility. Id. at 23. Appellants also allege that Appellees have not shown how the challenged statements would have contributed to the public discussion of making the YMCA s services available to its members after the closure. Id. [O]ne could easily conclude that Appellees made such statements to allow the public to infer that Appellants where [sic] acting wrongfully prior to their termination and that the YMCA was in financial despair because of the Appellants[ ] actions. Id. at 24. With regard to the statements made to the Daily News and in the [YMCA] Board s press release about gaming machines being stored on YMCA property, Appellants claim that just because the YMCA Board did not use the term illegal, the statement that the matter was turned over to the authorities should be fairly and reasonably construed to imply illegal activity to support defamation by innuendo. Id. at

7 Appellants argue that the trial court erred in determining that Appellees proved absolute and conditional privileges applied. First, Appellants assert that Appellee Brammell s statements were not absolutely privileged by way of her status as an attorney and as solicitor for the YMCA Board, because her statements were not made in the regular course of judicial proceedings. Id. at Likewise, Appellants claim Appellee Brammell s statements were not protected by the fair comment privilege, because they were not made in response to then pending litigation, but rather, were part of a campaign to discredit the Appellants in the eyes of their constituents, obscure the [YMCA] Board s contributions to the situation at the YMCA, and thereby to engender support for the then-current Board of Directors. Id. at 31. Regarding conditional privilege, Appellants argue that there was no proper motive or reasonable charges to allow the statements at issue and reiterate their argument that the statements were made to deflect negative attention away from the YMCA Board. 2 Id. at This is especially so, because Appellants contend the YMCA Board knew the following information about the video poker machines prior to making the statements at issue: (1) the machines were inoperable; (2) there was no electrical service to the storage unit; (3) the unit was renovated in 2004 and Board members were afforded opportunities to ascertain the manner in which it was being used[;] and (4) Appellees attempts to feign ignorance of the fact that the garage was rented out at all ignores the fact that monthly rental checks had been received by the YMCA for more than 20 years[.] Id. at

8 Preliminarily, we note the applicable scope and standard of review: Our scope of review of an order granting summary judgment is plenary. We apply the same standard as the trial court, reviewing all the evidence of record to determine whether there exists a genuine issue of material fact. We view the record in the light most favorable to the nonmoving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party. Only where there is no genuine issue as to any material fact and it is clear that the moving party is entitled to a judgment as a matter of law will summary judgment be entered. Motions for summary judgment necessarily and directly implicate the plaintiff's proof of the elements of her cause of action. Summary judgment is proper if, after the completion of discovery relevant to the motion, including the production of expert reports, an adverse party who will bear the burden of proof at trial has failed to produce evidence of facts essential to the cause of action or defense which in a jury trial would require the issues to be submitted to a jury. Thus, a record that supports summary judgment will either (1) show the material facts are undisputed or (2) contain insufficient evidence of facts to make out a prima facie cause of action or defense and, therefore, there is no issue to be submitted to the jury. Upon appellate review, we are not bound by the trial court's conclusions of law, but may reach our own conclusions. The appellate Court may disturb the trial court's order only upon an error of law or an abuse of discretion. H & R Block E. Tax Servs., Inc. v. Zarilla, 69 A.3d 246, (Pa. Super. 2013). In a defamation case, the plaintiff must prove: (1) [t]he defamatory character of the communication; (2) its publication by the defendant; (3) its application to the plaintiff; (4) the understanding by the recipient of its defamatory meaning; (5) the understanding by the recipient of it as - 8 -

9 intended to be applied to the plaintiff; (6) special harm resulting to the plaintiff from its publication; and (7) abuse of a conditionally privileged occasion. Weber v. Lancaster Newspapers, Inc., 878 A.2d 63, (Pa. Super. 2005); 42 Pa.C.S.A. 8343(a). Where the issue is properly raised, the defendant has the burden of proving: (1) the truth of the defamatory communication; (2) the privileged character of the occasion on which it was published; and/or (3) the character of the subject matter of the defamatory comment is of public concern. Id.; 42 Pa.C.S.A. 8343(b). Whether a privilege exists is a question of law for the court. Smith v. Griffiths, 476 A.2d 22, 25 (Pa. Super. 1984). A conditional privilege arises when a recognized interest of public concern is involved. American Future Systems, Inc. v. BBB, 872 A.2d 1202, 1210 (Pa. Super. 2005). Individuals may invoke a qualified, or conditional, privilege when they make out-of-court statements if those statements are a fair and accurate report of statements made or pleadings filed in a judicial proceeding, provided that the reporter, the individual, does not abuse the privilege or make his report with the sole purpose of causing harm to the person defamed. Doe v. Kohn Nast & Graf, P.C., 866 F. Supp. 190, 194 (E.D. Pa. 1994), citing Binder v. Triangle Publications, Inc., 275 A.2d 53, 56 (Pa. 1971). This Court has previously determined that statements made by judges, attorneys, witnesses and parties in the course of or pertinent to any - 9 -

10 stage of judicial proceedings are absolutely privileged and, therefore, cannot form the basis for liability for defamation. Richmond v. McHale, 35 A.3d 779, 784 (Pa. Super. 2012) (citations omitted). The extent of a lawyer's privilege has been defined in the Restatement (Second) of Torts 586, and adopted in Pennsylvania, as follows: An attorney at law 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 as counsel, if it has some relation to the proceeding. Smith, supra. It is clear that an allegedly defamatory communication is absolutely privileged when it is published prior to a judicial proceeding as long as that communication has a bearing on the subject matter of the litigation. Milliner v. Enck, 709 A.2d 417, 420 (Pa. Super. 1998). We turn now to the instant matter. In their defamation complaint, Appellants allege that on or about March 16, 2006, [Appellees], without privilege, passed out to members of the YMCA a proposed press release at a meeting between the [YMCA] Board and certain YMCA members. Complaint, 6/6/2012, at 6, 19. Appellants contend the release is defamatory in that it infers that [Appellants] were guilty of committing serious errors and further infers that [Appellants] embezzled and/or improperly withheld funds which belonged to the YMCA. Id. at 20. Appellants attached a copy of the press release to the complaint, which states, in pertinent part:

11 The Board of Directors of the Oak Hollow YMCA took action this week to examine a number of discrepancies involving the YMCA. Serious concerns expressed by an accountant on the board resulted in the termination of CEO Patricia Raynor; the termination of Associate Director Clara Peters; the temporary closing of the main buildings; and, new controls on access to other YMCA properties. The YMCA Board is initiating a full and independent audit of its finances, including YMCA funds maintained in separate bank accounts, not under the control of the YMCA Board. The Board is also making a determination of the practice of renting out YMCA spaces as personal storage for individuals, in this case the storage of gaming and vending equipment, an irregular circumstance causing serious concern to the Board. Temporary closure of the Oak Hollow YMCA main building has been effected in order to ensure that the YMCA is operating safely and soundly with proper staffing and oversight and to facilitate this inspection of irregularities. The closure is expected to last at least through next week. The separately located preschool and senior centers will remain open during this period. * * * Id., Exhibit A. The press release is attributable to: Rebecca A. Brammell, Counsel, representing the Board of Directors. Id. Appellants also alleged that, at the March 16, 2006 YMCA membership meeting, Appellee Brammell publicly accused [Appellant] Peters as having possession of and storing illegal gaming and video machines on the YMCA property. Id. at 6, 21. In addition, Appellants allege in their complaint that Appellees released various defamatory statements to two media outlets. More specifically, on March 18, 2006, The Daily News published a news blurb that largely paralleled the abovementioned press release. Id. at 7, 23, Exhibit B

12 Moreover, Appellants maintain that on March 23, 2006 the Pittsburgh Tribune Review published another article wherein [Appellee] Brammell made defamatory statements about [Appellant] Peters insinuating that she utilized rental space owned by the YMCA to store illegal video poker machines and that the matter was turned over to authorities. Id. at 25. Finally, in their complaint, Appellants assert that two defamatory letters, written by [Appellee] Hahn, proclaimed: (1) Appellant Peters was terminated due to wrongful conduct and (2) records revealed a payroll discrepancy and Appellant Raynor was not serving as a full-time director as [her] contract had required. Id. at 8, 28. In support of their motion for summary judgment, Appellees attached copies of two equity action complaints filed by Appellants prior to the instant defamation action. In the first action, Appellants sought injunctive relief against the Board and requested restricted access to Appellants personal computers and admission to the work place to allow Appellants to retrieve their personal belongings. The complaint also requested an accounting. Appellants alleged after a dispute arose over the mismanagement of expenditures, [Appellants] opened a separate bank account to hold the monies [the Auxiliary] raised through fundraising and refused to grant control of those monies to the [YMCA] Board. Complaint (#1920 of 2006 filed 3/5/2013), Exhibit 12 to Appellees Motion for Summary Judgment. Appellants further alleged that Appellee Brammell informed them she and the Executive Committee broke the locks and entered into the garages

13 leased to [Appellant] Peters in order to see what was inside. Appellees Motion for Summary Judgment at 14. They alleged such actions were unilateral and without providing prior notice and that it was not known whether the garage doors were re-secured or left open so that thieves could loot the contents of the garages. Id. In the second equity action, Appellants sought removal of the Board for failing to follow its constitution and by-laws, terminating Appellants without replacements, and breaking into the privately leased garages. Id. at Exhibit 13. Appellees argued that it was [Appellants ] two lawsuits, not Attorney Brammell or the Board, which brought to the media s attention the conflict, [i.e.,] the separate account for the Auxiliary-raised funds, the termination of [Appellants] from their employment, the alleged snooping around the rented property and the so-called confiscation of personal property. Id. at 26, 121. Appellees posited that the financial discrepancies as reported were brought to the public attention by Appellants by virtue of their lawsuits. Id. at 26, 128. Appellees attached to their summary judgment motion an expert report from a certified public accountant who conducted an audit of the YMCA and opined that setting up a separate account for the Auxiliary constituted an irregularity in bookkeeping. Id. at 30-31, 141, Exhibit 7. Regarding the found video poker machines maintained in a garage located on YMCA property, Appellees consulted with two experts who pronounced, at least two of the machines previously stored on YMCA property

14 specifically two Cherry Master video poker machines possessed qualities of illegal gambling devices. Id. at 15, 70, Exhibits The trial court identified each source of the purportedly defamatory statements and concluded that Appellants were not entitled to relief as a matter of law. The trial court first identified the statements at issue. At issue were: (1) the March 2006 press release implying serious errors by Appellants, that they withheld YMCA funds, and the suggestion of embezzlement; (2) statements made to two media outlets -- the published March 2006 press release in the Daily News and Appellee Brammell s statements published in the Pittsburgh Tribune Review that insinuated Appellant Peters stored illegal gaming machines on YMCA property; (3) Appellee Brammell s statements at a YMCA meeting regarding storage of gaming machines, and; (4) the two defamatory letters at issue, regarding Appellant Peters termination for wrongful conduct and Appellant Raynor s contractual obligation to work full-time as a YMCA Board member. In its opinion, the trial court set forth the aforementioned legal standards and concluded that the comments at issue dealt with matters of public concern. Therefore, upon Appellants allegations of defamation, the burden shifted to Appellees to prove the falsity of those statements. The trial court determined that Appellees met their burden of proving the statements were true, but then looked at whether the statements qualified as defamation by innuendo, which is actionable in Pennsylvania. The trial court concluded that Appellants defamation by innuendo claim would

15 normally defeat Appellees motion for summary judgment, as such factual determination would be for a jury. However, privileges are decided as a matter of law and, here, the trial court determined absolute and conditional privileges applied. More specifically, the trial court determined that the statements at issue were made on an issue of public concern and that Appellants failed to meet the burden to prove that the allegedly defamatory statements were false. Trial Court Opinion, 10/22/2012, at 6. The trial court also rejected Appellants argument that the publications contained falsely implied facts, or defamation by innuendo[,] because the statements at issue were protected under the doctrines of absolute privilege and conditional fair comment privilege. Id. at 7. Moreover, the trial court found that Appellee Brammell, who spoke in her professional capacity as the attorney for the YMCA Board, [was] absolutely privileged to comment upon the circumstances surrounding the [two then pending] lawsuits filed by Appellants. Id. at 7-8. Furthermore, the trial court decided the contents of each of the four allegedly defamatory statements simply stated the position of [Appellees] in response to the allegations contained in the lawsuits and were, therefore, conditionally privileged as fair comment. Id. at 8. Finally, the trial court concluded that the record was devoid of evidence that Appellees abused their privilege with malice or through negligence. Id. at 9. Based upon our standard of review, we agree with the trial court. Clearly, this controversy is of public concern because it involved a charitable

16 organization that provided services to the community. Appellants filed two lawsuits against the YMCA Board and put their terminations and the disagreement surrounding the rented YMCA property into the public eye. In those prior actions, Appellants conceded that a dispute arose over the management of expenditures and claimed that the Board took unilateral action by breaking locks on property owned by the YMCA and rented by Appellant Peters. In response, Appellees stated that they were looking into bookkeeping irregularities and discovered illegal video poker machines. Accordingly, we conclude the allegedly defamatory statements at issue were fair comments to Appellants previously instituted causes of action and not made with the sole purpose of causing harm to Appellants. Moreover, Appellee Brammell s comments had a bearing on the subject matter of the pending litigation and, therefore, were subject to absolute privilege. As such, Appellees pled and proved applicable privileges to defeat Appellants cause of action for defamation and the trial court properly entered summary judgment in favor of Appellees. Order affirmed. Judgment Entered. Joseph D. Seletyn, Esq. Prothonotary Date: 10/24/