Court of Appeals of Texas, Sixth District, Texarkana
PERRY D. REED AND PERRY D. REED & COMPANY, P.C., Appellants
JAMES T. DAVIS, CPA, JAMES T. DAVIS, P.C., DAVIS GRIFFIN, LLP, Appellees
Submitted: November 28, 2016
Appeal from the County Court at Law No. 2 Gregg County, Texas
Trial Court No. 2015-946-CCL2
Morriss, C.J., Moseley and Burgess, JJ.
R. Morriss, III Chief Justice
meeting called to identify and work through differences
between two pediatric dentists who were in the process of
ending and dividing their joint practice, James T. Davis, the
accountant for Ronald N. Fadal, DDS, P.A., offered his
tentative concern that Fadal's partner, Justin R. Horne,
DDS, may have improperly received distributions of some $1.2
million more than Fadal, an apparent discrepancy that needed
to be examined further. Davis' utterance resulted in a
May 2015 lawsuit by Perry D. Reed and his professional
corporation (collectively Reed) against Davis and two related
entities (collectively Davis),  setting out claims of defamation,
business disparagement, and tortious interference with
prospective relations. Reed had been the accountant for the
dental partnership, while Davis had been retained later by
the attorneys for Fadal to help in the practice separation
response to Reed's lawsuit, Davis filed a traditional and
no-evidence motion for summary judgment as to all three of
Reed's claims. Following a hearing on Davis' motion,
the trial court granted summary judgment to Davis on each of
Reed's claims on both traditional and no-evidence
grounds. The no-evidence summary judgment was granted based
on the trial court's ruling that there was no evidence of
actual malice or damages, thus defeating all three of
Reed's claims. The summary judgment was also rendered on
traditional grounds on all three claims based on the trial
court's ruling that qualified privilege and judicial
privilege were established as a matter of law.
appeal, Reed complains of the trial court's (a) discovery
rulings that upheld Davis' assertions of the work-product
exemption, the attorney-client privilege, and the consulting
expert privilege; (b) traditional summary judgment
sustaining Davis' affirmative defenses of judicial
privilege and qualified privilege; (c) no-evidence summary
judgment on Reed's defamation claim on the basis that
Reed raised fact issues regarding evidence of damages; and
(d) no-evidence summary judgment on Reed's
business-disparagement and tortious-interference claims on
the basis that Reed raised fact issues regarding actual
malice and special damages.
affirm the trial court's judgment, because (1) there was
no abuse of discretion in denying discovery of Davis'
Fadal file based on Davis' privilege assertions; (2)
traditional summary judgment was proper on Reed's claims
for defamation and business disparagement, because conclusive
proof established Davis' defense of qualified privilege;
and (3) no-evidence summary judgment was proper on Reed's
claim for tortious interference with prospective business
relations, because there was no evidence of damages.
2007, Fadal and Dr. Justin Horne, President of Justin R.
Horne, DDS, P.A., entered into a partnership agreement
forming a limited-liability partnership known as Pediatric
Dental Associates, L.L.P. (PDA), with each of their
respective professional associations (PAs) serving as general
partners. PDA had locations in Longview and Marshall owned by
Fadal-Horne Investment, LP, for which both Horne and Fadal
served as limited partners and Pediatric Dental Associates,
L.L.P., served as general partner. Reed was hired as the
accountant performing a full range of accounting services for
PDA. Eventually, Fadal's wife, Dr. Jennifer Rogers
(Jennifer) began working for or with PDA.
practicing together for over six years, Horne and Fadal
sought to dissolve the partnership. Reed drafted a memorandum
of understanding (MOU) for the dissolution of the
partnership. Soon, conflicts arose between Fadal and
Horne relating to the dissolution of the partnership. As a
result, Fadal decided to terminate Reed as his accountant and
to hire attorneys, Robert Foster and Jerry Hill, to represent
him during the dissolution of the partnership. After Fadal
retained Foster and Hill, Foster hired Davis as an accounting
expert to assist in representing Fadal. During this time
period, Reed resigned from serving Horne as a client. Horne
then elected to use attorney Matthew Hill as his
representative during the dissolution, as well as Rodney
Overman as his accounting expert. The parties also hired a
new accountant for partnership matters, Robert
Davis was retained, he began to prepare an accounting of the
PDA partnership, using information that had been given to him
by Foster. After Davis discovered what he believed was an
apparent disparity in the accounting favoring Horne,
parties set up a meeting for May 27, 2014 (the meeting). The
purpose of the meeting was to discuss the dissolution of the
partnership and the issue of disparity and to determine what
information would be needed to assist the parties in
resolving the issues. Horne's lawyer, Matthew Hill, recalled
Davis' statement during the meeting as
[Davis] -- was the first person to speak at the meeting; and
he said that Dr. Rogers was put under Fadal Pediatric -- Dr.
Fadal's individual PA and not under the partnership
Pediatric Dental Associates and, as a result of that -- and,
obviously the disparity in distributions that we talked
about, his -- Dr. Fadal was harmed to the tune of $1.2
million and that it was his opinion that Perry Reed showed
favoritism towards one partner over the other in providing
that advice, in doing that, and that he thought that it hurt
Dr. Horne, as well, financially, because now he's going
to have to make all this stuff up.
first amended original petition, Reed alleges, "Shortly
after the meeting convened, Defendant James Davis represented
to all present that Perry Reed's accounting advice and
services had served to favor Dr. Horne over Dr. Fadal in the
amount of $1, 200, 000." This statement, allegedly made
by Davis, is the basis for Reed's claims of defamation,
business disparagement, and tortious interference with
prospective business relations. Reed maintains that
"these false statements "had the effect of implying
that Plaintiffs breached their fiduciary duty to Pediatric
Dental Associates, LLP[, ] and Dr. Fadal in order to benefit
one partner over another." Reed also claims that he lost
business as a result of Davis' statements. Davis filed a
general denial and also maintained that judicial immunity and
qualified immunity were applicable to the facts of this case.
issues soon ensued. In particular, Reed sought the discovery
of Davis' file on Fadal relating to the dissolution of
PDA. Davis objected to Reed's request on the grounds that
the contents of Davis' file were protected by the
work-product exemption, the attorney-client privilege, and
the consulting-expert privilege. After reviewing Davis'
privilege logs and conducting several in camera
inspections, the trial court sustained many of Davis'
privilege assertions; however, it also overruled some of
Davis' assertions on the grounds of waiver and ordered
the disclosure of information that was directly related to
Davis' opinions at the May 27 meeting.
the requisite discovery process was completed, Davis filed
the motion for summary judgment. In addition to arguing that
there was no factual evidence to support any of Reed's
three claims, Davis also maintained that (a) his expressed
opinions and beliefs as a retained expert were not actionable
assertions of fact; (b) his preliminary opinions were true or
substantially true and were made without malice or
negligence; (c) qualified privilege was applicable to
Reed's business disparagement claim because the May 27
meeting was a closed-door meeting and only included parties
and their representatives who had an interest in the topics
discussed; (d) judicial privilege barred Reed's
defamation action because Davis' statements were made in
the context of a quasi-judicial forum and were absolutely
privileged; and (e) Reed suffered no damages. The trial court
granted both the no-evidence and traditional portions of the
motion for summary judgment.
1. There Was No Abuse of Discretion in Denying
Discovery of Davis' Fadal File Based on Davis'
the course of the litigation, Reed served written discovery
requests on Davis, seeking production of Davis' file
relating to work performed on behalf of Fadal that related to
the dissolution of PDA. Davis asserted the work-product
exemption,  the attorney-client privilege,
and the consulting-expert
December 25, 2015, letter to the parties, the trial court
made the preliminary finding that "the files of Mr.
Davis could potentially contain documents subject to both
Work Product Privilege and Consulting Expert Privilege."
In addition, the trial court found,
The services of Mr. Davis were engaged through the offices of
Mr. Rob Foster, the attorney for Dr. Fadal. As an accountant
retained by an attorney, the contents of the file of Mr.
Davis would be subject to the Attorney-Client Privilege.
[Tex. R. Evid.] 503(a)(4)(B). Again, the Court is finding the
prospect of an arbitration to resolve the disputed issues
sufficient to invoke this privilege. Watson v.
Kaminski, 51 S.W.3d 825, 827 (Tex. App.-Houston [1st
the trial court explained that it had received Davis'
file relating to the dissolution of PDA and that it would
conduct an examination of the documents contained in the file
to determine, among other things, whether the asserted
privileges applied. Following an in camera
inspection of the documents in conjunction with a review of
Davis' privilege logs, the trial court sustained
Davis' privilege assertions in regard to many of the
documents contained in Davis' file on Fadal.
that seeks to exclude any matter from discovery on the basis
of an exemption or immunity from discovery must specifically
plead the particular exemption or immunity and produce
evidence supporting such a claim. Humphreys, 888
S.W.2d at 470. The burden is on the party asserting a
privilege from discovery to produce evidence concerning its
applicability. Id. "To meet its burden, the
party seeking to assert a privilege must make a prima facie
showing of the applicability of the privilege and produce
evidence to support the privilege." In re USA
Mgmt. Res., L.L.C., 387 S.W.3d 92, 96 (Tex.
App.-Houston [14th Dist.] 2012, orig. proceeding). The prima
facie standard requires the "minimum quantum of evidence
necessary to support a rational inference that the allegation
of fact is true." Tex. Tech Univ. Health Scis. Ctr.
v. Apodaca, 876 S.W.2d 402, 407 (Tex. App.-El Paso 1994,
writ denied). The prima facie standard may be satisfied by
filing an affidavit in support of the assertion of privilege.
Moreover, prima facie evidence may be shown by the use of
testimony or by producing the documents to the court for
in camera inspection. In re Exxon Mobil
Corp., 97 S.W.3d 353, 357 (Tex. App.-Houston [14th
Dist.] 2003, orig. proceeding).
maintains that Davis presented no witnesses during the
hearing and relied on his own affidavit verifying the truth
of his interrogatory answers to support his claims of
privilege. As such, Reed contends that Davis failed to make a
prima facie showing that any of the asserted privileges were
applicable before the completion of the hearing, so
Davis' claims of privilege were waived.
support of Davis' assertions of privilege, he presented
to the trial court a sworn answer to an interrogatory from
Davis Griffin, L.L.P.[, ] was hired by Dr. Fadal's
attorney, Rob Foster, on or about March 15, 2014, to serve as
a consulting expert in regard to the dissolution of Pediatric
Dental Associates and any disputes or anticipated litigation
arising therefrom. Thereafter, on or about May 24, 2014, Dr.
Fadal retained Davis Griffin, L.L.P.[, ] to perform personal
contends this statement is conclusory and that it is only
some evidence of the consulting-expert privilege and no
evidence of the attorney-client privilege and work-product
exemption. Reed also maintains that the trial court's
ruling shielded the materials that informed Davis'
opinions regarding the May 27 meeting. Reed claims the
court's ruling was harmful because it prevented him from
discovering materials and information that may have been
relevant and admissible and may have permitted him to raise
genuine issues of material fact on the elements of actual
malice and ill will.
Davis responds that (a) Reed did not object at trial and has
not argued on appeal against using the answer to
interrogatory number three as evidence in support of
Davis' claims of privilege,  (b) the facts contained
in his answer to Reed's interrogatory are not conclusory,
but instead warrant a rational inference that the documents
contained in Davis' Fadal file included information
protected by the asserted privileges, (c) his answer to
Reed's interrogatory meets the required burden of proof;
and (d) even if this Court finds Davis failed to produce
prima facie evidence, the trial court was allowed to, and
did, conduct an in camera inspection of the
documents before issuing its order and found many of the
documents in Davis' file to be privileged.
(a) Hearing. Any party may at any reasonable time
request a hearing on an objection or claim of privilege
asserted under this rule. The party making the objection or
asserting the privilege must present any evidence necessary
to support the objection or privilege. The evidence
may be testimony presented at the hearing or
affidavits served at least seven days before the hearing or
at such other reasonable time as the court permits. If the
court determines that an in camera review of some or all of
the requested discovery is necessary, that material or
information must be segregated and produced to the court in a
sealed wrapper within a reasonable time following the
Tex. R. Civ. P. 193.4(a) (emphasis added). In this case, the
trial court made such a determination and set a hearing on
the matter in November 2015.
the hearing, after Davis offered his answer to interrogatory
number three as prima facie evidence in support of his
privilege assertions and Reed objected to his offer, the
trial court stated, "Mr. Perry, provide Mr. Davis'
file for an in camera inspection. I'm going to look at it
in light of the report -- the privilege log that is
provided. And, I might have a follow-up question or two for
Counsel once I get into it." Notably, Rule 193.4(a)
states that a party seeking to avoid production of a document
based on a privilege may resort to live testimony or
affidavits in order to support an assertion of privilege. It
does not state, however, that any other type of evidence,
such as a sworn answer to an interrogatory, is unacceptable
evidence for consideration by the trial court.
following the hearing, the trial court sent a letter to the
parties stating, "The Court has made a careful review of
the Court's file, the Motion to Compel filed by
Plaintiffs, together with the Responses filed on behalf of
Defendants, and the arguments of counsel provided at the
hearing on November 19, 2015, and sets forth its preliminary
rulings." After stating its preliminary findings, the
trial court closed its letter to the parties by stating,
The Court received Mr. Davis' file relating to the
dissolution of Pediatric Dental Associates LLP. The Court
will conduct an examination to determine: 1) whether there
are documents responsive to the disputed request; 2) whether
an Attorney-Client Privilege Applies; 3) whether an Attorney
Work Product Privilege applies; 4) whether a Consulting
Expert Privilege applies; and, 5) whether the document
relates to the alleged voluntary disclosure on the part of
the trial court found that Davis' sworn answer to
interrogatory number three, together with the court's
file, Reed's motion to compel, and Davis' answers to
Reed's interrogatories, warranted an in camera
inspection of the documents before making a final ruling. The
trial court was within its discretion to review the documents
themselves. "Affidavits or live testimony may be
sufficient proof; however, when the claim is based on
attorney-client or attorney-work product, the documents
themselves may constitute the only, and certainly the best,
evidence substantiating the claim of privilege."
Arkla, Inc. v. Harris, 846 S.W.2d 623, 631 (Tex.
App.-Houston [14th Dist.] 1993, orig. proceeding) (citing
Weisel Enters., Inc. v. Curry, 718 S.W.2d 56, 58
(Tex. 1986) (orig. proceeding) (per curiam)). The fact that
the trial court eventually sustained Davis' assertions of
privilege relating to a number of the documents contained in
his file necessarily means it found that Davis presented
prima facie evidence of the privileges he asserted as to
those documents. Under these circumstances, we do not find
that the trial court abused its discretion when it determined
that prima facie evidence of the asserted privileges existed,
regardless of when it made its determination. We also find no
waiver by Davis of his privilege assertions.
point of error is overruled.
Traditional Summary Judgment Was Proper on Reed's
Claims for Defamation and Business Disparagement, Because
Conclusive Proof Established Davis' Defense of Qualified
on Davis' statement during the May 27 meeting, Reed
alleged claims of defamation, business disparagement, and
tortious interference with prospective business relations.
The trial court, faced with both a no-evidence and
traditional motion for summary judgment, granted Davis'
no-evidence motion for summary judgment as to the issue of
malice relating to the claim of business disparagement and
his no-evidence summary judgment motion as to the issue of
damages as they relate to a claim of defamation. It also
granted Davis' traditional motion for summary judgment
with respect to all three of Reed's claims against Davis
finding that either qualified privilege or judicial privilege
protected Davis' statement.
grant of a trial court's summary judgment is subject to
de novo review on appeal. Provident Life & Accident
Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). In
making the required review, we deem as true all evidence
which is favorable to the nonmovant, we indulge every
reasonable inference to be drawn from the evidence to favor
the nonmovant, and we resolve any doubts in the
nonmovant's favor. Valence Operating Co. v.
Dorsett, 164 S.W.3d 656, 661 (Tex. 2005).
no-evidence summary judgment is essentially a pretrial
directed verdict. Therefore, we apply the same legal
sufficiency standard in reviewing a no-evidence summary
judgment as we apply in reviewing a directed verdict.
Wal-Mart Stores, Inc. v. Rodriguez, 92 S.W.3d 502,
506 (Tex. 2002). We must determine whether the claimant
produced any evidence of probative force to raise a fact
issue on the material questions presented. See id.;
Woodruff v. Wright, 51 S.W.3d 727, 734 (Tex.
App.-Texarkana 2001, pet. denied). The plaintiff will defeat
a defendant's no-evidence summary judgment motion if
plaintiff presented more than a scintilla of probative
evidence on each element of its claim. King Ranch, Inc.
v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003); Rhine
v. Priority One Ins. Co., 411 S.W.3d 651, 657 (Tex.
App.-Texarkana 2013, no pet.).
entitled to traditional summary judgment, a movant must
establish that there is no genuine issue of material fact so
that the movant is entitled to judgment as a matter of law.
Tex.R.Civ.P. 166a(c); Mann Frankfort Stein & Lipp
Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex.
2009). Once the movant produces evidence entitling it to
summary judgment, the burden shifts to the nonmovant to
present evidence raising a genuine issue of material fact.
Walker v. Harris, 924 S.W.2d 375, 377 (Tex. 1996). A
defendant who conclusively negates a single essential element
of a cause of action or conclusively establishes an
affirmative defense is entitled to summary judgment on that
claim. Frost Nat'l Bank v. Fernandez, 315 S.W.3d
494, 508-09 (Tex. 2010).
analysis leads us to conclude that, as a matter of law, (a)
only interested persons were at the meeting and (b) Davis
acted without malice.
Only Interested Persons Were at the Meeting In its
letter order, the trial court found as follows:
[T]hat the alleged defamatory statement was made by an
accountant retained by an attorney, representing one of [t]wo
(2) dentists seeking to address issues relating to the dental
practice. The Court finds that the participants to the
meeting all had interests sufficiently affected by the
communication, and therefore the qualified [privilege]
attached. As a result thereof, this Court is granting
Defendants' Traditional Motion for Summary Judgment that
a qualified privilege attached as to the alleged defamatory
contends the trial court erred when it granted summary
judgment to Davis based on qualified privilege. The common
law "qualified privilege" has been described as
follows: "Qualified privileges against defamation exist
at common law when a communication is made in good faith and
the author, the recipient or a third person, or one of their
family members, has an interest that is sufficiently affected
by the communication." Cain v. Hearst Corp.,
878 S.W.2d 577, 582 (Tex. 1994). Qualified privilege is a
conditional privilege and will be defeated if it is abused.
Hurlburt v. Gulf Atl. Life Ins. Co., 749 S.W.2d 762,
768 (Tex. 1988). That is, the statement must be made in good
faith and without malice. Zarate v. Cortinas,
553 S.W.2d 652, 655 (Tex. Civ. App.- Corpus Christi 1997, no
writ). When publication of an allegedly defamatory statement
is made under circumstances creating a qualified privilege,
the plaintiff has the burden to prove malice. Ramos v.
Henry C. Beck Co., 711 S.W.2d 331, 335 (Tex. App.-Dallas
1986, no writ). When a defendant moves for summary judgment,
however, the defendant assumes the burden of proving the
absence of malice. Martin, 860 S.W.2d at 199. In
making a determination as to whether a statement is subject
to a qualified privilege, courts must consider the
"occasion" of the communication by examining the
totality of the circumstances including the communication
itself, its communicator, its recipient, and the relief
sought. Clark v. Jenkins, 248 S.W.3d 418 (Tex.
App.-Amarillo 2008, pet. denied). The question of whether a
qualified privilege exists is a question of law which is to
be decided by the trial court. Mayfield v.
Gleichart, 484 S.W.2d 619 (Tex. Civ. App.-Tyler 1972, no
maintains that Davis failed to present competent summary
judgment evidence to show that all of the meeting's
attendees were sufficiently interested in the statement made
by Davis at the May 27 meeting. Reed contends he presented
sufficient evidence that Dr. Jennifer Rogers, Fadal's
wife, and Robert "Bob" Rogers, CPA, were not
sufficiently interested in the contents of Davis'
statements during the May 27 meeting. In support of his
assertion, Reed provided the affidavit of Leonard Acker, who
is a licensed Certified Professional
Accountant. Acker's affidavits reads:
I have been made aware in reviewing the various affidavits of
those present at the meeting that they all purport to have
had an interest in the topics discussed at the meeting.
Although none of them elaborate as to why they had an
interest in the topics, it is questionable from an accounting
perspective that either Mr. Bob Rogers or Dr. Jennifer Rogers
had any interest in the statements attributed to Mr. Davis at
that meeting. Bob Rogers was apparently employed as an
independent CPA to generate the tax returns for PDA for 2013.
His role apparently expanded beyond that point, but as of the
time of that meeting, any statements regarding the accounting
favoring one dentist over another in the amount of $1.2
million reflected back in time and would have no apparent
impact from an accounting perspective on generating tax
returns of PDA in 2013. As for Dr. Jennifer Rogers, she had
no partnership interest in PDA, Fadal, PA, or Horne, PA, and
she would have no interest in the statements attributed to
Mr. Davis from an accounting perspective because any failure
of accounting advice or services to PDA or Fadal, PA[, ] did
not have an affect on her and only would have affected the
one or both of the dentist's PAs or PDA
support of Davis' position, Davis provides affidavits
from many of the participants of the May 27 meeting,
including Robert "Bob" Roger's affidavit.
Rogers averred, "All persons present at the meeting had
an interest in the topics discussed during the meeting or
represented those who had such interest." Rogers also
I was later engaged to prepare, among other things, Pediatric
Dental Associates 2013 tax returns. On April 3, 2014, I met
with James Davis and Rodney Overman in Mr. Davis' office
to discuss capital accounts and guaranteed payments for
Pediatric Dental Associates. During that meeting, Mr. Davis
walked Mr. Overman and myself through the treatment of the
capital accounts, specifically with respect to how guaranteed
payments to Dr. Ronald Fadal were negatively impacted by
disbursements made to Dr. Fadal's P.A. for purpose of
compensating Dr. Jennifer Rogers. During that meeting, I