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Castleman v. Internet Money Limited

Court of Appeals of Texas, Seventh District, Amarillo

April 19, 2017

TIMOTHY CASTLEMAN AND CASTLEMAN CONSULTING, LLC, APPELLANTS
v.
INTERNET MONEY LIMITED D/B/A THE OFFLINE ASSISTANT AND KEVIN O'CONNOR, INDIVIDUALLY, APPELLEES

         On Appeal from the 237th District Court Lubbock County, Texas Trial Court No. 2016-519, 740, Honorable Les Hatch, Presiding

          Before QUINN, CJ., and CAMPBELL and PIRTLE, JJ.

          MEMORANDUM OPINION

          Brian Quinn Chief Justice

         The trial court denied the motion of Timothy Castleman and Castleman Consulting, LLC (Castleman) to dismiss the defamation suit filed against them by Internet Money Limited d/b/a The Offline Assistant and Kevin O'Connor (collectively referred to as Offline). Castleman thought itself entitled to such relief per the terms of the "Texas Citizens Participation Act" (TCPA). Tex. Civ. Prac. & Rem. Code Ann. § 27.01 et seq. (West 2015). We affirm.

         Background

         According to the limited record before us, the dispute arose from a commercial or business relationship between Castleman and Offline. The former retained the latter to help order and deliver products sold over the Castleman website. Allegedly, Offline failed to properly comply with instructions from Castleman about how to perform its tasks, which deviations purportedly resulted in Castleman experiencing lost profits. Offline responded by alleging that it had followed the instructions provided it.

         Eventually, Castleman posted on the internet comments about Offline's performance. For instance, it titled one of its blogs "Warning: Stay Away From The Offline Assistant Company & Kevin O'Connor" and wrote about the business relationship between the two, how he mentored O'Connor, how he "help[ed] [O'Connor] grow his business, " and the controversy arising therefrom. That blog also contained allegations that 1) "[n]o one from [O'Connor's] company . . . reviewed any of the orders to ensure they were being done correctly despite his assurances they do quality control and project management on all jobs, " 2) "[t]here was an 85% error rate by his staff in ordering products for us, " 3) O'Connor "doesn't stand behind his employees['] work, " and 4) Offline "has zero quality control or checks to ensure work is being done correctly." Through other internet avenues, Castleman stated that 1) his "goal [was] to protect other business owners from losing $8k or having to take a company to court like [he's] doing, " and 2) "[t]he fallout for this is going to be maybe 10 or 100 multiples of what this guy owes me, and none of it had to happen."

         Offline deemed the comments defamatory, demanded their removal, and requested damages. So too did it sue Castleman when the latter refused Offline's demands.

         Upon answering the petition, Castleman invoked the provisions of the TCPA and moved to dismiss the suit. According to Castleman, Tim Castleman had "the right to speak his mind on the behavior of companies and individuals with whom he [did] business. He has done so, and [Offline is] now trying to make him pay for it. But Castleman's statements [weren't] defamatory; they [fell] within no exception to the liberty of free speech that would allow a reasonable person to find them defamatory." Furthermore, the "Texas Citizens Participation Act" purportedly "protected] him from [Offline's] attempts to impose upon him the cost of defending such a lawsuit."

         The trial court denied the motion to dismiss and issued findings of facts and conclusions of law supporting its decision. Among other things, it determined that 1) "[t]he statements at issue arose out of the sale of goods, and the intended audience is actual or potential buyers or customers, " 2) Castleman's "statements were made with either the knowledge of their falsity or, at the very least, with reckless disregard as to their truth or falsity, " 3) Castleman "admitted their intent to harm [Offline] and acknowledged the damage their statements were causing [Offline], " 4) Castleman failed to prove that "the legal action was based on, related to, or was in response to [Castleman's] exercise of the right of free speech, the right to petition, or of the right of association, " 5) "Defendant Castleman Consulting, LLC did not file a motion to dismiss under the Texas Citizens Participation Act, " only Tim Castleman, " and 6) Castleman's "acts fall within an exception to the Citizens Participation Act." Castleman appealed.

         Disposition

         The sole issue before us concerns whether the trial court properly denied the motion to dismiss. We overrule the issue.

         The TCPA requires the dismissal of suits that impinge on certain First Amendment rights. Greer v. Abraham, 489 S.W.3d 440, 441 (Tex. 2016). The rights within its scope are those pertaining to free speech, to petition, and of association. Tex. Civ. Prac. & Rem. Code Ann. § 27.003(a). Yet, the Act "does not apply to a legal action brought against a person primarily engaged in the business of selling or leasing goods or services, if the statement or conduct arises out of . . . a commercial transaction in which the intended audience is an actual or potential buyer or customer." Id. § 27.010(b). Offline contended that the circumstances underlying its suit fall within this exemption. The trial court agreed, as illustrated by its statements that the "statements at issue arose out of the sale of goods, and the intended audience is actual or potential buyers or customers, " and Castleman's "acts fall within an exception to the Citizens Participation Act."

         Before us, though, Castleman posits that the decision is "nonsense" since "[t]he commercial-speech exception denies the Act's protection to misstatements about the products or services of a company or its competitors in an attempt to win business for the speaker (Emphasis added). It was not attempting to win business for itself, according to Castleman, when uttering the purported falsehoods at bar. Rather, he was attempting to warn prospective customers of Offline about Offline's supposed business capabilities and shortcomings. And, to support the contention, he cited multiple opinions rendered by various Texas intermediate appellate courts and a federal trial court. See, e.g., Epperson v. Mueller, No. 01-15-00231-CV, 2016 Tex.App. LEXIS 8671 (Tex. App.-Houston [1st Dist.] Aug. 11, 2016, no pet.) (mem. op.); Backes v. Misko,486 S.W.3d 7 (Tex. App.-Dallas 2015, pet. denied); Whisenhunt v. Lippincott,474 S.W.3d 30 (Tex. App.-Texarkana 2015, no pet.); Hicks v. Grp. & Pension Adm'rs, Inc.,473 S.W.3d 518 (Tex. App.-Corpus Christi-Edinburg 2015, no pet); Kinney v. BCG Attorney Search, Inc., No. 03-12-00579-CV, 2014 Tex.App. LEXIS 3998 (Tex. App.-Austin Apr. 11, 2014, pet. ...


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