Dawson v. Quigley

Filing 7

OPINION Entered by Judge Michael P. McCuskey on 7/27/12. IT IS THEREFORE ORDERED THAT: (1) Judgment is entered in favor of Quigley and against Dawson on Count IV of Dawsons Complaint. (2) This case is terminated in the district court. SEE OPINION.(SKD, ilcd)

E-FILED

Friday, 27 July, 2012 01:54:43 PM
Clerk, U.S. District Court, ILCD
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF ILLINOIS
URBANA DIVISION
PATRICIA SUE DAWSON,

)
)
Debtor,
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________________________________________ )
)
PATRICIA SUE DAWSON,
)
)
Plaintiff,
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v.
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)
TERRY QUIGLEY,
)
)
Defendant.
)

Case No. 12-CV-2089

OPINION

This case was submitted to this court by the United States Bankruptcy Court for the
Central District of Illinois (Bankruptcy case No. 11- 90716) pursuant to 28 U.S.C. § 157(c).
Following this court’s careful de novo review, this court enters judgment in favor of
Defendant, Terry Quigley (Quigley), and against Plaintiff, Patricia Sue Dawson (Dawson).
FACTS
Dawson operated a business known as “Patti’s Haircutting Cabin” in Pontiac, Illinois.
She leased the premises for the operation of her salon from Quigley. Dawson leased the
premises from Quigley for approximately eight years before she relocated her business prior
to this suit. On April 14, 2011, Dawson filed a Chapter 7 bankruptcy case in the United
States Bankruptcy Court, Central District of Illinois. After Dawson filed for bankruptcy,
Quigley removed Dawson’s sign indicating she had moved her business to a new location
and he posted signs in Dawson’s former leased premises which said “out of business” and
“filed chapter 7 bankruptcy.”
On April 26, 2011, Dawson filed a four-count Complaint against Quigley in the

United States Bankruptcy Court, Central District of Illinois. Dawson sought an injunction
prohibiting Quigley from displaying signs, advertising, or otherwise attempting to collect on
a debt owed by her (Count I). Dawson alleged that Quigley was in violation of an automatic
stay pursuant to 11 U.S.C. § 362(a) (Count II). Dawson also alleged that Quigley committed
tortious interference with her economic interest (Count III). Dawson further alleged that
Quigley committed libel and/or defamation (Count IV).
On April 27, 2011, Dawson filed a Motion for Preliminary Injunction which was
granted by the Bankruptcy Court on May 3, 2011. The Bankruptcy Court’s Order enjoined
and restrained Quigley from:
a)

Displaying signs, advertising, or otherwise communicating to the public or in a
manner likely to reach the public, that the Plaintiff is no longer operating her
business, is “out of business,” or similar statements; and

b)

Displaying signs, advertising or otherwise communicating to the public or in a
manner likely to reach the public, that the Plaintiff’s business has filed a chapter
7 bankruptcy; and

c)

Taking any action in an attempt to collect on debts listed in the Plaintiff’s
bankruptcy schedules, including harassing or otherwise communicating with the
Plaintiff or her customers about those debts, at all places and times, and especially
at the Plaintiff’s new place of business.

Quigley removed all offending signs and communication prior to the Bankruptcy Court’s
entry of its Order granting Dawson’s Motion for Preliminary Injunction.
On December 19, 2011, a brief trial was held on Dawson’s four-count Complaint. The
only witnesses at trial were Dawson and Quigley. Dawson’s four exhibits were admitted into
evidence without objection. At the close of the trial, the Bankruptcy Court found in favor
of Quigley on all four counts of Dawson’s Complaint. On December 22, 2011, the
Bankruptcy Court issued a written Order setting out its findings. The court found that
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Dawson did not establish any monetary damages as a result of Quigley’s actions regarding
Count I of the complaint. The court also found that the Dawson failed to establish any
willful violation of the automatic stay regarding Count II of the complaint. The court further
found that there was no evidence that Dawson suffered any economic loss as a result of
Quigley’s actions and that Dawson wholly failed to establish any claim for Count III.
Finally, the court found that Dawson’s testimony alone was insufficient to establish a claim
of libel and/or defamation and that she did not establish any economic loss or monetary
damages as a result of Quigley’s actions.
On January 3, 2012, Dawson filed a Motion to Reconsider, Amend or Vacate Judgment
requesting that findings of facts and conclusions of law be amended or reconsidered
regarding her libel and/or defamation claim (Count IV). Dawson also argued that the court
should reconsider and amend its findings of facts and conclusions of law regarding Counts
I-III. Dawson further argued that the Bankruptcy Court lacked jurisdiction to enter a final
judgment regarding her libel and/or defamation claim following the Supreme Court’s
decision in Stern v. Marshall, 131 S. Ct. 2594 (2011).
On March 15, 2012, the Bankruptcy Court entered an Opinion. The court stated that
it had jurisdiction to enter a final judgment on Counts I through III of Dawson’s complaint.
The court also stated that Dawson failed to meet her burden of proof as to Counts I through
III. The Bankruptcy Court stated:
In fact, a review of the transcript of this proceeding reveals that in only one
instance did the Plaintiff testify concerning monetary damages and that was in
regard to advertisements placed in newspapers in Pontiac, Illinois, in which the
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Plaintiff indicated that she was still in business. Even as to the cost of those
advertisements, the Plaintiff was not really sure about how much the
advertisements cost and could only estimate that the advertisements cost
somewhere around $150. No documentary evidence was provided as to the
cost of the advertisements, nor was there any evidence presented as to the
amount of money, if any, the Plaintiff lost as a result of the Defendant’s
actions. Given the scant evidence concerning the Plaintiff’s request for money
damages, this Court finds that there is simply no basis to vacate its judgment
as to Counts I through III of the Plaintiff’s Complaint.
Finally, the court found that it lacked jurisdiction to enter a final judgment regarding Count
IV following the Supreme Court’s decision in Stern v. Marshall, 131 S. Ct. 2594 (2011). The
court stated that it would therefore submit its proposed findings of fact and conclusions of
law to this court for entry of a final judgment on Count IV of Dawson’s Complaint.
The Bankruptcy Court stated:
As to Count IV of the Plaintiff’s Complaint, this Court finds that, even
assuming arguendo that the Plaintiff established the necessary elements to
establish defamation under Illinois law, See: VanHorne v. Mueller, 185 Ill.2d
299 (1998), the Plaintiff utterly failed to establish any monetary damages. As
noted above, the trial in this matter was very brief with only the testimony of
the Plaintiff and Defendant and the admission of four trial exhibits. A
thorough review of the transcript of the trial and the trial exhibits leads this
Court to reiterate its conclusion entered on December 22, 2011, finding that
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the Plaintiff has failed to establish damages and that, as a result, judgment
should be entered in favor of the Defendant and against Plaintiff on Count IV
of the Plaintiff’s Complaint.
ANALYSIS
I. STANDARD OF REVIEW
In this case, the Bankruptcy Court has submitted its proposed findings of facts and
conclusions of law to this court pursuant to 11 U.S.C. § 157(c)(1). Section 157(c)(1)
provides in relevant part:
A bankruptcy judge may hear a proceeding that is not a core proceeding but
that is otherwise related to a case under Title 11. In such proceeding, the
bankruptcy judge shall submit proposed findings of fact and conclusions of
law to the district court, and any final order or judgment shall be entered by the
district judge after considering the bankruptcy judge’s proposed findings and
conclusions and after reviewing de novo those matters to which any party has
timely and specifically objected.
28 U.S.C. § 157(c)(1). Furthermore, the Federal Rules of Bankruptcy Procedure provide the
applicable standard of review. Rule 9033(d) states:
The district judge shall make a de novo review upon the record, or after
additional evidence, of any portion of the bankruptcy judge’s findings of fact
or conclusions of law to which specific written objection has been made in
accordance to this rule. The district judge may accept, reject, or modify the
proposed findings of fact or conclusions of law, receive further evidence, or
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recommit the matter to the bankruptcy judge with instructions.
Fed. R. Bankr. P. 9033(d).
The parties agree that Dawson’s libel and/or defamation claim is a non-core
proceeding. Dawson submitted a timely objection and appellate brief to this court and the
Bankruptcy Court submitted its findings of facts and conclusions of law to this court.
Therefore, this court reviews the Bankruptcy Court’s findings of facts and conclusions of law
regarding Dawson’s libel and/or defamation claim de novo.
II. REVIEW OF COUNT IV
In her Brief, Dawson presented three issues: (1) whether she established a defamation
claim, (2) whether the Bankruptcy Court erred in ruling for Quigley on all counts, and (3)
whether the Bankruptcy Court’s proposed findings of facts and conclusions of law are
supported by the evidence. However, as to her second issue, Dawson has not explained how
this case is before this court for ruling on Counts I through III. In fact, Dawson has stated
that she has chosen not to further contest the merits of Count III in this court. This court will
therefore not address Plaintiff’s second issue.
As to the remaining issues, Dawson argued that the Bankruptcy Court did not propose
adequate findings of facts related to her libel and/or defamation claim. Moreover, Dawson
argued that the Bankruptcy Court did not correctly apply Illinois law to the facts of this case,
and thus rendered an incorrect judgment for Quigley on Dawson’s libel and/or defamation
claim.

Dawson argued that certain kinds of defamatory statements are considered

defamatory per se and that Quigley’s statements are actionable per se. Accordingly, Dawson
argued that the Bankruptcy Court erred when it denied her libel and/or defamation claim for
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failure to establish damages because under Illinois law she did not need to prove actual
monetary damages in defamation per se actions.
Dawson also argued that Quigley’s posting of the signs entitled her to punitive
damages. Dawson argued that she established that the signs Quigley posted were completely
false. Accordingly, Dawson argued that Quigley acted with malice because he knew that his
statements were false and she was entitled to punitive damages in addition to other presumed
damages.
In his Brief, Quigley argued that this court should accept the Bankruptcy Court’s
findings of fact and conclusions of law regarding Dawson’s libel and/or defamation claim.
Quigley also argued that the Bankruptcy Court’s findings of facts were sufficient to render
a final judgment as to this claim. Quigley also argued that the Bankruptcy Court made no
finding that Dawson met her burden to establish defamation per se. Moreover, Quigley
argued that his statements were reasonably capable of non-defamatory interpretation and thus
were not actionable per se under the innocent construction exception.
Dawson filed a Reply Brief. Dawson noted that the Bankruptcy Court did not address
the issue of whether Dawson met her burden to establish defamation per se. Dawson
therefore argued that the Bankruptcy Court erred in failing to make any finding regarding
Dawson’s defamation per se claim and that this court should address this issue. Dawson also
argued that based on Illinois law, the innocent construction exception does not apply to the
situation here.
A. FINDINGS OF FACTS
In her Brief, Dawson argued that the Bankruptcy Court did not propose sufficient
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findings of facts related to her libel and/or defamation claim. She argued that the Bankruptcy
Court should have proposed a finding of whether the complained of signs existed. She also
argued that the Bankruptcy Court should have proposed a finding of whether Dawson was
still conducting her business elsewhere when the signs were posted and whether Quigley was
aware of that fact. She also argued that the Bankruptcy court should have proposed a finding
of Quigley’s intent in posting the signs. Last, she argued that the Bankruptcy court should
have proposed a finding of Dawson’s non-economic damages.
After careful and thorough review, this court agrees with Dawson that the Bankruptcy
Court should have proposed a finding that the complained of signs existed. As Dawson
correctly observed, Quigley testified that he posted the signs on Dawson’s former business
location. The photographic exhibits further support this fact. Moreover, Quigley also
testified that he visited Dawson’s new business location at least once. Accordingly, this
court finds that Dawson was still conducting her business elsewhere and Quigley’s testimony
supports a finding that he was aware of that fact. However this court agrees with Quigley
that, in placing the signs on Dawson’s former business location, he intended to portray that
she was no longer in business at that location. The evidence demonstrates that she had
moved out of Quigley’s building during the time that the signs were posted. Moreover, this
court finds that the signs were taken down immediately after Dawson’s complaint and that
Dawson failed to establish any damages as a result of Quigley’s actions.
B. LIBEL AND/OR DEFAMATION
In recommending that judgment be entered in favor of Quigley against Dawson on her
defamation claim, the Bankruptcy judge first found that Dawson failed to establish the
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necessary elements to establish defamation under Illinois law. He next found that, assuming
that Dawson did establish the elements required for defamation under Illinois law, she utterly
failed to establish any monetary damages.
In her brief, Dawson argued that the Bankruptcy Court did not correctly apply Illinois
law to the facts of the case and rendered an incorrect judgment for Quigley on her libel
and/or defamation claim. Dawson argued that certain kinds of defamatory statements are
considered defamatory per se and that Quigley’s statements are actionable per se.
Accordingly, Dawson argued that she did not need to prove economic damages to recover
because Quigley’s statements should be considered defamation per se under Illinois law and
she was not required to prove any actual monetary losses to recover.
Under Illinois law, a defamatory statement is one that “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.” Van Horne v. Muller, 705 N.E.2d 898, 903 (Ill.
1998). Statements may be considered defamatory per se or per quod. Tuite v. Corbitt, 866
N.E.2d 114, 121 (Ill. 2006). Certain categories of defamatory statements are deemed
actionable per se because “they are so obviously and materially harmful to the plaintiff that
injury to the plaintiff’s reputation may be presumed.” Van Horne, 705 N.E.2d at 903.
“Illinois law recognizes five categories of defamatory statements which are considered
actionable per se: (1) those imputing the commission of a criminal offense; (2) those
imputing infection with a loathsome communicable disease; (3) those imputing an inability
to perform or want of integrity in the discharge of duties of office or employment; (4) those
that prejudice a party, or impute a lack of ability in his or her trade, profession or business;
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and (5) those imputing adultery or fornication.” Id. at 903. A defamation per quod action
is appropriate where a statement is defamatory on its face but does not fall within one of the
limited categories of statements that are actionable per se. Bryson v. News America Publ’ns,
Inc., 672 N.E.2d 1207, 1221 (Ill. 1996). In defamation per quod actions, damage to the
plaintiff’s reputation will not be presumed. Id. The plaintiff has to prove actual damage to
her reputation and pecuniary loss resulting from the defamatory statement, known as “special
damages,” in order to recover. Id. at 1221.
In this case, Dawson contends that Quigley’s statements should be considered
defamatory per se. Of the five categories recognized as defamation per se under Illinois law,
Dawson argues that the relevant categories are: those imputing an inability to perform or
want of integrity in the discharge of duties of office or employment and those that prejudice
a party or impute lack of ability in his or her trade, profession or business. See Tuite, 866
N.E.2d at 121. This court does not agree with Dawson that Quigley’s statements constituted
defamation per se.
“Statements that have been deemed defamatory per se by Illinois courts under the
third and/or fourth categories have always been related to job performance; to succeed, the
plaintiff must have been accused of lacking ability in his trade or doing something bad in the
course of carrying out his job.” Cody v. Harris, 409 F.3d 853, 857 (7th Cir. 2005) (emphasis
in original). In Kumaran v. Brotman, the court found that the plaintiff could plead a cause
of action for defamation per se under the third and fourth categories because the defendant
stated in a newspaper article that the plaintiff was “working a scam” by filing numerous
lawsuits to extract monetary settlements on a full time basis. Kumaran v. Brotman, 617
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N.E.2d 191, 198-199 (Ill. App. Ct. 1993). The court found that the newspaper article could
be found to be defamatory per se because it could be understood to have prejudiced the
plaintiff as a schoolteacher. Id. The court noted the defamatory statement was directly tied
to the plaintiff’s profession because, as a schoolteacher, plaintiff had the duty to set a good
example and to serve as a role model for students. Id. at 199. The court found that by
portraying the plaintiff as a swindler, the statements presented him as someone who would
not be an acceptable role model for students. Id. Similarly, in Parker v. House O’Lite Corp.,
the court found defamation per se when the plaintiff was accused of rigging the specifications
so that only his brother in law would be able to get the job. Parker v. House O’Lite Corp.,
756 N.E.2d 286, 295 (Ill. App. Ct. 2001). In that case, the court found that the statements
imputed the plaintiff with “an inability to perform or want of integrity in the discharge of
duties of office or employment.” Id. at 296. In both cases, the statements made by the
defendants imputed the plaintiffs’ lack of ability to perform their employment
responsibilities.
In this case, Quigley’s signs did not disparage Dawson’s skills in her profession or
trade. The signs “out of business” and “filed chapter 7 bankruptcy” did not impute her job
performance, rather they stated that Plaintiff was out of business at that location and that she
had filed for bankruptcy. Quigley’s statements do not portray Dawson as an unskilled
hairdresser nor do they impute a want of integrity in her employment. Accordingly, this case
is not like the Illinois cases that have found defamation per se under these two categories.
Even if this court believed that Quigley’s statements constituted defamation per se,
it will not be actionable per se if it is reasonably capable of an innocent construction. See
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Bryson, 672 N.E.2d at 1215. In Illinois courts, this determination is made by the judge and
is regarded as a question of law. Muzikowski v. Paramount Pictures Corp., 322 F.3d 918,
924 (7th Cir. 2003). The innocent construction rule requires courts to consider a statement
in context, giving words their natural and obvious meaning. Bryson, 672 N.E.2d at 1215.
If a statement is capable of two reasonable constructions, one defamatory and one innocent,
the innocent one will prevail. Muzikowski, 322 F.3d at 925. The rigorous standard of the
innocent construction rule favors defendants in per se actions so that a nondefamatory
interpretation must be adopted if it is reasonable. Anderson v. Vanden Dorpel, 667 N.E.2d
1296, 1302 (Ill. 1996). This tougher standard is warranted because damages are presumed
in per se actions. Id.
Dawson argued that there is no reasonable innocent construction of the “out of
business” and “filed chapter 7 bankruptcy” signs that were posted in her former business
location. Dawson argued that no reasonable person could come to any conclusion when
viewing Quigley’s signs other than that Plaintiff was no longer in business and was no longer
available to style hair. Dawson argued that no rational observer would construe the signs to
mean that Dawson relocated her business. This court disagrees. The signs “filed for chapter
7 bankruptcy” and “out of business” may be innocently construed. When construed in
context, the signs may be understood to simply mean that Dawson has relocated her business.
Dawson was out of business at that location. Moreover, Dawson had in fact filed for
bankruptcy during the time the “filed for chapter 7 bankruptcy” sign was posted. This court
is not required to balance reasonable constructions. See Green v. Rogers 917 N.E.2d 450,
463 (Ill. 2009). However, when a defendant clearly intends and unmistakably conveys a
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defamatory meaning, a court should not strain to see an inoffensive gloss on the statement.
Id. This court does not believe that Quigley unmistakably conveyed a defamatory meaning
in posting the signs. Accordingly, this court concludes that the signs were subject to an
innocent construction and are therefore not actionable under a per se theory.
This court concludes that Dawson failed to establish defamation per se. Her claim is
better construed as defamation per quod. Under defamation per quod, Dawson had to prove
actual damage to her reputation and pecuniary loss resulting from the defamatory statement
in order to recover. See Bryson, 672 N.E.2d at 1121. This court agrees with the Bankruptcy
Court that she failed to do so. After careful review, this court concludes that Dawson failed
to establish any monetary damages as a result of Quigley’s actions.
For all the reasons stated, this court holds that Dawson failed to establish a defamation
per se claim or a defamation per quod claim against Quigley. Judgment is entered in favor
of Quigley and against Dawson.
IT IS THEREFORE ORDERED THAT:
(1) Judgment is entered in favor of Quigley and against Dawson on Count IV of
Dawson’s Complaint.
(2) This case is terminated in the district court.
ENTERED this 27th day of July, 2012

s/MICHAEL P. McCUSKEY
U.S. DISTRICT JUDGE

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