Published and Unpublished Insurance Cases in California
B148782
COURT OF APPEAL OF CALIFORNIA, SECOND APPELLATE DISTRICT, DIVISION FOUR
2002 Cal. App. Unpub. LEXIS 9041
September 27, 2002, Filed
NOTICE: NOT TO BE PUBLISHED CALIFORNIA RULES OF COURT, RULE 977(a), PROHIBITS COURTS AND PARTIES FROM CITING OR RELYING ON OPINIONS NOT CERTIFIED FOR PUBLICATION OR ORDERED PUBLISHED, EXCEPT AS SPECIFIED BY RULE 977(B). THIS OPINION HAS NOT BEEN CERTIFIED FOR PUBLICATION OR ORDERED PUBLISHED FOR PURPOSES OF RULE 977.
PRIOR HISTORY: APPEAL from a judgment of the Superior Court of Los Angeles County, Super. Ct. No. BC207488. David L. Minning, Judge.
DISPOSITION: Judgment Reversed.
JUDGES: CURRY, J. We concur: VOGEL (C.S.), P.J., HASTINGS, J.
OPINION BY: CURRY
OPINION
The trial court granted a defense motion for summary judgment on appellant Mark Baker’s claims for defamation, intentional interference, and other related causes of action. The court was persuaded that the statements at issue were protected by the privilege contained in Civil Code section 47, subdivision (c)(1) and (2). We conclude that the privilege does not apply, and further reject the alternate grounds offered by respondents as a basis for affirming the grant of summary judgment. We, therefore, conclude that the judgment must be reversed.
FACTUAL AND PROCEDURAL BACKGROUND
Certain basic facts are not in dispute. Appellant Mark Baker was employed for a time as an agent for respondent Automobile Club of Southern California (ACSC). He left ACSC in 1997 and became a reserve or probationary insurance agent for Farmers Insurance in 1998. After appellant left ACSC, a claim was submitted on a policy procured by appellant. The claimant’s name was Janice Choi. ACSC suspected fraud, and respondent Shaw, Seagraves & Associates, Inc. (SSA), a licensed investigation firm, was hired by ACSC to investigate the claim. Respondent Scott Shaw is an investigator with SSA. Shaw went to appellant’s work place on May 1, 1998. He spoke with Farmers Insurance Agent Stephen Silver. Thereafter, appellant lost his position with Farmers.
In March 1999, appellant brought a complaint against ACSC, Interinsurance Exchange of ACSC, SSA, and Shaw based on the comments Shaw made in Farmers’s offices on May 1, 1998. The complaint asserted causes of action for defamation, interference with business relationship, interference with economic relationship, racketeering, 1 and misrepresentation. With regard to ACSC and Interinsurance Exchange of ACSC (jointly referred to herein as the ACSC respondents), the complaint further alleged claims of negligent hiring, negligent supervision, and respondeat superior. 2
1 The racketeering claim was subsequently withdrawn.
2 The complaint is not a part of the record on appeal, but is discussed in some detail in the motion for summary judgment and supporting memoranda.
Defense Motion for Summary Judgment
In November 2000, Shaw and SSA (jointly referred to herein as the SSA respondents) moved for summary judgment. The statement of undisputed facts set forth only nine facts: (1) “Scott Shaw is an investigator with the licensed investigation firm of [SSA]“; (2) “[SSA] was hired by [ACSC] to investigate a claim submitted by Janice Choi”; (3) “[Appellant] was the producer of record for Janice Choi’s insurance policy with [ACSC]“; (4) “Scott Shaw was asked by Daniel Brogdon of [ACSC] to interview [appellant] about producing the Janice Choi insurance policy”; (5) “Scott Shaw did not personally know and had never heard of [appellant] before receiving the assignment to interview him”; (6) “[Appellant] was not a party to the communication between Scott Shaw and Stephen Silver in which Scott Shaw allegedly defamed [appellant]“; (7) “Scott Shaw’s alleged defamatory statement was a response to a question posed by Stephen Silver”; (8) “The only circumstances under which Farmers Insurance does not pay its agents the contract value of the business placed with Farmers is when the agent is stealing from Farmers”; (9) “[Appellant] has not alleged more than one act of racketeering activity in his First Amended Complaint.”
The memorandum of points and authorities included additional facts not found in the statement of undisputed facts. According to the memorandum, Shaw had gone to appellant’s place of employment to interview him about a number of claims for car thefts that arose out of policies for which appellant was the producer of record. Shaw’s information about the policies and thefts came from Dan Brogdon of ACSC’s special investigation unit. Shaw arrived at Farmers’s offices on May 1, 1998, and asked to speak with appellant. Shaw gave his card to a man sitting at a table and identified himself as an investigator working with ACSC investigating insurance fraud. The man, later identified as ACSC Insurance Agent Stephen Silver, asked Shaw why he needed to speak with appellant. Shaw purportedly said: “I need to speak to [appellant] about some policies he produced for [ACSC] that ultimately resulted in some auto theft.” Silver told Shaw that he should speak with Lynn Kremin. 3
3 Although not discussed in the statement of facts or the memorandum of points and authorities, Shaw stated in the deposition testimony excerpt attached to the moving papers that Silver asked whether the claimants involved were Chinese. Shaw answered “yes,” and indicated a desire to interview Silver about appellant since it seemed to Shaw that Silver “had some information about [appellant].” Silver then asked how many policies were at issue, and Shaw told him somewhere between 150 and 200. When Silver indicated disbelief, Shaw stated: “No, no, really. I’ve got that number of claims that I need to talk to [appellant] about.”
The SSA respondents conceded that Silver prepared a written statement for appellant about two months after the incident in which he recalled Shaw saying “he was a private investigator for [ACSC]” who was “investigating [appellant] in regard to the theft of over 150 vehicles.” 4 However, because at the time of his deposition Silver could not recall the exact words used by Shaw 5 and because appellant was not a party to the conversation, respondents contended that “there is no competent, admissible evidence that indicates Shaw uttered a defamatory statement.” The SSA respondents further contended that the statement made was “true” in the sense that Shaw was investigating appellant with regard to claims on stolen automobiles and that even if Shaw had made false and defamatory statements, it was privileged as a (1) communication with an interested party; (2) request for response by an interested party; or (3) under Insurance Code section 791.03.
4 The statement also said that Shaw’s statements were made in the open lobby of the office where three fellow Farmers’s agents and three staff members were present.
5 In his deposition, Silver recalled that Shaw said he was investigating “some auto thefts regarding the Auto Club, 150 auto thefts” or “150 auto thefts related to Auto Club policies[.]” The deposition testimony attached to the moving papers further indicated that a number of other Farmers Insurance employees were in the area, that they discussed Shaw’s remarks among themselves later, and that a secretary remarked that she “didn’t believe that . . . 150 cars for one agent could be stolen.”
The ACSC respondents joined in the motion for summary judgment, but did not at that time file a motion of their own.
Appellant’s Motion to Compel and Motion for Leave to File Second Amended Complaint
On December 1, 2000, appellant filed motions to compel further responses to discovery. According to the moving papers, respondents had refused to answer a number of questions concerning the underlying fraud investigation. The motions were denied on December 28, 2000, “without prejudice.”
On December 8, 2000, appellant filed an application for leave to file a second amended complaint. The motion was ultimately denied.
Opposition to Motion for Summary Judgment
On December 4, 2000, appellant submitted an opposition to the motion for summary judgment. Appellant contended that the motion was premature because he had been “frustrated in his efforts to obtain full and complete testimony from [respondents] and production of documents.” However, he did not rest on that contention. He also submitted evidence in opposition to establish the existence of disputed facts, including his own declaration. Appellant stated in his declaration that he had tried to arrange a meeting with Shaw at ACSC offices, but that Shaw refused to meet with him there. Appellant’s declaration expressed his belief that after Shaw’s appearance at Farmers, appellant “was treated with suspicion by the people I knew at [Farmers]“; was “suspected by [his] coworkers and management of being guilty of fraud”; and “was treated with suspicion, scorn, derision and contempt by fellow [Farmers] agents and employees . . . .” During appellant’s exit interview, “over ninety percent of the conversation directed by the [Farmers] area supervisor concerned the accusations published by Scott Shaw . . . .”
Two witnesses, Insurance Investigator Georgiann Diorio and Michael Driver, professor of management and organizational behavior, gave opinion testimony, stating in their declarations that the statements allegedly made by Shaw to Farmers employees were “defamatory, without business purpose, vindictive and reckless of the reputation, career and business prospects of [appellant] and . . . served no legitimate investigative function.”
A percipient witness, Farmers Agent Constance Cathcart, stated in a declaration that she was working in Farmers’s offices on May 1, 1998, when Shaw approached Silver. According to Cathcart, Shaw “loudly within my hearing identified himself as an investigator for [ACSC]“; stated that he was looking for appellant; and “in the presence of myself and about four other [Farmers] employees . . . stated that . . . [appellant] was involved in the theft of 150 automobiles while employed with [ACSC].” Cathcart expressed the opinion that “all [her] coworkers at the office heard these allegations . . . and believed that it would not be said unless completely true and proven.” She stated that “the matter became a scandal . . . and was repeated throughout the company and injured [appellant's] reputation and standing with every one who heard it.”
Silver submitted a declaration reiterating his statement that Shaw had said “[appellant] was involved in the theft of 150 automobiles while employed with [ACSC].” Silver believed that Shaw “intended me and everyone within hearing to believe . . . that [appellant] was a suspect guilty of fraud and automobile theft.” He agreed with Cathcart that “the matter became a scandal thereafter and was repeated throughout the company and injured [appellant's] reputation and standing with every one who heard it.”
Respondents’ Evidentiary Objections
Respondents objected to all or essentially all of the statements in the declarations submitted by appellant. Silver’s testimony concerning what Shaw said to him was objected to as “willfully false testimony in direct conflict with deposition testimony” and “irrelevant.” The same objection was raised concerning Cathcart’s testimony about Shaw’s statement to Silver. Their testimony concerning the injury to appellant’s reputation was objected to as “vague and ambiguous; lack of foundation; speculative; improper conclusion; [and] hearsay.”
Respondents objected to the opinion testimony of Michael Driver and Georgiann Diorio concerning the lack of legitimate purpose for Shaw’s statements as lacking foundation, containing “improper conclusions” and “improper opinion testimony,” and for being “speculative.”
Finally, respondents objected to appellant’s declaration on numerous grounds. The statements concerning his unsuccessful attempts to meet with Shaw outside Farmers’s offices were said to be “irrelevant” as was his statement concerning his exit interview with the area supervisor. The latter statement was also objected to as “vague and ambiguous” and for being “hearsay.” Appellant’s statements concerning his treatment at Farmers following Shaw’s visit were said to lack foundation, and to be speculative, improper conclusions, and hearsay.
SSA Respondents’ Supplemental Motion for Summary Judgment
The hearing on the motion for summary judgment was continued to February 5, 2001, and the parties were ordered to file supplemental briefs on the issue of defamation. On January 8, 2001, the SSA respondents filed a supplemental statement of undisputed facts. The facts added were: “[ACSC] conducted an internal investigation of [appellant] relating to his involvement with a suspected insurance fraud scheme” 6 and “[ACSC's] internal audit of [appellant] revealed that he was backdating policies, adding vehicles to policies without following Department of Insurance guidelines and violating other policies set by the California Department of Insurance.” 7 However, rather than seeking to establish a defense based on truth (i.e., that appellant was, in fact, involved in a fraudulent scheme while he was working for ACSC), the SSA respondents reiterated the argument that the statement or statements made by Shaw were privileged.
6 In the excerpts of the deposition of Daniel Brogdon attached to support these “undisputed facts,” Brogdon testified that ACSC undertook an investigation of appellant with regard to the Choi claim because there were two cars stolen under the policy in a relatively brief period of time shortly after the cars were added to the policy, and appellant was the producer of the policy. His testimony did not indicate that the investigation revealed any substantive evidence of fraud on the part of appellant. Brogdon further testified that a computer printout was made of losses on policies produced by appellant, and that ACSC “wanted to look at” the 150 to 160 losses shown, but that the only investigation consisted of Brogdon “randomly pulling some files and [taking] a quick look at [them].” He found nothing suspicious in those randomly pulled files.
7 The only support for this statement was Shaw’s deposition in which he stated he had been told that appellant “had been found back-dating insurance policies, adding vehicles to policies without following Department of Insurance guidelines” and that “if there was a way to violate a policy set by the Department of Insurance by an insurance agent, [appellant] had violated that policy on a substantial number of policies.”
ACSC Respondents’ Reply and Supplemental Motion for Summary Judgment
The ACSC respondents’ reply to appellant’s opposition contained additional facts not set forth in the moving papers. According to the reply, Sunnie Kwon, a coworker of appellant’s at Farmers, testified at her deposition that appellant had said he had been terminated from his position at Farmers for writing a Farmers policy in violation of a Farmers underwriting rule. 8 This, it was argued, showed a lack of causation between the alleged defamation and appellant’s damage. The ACSC respondents also contended that Brogdon, the employee who spoke with Shaw about the investigation, “instructed [Shaw] only to interview [appellant] about certain policies [appellant] had sold on which there had been a theft or other losses without offering any judgment or opinion as to [appellant's] culpability for those losses.” Finally, the reply papers contained reference to Cathcart’s deposition in which she had said in response to the question, “You don’t recall the precise words which you heard that day, do you?” that she overheard Shaw say “he [presumably Shaw] was investigating him [presumably appellant] for the theft of autos.” (Bold deleted.)
8 The deposition transcript attached to the reply reveals that Kwon testified that “Farmers thought” appellant sold a policy to someone who did not have insurance and had been involved in an accident in violation of Farmers’ underwriting policy, but that she was there when he was writing the subject policy and “he didn’t violate any . . . underwriting rule.” The deposition transcript further reveals that Kwon testified elsewhere as follows: “The reason that [appellant] was terminated from Farmers was that he sold an insurance policy to a customer who was involved in an accident. And Farmers found out about that. And there was allegations of fraud. Farmers thought that there was fraud. And also they assumed that since there were so many accidents, that there was something wrong.”
Subsequently, Kwon submitted a declaration on behalf of appellant in which she stated: “I am Korean by birth and Korean is my primary language. I speak some English and can read English but I have great difficulty in speaking in English and understanding questions especially in the formal language such as was used at my deposition in this case. [P] . . . I read the transcript of the deposition and realized that what I had said about [appellant] saying to me that he had been terminated from [Farmers] for writing a policy in violation of [Farmers'] rules was not what I said or meant and is false. [Appellant] did state that the causes of his termination from [Farmers] was false accusations made about him by people employed by [ACSC] to [Farmers]. [P] . . . [Appellant] did admit he had while at [ACSC] made a few technical violations of [ACSC] guidelines and that that was used as a pretext for his termination from [ACSC].” Respondents objected to the declaration as consisting of hearsay and conflicting with the deposition testimony.
In addition, the ACSC respondents filed a supplemental motion for summary judgment containing a host of new allegedly undisputed facts. A supplemental statement of undisputed facts added some new factual contentions, including the following: appellant was the producing agent for a policy issued to Henry Choi; a “suspicious” theft claim was made under the policy and SSA was hired to investigate “preliminary to potential cancellation of the policy, denial of the claim and litigation with the policyholder”; Brogdon spoke with Kevin Letson of Farmers’s special investigation unit and “disclosed the general nature of the Choi investigation, as he believed he was obligated to do under the California Insurance Code”; Brogdon “reasonably believed” that Shaw “would conduct himself in a professional manner and act discreetly at all times”; Shaw “was not authorized to make any disclosure about the nature or the specific facts of the investigation to any Farmers employee other than those in Farmers’ Special Investigation Unit” and had been instructed “only to interview [appellant] about certain policies [appellant] had sold on which there had been a theft or other losses without offering any judgment or opinion as to [appellant's] culpability for those losses”; and “no representative of [ACSC] ever told [Shaw] that [ACSC] suspected [appellant] of fraud or any other wrongdoing.”
The supplemental statement of undisputed facts also contained additional information about appellant’s tenure at Farmers, based on the deposition of Farmers’s employee Lynn Kremin that the policies he sold there lost money for Farmers and that Farmers “compiled evidence of [appellant's] having backdated policies as support for Farmers’s decision to terminate its relationship with [appellant].”
Appellant’s Supplemental Declaration
After being served with the supplemental motions and new facts, appellant submitted a supplemental declaration in opposition to summary judgment. In it, he added the following new information: “During my final exit interview from [Farmers] in the presence of Ms. Lynn Kremin, Rick Segay[,] I was badgered and harassed by Mr. Kevin Letson with wild and false accusations relating primarily to policies written by me while employed by [ACSC]. [P] . . . During this exit interview certain matters concerning losses in policies I had written for [Farmers] were discussed as well as loss ratios and the like. The notion that policies written by me had generated high losses and thus [an] unacceptable loss ratio[] or were backdated were quickly shown to be based on incorrect information and were in essence false. This appeared at the meeting to be of only cursory interest to Mr. Letson whose questions, comments and accusations for the most part concerned only matters relating to [ACSC].” 9
9 Appellant also related a conversation he had with Janice Choi who allegedly said that the claims under the policy were paid, and that the only fraud committed was using an incorrect address. This caused respondents to submit a supplemental declaration from Brogdon who said that the claim had been partially denied when Janice Choi “confessed in a sworn statement . . . to fraud in obtaining the policy . . . .”
Respondents objected to the supplemental declaration as consisting of hearsay, lacking foundation, and being irrelevant, speculative, vague and ambiguous.
Trial Court’s Order
The trial court granted the motion for summary judgment, finding that “the alleged statements made by [Shaw] were privileged pursuant to California Civil Code Sections 47(c)(1) and 47(c)(2).” The order further stated that “all written evidentiary objections to the declarations of Constance Cathcart, Stephen Silver, Sunnie Kwon, Mark Baker (original and supplemented), . . . Georgiann Diorio, and Michael Driver, filed by [respondents] are sustained.”
Judgment was entered in favor of respondents, and timely notice of appeal followed.
DISCUSSION
I
Appellant contends that the trial court erred in ruling that the May 1, 1998, communication from Shaw to Silver, overheard by other Farmers’s employees, was privileged. Respondents argue here, and argued below, that Shaw’s statements fall within a number of privileges. The trial court based its ruling on the privilege contained in Civil Code section 47, subdivision (c)(1) and (2). We therefore begin our analysis with those subdivisions.
Civil Code section 47, subdivision (c) provides in relevant part: “A privileged publication or broadcast is one made: [P] . . . [P] (c) In a communication, without malice, to a person interested therein, (1) by one who is also interested, or (2) by one who stands in such a relation to the person interested as to afford a reasonable ground for supposing the motive for the communication to be innocent, or (3) who is requested by the person interested to give the information. This subdivision applies to and includes a communication concerning the job performance or qualifications of an applicant for employment, based upon credible evidence, made without malice, by a current or former employer of the applicant to, and upon request of, the prospective employer.”
In Brown v. Kelly Broadcasting Co. (1989) 48 Cal.3d 711, 726-727, 257 Cal. Rptr. 708, 771 P.2d 406, the Supreme Court explained the history and meaning of the statute: “It was enacted as part of the Civil Code in 1872. At that time, in the common law of England and the United States, defamation was subject to strict liability, that is, liability without fault as to truth or falsity. [Citations.] . . . [P] To ameliorate the harshness of the strict-liability standard, certain privileges and defenses developed in the common law. . . . The common-interest privilege . . . protected communications made in good faith on a subject in which the speaker and hearer shared an interest or duty. This privilege applied to a narrow range of private interests. The interest protected was private or pecuniary; the relationship between the parties was close, e.g., a family, business, or organizational interest; and the request for information must have been in the course of the relationship.” (Fn. omitted.)
It has been said that “the scope of the privilege under [former Civil Code] section 47, subdivision 3 [now section 47, subdivision (c)] is not capable of precise or categorical definition, and that its application in a particular case depends upon an evaluation of the competing interests which defamation law and the privilege are designed to serve.” (Institute of Athletic Motivation v. University of Illinois (1980) 114 Cal. App. 3d 1, 11, 170 Cal. Rptr. 411.) It is clear, however, that “the ‘interest’ must be one of direct and immediate concern” (5 Witkin, Summary of Cal. Law (9th ed. 1988) Torts, § 524, p. 613), not the general curiosity of members of the public or readers of newspapers and magazines toward a subject of public interest. (Id. at pp. 613-614; Rancho La Costa, Inc. v. Superior Court (1980) 106 Cal. App. 3d 646, 664, 165 Cal. Rptr. 347.) The term “interest” means “something other than mere general or idle curiosity . . . .” (Rancho La Costa, Inc., at pp. 664-665.)
The SSA respondents contend that “Farmers Insurance had a common interest in knowing whether one of its agents had a history and pattern of producing policies resulting in losses and whether its agents were complying with Department of Insurance guidelines.” Recognizing that the communication primarily at issue was not directed toward Farmers’s management personnel, but toward Silver, a fellow probationary insurance agent, these respondents further contend that Silver “had a common interest along with his employer in the subject of Shaw’s alleged statement” because “Silver was an important link to Farmers management and directed Shaw to the appropriate person to speak with regarding Shaw’s purpose in wanting to talk to [appellant].” 10
10 We note in this regard that the ACSC respondents’ brief does not even attempt to justify the trial court’s ruling, but seeks a ruling from this court that the communication was privileged contained in the litigation privilege under Civil Code section 47, subdivision (b).
This argument does not take into account that, according to the deposition testimony submitted by respondents themselves, Shaw’s statements were made in an open lobby area where anyone passing by could hear and that numerous employees did overhear his remarks, including a secretary who discussed the charges against appellant with Silver later. Respondents suggest no reason why these unintended eavesdroppers had a legitimate interest in the subject matter of the investigation. Moreover, respondents overlook the fact set forth in their own statements of undisputed facts that Shaw was not there to speak with persons in Farmers management about charges against appellant — he was there to interview appellant to discover whether there was any basis for ACSC’s preliminary suspicions. Since he was there solely to interview appellant, he did not need to be “directed . . . to the appropriate person.” The query about why he wished to speak with appellant could easily have been deflected by saying that the purpose of the visit was personal.
Beyond that, however, respondents’ purported justification for directing the comments made by Shaw to Silver makes no sense. The argument that the employee responsible for directing visitors to an appropriate person to speak to within a company is an “interested person” would transform every idle conversation at a reception desk into a privileged communication. Even if the topic was of potential significance to the proprietary or financial interests of the company itself, communication should have been limited to management personnel. There was no justification for blurting it out to the first person encountered in the company’s offices, 11 particularly under circumstances where it could easily be overheard by any number of lower level personnel.
11 There was no evidence that Shaw knew who Silver was or that he was an employee of Farmers when he initiated the conversation.
The authorities cited by the SSA respondents confirm our understanding that the joint interest privilege should be applied only where the information is directed to those within an organization with a real need to know. In Cuenca v. Safeway San Francisco Employees Fed. Credit Union (1986) 180 Cal. App. 3d 985, 225 Cal. Rptr. 852, the defendant corporation had initiated an investigation into improprieties allegedly committed by one of its managers and issued a written report. The report was distributed to the board of directors at a meeting, marked “‘ABSOLUTELY PERSONAL AND CONFIDENTIAL,’” and after the meeting, all copies were collected and locked up. (Id. at p. 991.) The court held that the report to the board of directors under those circumstances was privileged as a communication to interested parties, emphasizing that “publication of the report was limited to members of the supervisory committee for their approval and to members of the board of directors. . . . Clearly the charges contained in the written report and apparently repeated in oral statements were all directly relevant to plaintiff’s fitness as manger of [defendant] and as such were matters of direct interest to [defendant's] supervisory committee, its auditor and its board of directors.” (Id. at p. 996.)
In Williams v. Taylor (1982) 129 Cal. App. 3d 745, 181 Cal. Rptr. 423, plaintiff’s former employer, Taylor Motors, conducted an investigation indicating that he was performing unauthorized work in the employer’s body shop and terminated him. Subsequently, two insurance adjusters who regularly referred business to the body shop were informed that plaintiff had been terminated and why. The court held that this fell within the qualified privilege because “both Swanson and Sanford [the two insurance adjusters] dealt on a continuing basis with Taylor Motors, and specifically with the manager of the body shop — the position held by plaintiff before he was fired. If, as defendants believed, plaintiff abused his position as body shop manager by engaging in criminal activity, it was important for defendants to bring this fact to the attention of those who directed business to that part of the operation. Defendants were not only protecting their own interests, but also the interests of the adjusters who referred business to Taylor Motors.” (Id. at pp. 751-752.)
In Deaile v. General Telephone Co. of California (1974) 40 Cal. App. 3d 841, 115 Cal. Rptr. 582, plaintiff’s superiors disseminated to supervisors and then to hourly employees the reasons for plaintiff’s forced retirement which had to do with her use of sick leave on false pretenses which the employer likened to theft. The court concluded that the joint interest privilege applied because, “the undisputed evidence shows that all recipients of the allegedly libelous communications were in the employ of defendant and worked at the same facility which plaintiff had managed, or were plaintiff’s superiors. Furthermore, the factors surrounding plaintiffs forced retirement were only disseminated in an effort to preserve employee morale and job efficiency. Under these circumstances the recipients, as well as defendant, were ‘interested’ persons within the meaning of [former] section 47, subdivision 3, of the Civil Code.” (40 Cal. App. 3d at p. 846.) The court was careful to point out that “the privilege . . . may be lost if the defendant abuses the privilege by excessive publication or the inclusion of immaterial matters which have no bearing upon the interest sought to be protected . . . .” (Id. at p. 847.)
Assuming that Shaw was in possession of information of interest to Farmers management personnel, there was sufficient evidence presented of “excessive publication” to persons with no legitimate interest in the information to preclude a grant of summary judgment on this point.
II
Respondents maintain that the communication between Shaw and Silver was protected by the litigation privilege. The litigation privilege is codified in Civil Code section 47, subdivision (b) which provides simply: “A privileged publication . . . is one made: [P] . . . [P] (b) In any . . . (2) judicial proceeding . . . .” Although the trial court did not base its ruling on this provision, an appellate court may affirm a summary judgment on a different basis from the one set forth below, because we “review[] the ruling, not the rationale.” (Salazar v. Southern Cal. Gas Co. (1997) 54 Cal.App.4th 1370, 1376.)
As respondents correctly point out, a publication or communication need not actually be made inside a courthouse to qualify under the litigation privilege. (See, e.g., Albertson v. Raboff (1956) 46 Cal.2d 375, 380-381, 295 P.2d 405 ["It is our opinion that the [litigation] privilege applies to any publication . . . that is required [citation] or permitted [citation] by law in the course of a judicial proceeding to achieve the objects of the litigation, even though the publication is made outside the courtroom and no function of the court or its officers is invoked. [Citation.] Thus, it is not limited to the pleadings, the oral or written evidence, to publications in open court or in briefs or affidavits. If the publication has a reasonable relation to the action and is permitted by law, the absolute privilege attaches”].) Nor need the litigation to which the publication or communication relates have actually been commenced for the privilege to apply. The privilege “applies to communications preliminary to a proposed judicial proceeding, such as a demand letter from an attorney to a potential adversary. [Citation.] It also applies to communications made during an attorney’s investigatory interviews with private individuals preparatory to a hearing.” (Dove Audio, Inc. v. Rosenfeld, Meyer & Susman (1996) 47 Cal.App.4th 777, 781.) In Dove, this court held that the privilege applied where a law firm sought endorsement from a group of celebrities of the filing of a complaint with the Attorney General arising from plaintiff’s alleged underpayment of royalties to charities designated to receive them.
Respondents’ argument falls apart when we attempt to apply these undisputed principles of law to the facts of the present case. Admittedly, there was a potential for litigation between the Chois and ACSC justifying some prepatory investigation. But there was no reason why that investigation had to include a discussion with Silver of ACSC’s suspicions concerning appellant. Silver was neither a potential witness nor a potential party. For that matter, neither were any of the other employees in the area who allegedly overheard Shaw’s statements. Indeed, as far as can be ascertained from the record, there was no reason for Shaw to believe that anyone at Farmers, other than appellant, had information relevant to the Choi matter. Respondents are correct that the communication need only have “some relation” to the anticipated lawsuit to come under the privilege. But we can conceive of no relation whatsoever between an investigation of the Chois’ claims and the remarks allegedly made by Shaw to Silver on May 1, 1998, in the open lobby of Farmers’s offices. 12
12 We acknowledge that in Devis v. Bank of America (1998) 65 Cal.App.4th 1002, 1011, the court held that “the section 47 litigation privilege does not become actionable merely because it is made in public and may be heard or read by nonparticipants in the litigation.” In that case, however, the communication was an excited utterance to a police officer who had just arrived on the scene, accusing plaintiff of the crime of forging a check. “Of necessity, it will often be the case that reports to the police will be made under circumstances in which they may be overheard by others, and under hurried or excited circumstances which preclude any possibility of privacy. Public policy is advanced by encouraging an individual who observes a crime to call that fact to the attention of police, even if circumstances make it impossible for the information to be whispered, or communicated in a private place. If the reporting individual were subject to liability when the statements were heard by others, the open channel of communication between citizens and the police furthered by the privilege would quickly close.” (Devis, at p. 1011.) We can perceive no such important public policy where the communication at issue is between a private investigator and plaintiff’s fellow employees and no reason why Shaw could not have been more discreet.
III
Respondents seek to persuade us that appellant has no claim for defamation because the remarks attributed to appellant were true. According to the brief of the SSA respondents, “the gist of Shaw’s alleged statement, that he was investigating [appellant] with regard to the theft of 150 automobiles, was true and thus not defamatory.” According to the ACSC respondents, “there is no admissible evidence that Mr. Shaw made any statement about [appellant] other than that he was investigating the theft of automobiles covered by policies [appellant] had produced while working at [ACSC] . . . .” 13 Respondents once again overlook the factual statements set forth in their own moving papers. According to the statement of undisputed facts filed by the SSA respondents in November 2000 and joined in by the ACSC respondents: “[SSA] was hired by [ACSC] to investigate a claim submitted by Janice Choi” and “Scott Shaw was asked by Daniel Brogdon of [ACSC] to interview [appellant] about producing the Janice Choi insurance policy.” 14 Thus, under respondents’ own version of the facts, the statement that Shaw had been assigned to investigate appellant’s involvement with the thefts of 150 automobiles or claims under more than one policy was not true.
13 By the reference to “admissible evidence,” we presume respondents mean to suggest that the trial court was correct to sustain respondents’ objections to Cathcart’s and Silver’s declaration testimony. Respondents claimed that their statements that Shaw said “[appellant] was involved in the theft of 150 automobiles while employed with [ACSC]” contradicted their deposition testimony because at their depositions they admitted they did not remember Shaw’s precise words. This contention lacked merit. The discrepancy between the deposition testimony and the declaration testimony was minor. In addition, the witnesses’ recollections were very similar to what Shaw admitted he said — “I need to speak to [appellant] about some policies he produced for [ACSC] that ultimately resulted in some auto theft . . . .” When asked how many policies were at issue, he replied “somewhere between 150 or 200.”
14 We recognize that the ACSC respondents later contended in their supplemental motion that Brogdon “instructed [Shaw] only to interview [appellant] about certain policies [appellant] had sold on which there had been a theft or other losses . . . .” We are not sure how respondents would explain that discrepancy.
More importantly, the fact that the offending language is susceptible of an innocent interpretation does not necessarily mean that it is nondefamatory. (Slaughter v. Friedman (1982) 32 Cal.3d 149, 154, 185 Cal. Rptr. 244, 649 P.2d 886; Good Government Group of Seal Beach, Inc. v. Superior Court (1978) 22 Cal.3d 672, 682, 150 Cal. Rptr. 258, 586 P.2d 572; Washer v. Bank of America (1943) 21 Cal.2d 822, 828, 136 P.2d 297, overruled in part on other grounds in MacLeod v. Tribune Publishing Co. (1959) 52 Cal.2d 536, 343 P.2d 36.) Statements which on their face are ambiguous or appear to be mere statements of opinion can be actionable if the ordinary hearer would regard them as charging the plaintiff of serious misconduct. In Washer, the National Labor Relations Board ordered plaintiff’s former employer, a bank, to reinstate him. An officer of the bank made the following statement: “‘We cannot see how this institution could possibly reinstate anybody who had admitted he had falsified his expense account, who has been guilty of flagrant insubordination.’” (Washer v. Bank of America, supra, at p. 825.) While the statement did not literally state that plaintiff had falsified expense accounts or been guilty of insubordination or even mention plaintiff by name, the issue was whether “by its natural and probable effect upon the hearer or reader, [the statement would] tend to injure the appellant in his occupation . . . .” (Id. at p. 828.)
Statements can also be deemed false for purposes of a defamation claim if the truth is manipulated in such a way as to create a misleading impression, as where the speaker provides limited damning information, but withholds other facts which materially qualify the facts disclosed. (Randi W. v. Muroc Joint Unified School Dist. (1997) 14 Cal.4th 1066, 1082, 929 P.2d 582 [holding that defendants were guilty of "'misleading half-truths'" because "having undertaken to provide some information regarding [the prospective teacher's] teaching credentials and character, were obliged to disclose all other facts which ‘materially qualify’ the limited facts disclosed”]; Charpentier v. Los Angeles Rams Football Co. (1999) 75 Cal.App.4th 301, 312, fn. 9, quoting Cicone v. URS Corp. (1986) 183 Cal. App. 3d 194, 201, 227 Cal. Rptr. 887 ["'Where one does speak he must speak the whole truth to the end that he does not conceal any facts which materially qualify those stated. [Citation.] One who is asked for or volunteers information must be truthful, and the telling of a half-truth calculated to deceive is fraud’”].)
Here, Shaw’s announcement that he was a private investigator working for ACSC and had come to interview appellant about 150 automobile thefts under policies produced by appellant while at ACSC gave rise to an inference that policies procured by appellant had resulted in 150 suspicious claims. The sheer number purportedly involved could have led a reasonable listener to believe that appellant was guilty of some type of serious misfeasance. Shaw did not reveal the whole truth — that ACSC’s only hard evidence of wrongdoing was the submission of two auto theft claims on one policy in a short period of time or that no one had undertaken any type of investigation into the computer-generated list of 150 policies procured by appellant to determine whether there was anything untoward about the claims made under them. On the facts presented, the question of whether truth was a defense could not be resolved on summary judgment.
IV
The SSA respondents argue that the intentional interference claim must fail because appellant cannot show causation. Respondents state in their brief that “the record contains undisputed evidence that Farmers management obtained knowledge of the nature of [ACSC's] investigation through two independent sources. First, the evidence is undisputed that after Silver told Shaw that he needed to speak to Lynn Kremin, a Farmers Insurance District Manager, Shaw did in fact talk to Kremin. . . . Second, it is undisputed that prior to the date of the alleged defamatory statement, Daniel Brogdon, [ACSC's] Assistant Group Manager of Liability Operations, contacted Kevin Letson, a Farmers Special Investigation Unit supervisor, to determine the Farmers location where [appellant] worked. . . . During their conversation, Brogdon disclosed the nature of [ACSC's] investigation, including that it involved a suspicious theft claim made under a policy on which [appellant] was the producing agent. . . . Because both Kremin and Letson had been independently apprised of the nature of the investigation, [appellant] can only speculate that he was terminated as the result of Shaw’s alleged statement to Silver.”
Initially, we note that the motion for summary judgment filed by the SSA respondents in November 2000 contained no reference to any facts concerning the reasons for appellant’s termination. The only mention of the grounds for termination arose in the ACSC respondents’ reply and supplemental motion for summary judgment wherein they contended that undisputed facts indicated that appellant had been terminated from his position at Farmers for writing a Farmers policy in violation of a Farmers underwriting rule. This was based on mischaracterization of the deposition of Sunni Kwon who actually testified that appellant had been terminated because of the accusations concerning fraud at ACSC and that Farmers’ allegation that appellant violated its underwriting policies was untrue. 15 In addition, the supplemental statement of undisputed facts indicated, based on the deposition of Farmers employee Lynn Kremin, that the policies appellant sold while working for Farmers lost money and that Farmers “compiled evidence of [appellant's] having backdated policies as support for Farmers’ decision to terminate its relationship with [appellant].”
15 In addition, Kwon submitted a declaration explaining that any suggestion in her deposition that appellant was terminated for violating Farmers’s underwriting policies was unintentional and could be attributed to her limited mastery of the English language. We appreciate that respondents’ objections to her declaration were sustained by the trial court, but, quite frankly, we cannot fathom why. Respondents objected to the declaration on the grounds that it was hearsay and conflicted with the deposition testimony. Since respondents claimed that appellant told Kwon he was terminated for violating underwriting policies, her denial that he made those statements to her was not inadmissible hearsay. The objection based on conflict with her deposition testimony is equally meritless. If a witness can satisfactorily explain why prior deposition testimony is not actually contrary to present declaration testimony, the trial court should credit the declaration. (See, e.g., Niederer v. Ferreira (1987) 189 Cal. App. 3d 1485, 1503, 234 Cal. Rptr. 779.) Kwon’s deposition testimony that appellant “sold an insurance policy to a customer who was involved in an accident[;] and Farmers found out about that[;] and there was allegation of fraud” was susceptible of the meaning given in her declaration (that she was referring to the ACSC policy Shaw was investigating, not a Farmers’ policy). The explanation that her lack of mastery over the English language may have caused respondents to draw the wrong conclusion about the meaning of her words should not have been rejected.
Now, in a 180 degree turnaround, the SSA respondents argue that appellant was indeed terminated because of information communicated by ACSC personnel and/or Shaw concerning alleged improprieties in ACSC policies, but attempt to convince this court that we should nevertheless affirm the summary judgment. We are somewhat puzzled as to why this evidence of two additional potentially damaging statements supports the trial court’s grant of summary judgment. We can only suppose that respondents wish us to draw the conclusion that, in contrast to the statements made to Silver and other Farmers personnel on May 1, 1998, these statements were clearly privileged under Civil Code section 47, subdivision (b) or (c). Because, however, the record contains virtually no information concerning these conversations other than that they took place, we are unable to make that leap or conclude as a matter of law that any statements other than Shaw’s May 1, 1998, remarks were the proximate cause of appellant’s termination.
V
The SSA respondents make a halfhearted stab at persuading us that the communication was privileged under Insurance Code section 791.03. Section 791.03 provides: “No insurance institution, agent or insurance-support organization shall use or authorize the use of pretext interviews to obtain information in connection with an insurance transaction; provided, however, that a pretext interview may be undertaken to obtain information from a person or institution that does not have a generally or statutorily recognized privileged relationship with the person to whom the information relates for the purpose of investigating a claim where there is a reasonable basis for suspecting criminal activity, fraud, material misrepresentation or material nondisclosure in connection with a claim.”
There is no defamation privilege in Insurance Code section 791.03. By its terms, it permits insurance investigators to conduct pretextual interviews, not to defame third parties. Insurance Code section 791.02, subdivision (u) defines “pretext interview” as “an interview whereby a person, in an attempt to obtain information about a natural person, performs one or more of the following acts: [P] (1) Pretends to be someone he or she is not. [P] (2) Pretends to represent a person he or she is not in fact representing. [P] (3) Misrepresents the true purpose of the interview. [P] (4) Refuses to identify himself or herself upon request.” Although perhaps he should have, Shaw did none of these things in his discussions with Silver. Since the interview was not, under the statutory definition, a pretext interview, this statute can have no applicability. 16
16 Interestingly, the ACSC respondents, in a four-sentence discussion of Insurance Code section 791.03, claim that Shaw “availed himself of the authority that Cal. Ins. Code § 791.03 bestows” by “‘misrepresenting the true purpose of the interview[.]‘” We are not entirely sure what respondents mean by this statement. If they are attempting to convey the impression that Shaw deliberately lied by overstating the number of suspicious claims involving appellant, they are perilously close to admitting malice.
VI
The ACSC respondents contend that summary judgment should be affirmed as to them even if it is reversed as to the SSA respondents. Preliminary, they contend that Brogdon is not their employee; second they argue that he “did not authorize any of Mr. Shaw’s allegedly defamatory statements”; “expected Mr. Shaw to be professional and discreet in carrying out his assignment”; and “did not supply any information to Mr. Shaw that appeared in the allegedly defamatory statement.”
Brogdon initially stated at his deposition that he was employed by “the Automobile Club of Southern California, the Interinsurance Exchange” but immediately changed his answer to “ACSC Management Services, Inc.,” which he described as the management company for Interinsurance Exchange. This ambiguous testimony does not justify dismissal of the claims against the ACSC respondents. If ACSC Management Services is indeed a separate corporation and the relationship between the entities does not justify holding the ACSC respondents responsible for the actions of ACSC Management Services, that defense would need to be more fully fleshed out in later proceedings.
The fact that Shaw was not the ACSC respondents’ employee might also provide a shield from liability for his actions, provided no ACSC employee or agent was independently negligent in hiring or instructing him. But, again, this argument was not adequately fleshed out in ACSC’s papers. The evidence concerning precisely what instructions Brogdon gave Shaw was controverted by respondents themselves in their various motions, memoranda, and supplemental motions.
DISPOSITION
The order granting summary judgment and the judgment entered thereon is reversed. Appellant is to recover his costs on appeal.
CURRY, J.
We concur:
VOGEL (C.S.), P.J.
HASTINGS, J.