Condo Board Members Protected by Qualified Privilege in Co-Owner’s Defamation Claim

In Square Lake Hills Assn v Garland, unpublished opinion of the Court of Appeals,  Docket No. 350403, issued November, 12, 2020, the Michigan Court of Appeals upheld a ruling of the Oakland County Circuit Court that dismissed a defamation claim brought by a co-owner against a condominium association,individual board members and the management company on the basis that the allegedly defamatory statements were subject to a qualified privilege.  As will be outlined below, it is often difficult for co-owners to succeed on defamation claims as many unflattering statements are not actionable.

Facts

Square Lake Hills Condominium is located in Bloomfield Hills, Michigan and administered by the Plaintiff, Square Lake Hills Association (the “Condominium Association”).  The Condominium Association brought an action against Defendant, Russell Garland, a co-owner, for violating a provision of the condominium bylaws that prohibited the parking of boats or trailers in any part of the Condominium.  Garland filed a counterclaim, which in part, alleged that he was defamed by various third-party defendants, which include 1) Sandra Donia, a member of the Association’s board of directors 2) Cyril Cornak, a member of the Association’s board of directors 3) The Highlander Group MMC, Inc., the property management company for the Condominium Association and 4) Tina Sigler, the property manager for the Condominium Association.

Garland’s defamation claim alleged that the third-party defendants “made several false allegations and defamatory statements in an effort to destroy [Garland’s] reputation and professional standing, including but not limited to announcing to the members attending the Board Meeting that [Garland] had a gun, was violent, and that [Garland] was going to harm someone.”  The Association and third-party defendants filed a motion for summary disposition and argued that they had a qualified privilege to make the above statements.  In response to the motion for summary disposition, Garland attached the unsworn affidavit of Benjamin Esquivel, which stated that Sigler had told Garland to “shut the hell up and sit down” at a homeowners’ meeting and had stated that Garland had a gun, was violent, and was going to harm someone.  The Oakland County Circuit granted summary disposition in favor of the third-party defendants on the defamation claim and Garland appealed.

Analysis

In the trial court, third-party defendants successfully argued that Garland could not establish that they had made any defamatory statements, that any defamatory statements were made with malice and that they had a qualified privilege to make any of the alleged statements.  The Court of Appeals set out the parameters for establishing a defamation claim as follows:

(1) a false and defamatory statement concerning the plaintiff, (2) an unprivileged communication to a third party, (3) fault amounting at least to negligence on part of the publisher, and (4) either actionability of the statement irrespective of special harm (defamation per se) or the existence of special harm caused by publication. [Ghanam v. Does, 303 Mich. App. 522, 544; 845 N.W.2d 128 (2014) (quotation marks and citation omitted).]

“A communication is defamatory if, under all circumstances, it tends to so harm the reputation of an individual that it lowers the individual’s reputation in the community or deters other from associating or dealing with the individual.” Kefgen v. Davidson, 241 Mich. App. 611, 617; 617 N.W.2d 351 (2000). However, if the one defending against a claim of defamation had a qualified privilege to make the statement, then the one bringing the suit can overcome that privilege “only by showing that the statement was uttered with actual malice.” Smith v. Fergan, 181 Mich. App. 594, 597; 450 N.W.2d 3 (1989).

            Moreover, the Court stated that the affirmative defense of “qualified privilege” applies in the following circumstances:

“It is undisputed that Michigan law recognizes a qualified privilege as applying to communications on matters of ‘shared interest’ between parties.” 360 Constr. Co., Inc. v. Atsalis Bros. Painting Co., 915 F. Supp. 2d 883, 894 (E.D. Mich., 2012), citing Rosenboom v. Vanek, 182 Mich. App. 113, 117; 451 N.W.2d 520 (1989). A qualified privilege exists for bona fide communications concerning “any subject-matter in which the party communicating has an interest, or in reference to which he has a duty to a person having a corresponding interest or duty.” Timmis v. Bennett, 352 Mich. 355, 366; 89 N.W.2d 748 (1958) (quotation marks and citation omitted). “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 v. R. L. Polk Co., 193 Mich. App. 1, 15; 483 N.W.2d 629 (1992). Whether that privilege applies is a question of law for the court to decide. Id. at 14-15.

In the instant case, the third-party defendants argued that they had a qualified privilege to make the alleged defamatory statements on the basis that the other co-owners would presumably have an interest in whether Garland allegedly had a gun, was violent or posed a danger to the other co-owners.  In response to this argument, Garland submitted an unnotarized affidavit that the Court of Appeals indicated could not be considered at it was not signed under oath or notarized.  Given that this was the only “evidence” that was submitted by Garland that a defamatory statement was made, the Court of Appeals held that the grant of summary disposition on the defamation claim was proper.  The Court of Appeals also noted that even if summary disposition had not been granted on the basis of qualified privilege, Garland had also failed to show that any of the alleged statements were defamatory or that he suffered any damages and summary disposition would have been properly granted for those reasons as well.

Conclusion

It is not uncommon for co-owners to be subjected to unflattering or offensive statements that arise as a result of various interactions within a community association as many community association members are not shy about sharing their opinions.  However, as demonstrated in Square Lake Hills Assn v Garland, unpublished opinion of the Court of Appeals,  Docket No. 350403, issued November, 12, 2020, not all unflattering statements will give rise to a cause of action for defamation. 

            Pursuant to MCL 600.2911(1), defamation per se, i.e. where nominal damages will be available without establishing actual damages, is only available in the following circumstances:

Words imputing a lack of chastity to any female or male are actionable in themselves and subject the person who uttered or published them to a civil action for the slander in the same manner as the uttering or publishing of words imputing the commission of a criminal offense.

Accordingly, establishing a special harm may be difficult in the context of a co-owner pursuing a claim for defamation against a board member or property manager that does not involve imputation of lack of chastity or the commission of a criminal offense.  Similarly, given the doctrine of qualified privilege, it is also difficult for a co-owner to establish that a board member or management company acted with “malice” when many statements that they make would involve a shared interest of the community.  Accordingly, while the term “defamation” is often loosely thrown around in the context of homeowners associations, many allegedly defamatory statements are not actionable.

Kevin Hirzel is the Managing Member of Hirzel Law, PLC and concentrates his practice on commercial litigation, community association law, condominium law, Fair Housing Act compliance, homeowners association and real estate law. Mr. Hirzel is a fellow in the College of Community Association Lawyers, a prestigious designation given to less than 175 attorneys in the country. He is also a member of the Community Associations Institute’s (“CAI”) National Board of Trustees. Mr. Hirzel has been a Michigan Super Lawyer’s Rising Star in Real Estate Law from 2013-2020, an award given to only 2.5% of the attorneys in Michigan each year. Mr. Hirzel has been named a Leading Lawyer in Condominium & HOA law by Leading Lawyers Magazine from 2018-2020, an award given to less than 5% of the attorneys in Michigan each year. He represents community associations, condominium associations, cooperatives, homeowners associations, property owners and property managers throughout Michigan. He may be reached at (248) 480-8758 or kevin@hirzellaw.com.

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