                   IN THE COURT OF APPEALS OF TENNESSEE
                       WESTERN SECTION AT NASHVILLE


ROBERT E. EVANS,                    )
                                    )
             Plaintiff/Appellee,    ) Davidson Circuit No. 94C-257
                                    )
VS.                                 ) Appeal No. 01A01-9608-CV-00386
                                    )
AMCASH MORTGAGE COMPANY,            )
INC.,                               )
                                    )                            FILED
             Defendant/Appellant.   )
                                                                   August 1, 1997

          APPEAL FROM THE CIRCUIT COURT OF DAVIDSON COUNTY
                                                         Cecil W. Crowson
                       AT NASHVILLE, TENNESSEE          Appellate Court Clerk
              THE HONORABLE THOMAS W. BROTHERS, JUDGE




PHILIP D. IRWIN
PAMELA KING
NEAL & HARWELL
Nashville, Tennessee
Attorneys for Appellant


ROBERT E. EVANS, pro se
Nashville, Tennessee




REVERSED




                                                     ALAN E. HIGHERS, J.



CONCUR:

DAVID R. FARMER, J.

HOLLY KIRBY LILLARD, J.
       In this defamation action, Robert Evans (“Plaintiff”) filed suit against Amcash

Mortgage Company, Inc. (“Defendant”) and Franklin American Life Insurance Company1

for an alleged defamatory statement made by Defendant’s attorney to one of Defendant’s

employees. In granting the Defendant’s motion for partial summary judgment, the trial

court dismissed Franklin American Corporation from the suit, dismissed Plaintiff’s claims

against Defendant under a theory of “slander by action,” and held that a genuine issue of

material fact existed as to whether the statement made by Defendant’s attorney to one of

Defendant’s employees regarding the reason for Plaintiff’s employment termination is

subject to a qualified privilege. Defendant appeals the judgment of the court below arguing

that the trial court erred in denying Defendant’s motion for summary judgment regarding

the statement made by Defendant’s attorney to one of Defendant’s employees concerning

the reason for Plaintiff’s employment termination because the statement is subject to a

qualified privilege and is not defamatory in nature. For the reasons stated hereafter, we

reverse the judgment of the trial court and hold that the statement made by Defendant’s

attorney to one of Defendant’s employees regarding the reason for Plaintiff’s employment

termination is subject to a qualified privilege and is not defamatory.



                                            FACTS



       On March 1, 1993, Plaintiff began his employment with the Defendant as the

manager of Defendant’s Nashville office.



       On August 16, 1993 at approximately 9:00 p.m., an employee of the Defendant,

Tina Reynolds (“Reynolds”), telephoned Defendant’s chief executive officer, John Hackney

(“Hackney”), at his home and alleged that Plaintiff had fondled and sexually battered her.

Hackney immediately called one of Defendant’s attorneys, John Jordan (“Jordan”), and

told Jordan of Reynold’s allegations against the Plaintiff. Jordan then called Reynolds and

arranged to meet her at his office the following morning.




       1
         In accordance with an agreement m ade by the parties, Franklin American Corporation was
substituted as a defendant in the place of F rank lin Am erican Life Ins urance Co m pany.

                                               2
       On August 17, 1993 at approximately 8:00 a.m., Reynolds arrived at the office of

Anderson & Jordan, attorneys for the Defendant. Jordan greeted Reynolds at the door and

arranged for his law partner, Charles Anderson (“Anderson”), to interview Reynolds

regarding her sexual battery allegations against the Plaintiff.



       Following Anderson’s interview with Reynolds, Hackney, Jordan, Taylor Moore

(“Moore”), one of Defendant’s officers, and Gary Atnip, Defendant’s chief financial officer,

decided that Plaintiff’s employment with the Defendant should be terminated. Hackney

then instructed Jordan and Moore to inform Plaintiff that he was fired.



       Around 10:00 a.m. on August 17, 1993, Jordan and Moore went to Plaintiff’s office

to inform him that his employment with the Defendant had terminated. Two of Defendant’s

employees, Steve Carr (“Carr”) and Parker Judd (“Judd”), were in the office at the time

Jordan and Moore came to tell Plaintiff that he was fired. Jordan asked Carr and Judd to

step outside. After Carr and Judd left the office, Jordan and Moore told Plaintiff that he

was fired and that he should pack his belongings and leave immediately. Plaintiff then

packed his belongings, and Jordan and Moore escorted Plaintiff to his car. Jordan and

Moore did not tell Plaintiff the reason his employment was terminated.



       Prior to Plaintiff’s employment termination, Anderson’s interview with Reynolds was

the only investigation that Defendant undertook in evaluating the truthfulness of Reynold’s

allegations against the Plaintiff. Defendant never discussed with Plaintiff the allegations

that Reynolds had made against him.



       After Plaintiff was fired, Jordan acted as the temporary manager of Defendant’s

Nashville office. The following week after Plaintiff’s termination while Jordan, Carr, and

Judd were working in Defendant’s office sorting through files, Carr stepped back to pick up

the file cabinets, and Judd asked Jordan the reason Plaintiff was fired. Jordan responded

that Plaintiff was fired because he had inappropriately touched Reynold’s blouse.




                                             3
      In an affidavit, Carr stated that he was never told by the Defendant or any agent

acting on behalf of the Defendant that the reason Plaintiff was fired was because of his

sexual harassment of another employee. Carr further stated that the specific reasons for

Plaintiff’s termination were never discussed with him.



                                             LAW



      The sole issue before this Court is as follows:

       Whether the trial court erred in denying Defendant’s motion for summary judgment

regarding the statement Defendant’s attorney made to one of Defendant’s employees

concerning the reason Plaintiff was fired.



       The standards governing our review of a trial court’s action on a motion for summary

judgment are well settled.    Since our inquiry involves purely a question of law, no

presumption of correctness attaches to the trial court’s judgment, and our task is confined

to reviewing the record to determine whether the requirements of Rule 56 of the

Tennessee Rules of Civil Procedure have been met. Carvell v. Bottoms, 900 S.W.2d 23,

26 (Tenn. 1995); Cowden v. Sovran Bank/Central South, 816 S.W.2d 741, 744 (Tenn.

1991); Foley v. St. Thomas Hosp., 906 S.W.2d 448, 452 (Tenn. Ct. App. 1995); Brenner

v. Textron Aerostructures, A Division of Textron, Inc., 874 S.W.2d 579, 582 (Tenn. Ct. App.

1993). Tennessee Rule of Civil Procedure 56.03 provides that summary judgment is only

appropriate where: (1) there is no genuine issue of material fact relevant to the claim or

defense contained in the motion, and (2) the moving party is entitled to a judgment as a

matter of law on the undisputed facts. Carvell, 900 S.W.2d at 26; Byrd v. Hall, 847 S.W.2d

208, 210 (Tenn. 1993); Anderson v. Standard Register Co., 857 S.W.2d 555, 559 (Tenn.

1993). The moving party has the burden of proving that the motion satisfies these

requirements. Downen v. Allstate Ins. Co., 811 S.W.2d 523, 524 (Tenn. 1991).



      While the summary judgment procedure is not a substitute for trial, it goes to the

merits of the complaint and should not be taken lightly. Byrd, 847 S.W.2d at 210; Jones



                                              4
v. Home Indem. Ins. Co., 651 S.W.2d 213, 214 (Tenn. 1983); Fowler v. Happy Goodman

Family, 575 S.W.2d 496, 498 (Tenn. 1978); Foley, 906 S.W.2d at 452. It has been

repeatedly stated by the appellate courts of this state that the purpose of a summary

judgment proceeding is not the finding of facts, the resolution of disputed factual issues or

the determination of conflicting inferences reasonably to be drawn from the facts. Bellamy

v. Federal Express Corp., 749 S.W.2d 31, 33 (Tenn. 1988).            Rather, the purpose of

summary judgment is to resolve controlling issues of law. Id.



       In evaluating the propriety of a motion for summary judgment, we view the evidence

in the light most favorable to the nonmoving party and draw all reasonable inferences in

the nonmoving party’s favor. Byrd, 847 S.W.2d at 210-11. A motion for summary

judgment should only be granted when both the facts and the conclusions drawn from the

facts permit a reasonable person to reach only one conclusion. Id.



       In order to prevail in a defamation action, a plaintiff must demonstrate some level

of fault on the part of the defendant. Memphis Pub. Co. v. Nichols, 569 S.W.2d 412, 418

(Tenn. 1978). The Tennessee Supreme Court in Nichols decided that negligence is the

requisite level of fault that must be established by a private figure plaintiff who is bringing

a defamation action. Id. The supreme court in Nichols stated:

              In determining the issue of liability, the conduct of the
              defendant is to be measured against what a reasonably
              prudent person would, or would not, have done under the
              same or similar circumstances. This is the ordinary negligence
              test that we adopt, not a “journalistic malpractice” test whereby
              liability is based upon a departure from supposed standards of
              care set by publishers themselves.
              In our opinion, the appropriate question to be determined from a
              preponderance of the evidence is whether the defendant exercised
              reasonable care and caution in checking on the truth or falsity and the
              defamatory character of the communication before publishing it.

Nichols, 569 S.W.2d at 418 (citations omitted).



       In Press, Inc. v. Verran, 569 S.W.2d 435, 442 (Tenn. 1978), our Supreme Court

adopted the Restatement (Second) of Torts (1977) standards for liability in a defamation

suit. The court stated:



                                              5
         We are impressed with Standards 580A2 and 580B, Restatement (Second)
         of Torts (1977). They read as follows:

                             *                 *                *

                  § 580B. Defamation of a Private Person.
                  One who publishes a false and defamatory communication
                  concerning a private person, or concerning a public official or
                  public figure in relation to a purely private matter not affecting
                  his conduct, fitness or role in his public capacity, is subject to
                  liability, if, but only if, he
                  (a) knows that the statement is false and that it defames the
                  other,
                  (b) acts in reckless disregard of these matters, or
                  (c) acts negligently in failing to ascertain them.

                  We believe that these standards meet the criteria of our
                  federal and state constitutions and we adopt them as the law
                  of this jurisdiction.

Press, Inc., 569 S.W.2d at 442. Thus, liability is only imposed if the defendant acts

negligently in failing to ascertain the truth or falsity of the alleged defamatory statement.

Id.



         In the present case, Plaintiff claims that the Defendant acted negligently in failing

to ascertain whether Reynolds’ allegations of sexual harassment were true or false.

Plaintiff argues that because Anderson’s interview with Reynolds was the only investigation

that Defendant undertook in evaluating the truthfulness of Reynold’s allegations against

Plaintiff prior to Plaintiff’s employment termination, Defendant was negligent in investigating

Reynold’s claims of sexual harassment against Plaintiff.



         We believe Defendant exercised reasonable care and caution in investigating the

veracity of Reynold’s allegations of sexual harassment against Plaintiff before Plaintiff was

terminated. Reynolds called Hackney at home one evening and complained that Plaintiff

had fondled and had sexually battered her. Hackney then called Jordan and apprised

Jordan of Reynold’s allegations against Plaintiff. Jordan arranged to meet Reynolds the

following morning in his law office. Reynolds was interviewed by one of Defendant’s

attorneys, Anderson, the morning after Reynolds complained to Hackney of Plaintiff’s

conduct. After interviewing Reynolds regarding her allegations against Plaintiff, Defendant


         2
          Restatement (Second) of To rts § 5 80A (197 7) de als with the defam atio n of a p ublic offic ial or pu blic
figure. In this case, there is no dispute that the plaintiff is a private figure.

                                                          6
formed the belief that Reynold’s allegations were well-grounded in fact and that Plaintiff

should be terminated. Because we find that the Defendant exercised reasonable care and

caution in investigating the truth or falsity of Reynold’s allegations, an essential element

of Plaintiff’s defamation claim fails. A reasonable and prudent person would rely upon their

attorneys’ observations and insights into a situation.         Defendant, therefore, acted

reasonably in relying upon its attorneys’ judgment that Reynold’s allegations were sincere

and true and in relying upon its attorneys’ advice to fire Plaintiff.



       Nonetheless, it is an elementary rule in this state that publication is an essential

element of a defamation action without which a complaint must be dismissed. Applewhite

v. Memphis State University, 495 S.W.2d 190, 192-93 (Tenn. 1973); Freeman v. Dayton

Scale Co., 19 S.W.2d 255, 256 (Tenn. 1929); Woods v. Helmi, 758 S.W.2d 219, 222-23

(Tenn. Ct. App. 1988). Freeman and its progeny stand for the proposition that inasmuch

as the gravamen of the act of defamation is pecuniary damage to the character or credit

of the party defamed, an action for defamation cannot arise without publication. Woods,

758 S.W.2d at 223. We, therefore, do not reach the matter of privilege, malice or any

other question until there is a publication. Id.



       In Freeman, the supreme court held that the communication of a defamatory matter

between the agents and officers of a corporation in the ordinary course of business was

not a publication. Freeman, 19 S.W.2d at 258. The Freeman court quoted the following

annotation from 18 ALR 772, 778 which states:

              The more liberal rule, and the one which seemingly has the
              support of the weight of modern authority, is that, where the
              communication is made to a servant or business associate in
              the ordinary and natural course of business, there is no
              actionable libel.

Freeman, 19 S.W.2d at 257.



       In Woods v. Helmi, 758 S.W.2d 219 (Tenn. Ct. App. 1988), a nurse filed a

defamation and intentional interference with employment suit against certain doctors and

her immediate supervisor following her employment termination. The nurse’s defamation



                                               7
action was based upon a memorandum written by her supervisor and circulated to her

superiors regarding her operating room behavior. This memorandum led to the nurse’s

termination.   In holding that the supervisor’s memorandum was not published for

defamation purposes and that the contents of the memorandum, even if published, did not

sustain a cause of action for defamation because of the supervisor’s lack of malice in

preparing the memorandum, this Court stated:

               We interpret Freeman and its progeny to mean that
               communication among agents of the same corporation made
               within the scope and course of their employment relative to
               duties performed for that corporation are not to be considered
               as statements communicated or publicized to third persons.

Woods, 758 S.W.2d at 223.



       The communications in the present case, like those in Woods v. Helmi, were made

“among agents of the same corporation . . . within the scope and course of their

employment relative to duties performed for that corporation,” or were made to those “in

the ‘need to know’ channel.” See Woods, 758 S.W.2d at 224.           Under the rationale of

Woods, we are compelled to find that the communications “are not to be considered as

statements communicated or publicized to third persons.” Id. at 223. Because there was

no publication, the action of the trial court must be reversed.



       Furthermore, even if the statements made by Defendant’s attorney regarding the

reason for Plaintiff’s employment termination are defamatory, we believe that the

Defendant is entitled to summary judgment because this statement is conditionally

privileged under a common interest privilege.



       A conditional privilege is recognized where the interest which the defendant is

seeking to vindicate or further is regarded as sufficiently important to justify some latitude

for making mistakes. W. Page Keeton et al., Prosser and Keeton on the Law of Torts, §

115, at 825 (5th ed. 1988). The Tennessee Supreme Court authorized conditional

privileges in Southern Ice Co. v. Black, 189 S.W. 861, 863 (Tenn. 1916), and stated:

               Qualified privilege extends to all communications made in
               good faith upon any subject-matter in which the party


                                              8
              communicating has an interest, or in reference to which he has
              a duty to a person having a corresponding interest or duty; and
              the privilege embraces cases where the duty is not a legal one,
              but where it is of a moral or social character of imperfect
              obligation. . . . The rule announced is necessary in order that
              full and unrestricted communication concerning a matter in
              which the parties have an interest or a duty may be had. It is
              grounded in public policy as well as reason.

See also Price v. Sale, 8 Tenn. App. 382, 392-93 (1918).



       Conditional privileges may cover many different types of interests including a

common interest and a public interest. Keeton et al., supra, at 826-31. The common

interest privilege has been recognized in Tennessee to cover communications between

employees or agents of the same business or corporation. See Woods v. Helmi, 758

S.W.2d 219 (Tenn. Ct. App. 1988); Southern Ice Co., 189 S.W. at 863; Dickson v. Nissan

Motor Mfg. Corp., No. 87-289-ll, 1988 Tenn. App. LEXIS 80 (Feb. 10, 1988).



       In Southern Ice Co. v. Black, 189 S.W. 861 (Tenn. 1916), an employee, Black, filed

a defamation action for an alleged slanderous statement made by a foreman of the

Defendant corporation where Black worked. The foreman stated that Black had stolen

some tickets and that Black was a thief. In holding that the statements made by the

foreman were protected by qualified privilege and were not actionable unless malice was

shown, the court stated that the foreman was well warranted in believing that Black had

stolen a coupon book and that all of the parties to whom the publication was made were

interested in the transaction. Id. at 863. Because Black was unable to prove malice, the

alleged slanderous statements were not actionable based upon qualified privilege. Id. at

864.



       In Freeman v. Dayton Scale Co., 19 S.W.2d 255 (Tenn. 1929), the plaintiff, a former

employee of the defendant company, filed suit based upon an alleged libelous

communication which passed from an agent of the defendant corporation to the attorney

for the plaintiff. Plaintiff sued, in part, based upon the dictation of an allegedly libelous

letter by an agent of the defendant to a stenographer of the defendant corporation. In

holding that the dictation of a letter containing libelous matter to a stenographer does not


                                             9
constitute publication in the sense of the law of libel, our supreme court stated: “[W]here

the communication is made to a servant or business associate in the ordinary and natural

course of business, there is no actionable libel.” Id. at 257.



       In Dickson v. Nissan Motor Mfg. Corp., No. 87-289-ll, 1988 Tenn. App. LEXIS 80

(Tenn. Ct. App. Feb. 10, 1988), an employee, Dickson, filed suit against his employer for

alleged slanderous statements made to his superiors.             Dickson was fired from the

Defendant corporation for insubordination and for speaking to his superior in an obscene

and threatening manner. In holding that the Defendants’ statements were protected under

a qualified privilege, this Court stated:

              One is entitled to learn from his associates what is being done
              in a matter in which he has an interest in common with them.
              This interest in their common affairs entitles him to information
              as to how they are conducted, or to information that affects
              their common interest, even though he is not personally
              concerned with the information. Restatement of Torts 2d.
              1977 - 596, comment c.
              *          *           *
       This Court agrees with the argument of defendants that, where a plant
       employee is discharged, the employer has a privileged right to state and the
       other employees have a privileged right to hear that the discharge has taken
       place and the grounds therefor, stated in general terms.

Id. at *8-9.



       Similarly, in Perry v. Fox, No. 01A01-9407-CV-00337, 1994 Tenn. App. LEXIS 763

(Tenn. Ct. App. December 21, 1994), plaintiff was fired from his job at South Central Bell

Telephone Company (“SCB”) after being accused of work related misconduct including

malicious destruction of property, impersonation of another SCB employee, incorrectly

documenting time, and making unauthorized representations to a SCB customer. Plaintiff

filed a defamation suit against Fox, an employee of SCB, and SCB based upon a

memorandum Fox prepared and distributed which stated that plaintiff had been terminated

for malicious destruction of property and that in the future plaintiff would not be welcome

on company property. Plaintiff further alleged that SCB failed to make a reasonable

investigation into the allegations against him before terminating his employment. In

upholding the trial court’s grant of summary judgment in favor of the defendants’, this court

stated:


                                             10
              It is an elementary rule in this state that publication is an
              essential element of a libel action without which a complaint
              must be dismissed. Applewhite v. Memphis State University,
              495 S.W.2d 190 (Tenn. 1973); Woods v. Helmi, 758 S.W.2d
              219 (Tenn. App. 1988). Taken in the light most favorable to
              the plaintiff, the memorandum was disseminated to certain
              fellow employees of the plaintiff. This action falls short of
              publication within the ambit of the rule. As stated in Freeman
              v. Dayton Scale Co., 159 Tenn. 413, 19 S.W.2d 255 (Tenn.
              1929), “where communication is made to a servant or business
              associate in the ordinary or natural course of business there is
              no actionable libel.” See also, Woods, supra.

Perry, 1994 Tenn. App. LEXIS 763, at *3.



       The privilege can be lost, however, if the defendant does not act with good faith or

acts with actual malice. When a communication is conditionally privileged, it is not

actionable unless actual or express malice is shown by the plaintiff. Woods v. Helmi, 758

S.W.2d 219, 224 (Tenn. Ct. App. 1988); Southern Ice Co., 189 S.W. at 863-64. Once

privileged, the statement is presumed to have been made without malice, and the burden

is on the plaintiff to prove express malice. Langford v. Vanderbilt University, 318 S.W.2d

568, 576 (Tenn. Ct. App. 1958). To prove actual malice, there must be sufficient evidence

to permit the conclusion that the defendant in fact entertained serious doubts as to the

truth of his publication, and that publishing, with such doubt, shows reckless disregard for

truth or falsity and demonstrates actual malice. Moore v. Bailey, 628 S.W.2d 431, 433-34

(Tenn. Ct. App. 1981).



       The record does not reveal that the Defendant entertained serious doubts as to the

veracity of Reynold’s allegation of sexual battery against the Plaintiff or that the Defendant

acted with actual malice. As stated above, the record does not indicate that the Defendant

acted negligently in investigating Reynold’s allegations. We hold that the statement by

Defendant’s attorney to one of Defendant’s employees regarding the reason for Plaintiff’s

employment termination is conditionally privileged under a common interest privilege and,

therefore, is not actionable.



       The action of the trial court denying summary judgment to Defendant regarding the

statement Defendant’s attorney made to one of Defendant’s employees concerning the


                                             11
reason for Plaintiff’s employment termination is hereby reversed. Costs on appeal are

taxed to Plaintiff for which execution may issue if necessary.




                                                       HIGHERS, J.



CONCUR:




FARMER, J.




LILLARD, J.




                                           12
