                     IN THE COURT OF APPEALS OF TENNESSEE

                          EASTERN SECTION AT KNOXVILLE          FILED
                                                                   June 5, 1997

                                                                Cecil Crowson, Jr.
                                                                Ap pellate Co urt C lerk
DEBORAH HENDRIX,                            )    UNICOI CIRCUIT
                                            )
         Plaintiff/Appellant                )    NO. 03A01-9701-CV-00032
                                            )
v.                                          )    HON. G. RICHARD JOHNSON,
                                            )    JUDGE
FIRST TENNESSEE NATIONAL                    )
CORPORATION d/b/a FIRST                     )
TENNESSEE BANK,                             )
                                            )                                              )
         Defendant/Appellee                 )    AFFIRMED



James S. Pate, Erwin, for Appellant.
Steven C. Rose, West & Rose, Kingsport, for Appellee.



                                      OPINION

                                                               INMAN, Senior Judge

         This action for damages for defamation and outrageous conduct was

dismissed on motion for summary judgment. The plaintiff presents the propriety of

the dismissal for appellate review, which is de novo on the record with no

presumption of correctness. Johnson v. EMPE, Inc., 837 S.W.2d 62, 68 (Tenn. App.

1992).

         The plaintiff alleged that the defendant bank held a purchase money

mortgage on his residence which required a concomitant escrow account, the funds

from which, inter alia, were used to pay insurance premiums. Her efforts to discover

the identity of the insurance carrier were unfruitful for several weeks, but she was

advised in February 1994 of the name of the company. In May 1994 the insurance

company notified her that its policy was canceled for non-payment of premiums.

Whereupon, the plaintiff requested an accounting of her escrowed funds. She was

given a computer-generated document on which appeared, “This woman is crazy.

Please refer to supervisor if she calls.”

         The plaintiff alleged that this statement was defamatory and constituted
outrageous conduct.

       The defendant filed its answer admitting that the plaintiff had received a notice

of cancellation of the policy, but that the notice was inadvertent because directed to

the wrong policy. It admitted the criticized notation but denied the requisite

publication, alleging that the communication was privileged and limited to its

employees.

       The defendant then moved for summary judgment, alleging that “the

communication of which the plaintiff complained was an internal and privileged

communication” and “if a dissemination of the privileged communication was made, it

was made only by the plaintiff herself.”

       The trial judge, in granting the motion, found there was no publication of the

alleged defamatory words.

       The notation was made by Lisa Vanderwerf, a supervisor at the bank. It was

motivated by the admittedly persistent, screaming demands of the plaintiff relating to

the insurance policy; when emotions cooled, the notation “this woman is crazy” was

removed.

       Other than Ms. Vanderwerf, the only persons who had access to the computer

record were the servicing personnel in the mortgage division of the defendant. The

record reveals that only Ms. Vanderwerf and Becky Barrett, who was manager of the

Insurance and Tax Department, saw the statement.1

       An essential element of any defamation claim is that the allegedly defamatory

statement be “published.” See Applewhite v. Memphis State University, 495 S.W.2d

190 (Tenn. 1973). In the defamation context, publication is the “communication of

libelous matter to a third person.” Applewhite, 495 S.W.2d at 192-93; Quality Auto

Parts, Inc. v. Bluff City Buick, 876 S.W.2d 818, 821 (Tenn. 1994).

       Intra-corporate communication among employees of the corporation does not

constitute “publication” to third persons for defamation purposes. In Freeman v.

Dayton Scale Company, 19 S.W.2d 255 (Tenn. 1929), an agent of the defendant




       1
           The plaintiff showed the statement to other bank employees.

                                            2
corporation included an allegedly defamatory statement in a letter to the plaintiff’s

attorney which had been dictated to a stenographer. Plaintiff alleged that the

communication to the stenographer constituted a “publication” of the defamatory

statement. The court disagreed: “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

(citation omitted).

       This principle was reaffirmed in Woods v. Helmi, 758 S.W.2d 219 (Tenn. App.

1988). In that case, a certified registered nurse anesthetist sued the employer

hospital for libel in connection with certain internal memoranda written by hospital

administrators as a result of an apparently problematic operation which took place at

the hospital. The memoranda concerned plaintiff’s job performance and was

circulated only among the administration officials, some of whom were responsible

for the anesthesiology department and others were administrators of the hospital’s

employee relations department. Relying on the Freeman decision, the trial court

granted summary judgment in favor of the defendant. Woods, 758 S.W.2d at 221-

22.

       This Court affirmed. We held: “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.” Id. at 223.

       The undisputed record in this case brings the circumstances surrounding the

allegedly defamatory statement within the Freeman-Woods principle regarding intra-

corporate communications. The statement was not “published” to any third person

outside appellee’s business. The only persons who had access to the notation or

could conceivably have read it were servicing personnel in the bank’s mortgage

department.

       Appellant argues that the intra-corporate communications privilege applies


                                           3
only where the employees to whom an allegedly defamatory statement is made are

in a “need to know” position. This argument is generated by dicta in Woods:

      While many of the cases denying the existence of a publication speak in terms
      of corporations communicating to or with itself, it seems to this Court that
      more essential to the issue is the concept of “need to know” with the
      communication flowing through the proper chain of command, particularly in
      employee performance reviews or disciplinary action. It could readily be
      argued that the concept of intra-corporate communications would not apply if,
      in the case of a review by corporate superiors of the alleged misconduct of a
      branch manager, the circumstances surrounding the misconduct were
      communicated also to the corporation’s truck driver or janitor, who obviously
      would not be in the “need to know” pipeline.


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

      While we think the “need to know” argument has merit and is an exception to

the intra-corporate rule, there is no evidence that the statement was disseminated to

or read by any corporate employee who had no “need to know.” At a maximum, it

was seen by only four employees, none of whom, as far as the record reveals,

lacked a need to know.

      In light of our holding with respect to the non-publication of the allegedly

defamatory statement, the issue of whether the bank was guilty of outrageous

conduct is essentially moot. The point need not be labored, because the statement

authored by Ms. Vanderwerf when she vented the frustration occasioned by the

plaintiff’s screaming, persistent demands does not rise to the level of outrageous

conduct. Aside from the fact that the statement is not, prima facie, defamatory,2 it

obviously cannot to characterized as “not tolerated in civilized society.” See Dunn v.

Moto Photo, Inc., 828 S.W.2d 747, 753 (Tenn. App. 1991).

       The judgment is affirmed at the costs of the appellant.



                                         __________________________________
                                         William H. Inman, Senior Judge




      2
       Dicta, because not pleaded or argued, but mentioned lest it be assumed
otherwise.

                                           4
CONCUR:



_______________________________
Don T. McMurray, Judge



_______________________________
Charles D. Susano, Jr., Judge




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