Jack Sheets v. David Birky, Interra Credit Union, Curt Bechler, and Venture International, LLC. , 54 N.E.3d 1064 ( 2016 )

FILED
May 18 2016, 8:48 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEY FOR APPELLANT ATTORNEYS FOR DAVID W.
Patrick F. O’Leary BIRKY
Goshen, Indiana Jeffery A. Johnson
Brett R. Hummer
May Oberfell Lorber
Mishawaka, Indiana
ATTORNEYS FOR INTERRA
CREDIT UNION
Jeffrey L. Lund
Landon K. Richmond
Yoder Ainlay Ulmer &
Buckingham, LLP
Goshen, Indiana
ATTORNEYS FOR VENTURE
INTERNATIONAL LLC AND
CURT BECHLER
Ronald E. Elberger
Bryan H. Babb
Bradley M. Dick
Bose McKinney & Evans LLP
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
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Jack Sheets, May 18, 2016
Appellant-Plaintiff, Court of Appeals Case No.
20A04-1509-PL-01620
v. Appeal from the Elkhart Superior
Court
David Birky, Interra Credit The Honorable Evan S. Roberts,
Union, Curt Bechler, and Judge
Venture International, LLC., Trial Court Cause No.
Appellees-Defendants 20D01-1309-PL-222
Bailey, Judge.
Case Summary
[1] Jack Sheets (“Sheets”) was discharged from his employment with Interra Credit
Union (“Interra”). He subsequently filed a complaint alleging that Interra Vice-
President David Birky (“Birky”) had committed defamation per se, for which
Interra was vicariously liable; and that management consultant Venture
International, LLC (“Venture”) and its owner, Curt Bechler (“Bechler”), had
been negligent in the monitoring of Sheets’s condition after sick leave, had
negligently investigated and reported a hotline call, had breached a fiduciary
duty, and had intentionally interfered with Sheets’s employment-at-will
contract with Interra. Summary judgment was granted to Birky and Interra;
partial summary judgment was granted to Venture and Bechler. Negligence
and tortious interference claims against Venture and Bechler proceeded to trial,
and a jury found in favor of the defendants. Sheets challenges the grant of
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summary judgment to Birky and Interra and the judgment in favor of Venture
and Bechler on the claim of interference with an employment contract. 1 We
affirm.
Issues
[2] Sheets presents two issues for review:
I. Whether summary judgment was improvidently granted to
Birky and Interra upon the defamation per se claim; and
II. Whether the trial court abused its discretion in instructing
the jury regarding legal protection of an employment-at-
will contract.
Facts and Procedural History
[3] In 1976, Interra hired Sheets as a manager trainee. Sheets eventually became
the President and CEO of Interra, reporting to Interra’s Board of Directors
(“the Board”). Venture was hired to perform an organizational assessment in
2007 and again in 2011.2
1
Sheets does not challenge the earlier grant of partial summary judgment to Venture and Bechler, nor does
he challenge the judgment entered upon the jury verdict as to the claim of negligence against Venture and
Bechler.
2
When deposed, Bechler described an organizational assessment as a procedure that “seeks to identify
perceptions and seeks to identify issues of concern by the employees and the management team regarding
how the organization is functioning. . . . It gives the leadership of the organization feedback on how they’re
being perceived and how they’re functioning.” (App. at 199-200.)
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[4] On January 4, 2011, Sheets experienced an inter-cerebral hemorrhage. After a
four-month medical leave, Sheets returned to work on a restricted basis. In
April of 2011, the Board expanded Venture’s duties to include acting as a
liaison between Sheets and his medical team.3 In August of 2011, Sheets
returned to work full-time without restrictions.
[5] As part of its 2011 Organizational Assessment, Venture recommended the
installation of a Compliance Hotline accessible to Interra employees.
Employees were advised to: “Use the Compliance Line to report a serious
concern or a suspected policy violation.” (App. at 265.) After the completion
of the 2011 assessment, Venture’s responsibilities primarily concerned
monitoring and reporting calls coming into the hotline in exchange for a
$100.00 monthly fee.
[6] On August 18, 2012, Birky called the hotline, identified himself, provided his
telephone number, and left the following message:
My concern is about the fitness of leadership of Jack Sheets, our
President and CEO. I’ve had significant concerns about my own
personal level of frustration in interactions with Jack over the
past month. Since, my perception is that since almost from the
day that Venture International disengaged in their consulting
contract with Interra, Jack has become considerably more
aggressive. Jacks’ cognitive ability to process and follow
conversations when there are multiple voices around the table
has its [sic] significantly impaired in my opinion and his ability to
3
This role formed the basis of one of Sheets’s negligence claims against Venture and Bechler.
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focus on what’s important and the particular issue and accept
and follow conversations is also significantly less than optional
[sic] or ideal. I have, also have documentation of multiple
conversations that I personally have had with Jack where he
refuses to accept an answer or explanation and simply comes
back over and over and over again asking the same question over
and over again and being unable to process or understand what
he is being told. I’ve also had responses from Jack that say he
does not want to have a debate with me he simply wants me to
listen to his point of view and I have been frustrated and
unaccepting of that type of one way conversation instead of a
dialogue. I’ve also had feedback from respected peers within the
credit union industry who view Jack and have expressed their
view to me as not being fit for leadership of a credit union and at
some level view him as being an embarrassment to the credit
union as a whole. Almost everyone likes Jack but there is some
sense of true bewilderment that he is in charge of a credit union
this size and on the track that it’s on. I believe that there are
other members of the Senior Management team that share my
feelings; however, I am speaking for myself and would be happy
to provide additional feedback and specifics at any time. So I
appreciate the follow-up and look forward to hearing from a
communication specialist soon.
(App. at 162.)
[7] Venture contacted Birky regarding the call, and provided a transcript of the call
to Interra’s Board of Directors. Effective March 21, 2013, the Board discharged
Sheets from his employment.
[8] Sheets filed a complaint against Birky, alleging defamation per se. The
complaint was twice amended to add additional defendants and allegations.
Ultimately, Sheets’s Third Amended Complaint consisted of six counts. Count
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1, captioned Defamation Per Se, contained allegations that Birky defamed
Sheets. Count 2 (also captioned Defamation Per Se), alleged that Birky had
acted within the course and scope of his employment with Interra, such that
Interra should be vicariously liable to Sheets. Count 3 (Negligence) included
allegations that Venture and Bechler had agreed to monitor Sheets’s medical
treatment and recovery following a brain hemorrhage but had acted negligently
in monitoring and then reporting to Interra. Count 4 (Negligence) included
allegations that Venture and Bechler failed to use reasonable care in the
handling of Birky’s allegations. Count 5 (Intentional Interference) included
allegations that Bechler intentionally interfered with Sheets’s employment
relationship with Interra by making false reports as to Sheets’s cognitive
abilities and by “lobbying the Board in person.” (App. at 56.) Finally, Count 6
alleged a breach of fiduciary duty by Venture and Bechler.
[9] The parties filed various cross-motions for summary judgment. Following a
hearing, the trial court granted summary judgment to Birky and Interra. Also,
partial summary judgment was granted to Venture and Bechler. They were
granted summary judgment on Count 3 (negligence in monitoring and
reporting) and Count 6 (breach of fiduciary duty). A jury trial was conducted
on the claims of negligence in handling of the hotline report and intentional
interference with an employment relationship. At the conclusion of a nine-day
trial, the jury found in favor of Venture and Bechler. This appeal ensued.
Discussion and Decision
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Summary Judgment Standard of Review
[10] A trial court’s grant of summary judgment on appeal to this Court is “clothed
with a presumption of validity,” and an appellant has the burden of
demonstrating that the grant of summary judgment was erroneous. Williams v.
Tharp, 914 N.E.2d 756, 762 (Ind. 2009). Our standard of review is well
established:
When reviewing a grant of summary judgment, our standard of
review is the same as that of the trial court. Considering only
those facts that the parties designated to the trial court, we must
determine whether there is a “genuine issue as to any material
fact” and whether “the moving party is entitled to judgment as a
matter of law.” In answering these questions, the reviewing
court construes all factual inferences in the non-moving party’s
favor and resolves all doubts as to the existence of a material
issue against the moving party. The moving party bears the
burden of making a prima facie showing that there are no
genuine issues of material fact and that the movant is entitled to
judgment as a matter of law; and once the movant satisfies the
burden, the burden then shifts to the non-moving party to
designate and produce evidence of facts showing the existence of
a genuine issue of material fact.
Dreaded, Inc. v. St. Paul Guardian Ins. Co., 904 N.E.2d 1267, 1269-70 (Ind. 2009)
(internal citations omitted).
[11] When the defendant is the moving party, the defendant must show that the
undisputed facts negate at least one element of the plaintiff’s cause of action or
that the defendant has a factually unchallenged affirmative defense that bars the
plaintiff’s claim. First Farmers Bank & Trust Co. v. Whorley, 891 N.E.2d 604, 608
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(Ind. Ct. App. 2008), trans. denied. The role of the trial court at summary
judgment is not to act as a trier of fact, but rather to determine whether the
movant established, prima facie, either that there is insufficient evidence to
proceed to trial, or that the movant is otherwise entitled to judgment as a matter
of law. Kader v. State Dep’t of Corr., 1 N.E.3d 717, 727 (Ind. Ct. App. 2013).
Witness credibility and the relative apparent weight of evidence are not relevant
considerations at summary judgment. Id.
Grant of Summary Judgment to Birky and Interra
[12] The trial court granted summary judgment to Birky on Sheets’s defamation per
se claim, concluding that Birky’s statements made in the hotline call did not
“impute misconduct” or include an allegation of malfeasance, such that “to the
extent those comments relate to [Sheets’s] employment and profession, [they]
are not defamatory per se.” (App. at 22.) Because the allegation against Interra
was one of vicarious liability, Interra was also granted summary judgment. 4
[13] On appeal, Sheets observes that Birky “alleged conduct that Sheets had
committed that was inconsistent with his fitness to serve as president/CEO.”
(Appellant’s Br. at 10.) He then argues that this falls within a defamation per se
4
The trial court additionally concluded that, because the communication at issue was not defamatory per se,
there was no need to reach the claimed defense of qualified privilege. See Schrader v. Eli Lilly & Co., 639
N.E.2d 258, 262 (Ind. 1994) (recognizing that the qualified privilege of common interest “applies to
communications made in good faith on any subject matter in which the party making the communication has
an interest or in reference to which he has a duty, either public or private, either legal, moral, or social, if
made to a person having a corresponding interest or duty.”) To defeat application of the privilege, the
evidence must show that the speaker “lacked any grounds for belief as to the truth of the statements.” Bals v.
Verduzco, 600 N.E.2d 1353, 1357 (Ind. 1992).
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category described in a concurring opinion in Gibson v. Kincaid, 221 N.E.2d 834,
843 (Ind. Ct. App. 1966), that is, words that “tend to injure another in his
office, profession, trade, business or calling.”5 Interra and Birky respond that,
in order to constitute defamation per se, a communication related to one’s
profession must impute actual misconduct.
[14] In order to establish a claim of defamation, a plaintiff must prove (1) a
communication with defamatory imputation, (2) malice, (3) publication, and
(4) damages. Dugan v. Mittal Steel USA Inc., 929 N.E.2d 184, 186 (Ind. 2010).
A statement is defamatory if it tends “to harm a person’s reputation by lowering
the person in the community’s estimation or deterring third persons from
dealing or associating with the person.” Kelley v. Tanoos, 865 N.E.2d 593, 596
(Ind. 2007). This is not to say that all statements having a defamatory
imputation are defamation per se.
[15] An action for defamation per se “arises when the language of a statement,
without reference to extrinsic evidence, constitutes an imputation of (1)
criminal conduct, (2) a loathsome disease, (3) misconduct in a person’s trade,
5
Alternatively, Sheets argues that his complaint may be understood as stating an additional claim,
defamation per quod, “actionable only upon allegation and proof of special damage or harm.” Gibson, 221
N.E.2d at 843. Counts 1 and 2 of Sheets’s Third Amended Complaint were each captioned “Defamation Per
Se” but Sheets maintains that he alleged special damages – his loss of employment – and he notes that the
complaint once uses the term “defamation” without the subsequent phrase “per se.” Sheets’s attorney
advised the trial court that the claim was one of defamation per se, yet Sheets asserts that he should not be
bound by his attorney’s representation. In the absence of fraud, a client is bound by his or her attorney’s
representations. Lystarczyk v. Smits, 435 N.E.2d 1011, 1014 n.5 (Ind. Ct. App. 1982). “The reliability of
lawyers’ representations is an integral component of the fair and efficient administration of justice.” Binder v.
Benchwarmers Sports Lounge, 833 N.E.2d 70, 75 (Ind. Ct. App. 2005). Accordingly, Sheets may not simply
disregard the representations made to the trial court.
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profession, office, or occupation, or (4) sexual misconduct.” Dugan, 929
N.E.2d at 186. In contrast, if words are not defamatory in themselves, but
become so only when understood in the context of extrinsic evidence, they are
considered defamatory per quod. Id. Damages are presumed in an action for
defamation per se, but must be proven in an action for defamation per quod.
Id.
[16] Birky communicated, via the Interra Compliance Line, that he perceived Sheets
as being “more aggressive” since the disengagement of consulting services.
(App. at 162.) Birky also opined that Sheets’s cognitive ability had been
impaired, as evidenced by a lack of focus on significant issues and repetition of
the same questions many times. Birky also claimed to have received
“feedback” as to Sheet’s “not being fit for leadership” and being an
“embarrassment.” (App. at 162.) Although such statements cast aspersions
upon Sheet’s fitness to perform his professional duties – albeit in a forum
designed for such communications – they provide a general assessment of
unfitness, and do not allege misconduct. See Meyer v. Beta Tau House Corp., 31
N.E.3d 501, 515 (Ind. Ct. App. 2015) (recognizing that, if the speaker is merely
expressing his subjective view, interpretation, or theory, the statement is not
actionable defamation).
[17] Recent Indiana decisions clarify that defamation per se as to one’s profession
involves actual misconduct as opposed to a generalized opinion. In Levee v.
Beeching, 729 N.E.2d 215 (Ind. Ct. App. 2000), a school principal sued a
teacher’s union and the union representation for defamation per se. The union
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representative had called the principal a “liar” and stated that she “favored
some staff.” Id. at 218. A panel of this Court concluded that the words were
not “so obviously and naturally harmful that proof of their injurious character
can be dispensed with.” Id. at 220. The Court also observed that the
statements were not defamatory on their own, but were only defamatory with
reference to the union representative’s pattern of personal attacks against the
principal. Id.
[18] Baker v. Tremco, 917 N.E.2d 650 (Ind. 2009), involved a plaintiff who quit his
former employment with the defendant after a workplace dispute. The plaintiff
then started his own business and the former employer’s representative
commented that the plaintiff “had engaged in inappropriate sales practices.” Id.
at 657. Our Indiana Supreme Court found the statement to be “far too vague to
conclude that [it was] so obviously and naturally harmful that proof of [its]
injurious character c[ould] be dispensed with.” Id. at 658. Accordingly, the
statement was not defamatory per se. Although the phrase “inappropriate sales
practice” was directed toward the plaintiff’s “trade, profession, or occupation,”
it did not impute the requisite “misconduct.” Id.
[19] Wartell v. Lee, WL 7983987, ___ N.E.3d ___ (Ind. Ct. App. 2015), trans. denied,
was an appeal following a grant of summary judgment on a claim of
defamation per se. Lee had sent a letter to then-Purdue president Dr. France
Cordova urging denial of Chancellor Michael Wartell’s request for an exception
to Purdue’s retirement policy. The letter did not mention specific incidents of
misconduct; rather, it included general statements about Wartell’s character and
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conduct in his role as chancellor that “were arguably defamatory.” Slip op. at
6. However, the vague statements (including references to “his word not being
his bond,” a “lack of integrity,” and “broken faith” as well as a prediction that
support “will be hard to come by”) did not rise to the level of defamation per se.
Slip op. at 2. The Court explained:
It is understandable and indeed tempting to leap from a
determination that an allegedly defamatory statement is related
to a person’s trade, profession, office, or occupation to the
conclusion that the statement is defamatory per se. However,
that is simply not the proper legal analysis. As a matter of law,
for an allegedly defamatory statement to qualify as defamation
per se, it must impute not only the serious level of misconduct of
the type described in Dugan, but also in a way that does not
require reference to extrinsic facts for context.
Slip op. at 4.
[20] Birky’s communication regarding Sheets did not impute occupational
misconduct without resort to extrinsic evidence. The trial court properly
concluded, as a matter of law, that Birky’s statements did not constitute
defamation per se. Accordingly, the trial court properly granted summary
judgment on this claim to Birky and Interra.
Jury Instruction – Tortious Interference
[21] Sheets contends that the trial court abused its discretion by rejecting his
proffered jury instructions on intentional interference with an employment-at-
will contract. We resolve an appellate claim of trial error in refusing a tendered
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instruction by considering (1) whether the instruction is a correct statement of
the law, (2) whether there is evidence of record to support the giving of the
instruction, and (3) whether the substance of the instruction is covered by
another instruction given by the trial court. Raess v. Doescher, 883 N.E.2d 790,
798 (Ind. 2008). When evaluating these factors, we are mindful that instructing
the jury generally lies in the sole discretion of the trial court and reversal is
appropriate only for an abuse of that discretion. Id. at 799.
[22] Indiana recognizes that intentional unjustified interference by third parties6 with
an employment contract is an actionable tort. Drake v. Dickey, 2 N.E.3d 30, 34
(Ind. Ct. App. 2013). Tortious interference with a contractual relationship
consists of the following elements: (1) the existence of a valid and enforceable
contract; (2) the defendants’ knowledge of the existence of the contract; (3) the
defendants’ intentional inducement of breach of the contract; (4) the absence of
justification; and (5) resultant damages. Id.
[23] On August 4, 2015, before the jury trial commenced, Sheets filed a proposed
final jury instruction stating that his employment-at-will contract was protected
from outside interference; he had the burden to prove five requisite elements;
and two elements were undisputed. At the conclusion of trial, the litigants were
instructed to file proposed instructions and the trial court conducted a lengthy
6
Venture and Bechler now contend that, when they monitored the hotline and reported Birky’s call, they
acted as an agent of Interra, as opposed to a third party. Nonetheless, they do not suggest that they made this
argument at trial, and it appears that both parties agreed that the jury would be instructed on intentional
interference with an at-will employment contract.
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conference on final instructions. Sheets tendered two proposed instructions,
one of which was an abbreviated version of his earlier proffered instruction:7
Jack Sheets was an employee at will of Interra Credit Union.
Jack Sheets’ employment at will relationship was a contract that
the law protects from outside interference by third parties.
(App. at 873.)
[24] The instruction was not given. Rather, the trial court gave the jury the
following two instructions on tortious interference with an employment
contract:
To recover damages for wrongful interference with contractual
relations, Sheets must prove by the greater weight of the evidence
that:
(1) A valid and enforceable contract existed between Sheets and
Interra Credit Union;
(2) The Venture Defendants knew the contract existed;
(3) The Venture Defendants intentionally caused a breach of the
contract;
(4) No justification existed for the Venture Defendants’ conduct;
and
7
The second tendered instruction concerned the gratuitous assumption of a duty.
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(5) Sheets was harmed as a result.
(App. at 909).
Plaintiff was an employee at will of Interra Credit Union.
Plaintiffs’ employment was a relationship. An employment at
will is an employment relationship that has no definite length of
time. Except for a few limited circumstances, an employment-at-
will relationship may be terminated by the employer or employee
at anytime and for any reason or for no reason at all.
(App. at 912.) The trial court also instructed the jury that breach of an at will
employment agreement does not mean only termination of employment, and
that Venture would be liable if Bechler committed the alleged tort while acting
within the scope of his agency.
[25] At the jury instruction conference, Sheets argued that “without giving my
instruction … there’s a real danger that the jury might think it was an employee
at will relationship, therefore any – it could be terminated for any reason,
including the interference of the Defendants.” (Sept. 1, 2015 Tr. at 16.) He
renews this argument on appeal: “Without the benefit of Sheets’ tendered
instructions, the jury likely understood that “any reason” for termination could
include the Defendants’ alleged interference.” Appellant’s Brief at 20. He
further argues that jurors would understand a “contract” to be a written
contract and thus “it was incumbent upon the trial court to instruct the jury that
Sheets’ employment at will was a contract that the law protects from outside
interference.” Appellant’s Brief at 20.
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[26] Sheets’s understanding of protection of an at-will employment contract is overly
broad. In Bochnowski v. Peoples Fed. Sav. & Loan Ass’n, 571 N.E.2d 282 (1991),
our Indiana Supreme Court recognized that a plaintiff may bring a claim for
tortious interference with an employment relationship although the contract is
terminable at will. At the same time, however, the Court observed: “The
plaintiff bringing such an action, however, must be prepared to show that the
defendant interferer acted intentionally and without a legitimate business
purpose.” Id. at 285. Sheets’s instruction to the effect that the law protects such
a contract “from outside interference” is incomplete, in that it does not
contemplate that the interference must be intentional or without a legitimate
business purpose.
[27] Sheets did not demonstrate that the rejected instruction was a correct statement
of the law, supported by evidence of record, and not covered by other
instructions of the trial court. As such, he has demonstrated no abuse of
discretion.
Conclusion
[28] Summary judgment was properly granted on the defamation per se claim. The
trial court did not abuse its discretion when it refused Sheets’s incomplete
instruction on the protection afforded by Indiana law to an at-will employment
contract.
[29] Affirmed.
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Bradford, J., and Altice, J., concur.
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