Disputes sometimes arise between owners of family-owned businesses. And sometimes those owners say unflattering or insulting things about one another to other family members. When one family member claims that another owes him or her money in connection with the business, he or she may even use language like “steal,” “thief” and “robbed” in comments about the other owner. When that happens, can the target of the statements sue for defamation? In Nguyen v. Vu, Civil Action No. 18-CV-01132, a United States District Court in Colorado recently dealt with such a claim and decided that the statements were not defamatory, particularly where the statements were made in the context of the family business dispute and were not made in the presence of any non-family members.
Two cousins, Sarah Nguyen and Teresa Vu, and their respective spouses, owned a car wash business in Houston, Texas. Teresa and her husband Quoc sued Sarah and her husband Alex in a Texas court, claiming that Sarah and Alex wrongfully withheld distributions from Teresa and Quoc. The Texas court ultimately found that Sarah and Alex did in fact owe money to Teresa and Quoc and awarded them $123,000 in unpaid distributions and other damages. The parties thereafter reached a settlement through which Sarah and Alex purchased Teresa and Quoc’s interest in the business for $147,000.
During the course of the Texas lawsuit between the cousins, their respective parents had numerous conversations concerning the dispute. In a series of “heated arguments,” Teresa’s parents Mai and Hung Vu allegedly repeatedly told Sarah’s parents (Mai’s brother and sister-in-law) that their niece Sarah owed and should pay Teresa the money Teresa was seeking through the Texas lawsuit. Thus, according to the Court, “the business dispute between the cousins escalated into a family dispute between the cousins’ respective parents.”
Sarah and Alex then sued Mai and Hung Vu over statements they allegedly made to Sarah’s parents. They alleged that during various conversations over several months, Mai and Hung told Sarah’s parents that Alex and Sarah “stole” money from Teresa; they also allegedly told Sarah’s parents that “your children are thieves. They robbed our kids.” Finally, Sarah claimed that Mai and Hung were “making threats” and that they told other family members that they were going to “take care of” Sarah and Alex.
Sarah and Alex claimed that Mai and Hung’s statements to Sarah’s parents were defamatory. The Court, analyzing the claims under Colorado law, explained that a viable claim for defamation requires: “(1) a defamatory statement concerning another, (2) published to a third party, (3) with fault amounting to at least negligence on the part of the publisher, and (4) either actionability of the statement irrespective of special damages or the existence of special damages to the plaintiff caused by the publication.” The Court noted that certain statements can be defamation “per se” where they wrongly suggest that the target of the statements has committed a crime. In such a case, the target need not prove that he or she suffered any special damages as a result of the statement. However, in determining if a statement is defamatory per se, the Court “must look at the totality of the circumstances surrounding the statements in question, as well as the entire context in which they were made.”
Mai and Hung moved to dismiss the claims on the grounds that none of their statements constituted defamation. Sarah and Alex opposed the motion, claiming that the statements were “classic” defamatory statements because, on their face, the statements were accusations that Sarah and Alex committed a crime. The Court noted that the circumstances and context of the alleged statements in this case arose in a family business dispute over money, with one set of family members trying to encourage another set of family members to arrange the payment of that money. The Court also noted that Teresa had separately filed a public lawsuit against Sarah seeking recovery of the wrongfully retained funds from the family car wash business. The Court then concluded that the Vus’ calling their niece and her husband “‘thieves’ in the context of a pending family dispute over money, where the alleged statements were never made or published outside the immediate family, simply does not rise, without more, to an actionable defamation claim.” The Court also noted that Sarah and Alex actually did end up paying Teresa more than $100,000 to resolve the Texas lawsuit, which supported Mai and Hung’s apparent good faith belief that Sarah and Alex did in fact owe Teresa money.
In reaching its decision, the Court also noted that in popular usage, words like “crook” or “thief,” while derogatory, do not in and of themselves suggest the commission of a crime sufficient to support a defamation claim.
Instead, the Court determined that the language was “no more than rhetorical hyperbole” and acknowledged further that “[i]n today’s world, one simply is required to overlook a certain amount of undignified verbiage in everyday encounters.” Finally, the Court cautioned: “If these types of alleged defamatory statements, made by and between family members, were deemed defamatory per se, it would open up the floodgates of litigation by family members who, during heated arguments with other family members, were called names or accused of doing terrible things, where no one other than family members heard the allegedly slanderous statements.” Based on this reasoning, the Court dismissed Sarah and Alex’s defamation claim against Sarah’s aunt and uncle, Mai and Hung Vu.
The Ngyuen v. Vu matter serves as a reminder that disputes between the owners and managers of family businesses often spill over to extended, non-owner family members (parents, siblings, etc.). It is not uncommon for such non-owner family members to “take sides” with their closest relatives and, from there, to say unflattering or offensive things about other family members concerning the dispute. In extreme cases, the target of such statements may decide to sue for defamation. A court may view such statements as mere “name calling” that does not rise to the level of defamation. However, depending on the context, including whether the statements were made to non-family third parties, it is possible that such claims could survive a motion to dismiss and lead to expensive and time consuming litigation, in addition to the risk of a judgment. Thus, even when embroiled in heated discussions over the ownership and management of the business, family members still may wish to choose their words carefully.