Hoffman et al v. Bailey

Filing 87

ORDER denying 80 Motion to Dismiss for Failure to State a Claim. Signed by Judge Nannette Jolivette Brown. (jrc)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
PETER HOFFMAN, et al.

CIVIL ACTION

VERSUS

NO. 13-5153

DAVID BAILEY

SECTION: “G”(5)

ORDER
In this case, Plaintiffs Peter and Susan Hoffman (collectively “Hoffmans”) allege that
Defendant David Bailey (“Bailey”) falsely accused them of fraudulent conduct in connection with
their participation in a tax incentive program.1 Pending before the Court is Bailey’s “Motion
Pursuant to Rule 12(b)(6) to Dismiss the Complaint ‘With Prejudice’ As It Cannot State a
Cognizable Claim Upon Which Relief Can Be Granted Against Him.”2 Having considered the
motion, the memoranda in support, the memoranda in opposition, the record, and the applicable law,
the Court will deny the motion.
I. Background
A.

Factual Background
In their complaint, the Hoffmans allege that Susan Hoffman is owner of Seven Arts Pictures

Louisiana LLC (“SAPLA”), which owns real property located at 807 Esplanade Avenue in New
Orleans, Louisiana (the “Property”).3 The Hoffmans allege that SAPLA engaged in substantial
rehabilitation of the Property in order to restore and rehabilitate its historic character and to convert

1

Rec. Doc. 1.

2

Rec. Doc. 80.

3

Rec. Doc. 1 at p. 2.

1

the Property in order to be used as a motion picture post-production facility.4 The Hoffmans allege
that SAPLA obtained a letter from the Louisiana Department of Economic Development certifying
that the Property was eligible for Louisiana film infrastructure tax credits and received certification
from the United States Department of Interior that the Property, as restored, qualified for United
States historical rehabilitation tax credits.5 The Hoffmans also allege that SAPLA has requested, but
has not yet received, certification from the Louisiana State Historic Preservation Office (“SHPO”)
that the Property qualifies for Louisiana historic rehabilitation tax credits.6
According to the Hoffmans, Seven Arts Pictures plc (“PLC”), an English public limited
company led by Peter Hoffman until November 9, 2011, hired Bailey as its Finance Director in
August 2009.7 Bailey left that position in December 2009.8 Subsequently, in November 2012, Bailey
allegedly sent an e-mail message to the SHPO accusing the Hoffmans of perpetrating a “major
economic fraud” by filing a fraudulent application for rehabilitation tax credits, making false
expense claims, and improperly diverting funds used for renovation.9
The Hoffmans claim that Bailey’s November 2012 e-mail message is “untrue and [was] made
maliciously without any basis in fact and with an intent to damage plaintiffs’ reputations, successes,
and good will,” and was intended “to embarrass plaintiffs and to damage plaintiffs’ business

4

Id. at p. 3.

5

Id.

6

Id.

7

Id. at p. 4.

8

Id.

9

Id.

2

relationships.”10 In support of this assertion, the Hoffmans contend that: (1) Bailey has never seen
the reports summarizing the rehabilitation expenditures, nor the accounting “backup” on which the
reports are based; (2) Bailey had “no knowledge whatsoever” of the items claimed in those reports,
and had no responsibility for “any of these expenses at any time,” including during his tenure as
PLC’s Finance Director; (3) the audit report of the renovation project “was certified by a reputable
Louisiana firm of certified public accountants who fully reviewed every item therein;” (4) all
“related party” payments are disclosed in one of the reports; (5) the property “is now rehabilitated
and restored to its historic character in a model of such renovation,” although Bailey has “never
personally viewed the Property, either before or after its historic rehabilitation.”11 The Hoffmans
claim that Bailey’s conduct constitutes defamation and defamation per se.12
B.

Procedural Background
The Hoffmans filed a complaint in this matter on July 23, 2013.13 On July 24, 2013, the

matter was assigned to Section “A” of this District.14 On August 23, 2013, Bailey filed a motion to
dismiss pursuant to Federal Rules of Civil Procedure 12(b)(2), 12(b)(3), 12(b)(4), 12(b)(5), 12(b)(6),
and 12(f).15 On January 27, 2014, Judge Zainey denied Bailey’s motion to dismiss, holding that
Bailey had been properly served process, that Bailey was subject to specific personal jurisdiction
of the Court, that the Eastern District of Louisiana was an appropriate venue for the dispute, and that

10

Id. at p. 5.

11

Id. at pp. 5–6.

12

Id. at pp. 6–8.

13

Rec. Doc. 1.

14

Rec. Doc. 2.

15

Rec. Doc. 3.

3

the balance of public and private interest factors did not justify dismissal under forum non
conveniens.16 Judge Zainey also denied Bailey’s Federal Rule of Civil Procedure 12(f) motion to
strike under Louisiana Code of Civil Procedure article 971.17 On February 6, 2014, Judge Zainey
held a status conference at which Bailey expressed his intention to seek certification for an
interlocutory appeal of Judge Zainey’s order denying Bailey’s 12(f) motion to strike.18 On that same
day, Judge Zainey stayed the matter pending the resolution of Bailey’s appeal.19
On February 21, 2014, Bailey filed a motion for reconsideration “in light of the newly
discovered evidence.”20 On February 25, 2014, Bailey filed a motion to lift the stay.21 Judge Zainey
entered an Order of Recusal on February 25, 2014, citing an indictment recently filed against one
of the plaintiffs in the matter.22 The case was then transferred to this Section, Section “G.”23 This
Court granted the motion to lift the stay and denied the motion for reconsideration on December 23,

16

Rec. Doc. 38 at pp. 3–17.

17

Id. at pp. 21–22. Article 971 is Louisiana’s Anti-SLAPP statute (Strategic Lawsuit Against Public
Participation) which was “enacted by the legislature as a procedural device to be used early in legal proceedings to screen
meritless claims pursued to chill one’s constitutional rights under the First Amendment of the United States Constitution
to freedom of speech and press” and encourage public participation in matters of public significance. Henry v. Lake
Charles Am. Press, L.L.C., 566 F.3d 164, 169 (5th Cir. 2009) (quoting Lee v. Pennington, 2002-0381 (La. App. 4 Cir.
10/16/02); 830 So. 2d 1037, 1041).
18

Rec. Doc. 39. “A district court’s denial of a motion brought under an anti-SLAPP statute such as Article 971
is an immediately-appealable collateral order.” Henry v. Lake Charles Am. Press, L.L.C., 566 F.3d 164, 181 (5th Cir.
2009).
19

Id.

20

Rec. Doc. 43.

21

Rec. Doc. 44.

22

Rec. Doc. 45.

23

Id.

4

2015, stating that it did not appear from the record that Bailey’s Federal Rule of Civil Procedure
12(b)(6) motion to dismiss was considered in the first instance before Judge Zainey.24
Since this action was filed, the Hoffmans have been convicted of multiple wire fraud, mail
fraud, and conspiracy felonies in connection with tax credit applications regarding the 807
Esplanade Property.25
Bailey filed the instant motion to dismiss on December 30, 2015.26 Peter Hoffman filed an
opposition on January 13, 2016.27 Susan Hoffman did not file an opposition, timely or otherwise.
With leave of Court, Bailey filed a reply on January 20, 2016.28
II. Parties’ Arguments
A.

Bailey’s Arguments in Support of Dismissal
Bailey moves to dismiss the Hoffmans’ claims of defamation and defamation per se pursuant

to Federal Rule of Civil Procedure 12(b)(6).29 Bailey asserts that the Louisiana Supreme Court has
repeatedly described the elements of a claim for defamation as: “(1) a false and defamatory
statement concerning another; (2) an unprivileged publication to a third party; (3) fault (negligence
or greater) on the part of the publisher; and (4) resulting injury.”30 Bailey contends that the only
purported defamatory statement cited by the Hoffmans is his November 2012 email “giving notice
24

Rec. Doc. 77; Rec. Doc. 78 at p. 25.

25

Rec. Doc. 80-1 at p. 6; Rec. Doc. 81 at p. 9.

26

Rec. Doc. 80.

27

Rec. Doc. 81.

28

Rec. Doc. 82.

29

Rec. Doc. 80.

30
Rec. Doc. 80-1 at p. 21 (citing Kennedy v. Sheriff of E. Baton Rouge, No. 2005-C-1418 (La. 7/10/06); 935
So. 2d 669, 674).

5

to the State of Louisiana of the Hoffmans’ fraudulent tax credit applications as to the 807 Esplanade
Property.”31 According to Bailey, in light of the Hoffmans’ convictions for wire and mail fraud and
conspiracy felonies with respect to the fraudulent tax credit applications, the Hoffmans cannot now
establish any of the four elements necessary to constitute a cognizable defamation claim against
Bailey.32
With regard to the first element, Bailey asserts that the Louisiana Supreme Court has found
truth to be an absolute defense and it is sufficient for the allegedly defamatory statement to be
“substantially true,” where the “unimportant details need not be accurate.”33 Bailey also cites the
Fifth Circuit in Zerangue v. TSP Newspapers in support of his assertion that a publication is
protected if it is “substantially true.”34 Quoting the Fifth Circuit, Bailey asserts that “the court must
view the story through the eyes of the average reader or member of the audience” to determine if
the story’s “‘gist’ or ‘sting’ is true.”35
Furthermore, Bailey asserts that the defamation claims must be dismissed pursuant to what
he calls the Heck doctrine or the “favorable termination rule.”36 According to Bailey, the United
States Supreme Court, in Heck v. Humphrey, held that a court must dismiss a complaint when a
judgment in favor of the plaintiff would imply that the plaintiff’s criminal conviction or sentence

31

Id. (citing Rec. Doc. 1-3 at p. 30).

32

Id.

33

Id. at p. 22 (citing Romero v. Thomson Newspapers (Wisconsin), Inc., No. 94-1105 (La. 1/17/95); 648 So.
2d 866, 870.
34

Id. (citing 814 F.2d 1066, 1073 (5th Cir. 1987)).

35

Id. (citing Zerangue, 814 F.2d at 1073)).

36

Id. (citing Heck v. Humphrey, 512 U.S. 477 (1994)).

6

was invalid.37 Bailey contends that the Hoffmans’ felony convictions bar them from asserting
defamation claims.38 Bailey argues that now that the Hoffmans have been convicted of wire fraud,
mail fraud, and conspiracy felonies with respect to fraudulent tax credit applications as to the 807
Esplanade Property, their criminal convictions conclusively confirm that Bailey’s notice to
Louisiana was “true or substantially true,” namely that the Hoffmans were making fraudulent tax
credit applications to the State of Louisiana with respect to the 807 Esplanade Property.39 Bailey
asserts that another section of the Eastern District of Louisiana, in Mitchell v. Jefferson Parish
Correctional Center, applied this doctrine to defamation claims and dismissed a defamation claim
for failure to state a claim upon which relief can be granted because the claim would necessarily
imply the invalidity of the prior conviction.40
Turning to the second element, whether the communication was privileged, Bailey contends
that under Louisiana law, reporting a crime to governmental authorities is protected by a qualified
privilege.41 According to Bailey, the Louisiana Supreme Court has held that this qualified privilege
protects the person reporting the crime so long as the report was made “without knowing falsity or
reckless disregard for the truth.”42 Bailey contends that the assertion of the qualified privilege shifts
the burden to the plaintiff to establish abuse of the privilege, which requires the plaintiff to show that

37

Id. at p. 23 (citing Ballard v. Burton, 444 F.3d 391, 396 (5th Cir. 2006)).

38

Id. at p. 24.

39

Id. at pp. 23–24.

40

Id. at p. 23 (citing No. 13-4963, 2013 WL 6002770 (E.D. La. Nov. 12, 2013) (Africk, J.)).

41

Id. at p. 25 (citing Kennedy v. Sheriff of E. Baton Rouge, No. 2005-C-1418 (La. 7/10/06); 935 So. 2d 669,

42

Id. (citing Kennedy, 935 So. 2d at 686).

674).

7

the defendant knew the defamatory statement to be false, or that they acted in reckless disregard as
to the statement’s truth or falsity.43
As for the third element, the fault on the part of the publisher, Bailey asserts that the
Hoffmans’ felony convictions confirm that Bailey did not act with negligence or other fault as the
allegations have now been proven to be correct and true.44 Therefore, Bailey contends, the Hoffmans
cannot establish the third element of a defamation claim against Bailey.45 Finally, addressing the
fourth element, that there was a resulting injury to the Hoffmans as a result of the defamatory
statement, Bailey asserts that the injuries purportedly suffered by the Hoffmans result from their own
misconduct rather than Bailey’s notice of their misconduct to the State of Louisiana.46
In Bailey’s conclusion, he also requests that the Court sanction Peter Hoffman for his
misconduct and award Bailey legal fees and costs as Peter Hoffman has refused to dismiss the claims
against Bailey.47 Citing Mitchell, Bailey contends that because the Hoffmans’ claims for defamation
would necessarily imply invalidity of their convictions and are so “barred,” the defamation claims
are “legally frivolous.”48
Along with his motion to dismiss, Bailey has also filed a “Request to Take Judicial Notice,”
in which he requests that the Court take judicial notice of several filings in the criminal actions
against the Hoffmans, Peter Hoffman’s suspension from the practice of law in California, documents

43

Id. at pp. 25–26 (citing Kennedy, 935 So. 2d at 687).

44

Id. at p. 27.

45

Id.

46

Id. at p. 28.

47

Id. at p. 29.

48

Id. at p. 25 (citing No. 13-4963, 2013 WL 6002770 at *4 (E.D. La. Nov. 12, 2013) (Africk, J.))

8

relating to insolvency proceedings of PLC, and prior court orders in other cases finding that Peter
Hoffman had engaged in misconduct.49 Bailey contends that, in deciding a Rule 12(b)(6) motion to
dismiss, the Court may consider not only the contents of the complaint but also adjudications and
other matters of public record.50
B.

Peter Hoffman’s Arguments in Opposition to Dismissal
Peter Hoffman opposes the motion to dismiss on the grounds that the motion is based on

factual claims rather than the legal sufficiency of the complaint.51 Peter Hoffman also opposes
Bailey’s request for judicial notice of the Hoffmans’ convictions, asserting that Bailey has not made
a proper request pursuant to Federal Rule of Evidence 201(b) and that judicial notice of records of
another judicial proceeding may not be used to prove the truth of facts asserted therein.52
Peter Hoffman asserts that Bailey does not appear to contest that his statements are
defamatory per se or that the complaint properly alleges the four elements of defamation under
Louisiana law, but instead Bailey focuses only on his defenses.53 Peter Hoffman contends that it has
long been established in Louisiana that if statements are defamatory per se, the elements of fault,
falsity and injury are presumed.54

49

Rec. Doc. 80-3.

50

Rec. Doc. 80-1 at p. 6 (citing State of Louisiana v. United States, 656 F. Supp. 1310, 1314 n.6 (W.D. La.

51

Rec. Doc. 81 at p. 1.

1986)).

52

Id. at p. 2 (citing United States v. Jones, 29 F.3d 1549, 1553 (11th Cir. 1994); United States v. City of New
Orleans, 947 F. Supp. 2d 601, 617 n.103 (E.D. La. 2013)).
53

Id. at p. 3.

54

Id. (citing Kennedy v. Sheriff of E. Baton Rouge, No. 2005-C-1418 (La. 7/10/06); 935 So. 2d 669, 674).

9

Furthermore, Peter Hoffman contends that the criminal allegations were solely focused upon
three applications related to Louisiana film infrastructure tax credits and did not have anything to
do with applications for state historic rehabilitation credits.55 Peter Hoffman asserts that there was
no allegation in any indictment that “funds used to renovate the property [sic] were improperly
transferred to a related party,” as Bailey’s email states.56 Peter Hoffman further contends that
although Bailey claimed in the email that “all applications . . . submitted by the Hoffmans are
fraudulent,” Bailey offers no evidence or argument in support of a claim that the requirements of
federal or state tax fraud are met regarding the application for historic tax credits.57 In the alternative,
Peter Hoffman claims that if Bailey’s email is to be understood as stating that the Hoffmans had
committed civil fraud pursuant to Louisiana Civil Code article 1953, Peter Hoffman asserts that
there is no proof of any detrimental reliance by any person on a false representation made by either
of the Hoffmans in connection with the state historic tax credits.58
In addition, Peter Hoffman contends that Bailey refers to the Hoffmans’ criminal case in
which the Hoffmans were convicted under the mail fraud and wire fraud statutes pursuant to 18
U.S.C. §§ 1341, 1343.59 However, Peter Hoffman asserts, Bailey’s email does not refer to either of
those statutes or even suggest criminal actions.60 Peter Hoffman also contends that Judge Feldman’s

55

Id. at p. 4.

56

Id. at p. 5.

57

Id. at pp. 5–6.

58

Id. at p. 6.

59

Id. at p. 7.

60

Id.

10

rulings on the applicability of the wire and mail fraud statutes to his criminal case are contrary to
Fifth Circuit and United States Supreme Court precedent.61
Peter Hoffman also asserts that Bailey’s claim for a conditional privilege turns on questions
of fact.62 He states that Bailey has offered no allegations that his statements to SHPO would qualify
as a statement made to a law enforcement officer.63 Peter Hoffman also contends that abuse of the
conditional privilege arises if the statement was “not made with reasonable grounds for believing
the statements to be true” and this issue is a question of fact.64 Peter Hoffman contends that Bailey
had no reasonable grounds for believing the statements to be true because he had never seen the Part
III application to SHPO, the compilation of expenses, or the 807 Esplanade Property itself.65 Peter
Hoffman asserts that the issues regarding the falsity of Bailey’s statements and the application or
abuse of any conditional “public interest” privilege are issues that should be determined on a motion
for summary judgment.66
Peter Hoffman has also filed “Plaintiffs’ Request for Judicial Notice In Support of
Opposition to Motion to Dismiss (FREvid 201(b))” in which he requests that the Court take judicial
notice of the December 9, 2015 order in his criminal case (Docket Number 561), Part III
applications and certifications given by SHPO with respect to the 807 Esplanade Property, the

61

Id. at pp. 7–8.

62

Id. at p. 10.

63

Id. at pp. 10–11.

64

Id. at p. 11 (citing Kennedy v. Sheriff of E. Baton Rouge, No. 2005-C-1418 (La. 7/10/06); 935 So. 2d 669,

65

Id.

66

Id.

683–84).

11

Second Superseding Indictment in his criminal case, the Louisiana Revised Statute § 47:6007, and
the jury charge in his criminal case.67
C.

Bailey’s Arguments in Further Support of Dismissal
First, Bailey asserts that Susan Hoffman has not submitted any opposition to his motion and

therefore has waived any objection to and implicitly conceded Bailey’s motion to dismiss.68 Next,
Bailey reasserts his request for judicial notice of the Second Superseding Indictment against Peter
Hoffman and Peter Hoffman’s convictions, and asserts that Peter Hoffman’s opposition ignores the
Heck doctrine, which, Bailey asserts, bars a convict from asserting a defamation claim that would
necessarily imply invalidity of the criminal conviction.69 Bailey asserts that Peter Hoffman, in his
opposition, improperly attempts to reargue his convictions.70
In response to Peter Hoffman’s argument that a Rule 12(b)(6) motion is improper, Bailey
asserts that courts applying Louisiana defamation law have repeatedly dismissed defamation claims
for failure to state a claim and the Court invited Bailey, in its December 23, 2015 Order, to file the
instant motion.71 Bailey asserts that his November 2012 email, which is attached to the complaint,
is the sole basis of Hoffman’s defamation claim and shows that it was addressed to a Louisiana
government employee and states, “Who should I write to with the evidence I personally have that
indicates that all the applications made by the Hoffmans are fraudulent, that the amounts claimed

67

Rec. Doc. 81-1.

68

Rec. Doc. 85 at p. 5.

69

Id. at pp. 6–7 (citing Heck v. Humphrey, 512 U.S. 477 (1994)).

70

Id. at p. 7.

71

Id. at pp. 7–8.

12

were probably not spent . . .”72 Bailey asserts that his email refers to “fraudulent applications”
generally, without limitation or restriction to any particular kind or class of application.73 Bailey
contends that a statement is not defamatory if it is “true or substantially true,” and Peter Hoffman
was convicted of fraud felonies with respect to three tax credit applications for the 807 Esplanade
Property.74 Therefore, Bailey contends, his email statement that “all the applications made by the
Hoffmans are fraudulent” is a “true” statement.75
In support, Bailey cites to Judge Feldman’s Conviction Decision, where, Bailey asserts,
Judge Feldman recites the fraud felonies for which the Hoffmans were convicted, including falsely
claiming a $10 million loan although there was no such loan and falsely claiming equipment
purchases although that equipment was not purchased.76 Thus, Bailey argues, his email statement
that “amounts claimed were not spent” is not false but was in fact vindicated by Peter Hoffman’s
convictions.77 Furthermore, Bailey contends that the Conviction Decision, which describes felony
convictions for fraudulent applications “with respect to purported fund transfers to Hoffman
affiliates (such as transfers to Hoffman affiliates New Moon and Leeway Properties) for interest
charges on a $10 million loan never made, services never provided, and rentals charged far
exceeding a fair market rental,” confirms the truth of the portion of Bailey’s email that stated that

72

Id. at p. 8 (citing Rec. Doc. 1-3 at p. 30).

73

Id.

74

Id. at p. 9 (citing Romero v. Thomson Newspapers (Wisconsin), Inc., No. 94-1105 (La. 1/17/95); 648 So. 2d

866, 870).
75

Id.

76

Id.

77

Id.

13

funds purportedly “used to renovate the property . . . were improperly transferred to a related
party.”78 Bailey asserts that because the felony convictions confirm that Bailey statements were not
false, Peter Hoffman cannot sustain the requisite “falsity” element of a defamation claim.79
Turning to the second element of a defamation claim, Bailey asserts that Peter Hoffman
cannot overcome Bailey’s “qualified privilege” for reporting the fraudulent tax credit applications.80
Bailey contends that in Metoyer v. American Eagle Airlines, Inc., a case from the Western District
of Louisiana, the court dismissed the plaintiff’s defamation claim for statements made in a report
to governmental authorities for a crime in which the plaintiff was arrested and ultimately
convicted.81 Bailey asserts that Peter Hoffman’s argument that Bailey is not entitled to a qualified
privilege for reporting the fraud to Louisiana governmental authorities because he did not know all
of the details is without merit because he knew enough to know the “gist” of the fraud and, he
asserts, reporting fraud would be significantly handicapped if a privilege was denied on the grounds
that the individual did not know all of the details.82 Furthermore, Bailey contends, he explicitly
asked in his email to whom he should supply evidence of the Hoffmans’ fraudulent applications.83
Bailey asserts that the qualified privilege must apply broadly to efforts to locate a governmental
authority who deals with the crime being reported.84 Bailey asserts that the qualified privilege is not

78

Id. at p. 10.

79

Id. (citing Fitzgerald v. Tucker, No. 98-C-2313 (La. 6/29/99); 737 So. 2d 706, 716–20).

80

Id.

81

Id. at p. 11 (citing 806 F. Supp. 2d 911 (W.D. La. 2011)).

82

Id.

83

Id.

84

Id. at p. 12.

14

limited to reports of crime to police or law enforcement officials but also applies to reports to others
of financial misconduct.85 Bailey contends that in Roux v. Pflueger, III, the Louisiana Fourth Circuit
Court of Appeal affirmed the dismissal of a defamation claim because the conditional privilege
applied to a report to a church official of discrepancies in church financial records and missing
church property.86
As for the third element, the fault of the publisher, Bailey argues that because the Hoffmans’
felony convictions confirm that Bailey’s statements were true, the Hoffmans are unable to establish
this element.87 Finally, Bailey asserts that Peter Hoffman does not address the fourth element of a
defamation claim, resulting injury, in his opposition, and he cannot show injury resulting from the
email notice.88 Therefore, Bailey contends, Peter Hoffman cannot establish the fourth element of a
defamation claim and the complaint should be dismissed with prejudice.89
III. Law and Analysis
A.

Legal Standard on a Motion to Dismiss
Federal Rule of Civil Procedure 12(b)(6) provides that an action may be dismissed “for

failure to state a claim upon which relief can be granted.”90 A motion to dismiss for failure to state
a claim is “viewed with disfavor and is rarely granted.”91 “To survive a motion to dismiss, a

85

Id. (citing Roux v. Pflueger, III, No. 2009-CA-0009 (La. App. 4 Cir. 7/8/09); 16 So. 3d 590, 595–96).

86

Id. at p. 13 (citing Roux, 16 So. 3d at 595–96).

87

Id. (citing Kennedy v. Sheriff of E. Baton Rouge, No. 2005-C-1418 (La. 7/10/06); 935 So. 2d 669, 674).

88

Id. (citing Kennedy, 935 So. 3d at 674).

89

Id. at p. 14.

90

Fed. R. Civ. P. 12(b)(6).

91

Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982).

15

complaint must contain sufficient factual matter, accepted as true, to ‘state a claim for relief that is
plausible on its face.’”92 “Factual allegations must be enough to raise a right to relief above the
speculative level.”93 A claim is facially plausible when the plaintiff has pleaded facts that allow the
court to “draw a reasonable inference that the defendant is liable for the misconduct alleged.”94
On a motion to dismiss, asserted claims are liberally construed in favor of the claimant, and
all facts pleaded are taken as true.95 However, although required to accept all “well-pleaded facts”
as true, a court is not required to accept legal conclusions as true.96 “While legal conclusions can
provide the framework of a complaint, they must be supported by factual allegations.”97 Similarly,
“[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements”
will not suffice.98 The complaint need not contain detailed factual allegations, but it must offer more
than mere labels, legal conclusions, or formulaic recitations of the elements of a cause of action.99
That is, the complaint must offer more than an “unadorned, the defendant-unlawfully-harmed-me
accusation.”100 From the face of the complaint, there must be enough factual matter to raise a
reasonable expectation that discovery will reveal evidence as to each element of the asserted

92

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2008)).

93

Twombly, 550 U.S. at 556.

94

Id. at 570.

95

Leatherman v. Tarrant Cnty. Narcotics Intelligence & Coordination Unit, 507 U.S. 163, 164 (1993); see also
Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322–23 (2007).
96

Iqbal, 556 U.S. at 677–78.

97

Id. at 679.

98

Id. at 678.

99

Id.

100

Id.

16

claims.101 If factual allegations are insufficient to raise a right to relief above the speculative level,
or if it is apparent from the face of the complaint that there is an “insuperable” bar to relief, the claim
must be dismissed.102
“Normally, in deciding a motion to dismiss for failure to state a claim, courts must limit their
inquiry to the facts stated in the complaint and the documents either attached to or incorporated in
the complaint. However, courts may also consider matters of which they may take judicial notice.”103
B.

Legal Standard on a Louisiana Defamation Claim
The elements of defamation under Louisiana law are: “(1) a false and defamatory statement

concerning another; (2) an unprivileged publication to a third party; (3) fault (negligence or greater)
on the part of the publisher; and (4) resulting injury.”104 In Louisiana, a statement is defamatory if
it “tends to harm the reputation of another so as to lower the person in the estimation of the
community, deter others from associating or dealing with the person, or otherwise expose the person
to contempt or ridicule.”105 “Words which expressly or implicitly accuse another of criminal
conduct, or which by their very nature tend to injure one’s personal or professional reputation,
without considering extrinsic facts or circumstances, are considered defamatory per se. When a

101

Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 257 (5th Cir. 2009).

102

Moore v. Metro. Human Serv. Dep’t, No. 09-6470, 2010 WL 1462224, at * 2 (E.D. La. Apr. 8, 2010)
(Vance, C.J.) (citing Jones v. Bock, 549 U.S. 199, 215 (2007)); Carbe v. Lappin, 492 F.3d 325, 328 n. 9 (5th Cir. 2007).
103

Lovelace v. Software Spectrum Inc., 78 F.3d 1015, 1017–18 (5th Cir. 1996) (citing Fed. R. Evid. 201(f)).

104

Kennedy v. Sheriff of E. Baton Rouge, No. 2005-C-1418 (La. 7/10/06); 935 So. 2d 669, 674.

105

Id.

17

plaintiff proves publication of words that are defamatory per se, falsity and malice (or fault) are
presumed, but may be rebutted by the defendant. Injury may also be presumed.”106
C.

Requests for Judicial Notice
As an initial matter, the Court notes that both Bailey and Peter Hoffman have made several

requests for the Court to take judicial notice of certain documents. Bailey asks the Court to take
judicial notice of several filings in the criminal actions against the Hoffmans: Peter Hoffman’s
suspension from the practice of law in California, documents relating to insolvency proceedings of
Seven Arts Pictures Plc, and prior court orders in other cases finding that Peter Hoffman has
engaged in misconduct.107 Peter Hoffman asks the Court to take judicial notice of the December 9,
2015 order in his criminal case (Docket Number 561), Part III applications and certifications given
by SHPO with respect to the 807 Esplanade Property, the Second Superseding Indictment in his
criminal case, Louisiana Revised Statute § 47:6007, and the jury charge in his criminal case.108 As
noted above, in deciding Federal Rule of Civil Procedure 12(b)(6) motions to dismiss, courts may
consider matters of which they may take judicial notice.109
Pursuant to Federal Rule of Evidence 201, the Court may judicially notice a fact that is not
subject to reasonable dispute either on its own, or if a party requests it and the court is supplied with
the necessary information.110 First, the Court finds that many of the documents the parties request
the Court to take judicial notice of are irrelevant to these proceedings and therefore will not be
106

Id. at 675 (citations omitted).

107

Rec. Doc. 80-3.

108

Rec. Doc. 81-1.

109

Lovelace v. Software Spectrum Inc., 78 F.3d 1015, 1017–18 (5th Cir. 1996) (citing Fed. R. Evid. 201(f)).

110

Fed. R. Evid. 201(b)-(c).

18

considered.111 The Court finds that the suspension of Peter Hoffman from the practice of law, the
documents relating to the insolvency of proceedings of PLC, the Louisiana film tax credit statute,
the jury charge, the Part III applications and certifications given by SHPO, the prior adjudications
of Peter Hoffman for misconduct, as well as much of Judge Feldman’s December 9, 2015 Order in
the criminal action are irrelevant to this motion.
Moreover, it is unclear if the parties are requesting that the Court take judicial notice of the
fact that these documents exist, or if the parties are requesting that the Court take judicial notice of
the documents in their entirety and the allegations made therein. Bailey, however, appears to be
asking the Court to take judicial notice of these documents as proof of the truth of the facts stated
therein. The Fifth Circuit has explained that although courts may take judicial notice of documents
filed in other courts to establish the fact of such litigation and related filings, courts generally cannot
take notice of facts asserted in those pleadings or orders as they “are usually disputed and almost
always disputable.”112 Therefore, the Court will only address requests to take judicial notice where
the parties have asked the Court to take judicial notice of a specific fact and the alleged fact is
relevant to the instant motion.
D.

Motion to Dismiss
Under Louisiana law, “defamatory words have traditionally been divided into two categories:

those that are defamatory per se and those that are susceptible of a defamatory meaning.”113 Here,

111

See 21B Charles Alan Wright & Arthur Miller, Federal Practice & Procedure § 5104 (2d ed.) (“[C]ourts
would be foolish to take judicial notice of an irrelevant fact.”).
112

Ferguson v. Extraco Mortg. Co., 264 F. App’x 351, 352 (5th Cir. 2007).

113

Kennedy v. Sheriff of E. Baton Rouge, No. 2005-C-1418 (La. 7/10/06); 935 So. 2d 669, 674–75.

19

the Hoffmans allege that Bailey’s November 2012 email to the SHPO constitutes defamation per
se.114 In the email, Bailey asserts that Peter and Susan Hoffman are the architects “of a major
economic fraud.”115 Bailey asks, in the email, “Who should I write to with the evidence I personally
have that indicates that all the applications made by the Hoffmans are fraudulent, that the amounts
claimed were probably not spent, and that some or all of the funds used to renovate the property
were improperly diverted from SAP Plc by way of a transfer to a related party within 2 years of a
SAP Plc becoming insolvent?”116 Such an accusation is considered defamatory per se as the words,
in accusing the Hoffmans of committing a fraud, by their very nature implicate criminal conduct and
tend to injure a person’s personal or professional reputation.117 Therefore, under Louisiana’s
defamation rules, the elements of falsity and malice (or fault) are presumed, shifting the burden of
proof to defendant to rebut the adverse presumption.118 Bailey does not address this shifting of the
burden, but rather argues that the Hoffmans cannot establish any of the four elements of a
defamation claim.119 The Court will address each of the elements in turn.

114

Rec. Doc. 1 at p. 6.

115

Rec. Doc. 1-3 at p. 30.

116

Id.

117

Kennedy, 935 So. 2d at 675. See Thompson v. Bank One of La., No. 2013-CA-1058 (La. App. 4 Cir.
2/26/14); 134 So. 3d 653, 662 (finding that statements accusing the plaintiff of “embezzlement of Church funds,” of
being a “thief” and a “liar,” and that the plaintiff’s actions constituted fraud were defamatory per se as they accused the
plaintiff of criminal conduct and tended to injure his professional reputation as a pastor).
118

Id.

119

Rec. Doc. 80-1 at p. 21.

20

1.

Falsity

Bailey argues that the Hoffmans cannot establish the required element of “falsity” in light
of their criminal convictions for wire fraud, mail fraud, and conspiracy with respect to tax credit
applications regarding the 807 Esplanade Property.120 However, because the Hoffmans have alleged
defamation per se, falsity is presumed and the burden shifts to Bailey to rebut this presumption.121
In support of his assertion that his November 2012 email was true, Bailey asks that the Court
take judicial notice of the December 9, 2015 ruling of Judge Feldman, denying Peter Hoffman’s
motion for acquittal as to his 16 felony counts and denying Susan Hoffman’s motion for acquittal
as to her 3 felony counts.122 Peter Hoffman objects to the Court taking judicial notice of these
documents on the grounds that Bailey has not complied with the requirements of Federal Rule of
Evidence 201(b) and arguing that judicial notice of records of another judicial proceeding may not
be used to prove the truth of facts asserted therein.123 The Fifth Circuit has stated that “[a] judicially
noticed fact must be one not subject to reasonable dispute in that it is either (1) generally known
within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination
by resort to sources whose accuracy cannot reasonably be questioned.”124 Peter Hoffman does not
explain how Bailey has failed to comply with Rule 201(b), which describes the kinds of facts that

120

Id. at p. 23.

121

Kennedy, 935 So. 2d at 675.

122

Rec. Doc. 80-3.

123

Rec. Doc. 81 at p. 2 (citing United States v. Jones, 29 F.3d 1549, 1553 (11th Cir. 1994); United States v.
City of New Orleans, 947 F. Supp. 2d 601, 617 n.103 (E.D. La. 2013)).
124

Funk v. Stryker Corp, 631 F.3d 777, 783 (5th Cir. 2011) (citing Fed. R. Evid. 201(b)).

21

may be judicially noticed. Therefore, it is unclear to the Court as to what Peter Hoffman’s objection
is to judicial notice on these grounds.
Hoffman also argues that the Court may not use records of other judicial proceedings to
prove the truth of facts asserted therein.125 Bailey requests that the Court take judicial notice of
records in the criminal proceedings of Susan and Peter Hoffman, in particular Judge Feldman’s
Order regarding Peter and Susan Hoffman’s post-trial motions for a new trial and for judgment of
acquittal, in support of his assertion that the statements Bailey made in the November 2012 email
were true.126 The Fifth Circuit has explained that although courts may take judicial notice of
documents filed in other courts to establish the fact of such litigation and related filings, courts
generally cannot take notice of facts asserted in those pleadings or orders as they “are usually
disputed and almost always disputable.”127 Therefore, the Court may take judicial notice of the fact
that Peter Hoffman and Susan Hoffman were convicted of mail fraud, wire fraud, and conspiracy
to commit mail or wire fraud, as those facts are indisputable; however, it may not take judicial notice
of the majority of the facts at issue in those proceedings as proof of the truth of Bailey’s
statements.128 Therefore, Bailey has not met his burden of rebutting the presumption of falsity.

125

Rec. Doc. 81 at p. 2.

126

Rec. Doc. 80-3.

127

Ferguson v. Extraco Mortg. Co., 264 F. App’x 351, 352 (5th Cir. 2007).

128

See 21B Charles Alan Wright & Arthur Miller, Federal Practice & Procedure § 5106.4 (2d ed.) (“[I]f
another court were to notice the court record of the judge’s utterance [‘I find the defendant guilty’] to show that the
defendant was guilty, this would be improper because the defendant’s guilt is not ‘indisputable.’ But the record of the
judge’s utterance would be a source of ‘reasonably indisputable accuracy’ if the court wished to notice, not defendant’s
guilt, but his conviction.”).

22

Bailey also asserts that the “favorable termination rule” from the Supreme Court case Heck
v. Humphrey bars the Hoffmans’ defamation claims.129 In Heck, the Supreme Court held when a
plaintiff seeks damages on a 42 U.S.C. § 1983 claim, the district court must consider whether a
judgment in favor of the plaintiff would necessarily imply the invalidity of his conviction or
sentence and, if it would, the complaint must be dismissed.130 Peter Hoffman does not specifically
respond to this argument, but he contends that the criminal allegations against him were solely
focused upon three applications related to Louisiana film infrastructure tax credits and did not have
anything to do with applications for state historic rehabilitation credits.131 In the Eastern District of
Louisiana case cited by Bailey, Mitchell v. Jefferson Parish Correctional Center, the court held that
the plaintiff’s 42 U.S.C. § 1983 claims were barred by Heck.132 Bailey has not presented any
authority for the extension of this doctrine to claims outside of § 1983, nor has the Court found any.
Accordingly, the Court is not persuaded that the Hoffmans’ claims are barred by Heck.

129

Rec. Doc. 80-1 at p. 22.

130

512 U.S. at 486. The Supreme Court also held that there was an exception to this rule if the conviction or
sentence had been “reversed on direct appeal, expunged by executive order, declared invalid by a state tribunal
authorized to make such determination, or called into question by a federal court’s issuance of a writ of habeas corpus,
28 U.S.C. § 2254.” Id. at 486–87.
131

Rec. Doc. 81 at p. 4. Peter Hoffman asks the Court to take judicial notice of the Second Superseding
Indictment in his criminal case for the fact that the allegations are directed solely at applications for film infrastructure
credits and contain no allegations regarding historic tax credits. Rec. Doc. 81 at p. 4. The Court, having reviewed the
Second Superseding Indictment, finds that it has the necessary information to take judicial notice of the fact that there
are no allegations directed towards any historic tax credits in the Second Superseding Indictment.
132

No. 13-4963, 2013 WL 6002770, at *3–4 (E.D. La. Nov. 12, 2013) (Africk, J.).

23

2.

Unprivileged Publication

Bailey also argues that his email notice to the State of Louisiana was conditionally privileged
and therefore the Hoffmans are unable to establish the second element of a defamation claim.133
Under Louisiana law, privilege is a defense to a defamation action.134 Peter Hoffman asserts that this
issue should be determined on a motion for summary judgment.135 “Although dismissal under Rule
12(b)(6) is ordinarily determined by whether the facts alleged in the complaint, if true, give rise to
a cause of action, a claim may also be dismissed if a successful affirmative defense appears clearly
on the face of the pleadings.”136 In their complaint, the Hoffmans allege that Bailey sent an email
to the SHPO stating that the Hoffmans were the architects “of a major economic fraud” and that their
applications were fraudulent.137 As Bailey asserts that, in his email, he was reporting the crimes of
wire and mail fraud to governmental authorities and therefore his statements are protected by a
“qualified privilege,” the Court will evaluate whether this is a valid defense that appears clearly on
the face of the pleadings.138
In Kennedy v. Sheriff of East Baton Rouge, the Louisiana Supreme Court stated that although
it is impossible to reduce the scope of a conditional privilege to any precise formula, the elements
of a conditional privilege have been described as “good faith, an interest to be upheld and a

133

Rec. Doc. 80-1 at p. 25.

134

Kennedy, 935 So. 2d at 681.

135

Rec. Doc. 81 at pp. 3, 11.

136

Clark v. Amoco Prod. Co., 794 F.2d 967, 970 (5th Cir. 1986).

137

Rec. Doc. 1 at p. 4.

138

Rec. Doc. 80-1 at p. 25.

24

statement limited in scope to this purpose, a proper occasion, and publication in the proper manner
and to proper parties only.”139 The Louisiana Supreme Court has instructed that the privilege “arises
from the social necessity of permitting full and unrestricted communication concerning a matter in
which the parties have an interest or duty, without inhibiting free communication in such instances
by the fear that the communicating party will be held liable in damages if the good faith
communication later turns out to be inaccurate.”140 Whether a conditional privilege exists involves
a two-step process: (1) “it must be determined whether the attending circumstances of a
communication occasion a qualified privilege;” and (2) “a determination of whether the privilege
was abused, which requires that the grounds for abuse-malice or lack of good faith-be examined.”141
“While the first step is generally determined by the court as a matter of law, the second step of
determining abuse of a conditional privilege or malice is generally a fact question for the jury
‘[u]nless only one conclusion can be drawn from the evidence.’”142
In this case, Bailey asserts that the reporting to governmental authorities of a crime, such as
the wire and mail fraud felonies committed by the Hoffmans, is protected by a qualified privilege.143
In their complaint, however, the Hoffmans allege that the statements made in the email were untrue
and were made “maliciously without any basis in fact and with an intent to damage plaintiffs’
reputations, successes, and goodwill, to embarrass plaintiffs and to damage plaintiffs’ business

139

935 So. 2d at 681 (quoting Madison v. Bolton, 102 So. 2d 433, 439 n.7 (La. 1958)).

140

Id. at 681–82 (quoting Toomer v. Breaux, 146 So. 2d 723, 725 (La. 3 Cir. 11/5/1962)).

141

Id. at 682 (citing Smith v. Our Lady of the Lake Hosp., Inc., 93-2512 (La. 7/5/94); 639 So. 2d 730, 745).

142

Id. (quoting Smith, 639 So. 2d at 745).

143

Rec. Doc. 80-1 at p. 25.

25

relationships.”144 The Hoffmans allege that the Compilation Report was prepared in 2012, long after
Bailey had ceased to be an employee of PLC and Bailey had never seen or received the Compilation
Report, the Audit Report, or any of the accounting “back up” on which both are based.145
Furthermore, they allege that Bailey had “no knowledge whatsoever of the items claimed as
qualified historic preservation expenses in the Compilation Report in 2012 and had no responsibility
for any of these expenses at any time, including the four months in 2009 during which he was
engaged by PLC.”146 As abuse of the privilege is generally a fact question for the jury and thus
cannot be determined from the face of the pleadings, the Court does not find that Bailey’s asserted
defense precludes the Hoffmans’ defamation claims.147
3.

Fault on the Part of the Publisher

Bailey also argues that the Hoffmans cannot establish the third element of their defamation
claim, any fault of Bailey, because, he asserts, the felony convictions confirm that Bailey did not act
with negligence or other fault.148 In opposition, Peter Hoffman asserts that as Bailey’s statements
are defamatory per se, fault is presumed.149 Peter Hoffman also asserts that Bailey “had no
reasonable grounds for believing his statements to be true.”150 Because Bailey’s statements are

144

Rec. Doc. 1 at p. 5.

145

Id.

146

Id.

147

Kennedy, 935 So. 2d at 682 (quoting Smith, 639 So. 2d at 745).

148

Rec. Doc. 80-1 at p. 27.

149

Rec. Doc. 81 at p. 3.

150

Id. at p. 11.

26

defamatory per se, under Louisiana’s defamation rules, the element of fault is presumed, shifting the
burden of proof to Bailey to rebut the adverse presumption.151 Bailey does not acknowledge this
shifting burden, but rather asserts that the Hoffmans’ convictions demonstrate that they are unable
to establish the third element of a defamation claim against him by showing that he acted with
“fault.”152 Again, Bailey’s assertion relies upon the Court taking judicial notice of the criminal case
proceedings as proof that Bailey’s allegations are true. As discussed above, courts may take judicial
notice of “‘a document filed in another court . . . to establish the fact of such litigation and related
filings,’ but generally cannot take notice of the findings of fact from other proceedings because those
facts are usually disputed and almost always disputable.”153 Therefore, the Court finds that fault is
presumed as Bailey’s statements constitute defamation per se, and Bailey has not met his burden of
rebutting this presumption.
4.

Resulting Injury

Bailey also argues that the Hoffmans cannot establish the fourth element of their defamation
claim as they cannot show any injury resulting from Bailey’s statements.154 Bailey asserts that the
Hoffmans’ injuries resulted from their participation in false and misleading tax credit applications
for which they have been convicted of multiple felonies, not from his notice of their misconduct to

151

Kennedy, 935 So. 2d at 675.

152

Rec. Doc. 82-1 at p. 13.

153

Ferguson v. Extraco Mortg. Co., 264 F. App’x 351, 352 (5th Cir. 2007).

154

Rec. Doc. 80-1 at p. 27.

27

the State of Louisiana.155 In opposition, Peter Hoffman contends that injury is presumed as Bailey’s
statements are defamatory per se.156
The Louisiana Supreme Court in Kennedy v. Sheriff of East Baton Rouge stated that when
a plaintiff proves publication of words that are defamatory per se, injury may be presumed.157 In the
Hoffmans’ complaint, they allege that they have suffered damages of more than $3 million due to
loss of income from the Louisiana historic rehabilitation credits, increased business costs, injury to
business/professional reputations, personal humiliation, embarrassment, and mental anguish and
suffering.158 Although a plaintiff must show that the defamatory statements were a “substantial factor
in causing the harm” the plaintiff alleges,159 Bailey has not rebutted the presumption that the
Hoffmans suffered an injury as a result of his allegedly defamatory statements. Accordingly, the
Court finds that Bailey is not entitled to dismissal of the Hoffman’s defamation claims against him
on these grounds.
E.

Sanctions
Bailey also requests that the Court sanction Peter Hoffman on the grounds that his complaint

is “legally frivolous” and award Bailey legal fees.160 Peter Hoffman does not specifically respond
to Bailey’s request for sanctions. As the Court is denying Bailey’s motion to dismiss, the Court

155

Id. at p. 28.

156

Rec. Doc. 81 at p. 3.

157

935 So. 2d at 675.

158

Rec. Doc. 1 at p. 8.

159

Thompson v. Bank One of La., NA, 2013-1058 (La. App. 4 Cir. 2/26/14); 134 So. 3d 653, 665.

160

Rec. Doc. 80-1 at p. 29.

28

disagrees with Bailey’s characterization of the complaint as “legally frivolous.” Therefore, it denies
Bailey’s request to sanction Peter Hoffman and award Bailey legal fees.
IV. Conclusion
Based on the foregoing,
IT IS HEREBY ORDERED that Bailey’s “Motion Pursuant to Rule 12(b)(6) to Dismiss
the Complaint ‘With Prejudice’ As It Cannot State a Cognizable Claim Upon Which Relief Can Be
Granted Against Him”161 is DENIED.

3rd
NEW ORLEANS, LOUISIANA, this ________ day of February, 2016.

_________________________________________
NANNETTE JOLIVETTE BROWN
UNITED STATES DISTRICT JUDGE

161

Rec. Doc. 80.

29