                              In the

United States Court of Appeals
               For the Seventh Circuit

No. 07-2800

G IANT S CREEN S PORTS, doing business as,
G IANT S CREEN F ILMS LLC, and G IANT S CREEN
F ILMS V IKINGS LLC,
                                      Plaintiffs-Appellants,
                             v.


C ANADIAN IMPERIAL B ANK OF C OMMERCE,

                                                 Defendant-Appellee.


             Appeal from the United States District Court
        for the Northern District of Illinois, Eastern Division.
           No. 05 C 7184—Samuel Der-Yeghiayan, Judge.


   A RGUED S EPTEMBER 9, 2008—D ECIDED JANUARY 20, 2009




  Before B AUER, C UDAHY, and W OOD , Circuit Judges.
  B AUER, Circuit Judge. This is an appeal from a grant
of summary judgment in favor of the defendant in a
suit claiming defamation per se in written statements
made by the defendant concerning business dealings of
the plaintiff.
2                                             No. 07-2800

   In October 2001, Giant Screen Sports (doing business as
Giant Screen Films LLC) and Sky High entered into an
agreement which called for Giant Screen Sports to distrib-
ute two films produced by Sky High entitled “Adrenaline
Rush” and “Ultimate Gs.” A year later, Sky High
entered into a similar agreement for a subsidiary of
Giant Screen Sports, Giant Screen Films Vikings LLC
(collectively “Giant Screen”), to distribute Sky High’s
film entitled “Vikings: Journey to New Worlds.” As part of
this Vikings agreement (Distribution Agreement), Giant
Screen agreed to pay Sky High a total of $3 million during
the three-year period following the distribution of the
Vikings film.
  To finance the production of “Vikings,” Sky High
negotiated a credit agreement with Canadian Imperial
Bank of Commerce (CIBC). As security for the loan, Sky
High was required to assign CIBC the $3 million expected
from Giant Screen under the Distribution Agreement. CIBC
also required Sky High to obtain insurance from Export
Development Canada (EDC), covering the payments due
if Giant Screen defaulted. EDC would not insure the
payments under this agreement. EDC would only issue the
policy if several provisions were altered to reflect a new
Distribution Agreement (Falsified Distribution Agree-
ment), particularly to require that Giant Screen pay the
$3 million in $500,000 installments and Giant Screen
guarantee Sky High’s financial obligations.
  EDC would issue the insurance policy only if it
approved the Credit Agreement, and the new provisions
reflected in the Falsified Distribution Agreement, between
No. 07-2800                                              3

CIBC and Sky High. The insurance policy would not
cover non-payments if Giant Screen’s non-payment was
the result of fraud on the part of Sky High. Giant Screen’s
signature was required on the Falsified Distribution
Agreement since it was becoming a guarantor and its
contractual obligations were being altered; EDC would
not issue its policy and CIBC would not fund the loan to
Sky High if Giant Screen’s signature was not present. No
party, including CIBC, ever contacted Giant Screen re-
garding the proposed modifications. In a correspondence
to CIBC and Sky High, EDC acknowledged that the
modifications would probably be difficult for Giant
Screen to accept, since they accelerated the payments due.
  On November 29, 2002, Sky High sent CIBC a contract,
representing the new changes required to issue the loan,
and seemingly bearing the appropriate signatures of Sky
High and Giant Screen. Giant Screen maintains that it
was unaware of the changes reflected in the Falsified
Distribution Agreement and that its signature on this
agreement was forged to obtain the loan.
  Also, as part of the Credit Agreement, which incorpo-
rated the Falsified Distribution Agreement, CIBC required
that Giant Screen make the $3 million in installment
payments directly to CIBC under a Notice of Security,
Direction of Payment and Distributor Acceptance (Notice
of Security). Sky High sent CIBC a signed copy of the
Notice of Security, again bearing the appropriate signa-
tures of Sky High and Giant Screen. Giant Screen maintains
that it was unaware of the Notice of Security and that its
signature on this document was also forged.
4                                                No. 07-2800

  On October 6, 2004, CIBC sent a letter to Giant Screen,
together with a copy of the Notice of Security, that the
payments under the Notice of Security should thereafter
be paid to CIBC. Giant Screen maintains that this was
the first time it became aware of the Notice of Security.
  After the letters were received, Giant Screen responded
that it was not familiar with the Notice of Security and that
CIBC should address the issue with Sky High. After several
later communications denying familiarity with the Notice
of Security, Giant Screen stated to CIBC that in Giant
Screen’s belief, it had no obligation to CIBC since it was not
a party to that agreement.
  On November 12, 2004, Giant Screen informed CIBC
that the signature on the Notice of Security was not the
signature of its president, Donald Kempf. CIBC acknowl-
edged that it had not received any documents directly
from Giant Screen, but rather through Sky High. CIBC
expressed concerns regarding Sky High’s offer to
obtain Giant Screen’s signature, which CIBC initially
expected to gather directly.
  On November 15, 2004, CIBC sent Giant Screen copies
of the Falsified Distribution Agreement, the Notice of
Security, and various pledgeholder agreements to deter-
mine whether all of Donald Kempf’s signatures were
forgeries. The following day, Giant Screen informed
CIBC that it would cooperate with the forgery investiga-
tion, but needed the protection of legal process before
doing so. Although Giant Screen did not answer as to
whether the signatures were forgeries, Giant Screen did
state that CIBC would not like the answers about the
signatures’ authenticity.
No. 07-2800                                              5

  On November 24, 2004, CIBC sent Sky High a letter
requesting an explanation of Giant Screen’s forged signa-
ture on the Notice of Security. Sky High did not respond.
CIBC declared Sky High in default and sued under the
Credit Agreement. In an affidavit, CIBC stated that it
feared the Notice of Security was false and the disburse-
ment of the loan provided by the Credit Agreement
was based on false representations.
  In April 2005, CIBC settled its claim with Sky High,
providing that Sky High would cooperate with CIBC in
requiring Giant Screen to abide by the Notice of Security.
Giant Screen and EDC received a letter from CIBC indicat-
ing that the matter was settled and that the Credit Agree-
ment between Sky High and CIBC had been reinstated.
   On June 7, 2005, CIBC filed an insurance claim with
EDC. The claim stated that CIBC had sustained a loss as a
result of Giant Screen’s failure or refusal to pay the
first installment of $500,000 under the Falsified Distribu-
tion Agreement.
  EDC inquired into the insurance claim by asking CIBC
about Giant Screen’s default and whether there were any
disputes with Sky High that would impede payment of
the first installment. CIBC stated that, to its knowledge,
Giant Screen was still in default and that it was unaware
of any disputes that would impede payment and did not
know of any reason why Giant Screen had not paid.
  Giant Screen then filed a diversity action against Sky
High and its president Samson, and later added CIBC as
a defendant. Giant Screen asserted that it was per se
defamed by CIBC in CIBC’s letters to EDC about Giant
6                                               No. 07-2800

Screen’s lack of payment. CIBC filed cross-claims
against Sky High and counterclaims against Giant
Screen. The district court granted in part and denied in
part both Giant Screen’s and CIBC’s motions for sanc-
tions against Sky High for the forgery; granted summary
judgment in favor of both Giant Screen and CIBC against
Sky High; and granted summary judgment in favor of
Giant Screen on CIBC’s counterclaims. The district court
granted summary judgment in favor of CIBC on Giant
Screen’s defamation per se claim, finding that the com-
munications were not defamatory since they were sub-
jective opinions, subject to innocent constructions, and
made for a legitimate business purpose. Giant Screen
filed this timely appeal only as to its defamation per se
claim.


                      DISCUSSION
   Giant Screen claims that the statements made about
its contractual failures to pay a legal debt and its “de-
fault” status were so serious that its reputational injury
may be presumed as defamation per se. Giant Screen
also argues that CIBC abused its qualified privilege to
make such statements since CIBC either knew of the
forgery or displayed a reckless disregard for the truth
or falsity of the statements before filing the insurance
claim. We review de novo the district court’s decision to
grant summary judgment, construing all the facts and
inferences in favor of Giant Screen. See Republic Tobacco Co.
v. N. Atl. Trading Co., 381 F.3d 717, 726 (7th Cir. 2004).
No. 07-2800                                                    7

  Summary judgment is appropriate when the pleadings,
depositions, answers to interrogatories, and admissions
on file, together with any affidavits, show that there is no
genuine issue of material fact and the movant is entitled
to judgment as a matter of law. Fed. R. Civ. P. 56(c). “The
initial burden is on the moving party . . . to demonstrate
that there is no material question of fact with respect to
an essential element of the non-moving party’s case.” Cody
v. Harris, 409 F.3d 853, 860 (7th Cir. 2005). If the moving
party meets this burden, the non-moving party must
submit evidence that there is a genuine issue for trial. Fed.
R. Civ. P. 56(e); Ptasznik v. St. Joseph Hosp., 464 F.3d 691, 694
(7th Cir. 2006). The existence of merely a scintilla of
evidence in support of the non-moving party’s position
is insufficient; there must be evidence on which the jury
could reasonably find for the non-moving party. Id. We
apply the substantive law of Illinois, the state in which
this diversity case was filed, to each of Giant Screen’s
claims. See Global Relief Found., Inc. v. New York Times Co.,
390 F.3d 973, 981 (7th Cir. 2004).


  A. Defamation Per Se
  Giant Screen claims that CIBC’s statements made to
EDC imputed an inability to perform or a want of
integrity; that the statements, taken as a whole, express a
failure of Giant Screen to uphold contractual obligations,
and that these statements prejudice its reputation in the
industry. We agree.
 Defamation actions provide redress for false state-
ments of fact that harm a plaintiff’s reputation. Brennan
8                                                 No. 07-2800

v. Kadner, 814 N.E.2d 951, 956 (Ill. App. Ct. 2004). A
statement is defamatory if its publication “tends to cause
such harm to the reputation of another that it lowers
that person in the eyes of the community or deters
third persons from associating with [the plaintiff].” Kolegas
v. Heftel Broad. Corp., 607 N.E.2d 201, 206 (Ill. 1992). To
prove a defamation claim, the evidence must show
that a defendant made a false statement concerning the
plaintiff, that there was an unprivileged publication of
the defamatory statement to a third party by the
defendant, and that the plaintiff suffered damages as a
result. Seith v. Chicago Sun-Times, Inc., 861 N.E.2d 1117,
1126 (Ill. App. Ct. 2007). Illinois recognizes two types
of defamation: defamation per se and defamation per quod.
Knafel v. Chicago Sun-Times, Inc., 413 F.3d 637, 639 (7th Cir.
2005). This case is based on a claim of defamation per se.
  Some statements are considered defamatory per se
because they are “so obviously and materially harmful” to
a plaintiff that his injury may be presumed and he does
not need to prove actual damages to recover, as the
defamatory character is apparent on its face. Tuite v.
Corbitt, 866 N.E.2d 114, 121 (Ill. 2006). Illinois recognizes
five categories of statements which are considered action-
able per se; two are pertinent to this case: (1) those im-
puting an inability to perform or want of integrity in the
discharge of one’s duties of office or employment; and
(2) those that prejudice a party, or impute lack of ability, in
his or her trade, profession or business. Bryson v. News
America Publications, Inc., 672 N.E.2d 1207, 1214 (Ill. 1996).
  Although a statement may fit into one of these
categories, this fact, standing alone, “has no bearing on
No. 07-2800                                                9

whether the alleged defamatory statement is actionable,”
because certain factors may render defamatory state-
ments non-actionable as a matter of law. Hopewell v. Vitullo,
701 N.E.2d 99, 102 (Ill. App. Ct. 1998). For example, as
CIBC argues, if a defendant’s statements are reasonably
capable of an innocent, nondefamatory construction, a
plaintiff cannot maintain action for defamation per se.
Bryson, 672 N.E.2d at 1215. The innocent construction
rule “requires courts to consider a written or oral state-
ment in context, giving the words, and their implications,
their natural and obvious meaning.” Id. If the “com-
plained-of statement may reasonably be innocently inter-
preted, it cannot be actionable per se.” Harrison v. Chicago
Sun-Times, Inc., 793 N.E.2d 760, 772 (Ill. App. Ct. 2003).
Illinois courts emphasize that the interpretation must
be reasonable. Bryson, 672 N.E.2d at 1215. Illinois courts
and our court have held that whether a statement is
reasonably capable of an innocent construction is a ques-
tion of law for the court to decide. See Muzikowski v.
Paramount Pictures Corp., 322 F.3d 918, 924 (7th Cir. 2003);
See also Anderson v. Vanden Dorpel, 667 N.E.2d 1296, 1302
(Ill. 1996). The First Amendment also affords protection
from liability to a speaker expressing an opinion that
does not misstate actual facts. See Milkovich v. Lorain
Journal Co., 497 U.S. 1, 20 (1990); see also Moriarty v.
Greene, 732 N.E.2d 730, 739 (Ill. App. Ct. 2000).
  There are three disputed statements in this case: (1) that
Giant Screen’s failure or refusal to pay resulted in CIBC’s
loss; (2) that Giant Screen was still in default of its
payment obligations; and (3) that CIBC was unaware of
any Sky High disputes that would impede Giant Screen’s
10                                             No. 07-2800

payment. CIBC principally argues that the district court
was correct in finding that these statements are not per se
defamatory because they are capable of reasonable,
innocent constructions.
  In considering allegedly defamatory statements under
the innocent construction rule, courts must interpret the
words “as they appeared to have been used and
according to the idea they intended to convey to the
reasonable reader.” Bryson, 672 N.E.2d at 1217. The rule
“does not require courts to strain to find an unnatural
innocent meaning for a statement when a defamatory
meaning is far more reasonable.” Tuite, 866 N.E.2d at 123
(quoting Bryson, 672 N.E.2d at 1217). It also does not
require courts “to espouse a naïveté unwarranted under
the circumstances.” Id. Thus, “when a defamatory
meaning was clearly intended and conveyed, [Illinois
courts] will not strain to interpret allegedly defamatory
words in their mildest and most inoffensive sense in
order to hold them nonlibellous under the innocent
construction rule.” Bryson, 672 N.E.2d at 1217.
  Our inquiry, then, is whether there is a reasonable,
innocent construction of CIBC’s words: an interpretation
other than that of Giant Screen’s purposeful delinquency
in its financial obligations. In making this determina-
tion, the context of the statements is critical in deter-
mining their meaning. See Bryson, 672 N.E.2d at 1215.
  CIBC argues that the three statements do not imply
that Giant Screen deliberately disregarded its obligation
to pay a lawful debt for an improper reason. Rather, the
refusal or failure to pay could have resulted from a mis-
No. 07-2800                                               11

take, a breach by Sky High, a good faith dispute over
liability, or other innocent constructions, to support
summary judgment in CIBC’s favor. See Muzikowski v.
Paramount Pictures, 477 F.3d 899, 904 (7th Cir. 2007) (“If a
statement is capable of two reasonable constrictions, one
defamatory and one innocent, the innocent one will
prevail.”). We disagree. There is no reasonable construc-
tion of the statements other than that Giant Screen was
unable to perform or willfully refused to meet its
financial obligations.
  CIBC disparaged Giant Screen’s ability and integrity as
a business by telling EDC that, in essence, Giant Screen’s
contractual word to meet an obligation is meaningless.
The natural and obvious response of anyone con-
templating entering an agreement with Giant Screen,
upon being told that Giant Screen had either refused or
failed to pay a legal obligation, is to not transact with
Giant Screen, but take his business elsewhere. See Action
Repair v. American Broadcasting Companies, 776 F.2d 143, 148
(7th Cir. 1985). More importantly, CIBC’s second letter
expressly stated that Giant Screen was “still in default.”
Such an express statement about Giant Screen’s lack of
financial integrity is not intended to put EDC on notice
of a future claim, but to inform EDC that Giant Screen
had purposely disregarded payments it was legally
obligated to make. With such an intentional breach, CIBC
argued it was entitled to the insurance proceeds.
  It was the district court’s job to decide whether, in light
of the summary judgment record, the statements made to
EDC could reasonably, without undue strain, be inter-
12                                              No. 07-2800

preted innocently. However, the district court’s decision
puts an undue strain on the meaning behind CIBC’s
statements. CIBC intended to convey, and indeed ex-
pressly stated, that Giant Screen was in default of a
payment legally due. CIBC reinforced this negative
portrayal of Giant Screen by stating that Giant Screen was
“still in default,” suggesting that Giant Screen couldn’t or
wouldn’t make payments that were due. Moreover, CIBC
communicated to EDC that it knew of no dispute with
Sky High that would impede Giant Screen’s payment.
This statement strengthened CIBC’s message that there
was no justification for Giant Screen’s non-payment,
implying only that Giant Screen purposely failed or
willfully refused to uphold its end of the bargain.
  Illinois law rejects attempts to imagine innocent explana-
tions of plainly defamatory statements. Tuite, 866 N.E.2d at
123. Upon reading these statements, EDC’s reaction would
not be that “failure or refusal to pay” or “still being in
default” were innocent statements. See Action Repair, 776
F.2d at 148. “Default,” when used to describe the status of
a transacting business, is the willful refusal to pay an
obligation. The word alone triggers notions of collection
and bankruptcy proceedings. Although the district court
decided that the letters’ purpose was to put EDC on notice
of a potential claim, we conclude that both letters were
actually a claim on the insurance company for the respec-
tive proceeds. In addition to stating that Giant Screen
breached its contractual duty, the August 26, 2005 letter
concludes with CIBC advising EDC that any potential
investigation into the claim should not preclude “prompt
payment” of the insurance proceeds. CIBC’s intent was
No. 07-2800                                                   13

to collect the proceeds under the insurance policy, and
to do so, CIBC expressly stated that Giant Screen pur-
posely welshed on its financial obligations. To the rea-
sonable reader, the statements, taken as a whole, convey
the untrue imputation that Giant Screen is an inten-
tionally dishonest business entity, which purposely
disregards its financial contracts.
  The district court also decided that the statements
cannot be reasonably interpreted as actual facts, but only
as subjective opinions, thereby protecting the statements
as non-actionable opinions. Statements of opinion, al-
though defamatory, do not give rise to a defamation
claim. See Bryson, 672 N.E.2d at 1220 (quoting Milkovich,
497 U.S. at 20) (a defamatory statement is protected under
the First Amendment and rendered non-actionable only
if the remark “cannot be reasonably interpreted as
stating actual facts.”). If it is plain that the speaker is
expressing a subjective view, an interpretation, a theory,
conjecture, or surmise, rather than claiming to be in
possession of objectively verifiable facts, the statement is
not actionable. Wilkow v. Forbes, 241 F.3d 552, 555 (7th
Cir. 2001). To be actionable, the allegedly defamatory
statement must contain an objectively verifiable factual
assertion. See Lifton v. Bd. of Educ. of the City of Chicago, 416
F.3d 571, 579 (7th Cir. 2005). Although “in one sense
all opinions imply facts, the question of whether a state-
ment of opinion is actionable as defamation is one of
degree; the vaguer and more generalized the opinion, the
more likely the opinion is non-actionable as a matter of
law.” Wynne v. Loyola Univ., 741 N.E.2d 669, 676 (Ill. App.
Ct. 2000).
14                                              No. 07-2800

  The statements at issue are not non-actionable state-
ments of opinion; they contain objectively verifiable
factual assertions. A speaker’s remarks cannot be divorced
from the context in which they occur. Although the
circumstances under which a remark was made may
“negate the impression that the statement had factual
content,” the statements here were made to an insurance
company to collect proceeds, giving the greatest impres-
sion that each statement had factual content and was not
merely a generalized, vague statement. Hopewell, 701
N.E.2d at 103. CIBC could not collect, and certainly EDC
would not pay, unless it had been factually stated, not
subjectively opined, that Giant Screen was in default.
  Although the district court decided that the state-
ments were mere suppositions, characterizations such as
“failure or refusal” to pay and “still in default” convey
that Giant Screen, as a matter of fact, intentionally did
not pay what it was legally obligated to. The reasonable
reader would understand CIBC to be informing him of
events that already have occurred, namely that Giant
Screen inexcusably did not pay what it should have.
Expressing that a party delinquently failed to meet a
contractual obligation, particularly that it “did not pay” or
“refused to pay” or remains “in default,” is an objectively
factual assertion, clearly capable of being verified as a
statement of fact, and does not fall within the protec-
tive ambit of the Constitution.
  Furthermore, CIBC’s per se defamatory statements are
not saved from being actionable as non-actionable
opinion by the prefatory term, “[t]o CIBC’s knowledge,”
No. 07-2800                                              15

when stating that Giant Screen remained in default.
Prefatory language does not control whether the statement
is defamatory. See Milkovich, 497 U.S. at 17-21; see also
Wilkow, 241 F.3d at 555. This court has held that state-
ments of fact are not shielded from an action for defama-
tion even if prefaced with the words “in my opinion.”
Haynes v. Alfred A. Knopf, Inc., 8 F.3d 1222, 1227 (7th Cir.
1993). As previously discussed, CIBC’s statements are
not expressing a subjective view.
  Again, context is key, and here, CIBC was making a
claim for insurance proceeds by factually stating that
Giant Screen breached its obligation. To hold that CIBC
was making a claim for insurance proceeds by ex-
pressing its subjective opinion is unreasonable.
  As noted, courts will not strain to find an innocent
meaning for words when a defamatory construction is
far more reasonable. Bryson, 672 N.E.2d at 1217. CIBC’s
statements about Giant Screen are not reasonably suscepti-
ble to an innocent construction. They are not non-action-
able statements of opinion; they are so harmful to Giant
Screen that they constitute defamation per se. Summary
judgment on Giant Screen’s defamation per se claim
was improperly granted.


  B. Qualified Privilege
  The district court also decided that there was a qualified
privilege in CIBC’s communication to EDC. Although
Giant Screen does not question the existence of such a
privilege, Giant Screen argues and we conclude that
16                                               No. 07-2800

there are triable issues of material fact as to whether
the privilege had been abused.
   Even if a qualified privilege exists, the communication
can still be defamatory and actionable if the privilege
has been abused. “In general terms, overcoming the
qualified privilege requires a showing that the defendant
either intentionally published the material while
knowing the matter was false, or displayed a reckless
disregard as to the matter’s falseness.” Smock v. Nolan, 361
F.3d 367, 372 (7th Cir. 2004) (citing Kuwik v. Starmark Star
Mktg. and Admin., Inc., 619 N.E.2d 129, 133 (Ill. 1993)).
To prove such abuse, a plaintiff must show “a direct
intention to injure another, or a reckless disregard of
[the defamed party’s] rights and of the consequences
that may result to him.” Kuwik, 619 N.E.2d at 135. Impor-
tantly, a defendant acts with reckless disregard when
it makes a statement “despite a high degree of awareness
of probable falsity or entertaining serious doubts as to
its truth.” Id. at 133 (citation omitted). Reckless disregard
of a plaintiff’s rights can also include the failure to prop-
erly investigate the truth of the matter. Id. at 136. Although
whether a qualified privilege exists is a question of law
for the court, the issue of whether the privilege was
abused is a question of fact for the jury. Id. at 133.
  The question of whether CIBC abused its privilege in
making any of the defamatory statements involves only
one factual dispute: whether CIBC knew of the forgery or
had reason to know of the forgery when it made its insur-
ance claim. We conclude that genuine issues of material
fact exist as to whether CIBC knew of or had reason to
No. 07-2800                                             17

suspect the forgery, which indicate that CIBC’s behavior
in sending the letters to EDC may have been in
reckless disregard of Giant Screen’s rights.
  Although CIBC acknowledged the Notice of Security’s
forgery, CIBC argues that it neither knew nor should
have known that Giant Screen’s signature on the
Falsified Distribution Agreement was forged. Because
of this, CIBC argues that a reasonable jury could not
conclude that CIBC directly intended to injure Giant
Screen or recklessly disregarded Giant Screen’s rights
when making its insurance claim. Specifically, CIBC asserts
that in November 2004, it sent Giant Screen a copy of the
Falsified Distribution Agreement to examine the signa-
ture’s authenticity. In response, Giant Screen did not tell
CIBC that the document was forged, leading to CIBC’s
belief that nothing was wrong with the document.
Also, CIBC argues that it was unaware of any dispute
involving Sky High, since it had settled its suit with Sky
High prior to making its claim with EDC. With these
undisputed facts, CIBC argues it was entitled to
summary judgment since no jury could reasonably con-
clude that it had a direct intention to injure Giant Screen
or that it recklessly disregarded Giant Screen’s rights.
  We are not satisfied, especially in viewing the record
in Giant Screen’s favor, that nothing in this record could
have justified a jury finding that the privilege had been
abused. There are disputes of material fact as to whether
CIBC made the statements to EDC knowing either they
were false or highly likely to be false. When Sky High
defaulted on the CIBC loan, CIBC sought payment from
18                                             No. 07-2800

Giant Screen, attaching the Notice of Security to the
payment request. In response, Giant Screen repeatedly
denied familiarity with the document. On November 12,
2004, Giant Screen expressly stated to CIBC that it had not
signed the Notice of Security. At this point, CIBC would
have had reason to suspect that Giant Screen’s
signatures might not have been authentic.
  CIBC argues that the Notice of Security’s forgery does
not raise a genuine issue of material fact regarding the
Falsified Distribution Agreement. We disagree; the Falsi-
fied Distribution Agreement encompassed the Notice of
Security and neither of the forged documents could be
viewed in isolation. In the first defamatory letter to EDC,
CIBC stated that it suffered a loss as a result of Giant
Screen’s failure or refusal to pay under the Distribution
Agreement, “as defined by the policy.” The policy defines
the agreement “as being amended by the Notice” of
Security. EDC therefore issued the policy reflecting both
the Notice of Security and the Falsified Distribution
Agreement. Moreover, Section Two of the Notice of
Security obligates Giant Screen to make the guaranteed
payments due under the Falsified Distribution Agree-
ment directly to CIBC. Thus, the Falsified Distribution
Agreement incorporated the Notice of Security. We
reject CIBC’s argument that the documents are independ-
ent of each other and that knowledge of a forgery on the
Notice of Security does not give rise to knowledge, or
reason to know, of forgery on the Falsified Distribu-
tion Agreement. If one was acknowledged as forged, there
are genuine issues of material fact as to whether the
other’s authenticity should at least have been in doubt.
No. 07-2800                                               19

  Importantly, three days after Giant Screen stated that
the Notice of Security had been forged, CIBC acknowl-
edged the forgery, and inquired whether other docu-
ments, such as the Falsified Distribution Agreement, had
also been forged. A jury could conclude that CIBC knew
or, at a minimum, had reason to know that the Falsified
Distribution Agreement had been forged. By asking
whether the Falsified Distribution Agreement had been
forged, there are genuine issues present as to whether
CIBC entertained serious doubts as to the authenticity
of its signature. The request alone establishes factual
disputes regarding the suspicion raised as to the signa-
ture’s genuineness. Further, Giant Screen informed CIBC
that it would not “like the answers,” cementing triable
issues of fact concerning whether Giant Screen provided
notice to CIBC that the document had been forged.
  Forgeries of Giant Screen’s signature prompted CIBC to
send a letter to Sky High requesting an explanation for
the Notice of Security’s lack of authenticity. When Sky
High failed to respond, CIBC filed suit against Sky High,
stating in an affidavit that it “feared” the Notice of
Security was false and based on false representations.
CIBC then filed its insurance claim with EDC. A reasonable
jury could conclude that CIBC “feared” the forgery be-
cause, as CIBC’s internal communications reflect, a
forgery would preclude receipt of the insurance pro-
ceeds. The factual disputes, taken favorably on Giant
Screen’s behalf, suggest that CIBC’s failure to investigate
the truth prior to its claim may have been reckless.
  All of these events lead to triable issues of material fact
as to whether CIBC knew or had reason to know of the
20                                            No. 07-2800

Falsified Distribution Agreement’s forged signature. A
triable issue of fact exists as to whether CIBC recklessly
disregarded Giant Screen’s rights by failing to properly
investigate the truth behind the signature before
making the insurance claim.


                    CONCLUSION
  The district court held that CIBC’s statements to EDC
were not per se defamatory and that CIBC’s qualified
privilege rendered them non-actionable. We conclude,
however, that the statements amounted to defamation
per se and genuine issues of material fact exist as to
CIBC’s abuse of its privilege. Therefore, we R EVERSE
and R EMAND for further proceedings. Rule 36 is to apply.




  C UDAHY, Circuit Judge, dissenting. After Giant Screen
and Sky High executed an agreement to co-produce an
IMAX film about Vikings, Sky High sought and obtained
additional financing by perpetrating a fraud on the defen-
dant CIBC: it forged signatures on a series of documents
through which Giant Screen appeared to guarantee CIBC’s
loan to Sky High. Not surprisingly given these rather
inauspicious beginnings, things did not end well. Sky
High failed to deliver the film on time, CIBC sent Giant
No. 07-2800                                              21

Screen a letter demanding repayment and Giant Screen
disclaimed knowledge of the fraudulent documents by
means of which Giant Screen appeared to have
guaranteed the loan. CIBC made some preliminary inqui-
ries into Giant Screen’s allegations of fraud, but gave up
when Giant Screen said it would answer CIBC’s questions
only if ordered to do so by a court. Without inquiring
further, CIBC made a series of statements to its insurer
that lie at the center of this dispute. Most pertinently, it
stated that Giant Screen was “still in default of its pay-
ment obligations.”
  As I read this statement, and the other statements that
are at issue here, I find myself incapable of the sort of
indignation that seems to animate the majority opinion.
According to the majority, CIBC’s statement suggests
that “Giant Screen’s contractual word to meet an obliga-
tion is meaningless” (Maj. Op. at 11), and “triggers
notions of collection and bankruptcy proceedings.” (Maj.
Op. at 12.) To my ear, the statement does no such thing.
CIBC has not said that Giant Screen is incapable of
paying; it has not even stated that Giant Screen lacked an
excuse for nonpayment. It has said only that Giant Screen
simply has not paid, and that payment was due. What,
then, has led my colleagues to conclude that this is defama-
tory?
   It seems safe to say that my colleagues have not based
their decision on specific Illinois precedent. Indeed,
given that we are sitting in diversity, one can’t help but
be struck by the majority’s indifference to the fact that
Illinois courts have stated that “[a]llegations of out-
22                                                No. 07-2800

standing debts and the failure of a business venture are
neither necessarily injurious to a person’s business reputa-
tion nor indicative of a lack of integrity in business deal-
ings.” Makis v. Area Publ’ns Corp., 395 N.E.2d 1185, 1189 (Ill.
App. Ct. 1st Dist. 1979). It appears to be widely accepted,
both in Illinois and elsewhere, that the mere statement that
someone has failed to perform under an agreement does
not, without more, implicate one’s ability, business integ-
rity or solvency. See, e.g., Springer v. Harwig, 418 N.E.2d
870, 872 (Ill. App. Ct. 1st Dist. 1981) (lawsuit charging
a person with failure to perform under an agreement
“does not, in itself, charge him with lack of ability or
integrity in his business.”); Am. Needle & Novelty, Inc. v.
Drew Pearson Mktg., Inc., 820 F. Supp. 1072, 1075-76 (N.D.
Ill. 1993) (statement that plaintiff has knowingly
breached an agreement and is delinquent in payments
“while discourteous . . . do[es] not, in obviously and
naturally harmful words, constitute a serious charge of
incapacity or misconduct.”); Union Pac. R.R. Co. v. Vill. of
S. Barrington, 958 F. Supp. 1285, 1300 (N.D. Ill. 1997)
(allegation that plaintiff breached contract is not a
serious charge of incapacity or misconduct that would
support an action for defamation per se); see also Makofsky
v. Cunningham, 576 F.2d 1223, 1236 (5th Cir. 1978) (assertion
that buyer was “in default” of purchase agreement is not
defamatory per se, “especially when, as here, [the words]
are employed merely to claim a deposit made as a security
for contractual performance.”); Williams v. Gulf Coast
Collection Agency Co., 493 S.W.2d 367, 369 (Mo. Ct. App.
1973) (the general rule is that it is not defamatory per se to
state that a person owes a debt which is long past due
No. 07-2800                                                       23

where this charge does not affect the person in his busi-
ness); Patton v. Jacobs, 78 N.E.2d 789, 790-91 (Ind. App. Ct.
1948) (statement that a person who is not a merchant
owes a debt and refuses to pay is not defamatory per se);
Demmel v. Triumph of Europe, Inc., 208 N.Y.S.2d 463 (N.Y.
Sup. Ct. 1960) (assertion that plaintiff failed to perform
his contracts would not tend to hold plaintiff to ridicule
or aversion and was not calculated to prejudice him in
seeking a livelihood).1
  The majority’s decision is no more compelled by the
general principles of the law of defamation than it is
required by specific Illinois precedent. The law of defama-
tion in Illinois is unremarkable: defamation tends to
cause such harm to the reputation of another that it
lowers that person in the eyes of the community or deters
third persons from associating with him. See Tuite v.
Corbitt, 866 N.E.2d 114, 121 (Ill. 2006). Statements are
defamatory per se when they impute inability or want of



1
   In Quality Granite Constr. Co., Inc. v. Hurst-Rosche Eng’rs, Inc.,
632 N.E.2d 1139 (Ill. App. Ct. 5th Dist. 1994), an Illinois court
refused to overturn a jury’s finding that a letter stating that
the plaintiff “may be considered in default” was defamatory.
Id. at 1143. However, in that case, the defendant also accused
the plaintiff of failing “to complete the project in a timely
manner, substandard workmanship, reluctance to complete
punch list items and inability to interpret the contract docu-
ments, plans and specifications as bid.” Id. at 1141. It is probably
not irrelevant that the jury also found that the defendant’s
statement was made to pressure the plaintiff into forfeiting
its claims for additional compensation. Id.
24                                                  No. 07-2800

integrity in business, or in one’s performance of employ-
ment duties. Id. The mere recitation of this definition,
however, does not settle much. At most, CIBC’s statements
are agnostic with respect to Giant Screen’s “integrity” and
its “business ability.” Thus, it seems to me that we are
required under Illinois’ “innocent construction rule” to
hold the statement to be non-defamatory. See Tuite, 866
N.E.2d at 121 (a statement is not defamatory if it is “rea-
sonably capable of an innocent construction.”).
  The majority pays lip service to the innocent construc-
tion rule, but dismisses as “unreasonable” any innocent
interpretation of CIBC’s statements. (Maj. Op. at 11.)
I disagree. It seems to me that CIBC’s statements are
obviously (and reasonably) capable of innocent construc-
tion. The innocent construction of its statements would
be as follows: Giant Screen did not perform an action
required by contract; it may subjectively believe that
performance wasn’t due, and this belief may even be reasonable,
or at any rate, excusable; however, its nonperformance has
resulted in a loss to CIBC for which CIBC is entitled to insurance
compensation. Again, one doesn’t have to strain to see this
interpretation—this is more or less what CIBC actually
said.
  The innocent construction rule seems to embody the
principle that courts should, where reasonable, strive to
minimize the set of statements that can give rise to poten-
tial tort liability. This makes a great deal of economic
sense. The risk of taking unavailing breach of contract
claims to be defamatory is that we will make it harder,
rather than easier, for people in business to interact. Even
No. 07-2800                                                 25

when the prospect of ultimately being found liable
seems remote, as seems to be the case here, our law
unnecessarily increases the cost of business if ordinary
business communications have the potential to foist on
speakers the cost of standing trial to prove that their
statements were true, or were not reckless in their
possible falsity.
   In the light of all this, I think our decision today is ill-
advised. It seems to me very likely that harsher words
than the ones at issue here have passed between
business associates without the parties coming to blows
or contacting their lawyers. Again, because parties appar-
ently rarely see the need to litigate over such trivialities,
it is hardly clearly established as a matter of law that
the words like “default” give rise to tort liability when
they are embedded in sentences that might conceivably
be false. In spite of this, the majority today holds what, to
my knowledge, no court has ever held: namely, that one
defames a business associate as a matter of law by saying
that this associate is “in default.” In assigning such treach-
erous consequences to the use of this rather bloodless
and at any rate unremarkable word, the majority has dug
a new and hidden pitfall for civil discourse among
businesspeople. This result, in other words, is both impru-
dent and unnecessary. I respectfully dissent.




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