Facts

This case began as a routine collections suit. It turned into a Texas Citizens Participation Act (TCPA) case. MVS INTERNATIONAL CORPORATION, et al v. INTERNATIONAL ADVERTISING SOLUTIONS, et al, No. 08-16-00173-CV, (Tex. App. – El Paso October 11, 2017).

When the creditor filed a collection suit, the debtor filed a counterclaim alleging that the creditor had falsified some invoices then told others about the non-payment by the debtor. The creditor then invoked the TCPA asking the court to dismiss the counterclaim and award attorney’s fees. The creditor contended that the communications as alleged would implicate their rights to free speech, right of petition, and right of association as those terms are uniquely defined by the TCPA. The debtor alleged these causes of action against the creditor: (1) civil conspiracy; (2) breach of contract; (3) fraud; (4) interference with business relations; (5) business disparagement; (6) defamation and intentional infliction of emotional distress; (7) violation of the Deceptive Trade Act and (8) spoliation. The trial court granted the creditor’s Rule 91a motion (dismissal of baseless causes of action) then ruled that the TCPA motion was moot. The creditor appealed.

Court of Appeals

The El Paso appeals court stated that there were three questions that it needed to answer first based on the status of the case when it reached the appeals court. Those questions include: (1) whether (debtors)  response, and particularly an affidavit, were timely filed; (2) whether the affidavit should be struck in whole or in part based on various evidentiary objections (the burden to prove a prima facie case once the TCPA has been invoked); and (3) whether (creditor) can prove a valid exercise of TCPA rights when they deny some of the very statements upon which the rights of speech, petition, and association are based.

Time Limits

The TCPA intends a quick resolution of a case to which it applies. To that end, a TCPA motion to dismiss must be filed not later than “the 60th day after the date of service of the legal action.” A hearing must be set within 60 days with some exceptions. In this case, the issue was the debtor’s response to the TCPA motion – was it timely filed. The hearing was set for 2:00pm. Because of court business, the judge didn’t hear the case until 6:00pm. After 2:00pm but before 6:00pm, the debtor filed a response. The court held that The Texas Rules of Civil Procedure include no general rule for when a response should be filed in relation to a hearing. The TCPA also does not address the issue. The court considered the response timely and considered it as part of the record.

Prima Facie Case

Once a party has properly invoked the TCPA to dismiss a claim, the burden then shifts to the party making the claim to establish by clear and specific evidence a prima facie case for each essential element of the claim in question. The court found no language in the TCPA dealing with the response affidavit and what standard it had to meet to prove a prima facie case. The court then applied some of the rules in summary judgment case saying “(w)hile we are not inclined to apply wholesale the summary judgment affidavit cases here, we are confident that the “clear and specific” standard in the TCPA at least requires us to reject conclusory claims made by an affiant. ” “Bare, baseless opinions” are not “a sufficient substitute for the clear and specific evidence required to establish a prima facie case” under the Act. The court then stated that it would only consider those statements in the affidavit that were based on personal knowledge and accept only those portions of the affidavit that make assertions of fact, or state a conclusion arrived at upon a reasoned basis.

Admitting the Claim

Some court had held that before a defendant could invoke the TCPA, they had to admit the underlying cause. In other words, if a party is sued for defamation he would have to admit the defamatory statement before he could use the TCPA. This idea came from several cases out of the Dallas Court of Appeals. However, the Texas Supreme Court disapproved of those cases and now the defendant can deny the underlying claim and at the same time file for dismissal under the TCPA.

Free Speech

After disposing of the above issues, the court went on to discuss whether the TCPA applied to conspiracy claims.  The debtors asserted a civil conspiracy claiming that creditors “planned to ruin the reputation and to cause the financial ruin of debtors. The end-point of the conspiracy was creditors’ communication to third parties that debtor did not pay their bills and were deadbeats. Under the TCPA, one exercises a right of free speech by making a communication in connection with a matter of public concern. The court said that creditors here have done no more than warn other media outlets about potential customers who (allegedly) do not pay their accounts. Under the TCPA, one exercises a right of free speech by making a communication in connection with a matter of public concern. A public concern can include a good, product or service in the marketplace. The court held that the TCPA did apply to the conspiracy claim.

Commercial Speech Exemption

The debtors then tried to invoke the commercial speech exemption in the TCPA. That exemption provides: This chapter does not apply to a legal action brought against a person primarily engaged in the business of selling or leasing goods or services, if the statement or conduct arises out of the sale or lease of goods, services, or an insurance product, insurance services, or a commercial transaction in which the intended audience is an actual or potential buyer or customer. The burden of proving the applicability of this exemption is on the party asserting it. For the commercial speech exemption to apply the statements must be part of the creditors sale of goods or services or the debtors are shown to be actual or potential buyers or consumers. Since the debtors affidavit did not show that he possessed personal knowledge of the background of the statements in question, he couldn’t show that the commercial speech exemption applied. The court then held that one count of conspiracy did meet the commercial speech exemption stating “the derogatory statements were made as a part of (creditors’) own business presentation to promote the Exa concert, and communicated to an actual or potential buyer of (creditors’) promotional services. Because this one single instance meets the commercial speech exception, the TCPA does not apply to the (this) conspiracy count .”

NOTE: The Texas Supreme Court on April 27, 2018, decided a case  that required it to fully define the commercial-speech exemption. That case should be consulted if there is a commercial-speech exemption question.

Business Interference

The court held that the tortious interference with business relations claims were covered by the TCPA because an essential element with the claim is communications with third parties. Because the debtors’ affidavit did not show clear and specific evidence a prima facie case for each essential element of the claim for tortious interference with business relations, the claim should be dismissed. The court disposed of the Business Disparagement, Defamation and Intentional Infliction of Emotional Distress claims on the same basis.

Other Claims

The court held that breach of contract and fraud claims were not covered by the TCPA because the allegations relate to direct dealings between the parties.

Final Result

The court returned the case to the trial court to dismiss the conspiracy, fraud, interference with business relations, business disparagement, defamation, intentional infliction of emotional distress claims on behalf of the one defendant who filed the TCPA motion to dismiss. The breach of contract claim and the fraud claim were not dismissed and were returned to the trial court for trial. One defendant did not file a TCPA motion so the decision does not affect the claims against it.