DABNEY BASSEL, Justice.
In this accelerated interlocutory appeal, Appellants Seth Bookout, Leslye Romero, and Ryan Gallagher challenge the trial court's denial of their motion invoking the Texas Citizens Participation Act (the TCPA or the Act)
This case involves an internecine battle for control of Stedfast. In September 2021, Appellants, claiming that they were Stedfast's duly elected board of directors, purported to terminate Shelley as pastor and seized control of Stedfast's bank accounts. In response, Appellees filed this lawsuit in which they seek a declaratory judgment that, among other things, Appellants are not, in fact, directors of Stedfast and have no authority to act on its behalf. Appellees also allege causes of action for conversion and defamation.
Appellants moved to dismiss Appellees' suit under the TCPA, asserting that Appellees' defamation claim violated Appellants' exercise of the right of free speech and that their causes of action for declaratory relief and conversion violated Appellants' right of association. Appellees responded to the motion by filing affidavits and documentary evidence that they argued established a prima facie case for each essential element of their claims against Appellants. The trial court denied Appellants' TCPA motion and, finding that it was frivolous or filed solely for the purpose of delay, awarded attorney's fees to Appellees.
On appeal, in addition to challenging the trial court's denial of their TCPA motion and its award of attorney's fees to Appellees, Appellants assert for the first time that—based on the ecclesiastical abstention doctrine—the trial court lacks subject matter jurisdiction over Appellees' causes of action.
We conclude (1) that, though certain statements relied upon by Appellees may not form the basis of a defamation claim pursuant to the ecclesiastical abstention doctrine, the trial court has subject matter jurisdiction over all of Appellees' causes of action and (2) that the trial court's ruling on Appellants' TCPA motion was correct. The first part of this opinion focuses on our conclusion that the ecclesiastical abstention doctrine does not bar the adjudication of Appellees' claims. In the second part—employing the TCPA's three-step process—we demonstrate that, though Appellees' claims are subject to the strictures of the TCPA, they should nevertheless be allowed to proceed because they appear to have merit. Accordingly, we will affirm the trial court's order.
A. Stedfast's History and Disputed Leadership
In 2014, Benjamin Romero, the former husband of Appellant Leslye Romero, formed Stedfast Baptist Church as a nonprofit corporation for religious, educational, and charitable purposes. Mr. Romero served as the church's original pastor and as a member of the initial board of directors, which also included his then-wife Leslye and Robert Starnes. In January 2019, Mr. Romero was compelled to resign as both pastor and director of Stedfast due to inappropriate conduct.
After Mr. Romero resigned, Shelley was installed as the replacement pastor of Stedfast in January 2019. Around this time, Stedfast's existing board of directors purportedly executed a document removing themselves as directors and appointing Shelley, Ryan Urbanek, and Kevin Edelmann to replace them effective January 1, 2019. However—though she admits the document contains a signature resembling her own—Mrs. Romero denies ever signing this document, and prior to September 2021, no public announcement or corporate filing was ever made to commemorate this supposed change of leadership.
In September 2021, Mrs. Romero, apparently believing she was still a member of the board, purported to call a special meeting of Stedfast's board of directors via Zoom videoconference.
Shortly thereafter, Appellants contacted Chase Bank to remove Shelley as the signatory on Stedfast's accounts and replace him with Bookout. Appellants then engaged an attorney to send a termination letter to Shelley purporting to remove him as Stedfast's pastor.
After realizing that he no longer had access to Stedfast's bank accounts, discovering the periodic report filed by Appellants naming themselves as officers and directors of Stedfast, and receiving the termination letter, Shelley engaged legal counsel to represent Stedfast and himself. In early October 2021, Stedfast's counsel filed a Restated Certificate of Formation for the church naming Shelley, his wife Keri Shelley, and Ryan Urbanek as directors. In addition, at a meeting held October 3, 2021, this alternate slate of directors adopted new bylaws for Stedfast.
B. Bookout's Vitriolic Statements about Shelley and Stedfast
In June 2019—approximately two years before the previously described battle for control of Stedfast began—Shelley confronted Bookout and admonished him for "railing" and promoting false doctrines such as "Flat Earth Theory." When Bookout refused to repent, Shelley removed him as a member of Stedfast.
After his removal, Bookout began to harshly and publicly criticize both Shelley and Stedfast. Specifically, Shelley claims that in videos posted to social media platforms such as YouTube, Bookout accused him of, among other things, physically abusing his children, embezzling funds from Stedfast to pay for the remodeling of his home, and being a "sodomite." In addition, Shelley claims that Bookout described Stedfast as a cult and accused Shelley of being a cult leader.
C. Legal Proceedings
In October 2021, Shelley and Stedfast filed suit against Appellants seeking injunctive relief; damages for conversion and defamation; and a declaratory judgment that, among other things, Shelley, Keri Shelley, and Ryan Urbanek (sometimes collectively referred to herein as the Shelley Group)—not Appellants—are the duly elected and appointed members of Stedfast's board of directors. Appellants filed a motion to dismiss pursuant to the TCPA. The trial court denied the motion to dismiss and, finding that the motion was frivolous or filed for the sole purpose of delay, ordered Appellants to pay Stedfast's attorney's fees and expenses incurred in responding to the motion. This interlocutory appeal followed.
On appeal, Appellants raise seven issues:
We will address each of these issues below.
A. Subject Matter Jurisdiction: Application of the Ecclesiastical Abstention Doctrine
In their first issue, Appellants assert that the trial court does not have subject matter jurisdiction over Appellees' causes of action under the ecclesiastical abstention doctrine.
1. Subject Matter Jurisdiction and Standard of Review
"`Subject matter jurisdiction cannot be waived or conferred by agreement' and `can be raised at any time,' including in an interlocutory appeal." Anderson v. Truelove, 446 S.W.3d 87, 91 (Tex. App.-Houston [1st Dist.] 2014, no pet.) (quoting Rusk State Hosp. v. Black, 392 S.W.3d 88, 103 (Tex. 2012) (Lehrmann, J., concurring in part and dissenting in part)). We review the existence of subject matter jurisdiction de novo.
2. The Ecclesiastical Abstention Doctrine
The ecclesiastical abstention doctrine prohibits civil courts from delving into matters of theological controversy, church discipline, ecclesiastical government, or members' conformity to the church's moral standards. Serbian E. Orthodox Diocese v. Milivojevich, 426 U.S. 696, 713-14, 96 S.Ct. 2372, 2382 (1976) (quoting Watson v. Jones, 80 U.S. 733, 733-34 (1871)). The doctrine is grounded in the First Amendment, which protects the right of religious institutions to decide for themselves, free from state interference, matters of church governance as well as those of faith and doctrine. Id. at 721-22, 96 S. Ct. at 2386; In re Diocese of Lubbock, 624 S.W.3d 506, 508-09 (Tex. 2021) (orig. proceeding).
"Determining the reach of subject matter jurisdiction in disputes involving religious organizations requires consideration of competing demands." Thiagarajan v. Tadepalli, 430 S.W.3d 589, 594 (Tex. App.-Houston [14th Dist.] 2014, pet. denied). "Courts do not have jurisdiction to decide questions of an ecclesiastical or inherently religious nature, so as to those questions they must defer to decisions of appropriate ecclesiastical decision makers." Masterson v. Diocese of Nw. Tex., 422 S.W.3d 594, 605-06 (Tex. 2013). "But Texas courts are bound to exercise jurisdiction vested in them by the Texas Constitution and cannot delegate their judicial prerogative where jurisdiction exists." Id. at 606. "In short, courts must act but cannot intrude." Thiagarajan, 430 S.W.3d at 595; see also Masterson, 422 S.W.3d at 596 (recognizing that Texas courts have a "constitutional duty to decide disputes within their jurisdiction while still respecting limitations the First Amendment places on that jurisdiction").
"Properly exercising jurisdiction requires courts to apply neutral principles of law to non-ecclesiastical issues involving religious entities in the same manner as they apply those principles to other entities and issues." Masterson, 422 S.W.3d at 606. "Thus, courts are to apply neutral principles of law to issues such as land titles, trusts, and corporate formation, governance, and dissolution, even when religious entities are involved." Id. "[T]he line between required judicial action and forbidden judicial intrusion `will not always be distinct' because many disputes `require courts to analyze church documents and organizational structures to some degree.'" Thiagarajan, 430 S.W.3d at 595 (quoting Masterson, 422 S.W.3d at 606). "[C]ourts must look to the substance and effect of a plaintiff's complaint to determine its ecclesiastical implication, not its emblemata." Tran v. Fiorenza, 934 S.W.2d 740, 743 (Tex. App.-Houston [1st Dist.] 1996, no writ) (citing Green v. United Pentecostal Church Int'l, 899 S.W.2d 28, 30 (Tex. App.-Austin 1995, writ denied)); see also Williams v. Gleason, 26 S.W.3d 54, 59 (Tex. App.-Houston [14th Dist.] 2000, pet. denied) ("Whether this suit is ecclesiastical, or concerns property rights, torts, or criminal conduct, is determined by first examining the substance and effect of the [plaintiffs'] petition— without considering what they use as claims—to determine its ecclesiastical implication.").
3. Application to the Present Case
To determine whether and to what extent the ecclesiastical abstention doctrine applies to the present case, we must examine the "substance and effect" of Appellees' petition to evaluate its ecclesiastical implication. See Tran, 934 S.W.2d at 743. In their amended original petition, Appellees assert causes of action for defamation, declaratory relief, and conversion. We will consider the applicability of the ecclesiastical abstention doctrine to each of these causes of action in turn.
To prevail on a cause of action for defamation, "[a] plaintiff must prove that the defendant: (1) published a statement; (2) that was defamatory concerning the plaintiff; (3) while acting with either actual malice, if the plaintiff was a public official or public figure, or negligence, if the plaintiff was a private individual, regarding the truth of the statement." WFAA-TV, Inc. v. McLemore, 978 S.W.2d 568, 571 (Tex. 1998). In addition, unless the statement in question constitutes defamation per se, the plaintiff must prove damages. See Waste Mgmt. of Tex., Inc. v. Tex. Disposal Sys. Landfill, Inc., 434 S.W.3d 142, 146 n.7 (Tex. 2014). "A statement is defamatory if it tends to harm the reputation of another so as to lower him in the estimation of the community or to deter third persons from associating or dealing with him, or if it tends to expose him to public hatred, contempt, or ridicule." Hanssen v. Our Redeemer Lutheran Church, 938 S.W.2d 85, 92 (Tex. App.-Dallas 1996, writ denied) (citing Hardwick v. Hous. Lighting & Power Co., 881 S.W.2d 195, 197 (Tex. App.-Corpus Christi-Edinburg 1994, writ dism'd w.o.j.)).
Appellees' defamation claims are primarily based upon certain statements allegedly made by Bookout in videos posted to social media in which he, among other things, called Shelley a "sodomite" and accused him of physically abusing his children and embezzling money from Stedfast to pay for a home remodel. Bookout also allegedly referred to Shelley as a "cult leader" and claimed Stedfast was a "cult." In addition, Appellees' petition asserts—without specifics—that the termination letter Appellants' counsel sent to Shelley contained "several false and defamatory statements about the character of Pastor Shelley." We will consider each of these statements in turn to determine whether the ecclesiastical abstention doctrine deprives the trial court of jurisdiction to hear claims predicated on the statements.
First, Bookout's alleged accusations that Shelley had physically abused his children and embezzled money from Stedfast clearly have no ecclesiastical implications. The truth or falsity of these allegations does not depend on any church doctrine or turn on anyone's religious beliefs. Moreover, the defamatory nature of these allegations is not inextricably intertwined with ecclesiastical matters because, while such behavior would run counter to the teachings of most churches or religious institutions, it is also against the law and can be viewed as defamatory from a purely secular standpoint. Indeed, if—as Appellees assert—these statements unambiguously and falsely impute criminal conduct to Shelley, they would constitute defamation per se, meaning damages would be presumed. See Gray v. HEB Food Store No. 4, 941 S.W.2d 327, 329 (Tex. App.-Corpus Christ-Edinburg 1997, writ denied). Thus, these allegations are not unlike those routinely considered by courts in adjudicating defamation claims involving secular parties. Therefore, we conclude that these statements are actionable—no matter the ecclesiastical abstention doctrine.
Bookout's statements that Shelley was a "cult leader" and that Stedfast was a "cult" fall on the other end of the spectrum. As one of our sister courts has recognized, "being labeled a `cult' is not actionable because the truth or falsity of the statement depends upon one's religious beliefs, an ecclesiastical matter which cannot and should not be tried in a court of law." Harvest House Publishers v. Local Church, 190 S.W.3d 204, 212 (Tex. App.-Houston [1st Dist.] 2006, pet. denied) (citing Sands v. Living Word Fellowship, 34 P.3d 955, 960 (Alaska 2001)). Thus, the ecclesiastical abstention doctrine bars any defamation claim arising from these statements.
Next, we must consider Bookout's statement that Shelley is a "sodomite." The applicability of the ecclesiastical abstention doctrine to this statement is not as clear-cut. "Sodomite" is not a strictly religious label and can be defined in purely secular terms.
Finally, we consider the allegedly defamatory statements contained in the termination letter sent to Shelley.
b. Declaratory Relief
Chapter 37 of the Texas Civil Practice & Remedies Code provides that
Tex. Civ. Prac. & Rem. Code Ann. § 37.004(a). "Chapter 37's stated purpose is `to settle and to afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations.'" Allstate Ins. Co. v. Irwin, 627 S.W.3d 263, 271 (Tex. 2021) (quoting Tex. Civ. Prac. & Rem. Code Ann. § 37.002(b)).
In their amended petition, Appellees seek a declaratory judgment that:
Thus, at the heart of Appellees' request for declaratory relief is whether the Shelley Group or Appellants are the duly elected and appointed members of Stedfast's board of directors.
Applying the ecclesiastical abstention doctrine to Appellees' request for declaratory relief highlights the indistinct nature of "the line between required judicial action and forbidden judicial intrusion." Thiagarajan, 430 S.W.3d at 595. On one hand, adjudication of this cause of action will require the examination of church documents and organizational structures, and given the nature of the declaratory relief sought, the outcome of this cause of action will, in essence, decide who has authority to manage and act on behalf of Stedfast. This, at first blush, might lead one to conclude that it would be barred as an improper intrusion into matters of ecclesiastical government. See, e.g., In re Diocese of Lubbock, 624 S.W.3d at 508-09. However, because the resolution of this cause of action does not turn on matters of an ecclesiastical or inherently religious nature but, rather, hinges on the interpretation and verification of corporate documents—including Stedfast's bylaws and board minutes—and the Texas Business Organizations Code, the trial court may properly exercise jurisdiction. See Ceglar v. Christ's Harbor Church, No. 13-19-00034-CV, 2020 WL 948380, at *2 (Tex. App.-Corpus Christi-Edinburg, Feb. 27, 2020, pet. denied) (mem. op.) ("Under [a neutral principles of law] approach, a court may interpret church documents in purely secular terms without relying on religious precepts in resolving the conflict."); Lacy, 132 S.W.3d at 123 (same).
An examination of the specific declaratory relief sought by Appellees reveals that this cause of action is, at its core, a dispute over corporate governance, not religious or doctrinal matters. See Iglesia Pentecostal Filadelfia, Inc. v. Rodriguez, No. 13-20-00012-CV, 2021 WL 6129316, at *4 (Tex. App.-Corpus Christi-Edinburg Dec. 29, 2021, no pet.) (mem. op.) ("A court may exercise jurisdiction over a [controversy] if it can apply neutral principles of law that will not require inquiry into matters such as religious doctrine." (first citing Westbrook v. Penley, 231 S.W.3d 389, 398-400 (Tex. 2007); then citing Dean, 994 S.W.2d at 395; and then citing Ceglar, 2020 WL 948380, at *2)).
The relief sought in items (a) and (b) on the list of Appellees' requested declaratory relief pertains to Stedfast's basic organizational structure and purpose, which can be readily determined by reviewing its articles of incorporation and bylaws. The adjudication of the remaining items, (c) through (g), depends—at least primarily—upon the determination of whether the Shelley Group or Appellants are the rightful directors of Stedfast. Appellees have presented evidence in the form of corporate records, including board minutes, and affidavits to support their claim that the Shelley Group is the rightful board of directors. Appellants have challenged this evidence, specifically with respect to whether Leslye Romero signed the minutes from the January 2019 board meeting reflecting that she and the other then-current board members had been removed and replaced by Shelley, Edelmann, and Urbanek. Thus, the resolution of this central issue will involve examining and verifying corporate records and organizational documents and evaluating the credibility of witness testimony regarding corporate actions, all of which can be done on a purely secular basis by applying neutral principles of law. Cf. Masterson, 422 S.W.3d at 608 (holding dispute could be resolved by application of neutral principles of law where bylaws expressly governed the question presented). Crucially, its adjudication will not require the court to examine or resolve any questions touching upon matters of faith, doctrine, or church discipline.
Among the cases Appellants cite in support of their contention that the trial court lacks jurisdiction is our prior opinion in Dean. 994 S.W.2d at 394-95. However, Dean is distinguishable from the present case.
The present case is distinguishable because while Dean was principally concerned with the termination of a pastor, the issue of Shelley's termination is not directly at issue. Indeed, Appellees' petition contains no allegation that Shelley was discharged, much less wrongfully discharged. While Appellees seek a declaratory judgment that "Shelley is the duly appointed and ordained [p]astor of Stedfast," this determination turns on the antecedent issue of whether Appellants or the Shelley Group is Stedfast's true board of directors. If, as Appellees claim, Appellants are not the duly elected members of Stedfast's board, then the termination letter that they caused to be sent to Shelley would be of no force or effect, and since Shelley's original appointment as Stedfast's pastor in 2019 is not in dispute, he would therefore continue to be "the duly appointed and ordained [p]astor of Stedfast." Thus, unlike in Dean, the trial court will not be required to involve itself in the inherently ecclesiastical process of determining whether the church members desire to sever their relationship with their pastor; rather, the court will only be required to resolve the antecedent issue of corporate governance, which, as noted above, can be accomplished by applying neutral principles of law to review and verify Stedfast's organizational documents and corporate records, including board minutes. Cf. Masterson, 422 S.W.3d at 608.
The Anderson case, which Appellants also cite in support of their argument for ecclesiastical abstention, is likewise distinguishable. 446 S.W.3d at 91. As Appellants point out in their briefing, Anderson's facts are, in many respects, "eerily reminiscent" of the present case: both involve the attempted ouster of a pastor of a non-hierarchical church incorporated as a nonprofit under the laws of Texas by a board of directors with disputed membership. Id. at 89-90. However, there are two significant differences. First, unlike the present case, in Anderson, the pastor's termination was directly at issue as the pastor sought declaratory relief that his termination was void— relief not sought by Appellees here. Id. Second, and more importantly, the pastor in Anderson had argued and presented evidence showing that the church's bylaws did not permit the board of directors to terminate him. Id. at 90. As one witness testified, "whether [the pastor] stays or goes is something for the church members to decide." Id. This lack of board authority was central to the Anderson court's ruling, as it held that because the bylaws contained no provision regarding the termination of a minister, the court could not "merely construe the bylaws under neutral principles of law to resolve the parties' dispute." Id. at 94. Here, no such challenge to the board's authority has been raised. While Appellees seek declaratory relief that Appellants are not duly elected members of Stedfast's board, they do not question whether a properly elected board would have the authority to terminate Shelley.
In sum, because the court can adjudicate Appellees' request for declaratory relief by applying neutral principles of law to review and verify Stedfast's organizational documents and corporate records, including board minutes, the trial court may properly exercise jurisdiction over this cause of action. See Masterson, 422 S.W.3d at 606; cf. Lee v. Paik, No. 05-17-01406-CV, 2019 WL 1033869, at *1-3 (Tex. App.-Dallas Mar. 5, 2019, no pet.) (mem. op.) (affirming declaratory judgment regarding, inter alia, the composition of the board of trustees of a church incorporated as a nonprofit corporation under the Texas Business Organizations Code and the termination of the church's pastor that contained the trial court's specific finding that "the Court need not (and did not) refer to any ecclesiastical law or theological doctrine in making its determination in this case").
Conversion is "the wrongful exercise of dominion and control over another's property in denial of or inconsistent with his rights." Green Int'l, Inc. v. Solis, 951 S.W.2d 384, 391 (Tex. 1997). "To establish conversion of personal property, a plaintiff must prove that: (1) the plaintiff owned or had legal possession of the property or entitlement to possession; (2) the defendant unlawfully and without authorization assumed and exercised dominion and control over the property to the exclusion of, or inconsistent with, the plaintiff's rights as an owner; and (3) the plaintiff suffered injury." Lopez v. Lopez, 271 S.W.3d 780, 784 (Tex. App.-Waco 2008, no pet.) (op. on reh'g) (first citing United Mobile Networks, L.P. v. Deaton, 939 S.W.2d 146, 147-48 (Tex. 1997); and then citing Apple Imports, Inc. v. Koole, 945 S.W.2d 895, 899 (Tex. App.-Austin 1997, pet. denied) (op. on reh'g)).
Appellees' conversion claim is based on Appellants' actions to assume control of Stedfast's bank accounts, which contained approximately $125,000 in deposits, and to pay $40,000 of those funds to Appellants' counsel. Thus, Appellees' conversion claim—like most of their requests for declaratory relief—turns on the issue of which slate of board members—Appellants or the Shelley Group—is the rightful one. For if Appellants are the duly elected members of Stedfast's board, then their exercise of dominion and control over Stedfast's bank accounts would be neither unlawful nor unauthorized. Since Appellees' conversion and declaratory judgment causes of action revolve around the same central issue, our ecclesiastical abstention analysis is the same: because the court can resolve the dispute regarding the membership of Stedfast's board by applying neutral principles of law to review and verify Stedfast's organizational documents and corporate records, including board minutes, the trial court may properly exercise jurisdiction. See Masterson, 422 S.W.3d at 606. Indeed, a conversion claim is, at its core, a property dispute, which the Texas Supreme Court has expressly declared to be a matter courts can decide using the neutral-principles methodology. See In re Diocese of Lubbock, 624 S.W.3d at 513 ("Under the neutral-principles methodology, `courts decide non-ecclesiastical issues such as property ownership based on the same neutral principles of law applicable to other entities. . . .'" (quoting Masterson, 422 S.W.3d at 596)).
Having applied the ecclesiastical abstention doctrine to Appellees' causes of action, we sustain in part and overrule in part Appellants' first issue. We conclude that under the ecclesiastical abstention doctrine the trial court lacks subject matter jurisdiction over Appellees' defamation claim to the extent that it is based on Bookout's alleged statements that Stedfast is a "cult" and that Shelley is a "cult leader." Similarly, Bookout's alleged statements referring to Shelley as a "sodomite" or "suggest[ing] that [Shelley] engage[s] in sexual activities that are condemned by the doctrines of [his] [c]hurch" are not actionable. However, the trial court may properly exercise jurisdiction over the remainder of Appellees' defamation claim as well as their causes of action for declaratory relief and conversion.
B. The Texas Citizens Participation Act (TCPA)
Having determined that, though the ecclesiastical abstention doctrine prohibits Appellees from relying on certain statements to support their defamation claim, the trial court may nevertheless properly exercise subject matter jurisdiction over all of Appellees' causes of action, we must now consider whether any of these claims must be dismissed under the TCPA.
1. Standard of Review
We review de novo a trial court's denial of a TCPA motion to dismiss. Robert B. James, DDS, Inc. v. Elkins, 553 S.W.3d 596, 603 (Tex. App.-San Antonio 2018, pet. denied). In reviewing a ruling on a TCPA motion, "[w]e view the pleadings and evidence in the light most favorable to the nonmovant." Id.
We also review questions of statutory construction de novo. See ExxonMobil Pipeline Co. v. Coleman, 512 S.W.3d 895, 899 (Tex. 2017); see also Adams v. Starside Custom Builders, LLC, 547 S.W.3d 890, 897 (Tex. 2018) ("In TCPA appeals, we have decided whether communications are matters of public concern under a de novo standard of review, suggesting that the determination is one of law."). Our objective is to "ascertain and give effect to the Legislature's intent as expressed by the language of the statute." State ex rel. Best v. Harper, 562 S.W.3d 1, 11 (Tex. 2018) (quoting City of Rockwall v. Hughes, 246 S.W.3d 621, 625 (Tex. 2008)). When a statute does not define a key term, we give that term its "common, ordinary meaning unless a contrary meaning is apparent from the statute's language." Tex. State Bd. of Exam'rs of Marriage & Fam. Therapists v. Tex. Med. Ass'n, 511 S.W.3d 28, 34 (Tex. 2017). To determine a word's common, ordinary meaning, we look first to its dictionary definitions. Id. at 35. "[I]f an undefined term has multiple common meanings . . . we will apply the definition most consistent with the context of the statutory scheme." Thompson v. Tex. Dep't of Licensing & Regul., 455 S.W.3d 569, 571 (Tex. 2014).
In addition to these general rules of statutory construction, we must adhere to the express directions for construction contained within the TCPA itself. See State ex rel. Best, 562 S.W.3d at 11. Thus, we construe the TCPA "liberally to effectuate its purpose and intent fully." Tex. Civ. Prac. & Rem. Code Ann. § 27.011(b).
2. The Background and Structure of the TCPA
The TCPA is popularly known as the Texas Anti-SLAPP statute, referring to Strategic Lawsuits Against Public Participation. Its stated purpose "is to encourage and safeguard the constitutional rights of persons to petition, speak freely, associate freely, and otherwise participate in government to the maximum extent permitted by law and, at the same time, protect the rights of a person to file meritorious lawsuits for demonstrable injury." Id. § 27.002. To effectuate this purpose, the TCPA provides "an expedited procedure for the early dismissal of groundless legal actions that impinge on First Amendment rights." Greer v. Abraham, 489 S.W.3d 440, 442 (Tex. 2016).
This court has previously described the three-part burden-shifting analysis that must be undertaken once a motion to dismiss is filed under the TCPA:
Miller v. Watkins, No. 02-20-00165-CV, 2021 WL 924843, at *7 (Tex. App.-Fort Worth Mar. 11, 2021, no pet.) (mem. op.).
3. Application to the Present Case
Appellants moved to dismiss all of Appellees' claims under the TCPA, asserting that Appellees' defamation cause of action is based on Appellants' right of free speech and that Appellees' declaratory judgment and conversion causes of action are based on Appellants' right of association. While Appellees concede that their defamation claim falls within the scope of the TCPA, they contend that the Act does not apply to their causes of action for declaratory judgment and conversion. Thus, though we will need to determine whether Appellants have satisfied their burden to show that Appellees' declaratory judgment and conversion claims are "based on or in response to" Appellants' rights of association, we can dispense with this first step of the TCPA burden-shifting analysis with respect to Appellees' defamation cause of action.
a. Defamation: Claims against Gallagher and Romero
In their third issue, Appellants assert that the trial court erred when it denied Appellants' motion to dismiss Appellees' defamation cause of action against Gallagher and Romero. In their brief, Appellees claim that their defamation cause of action was directed solely at Bookout and that they do not assert a defamation claim against Gallagher or Romero. Appellants—not satisfied with what they label Appellees' "unorthodox nonsuit" because it would deny them the possibility of an award of attorney's fees or sanctions that comes with dismissal under the TCPA—request that any defamation claims against Gallagher and Romero be dismissed. Thus, before we turn our focus to whether Appellees have carried their burden under the TCPA to present clear and specific evidence to establish a prima facie case of defamation against Bookout, we must first consider whether the trial court erred by failing to dismiss Appellees' supposed defamation claims against Gallagher and Romero.
Appellants assert that, notwithstanding Appellees' recent protestations to the contrary, Appellees' amended petition put Gallagher and Romero on notice that they would have to defend against a defamation suit. Appellants base this assertion on the following allegation contained in the "Factual Background" section of Appellees' amended petition:
For their part, Appellees contend that their petition never specified a cause of action for defamation against either Gallagher or Romero. This contention is based on the wording used to assert their defamation cause of action, which provides, in relevant part, that "Plaintiff would show that Defendants, one or all of them, intentionally and knowingly published false and defamatory statements about Plaintiff Jonathan Shelley, Plaintiff Stedfast[,] and others." [Emphasis added.] Appellees assert that because the phrase "Defendants, one or all of them" could refer to fewer than all Appellants and because the petition's factual allegations and the arguments in Appellees' response to the motion to dismiss made it clear that their defamation cause of action was directed solely at Bookout, the trial court had no basis for dismissing a nonexistent defamation claim against Gallagher or Romero.
Appellees argue that we should liberally construe their petition in their favor and look to their intent in deciding this issue. Given that the situation presented here is analogous to that presented by a motion to dismiss under Rule 91a of the Texas Rules of Civil Procedure,
Because Appellants' request for dismissal of the supposed defamation claims against Gallagher and Romero was procedurally defective, we need not decide whether to accept Appellees' view of "liberal construction." In their motion to dismiss, Appellants did not request that Appellees' supposed defamation claims against Gallagher and Romero be dismissed on the grounds that they lack a basis in law.
Moreover, we question whether a motion to dismiss under the TCPA would have been the proper vehicle by which to seek the relief requested by Appellants. As stated above, a party invoking the TCPA must demonstrate that a "legal action" has been brought against it that is "based on or is in response to" an exercise of the rights of free speech, petition, or association protected by the Act. Tex. Civ. Prac. & Rem. Code Ann. § 27.003(a). Where, as here, a defendant seeks dismissal of a defamation claim on the grounds that the plaintiff's petition contains no allegations that the defendant made any defamatory statements, it is difficult to see how the defendant could show that the legal action was based on his exercise of free speech. In such an instance, the plaintiff has not alleged that any statements made by the defendant were defamatory, nor can the defendant point to any specific "speech" upon which the legal action is based. Thus, it would appear that the defendant could not properly invoke the TCPA. However, such a defendant is not without remedies. If, given the ambiguity in Appellees' petition, Gallagher and Romero were unsure as to whether they would be required to defend against a defamation suit, they could have filed special exceptions under Rule 91 or filed a motion to dismiss under Rule 91a on the grounds that the defamation claims against them had no basis in law. Tex. R. Civ. P. 91, 91a.1.
In sum, because Appellants did not specifically request the dismissal of the defamation claims against Gallagher and Romero on the grounds that they lack a basis in law in their TCPA motion to dismiss—or in a separate motion to dismiss under Rule 91a—the trial court did not err in declining to grant this relief.
We overrule Appellants' third issue.
b. Defamation Step Two: Appellees' Prima Facie Case against Bookout
In their fourth issue, Appellants assert that the trial court erred by denying their motion to dismiss Appellees' defamation cause of action against Bookout. Because Appellees concede that the TCPA applies to their defamation cause of action, we begin our TCPA analysis with the question of whether Appellees carried their burden under the second step to present clear and specific evidence to establish a prima facie case of defamation against Bookout. We conclude that they did.
(i) Our analysis of the evidence of Appellees' prima facie case will be governed by the following principles.
As we have previously recognized, a specialized body of law has emerged to define the prima facie burden a party responding to a TCPA motion to dismiss bears, to define the words used by the Act, and to explain the Act's concepts of proof. Miller, 2021 WL 924843, at *8. The salient governing principles are as follows:
(ii) There are four elements of defamation.
"Defamation's elements include: (1) the publication of a false statement of fact to a third party, (2) that was defamatory concerning the plaintiff, (3) with the requisite degree of fault, and (4) damages, in some cases." Lipsky, 460 S.W.3d at 593 (first citing WFAA-TV, 978 S.W.2d at 571; and then citing Waste Mgmt. of Tex., 434 S.W.3d at 146 n.7). As noted above, "[a] statement is defamatory if it tends to harm the reputation of another so as to lower him in the estimation of the community or to deter third persons from associating or dealing with him, or if it tends to expose him to public hatred, contempt, or ridicule." Hanssen, 938 S.W.2d at 92 (citing Hardwick, 881 S.W.2d at 197).
The "requisite degree of fault" depends on whether the person defamed is a private individual or a public figure. Lipsky, 460 S.W.3d at 593. "A private individual need only prove negligence, whereas a public figure or official must prove actual malice." Id. (citing WFAA-TV, 978 S.W.2d at 571). In the context of a defamation claim, "actual malice" means that the statement was made with knowledge of its falsity or with reckless disregard for its truth. Id. (citing Huckabee v. Time Warner Ent. Co., 19 S.W.3d 413, 420 (Tex. 2000)).
Finally, with respect to damages, they must be pleaded and proven unless the statements at issue are defamatory per se. Id. (citing Waste Mgmt. of Tex., 434 S.W.3d at 146 n.7). For a statement to be defamatory per se, it must fall within one of four categories: (1) imputation of a crime; (2) imputation of a loathsome disease; (3) injury to a person's office, business, profession, or calling; or (4) imputation of sexual misconduct. Gray, 941 S.W.2d at 329.
(iii) In reviewing whether Appellees established a prima facie claim for defamation, we do not require prima facie proof that every statement allegedly made by Appellants was defamatory.
As we recently clarified, we are not required to determine that every statement that Bookout made is defamatory in order to conclude that Appellees carried their burden to prove that they have a viable cause of action for defamation. Miller, 2021 WL 924843, at *9 (citing Stone v. Melillo, No. 14-18-00971-CV, 2020 WL 6143126, at *5 (Tex. App.-Houston [14th Dist.] Oct. 20, 2020, no pet.) (mem. op.)). Instead, the inquiry is whether Appellees presented sufficient proof to establish a viable defamation cause of action, and that task requires only that we determine whether any of the statements made by Bookout were defamatory.
Id. (quoting Stone, 2020 WL 6143126, at *6). Thus, our analysis will focus on each element of defamation, not each alleged defamatory statement.
(iv) With regard to the first element of defamation, there is prima facie proof that Bookout published a false statement of fact about Shelley to a third party.
The principles that guide the determination of whether Appellees have established prima facie proof of the first element of their defamation claim are as follows:
Appellees have shown evidence that Bookout made at least two actionable statements of fact.
Appellants assert that Appellees cannot show that Bookout made any actionable statements of fact because the general tenor of Bookout's YouTube channel is satirical. The Texas Supreme Court has stated that in defamation cases involving satire or parody, "the test is whether the publication could be reasonably understood as describing actual facts." New Times, Inc. v. Isaacks, 146 S.W.3d 144, 157 (Tex. 2004) (citing Pring v. Penthouse Int'l, Ltd., 695 F.2d 438, 442 (10th Cir. 1982)). This inquiry is an objective one, and in applying this test, "courts must analyze the words at issue with detachment and dispassion, considering them in context and as a whole, as the reasonable reader would consider them." Id. at 157-58.
Analyzing Bookout's videos under this standard, it is clear that they include actionable statements of fact. For example, according to Shelley, Bookout's exact statements concerning Shelley's alleged child abuse were as follows:
By any objective measure, this excerpt contains statements of fact. Bookout is, in essence, testifying as an eyewitness to alleged child abuse. It is difficult to conceive of a more clear-cut example of a statement that could be reasonably understood as describing actual facts. Thus, we reject Appellants' argument that the supposed satirical nature of Bookout's videos prevents Appellees from proving the first element of their defamation claim.
Moreover, the statements were "published." It is undisputed that Bookout made these statements in videos that he posted to YouTube, where they were viewed by people capable of understanding their defamatory import. This satisfies the "publication" requirement. Cf. Hosseini v. Hansen, No. 04-17-00790-CV, 2019 WL 1262276, at *3 (Tex. App.-San Antonio Mar. 20, 2019, pet. denied) (mem. op.) (holding statements posted on Facebook that were "liked" and "shared" satisfied the publication requirement for a defamation claim).
With respect to falsity, Shelley has denied ever physically abusing his children or embezzling funds from Stedfast. As we have previously recognized, at the TCPA motion-to-dismiss stage where one party claims an event occurred and the other claims it did not, a plaintiff's denial can satisfy his burden to present prima facie evidence of falsity. Miller, 2021 WL 924843, at *10; see also Van Der Linden v. Khan, 535 S.W.3d 179, 198 (Tex. App.-Fort Worth 2017, pet. denied) (holding plaintiff "met his burden under chapter 27 to establish by clear and specific evidence a prima facie case for the essential element of falsity" by denying the defendant's allegations that he had given money to the Taliban or had told the defendant that he had). Here, as in Miller, "the clash between the statement that an action occurred and the denial that it did is evidence that the person making the statement spoke falsely." Miller, 2021 WL 924843, at *11.
Appellants argue that Shelley's denials are insufficient to satisfy Appellees' burden because Appellees could have offered additional evidence such as Stedfast's financial records to prove the falsity of the embezzlement claim.
(v) With regard to the second element of defamation, there is prima facie proof that Bookout's statements about Shelley were reasonably capable of a defamatory meaning.
The elementary question in establishing that a statement is defamatory turns on whether it "tends [ ] to harm the reputation of another as to lower him in the estimation of the community or to deter third persons from associating or dealing with him." Innovative Block of S. Tex., Ltd. v. Valley Builders Supply, Inc., 603 S.W.3d 409, 417 (Tex. 2020) (quoting Restatement (Second) of Torts § 559 (Am. L. Inst. 1977)). Answering this question involves two independent steps: (1) determining whether the meaning that the plaintiff assigns to the statement is reasonably capable of arising from the text of which the plaintiff complains and (2) determining whether the meaning ascribed to the statement by the plaintiff is reasonably capable of defaming the plaintiff. Tatum, 554 S.W.3d at 625. Whether a statement is defamatory is a legal question. Innovative Block, 603 S.W.3d at 419-20.
The Texas Supreme Court recently established new categories to address these questions and abandoned—other than for the purpose of presuming general damages—the long-used categories of defamation per se and per quod as descriptors of whether a statement was defamatory "by its text alone."
Here, Appellees assert that Bookout has accused Shelley of physically abusing his children and of embezzling money from Stedfast, both of which are crimes. Because being accused of a crime is acknowledged as being obviously harmful to one's reputation, these accusations are reasonably capable of defaming Shelley. See, e.g., Lipsky, 460 S.W.3d at 596. Thus, our analysis of whether Appellees have satisfied their burden will focus on the first step of the process promulgated by the supreme court—whether the meaning that Appellees assign to Bookout's publications is reasonably capable of arising from the statements of which they complain. See Tatum, 554 S.W.3d at 625.
Bookout's accusation that Shelley physically abused his children is explicitly defamatory and is thus a classic example of textual defamation. See id. at 626-27. Bookout's statement that he personally witnessed Shelley slap his child "full power" requires no extrinsic evidence to perceive its defamatory meaning. Thus, this statement is defamatory.
Unlike the accusation of child abuse, Bookout's accusation of embezzlement is not explicit. The allegedly defamatory statement upon which Appellees rely is contained in a YouTube video Bookout posted in August 2021. In the video, Bookout remarks that Shelley "got a house remodel out of the deal," which Shelley interprets as implying that he improperly used church money to pay for the remodeling of his home. As Appellants have pointed out, this statement is not defamatory on its face. The question then is whether this facially innocent statement "becomes defamatory when considered in light of `other facts and circumstances sufficiently expressed before' or otherwise known to" the viewers of Bookout's YouTube channel. Id. at 626 (quoting Snider v. Leatherwood, 49 S.W.2d 1107, 1109 (Tex. App.-Eastland 1932, writ dism'd w.o.j.)). We believe that it does. As Bookout acknowledged in the proceedings below, there had been rumors as early as 2019 that Shelley and his mentor Steve Anderson had been stealing money from the church to pay for Anderson's house remodel and that people both inside and outside the church had been questioning Shelley's motivation for becoming Stedfast's pastor. Moreover, Bookout further acknowledges that he posted a video on his YouTube channel in March or April 2020 of Shelley addressing these rumors. According to Bookout, given the rumors of financial misconduct, church members asked him to investigate Shelley's house remodel by getting in touch with the contractor performing the work on Shelley's home, and Bookout did, in fact, obtain images of checks Shelley had provided to the contractor. Bookout proceeded to display these check images in a YouTube video entitled "House Remodel" in which he, in his own words, "juxtapose[d] the check images with statements by . . . Shelley to highlight [the] peculiarity of the content and timing [of] his statements regarding rumored church theft for Anderson's remodel, and his own actual house remodel being conducted shortly thereafter." Given the rumors of financial misconduct and Bookout's previously posted YouTube content, a viewer of Bookout's YouTube channel could reasonably be expected to perceive Bookout's statement that Shelley "got a house remodel out of the deal" as implying that Shelley had embezzled funds from Stedfast. Therefore, this statement is defamatory.
(vi) With regard to the third element of defamation, there is prima facie proof that Bookout acted with the requisite degree of fault.
As noted above, the "requisite degree of fault" that a defamation plaintiff must prove depends on whether the person defamed is a private individual or a public figure. Lipsky, 460 S.W.3d at 593. "A private individual need only prove negligence, whereas a public figure or official must prove actual malice." Id. (citing WFAA-TV, 978 S.W.2d at 571). As Appellees concede that they are limited-purpose public figures, they are required to prove that Bookout acted with actual malice. See WFAA-TV, 978 S.W.2d at 573.
We have recently discussed the imprecise standards governing the actual-malice determination, which turns on the subjective awareness of the defendant regarding the truth of the statements in question but is also impacted to a certain degree by an injurious motive, though that motive is not determinative. Miller, 2021 WL 924843, at *15. In Miller, we quoted language from an opinion of the Tyler Court of Appeals exploring the parameters of the actual-malice determination, which bears repeating here:
Miller, 2021 WL 924843, at *15-16 (quoting MediaOne, L.L.C. v. Henderson, 592 S.W.3d 933, 942-43 (Tex. App.-Tyler 2019, pet. denied)). Actual malice must be established by clear and convincing evidence. Bentley, 94 S.W.3d at 596.
Appellees have presented prima facie proof that Bookout acted with actual malice. First, as Appellees point out, Bookout has acknowledged that the contractor who remodeled Shelley's home provided him with copies of the checks Shelley wrote to pay for the remodeling services and that these checks were written on Shelley's personal account, not Stedfast's. Thus, at the time Bookout made the statement implying that Shelley had embezzled funds to pay for his house remodel, Bookout was in possession of evidence that, though short of conclusive proof of innocence, was nonetheless exculpatory.
Moreover, with regard to Bookout's statement that he witnessed Shelley slap his child "full power" across the face, Shelley categorically denies that this event ever took place. As we have previously recognized, "actual malice may be inferred if the plaintiff demonstrates that the defamatory statement had no basis in fact, was fabricated by the defendant, or was the product of her imagination." Miller, 2021 WL 924843, at *17 (quoting Ratner v. Kohler, Civ. No. 17-00542 HG-KSC, 2018 WL 1055528, at *9 (D. Haw. 2018) (order)); see also Bentley, 94 S.W.3d at 596 ("Professions of good faith will be unlikely to prove persuasive, for example, where a story is fabricated by the defendant [or] is the product of his imagination. . . ." (quoting St. Amant v. Thompson, 390 U.S. 727, 732, 88 S.Ct. 1323, 1326 (1968))). Thus, where, as here, two parties have dramatically opposed versions of events, a plaintiff's claim of falsity is evidence both that the statement was false and that the defendant necessarily knew it was false at the time he said it because—if the plaintiff's version of events is correct—it never occurred. See Miller, 2021 WL 924843, at *17 (citing Chastain v. Hodgdon, No. 16-2087, 2016 WL 5109944, at *2 (D. Kan. Sept. 20, 2016) (mem. & order)).
Further, though an injurious motive is not determinative of actual malice, it is a factor that may be considered. See Campbell, 471 S.W.3d at 629 (quoting Bentley, 94 S.W.3d at 597). Here, Appellees have presented evidence that Bookout had a falling out with Shelley and that, in addition to launching what Shelley describes as a "smear campaign" against him, Bookout posted documents containing Shelley's social security number and other sensitive personal information on YouTube accompanied by the caption "Who wants to open a credit card?" This evidence raises an inference of an injurious motive and, in combination with the other evidence, is relevant to Bookout's subjective belief regarding whether his statements were true. Thus, the record supports an inference that Bookout acted with actual malice.
(vii) Because Bookout's statements constitute defamation per se, Appellees are not required to prove damages.
As we noted above, though the terms defamation per se and defamation per quod have fallen out of favor in describing the defamatory sting of a statement, they remain viable in determining whether the statement produces a presumption of damage.
With certain qualifications,
Here, Appellees have presented prima facie evidence that Bookout accused Shelley of two potential crimes: child abuse and embezzlement. We therefore consider these statements to be defamatory per se and conclude that the presumption of general damages frees Appellees from having to present prima facie proof of damages.
c. Defamation Step Three: Bookout's Affirmative Defenses
Having determined that Appellees have presented clear and specific evidence establishing a prima facie case for each essential element of their defamation claim, we must now consider whether Bookout has established an affirmative defense that would entitle him to judgment as a matter of law. Tex. Civ. Prac. & Rem. Code Ann. § 27.005(c)-(d). In the trial court, Bookout asserted two affirmative defenses to Appellees' defamation claim: statute of limitations and qualified privilege.
None of Appellants' briefing makes any reference whatsoever to the defense of qualified immunity. Thus, this defense has been waived. See Tex. R. App. P. 38.1(i) ("The brief must contain a clear and concise argument for the contentions made, with appropriate citations to authorities and to the record."); Jackson v. Vaughn, 546 S.W.3d 913, 922 (Tex. App.-Amarillo 2018, no pet.) (finding issue waived due to inadequate briefing); City of Alton v. City of Mission, 164 S.W.3d 861, 870 (Tex. App.-Corpus Christi-Edinburg 2005, pet. denied) (holding appellant's asserted fact issue related to an affirmative defense had been waived due to inadequate briefing).
Moreover, while Appellants assert in their reply brief that Bookout's alleged statements accusing Shelley of child abuse are barred by the statute of limitations, this argument was not raised in their initial brief in this court. The Texas Rules of Appellate Procedure do not allow parties to add a new issue in their reply brief that was not discussed in their original brief. See Tex. R. App. P. 38.3; Stovall & Assocs. v. Hibbs Fin. Ctr., Ltd., 409 S.W.3d 790, 803 (Tex. App.-Dallas 2013, no pet.); Howell v. Tex. Workers' Comp. Comm'n, 143 S.W.3d 416, 439 (Tex. App.-Austin 2004, pets. denied); see also Molho v. Weichert, Realtors Reichardt & Assocs., No. 14-11-00861-CV, 2012 WL 6631732, at *3 n.6 (Tex. App.-Houston [14th Dist.] Dec. 20, 2012, pet. denied) (mem. op.) ("Arguments may not be raised for the first time in a reply brief." (citing Brown v. Green, 302 S.W.3d 1, 13-14 (Tex. App.-Houston [14th Dist.] 2009, no pet.))). Thus, this defense has also been waived for purposes of this appeal. See Stovall, 409 S.W.3d at 803 ("[A]n issue raised for the first time in a reply brief is ordinarily waived and may not be considered by this Court.").
Even if the limitations defense had not been waived, it still would not entitle Bookout to judgment as a matter of law. By Appellants' own admission, the limitations defense only applies to Bookout's alleged statements accusing Shelley of child abuse, not his statement implying that Shelley embezzled money from Stedfast to pay for a home remodel. Thus, even assuming Bookout's limitations defense were valid, Appellees would still have a viable defamation claim, and Bookout would not be entitled to judgment as a matter of law. See Stone, 2020 WL 6143126, at *6-7 (holding that a defamation plaintiff can meet its burden under the second step of the TCPA by presenting prima facie proof of any statement upon which the defamation claim is based and concluding that "each alleged defamatory statement is not a separate `legal claim' under the TCPA").
Because Appellees have presented clear and specific evidence establishing a prima facie case for each essential element of their defamation claim and Bookout has not established an affirmative defense that would entitle him to judgment as a matter of law, we overrule Appellants' fourth issue.
d. Declaratory Relief and Conversion Causes of Action Step One: Does the TCPA Apply?
In their fifth and sixth issues, Appellants assert that the trial court erred in denying their motion to dismiss Appellees' causes of action for declaratory relief and conversion. Because Appellees contend that the TCPA does not apply to these causes of action, we must first address whether Appellants have satisfied their initial burden to demonstrate that these claims are "based on" or "in response to" an exercise of Appellants' rights of free speech, petition, or association as defined in the Act. Tex. Civ. Prac. & Rem. Code § 27.003(a).
Appellants argue that Appellees' declaratory judgment and conversion causes of action are subject to the TCPA because they are "based on" or were filed "in response to" Appellants' exercise of the right of association. See id. Under the TCPA, "`[e]xercise of the right of association' means to join together to collectively express, promote, pursue, or defend common interests relating to a governmental proceeding or a matter of public concern." Id. § 27.001(2). "`Matter of public concern' means a statement or activity regarding: (A) a public official, public figure, or other person who has drawn substantial public attention due to the person's official acts, fame, notoriety, or celebrity; (B) a matter of political, social, or other interest to the community; or (C) a subject of concern to the public." Id. § 27.001(7). Thus, the applicability of the TCPA to these causes of action turns on whether Appellants, by (1) holding a meeting to appoint Gallagher and Bookout as directors of Stedfast and to appoint themselves as officers, (2) purporting to terminate Shelley for cause, (3) seizing control of Stedfast's bank accounts, and (4) seeking to investigate Stedfast's finances and wind down its affairs, joined together to collectively pursue or defend "common interests" relating to "a matter of public concern."
Appellees, relying on our decision in Kawcak v. Antero Resources Corporation, 582 S.W.3d 566 (Tex. App.-Fort Worth 2019, pet. denied), assert that Appellants have not carried their burden to show that the TCPA applies to Appellees' declaratory judgment and conversion claims because they have not shown that they were acting to pursue or defend "common interests." In Kawcak, following a "straightforward but admittedly long" analysis, we determined that the word "common" as used in the TCPA "requires more than two tortfeasors conspiring to act tortiously for their own selfish benefit." Id. at 573, 588. Appellees argue that Appellants have only shown that they joined together to pursue their own selfish interests and that there is no evidence in the record to suggest that the supposedly "common interest" to dissolve Stedfast was shared by anyone other than Appellants themselves. Thus, according to Appellees, the interests pursued or defended by Appellants are not "common" as defined by this court in Kawcak.
However, as Appellants point out, the present case is distinguishable from Kawcak. Unlike the appellant in Kawcak, who candidly admitted to conspiring to engage in tortious and illegal behavior,
Moreover, we do not view Appellees' status as public figures to be reasonably in doubt. Indeed, Appellees have conceded that they are, at a minimum, limited-purpose public figures under the standards relevant to their defamation claim, and they have not challenged Appellants' assertion that they are public figures for purposes of the TCPA. As Appellants point out, the management of Stedfast's affairs has been an ongoing topic of public discussion and has been the subject of several national news articles. Thus, there is evidence that the "common interests" Appellants joined together to defend or pursue relate to a "matter of public concern" as defined in the TCPA.
Further, it is clear that Appellees' causes of action for declaratory judgment and conversion are "based on" or were filed "in response to" Appellants' actions in joining together to investigate Stedfast's finances and wind down its affairs. Both causes of action center around whether Appellants or the Shelley Group are the rightful directors of Stedfast. But for Appellants' actions in joining together to assert control of Stedfast, neither cause of action would have been filed.
Thus, Appellants have met their burden to show that Appellees' declaratory judgment and conversion causes of action are "based on" or "in response to" Appellants' "exercise of the right of association" as defined in the TCPA. Tex. Civ. Prac. & Rem. Code Ann. §§ 27.001(2), .003(a). Accordingly, we must now proceed to the second step of our TCPA analysis of these claims.
e. Conversion Step Two: Prima Facie Case
Having determined that Appellants have satisfied their initial burden to invoke the TCPA as to Appellees' conversion and declaratory judgment claims, we must now—guided by the same principles set forth above
(i) There are three elements of conversion.
To prevail on a claim for conversion, a plaintiff must show that (1) he owned, possessed, or had the right to immediate possession of personal property; (2) the defendant unlawfully and without authorization exercised dominion or control over the property to the exclusion of, or inconsistent with, the plaintiff's rights; and (3) the plaintiff suffered injury.
(ii) With regard to the first element of conversion, there is prima facie evidence that Stedfast owned, possessed, or had the right to immediate possession of personal property.
There is ample record evidence to show—and Appellants do not dispute—that Stedfast maintained deposit accounts at Chase Bank, that Shelley and another church employee were the signatories on those accounts, and that Stedfast owned, possessed, or had the right to immediate possession of those funds. Thus, to the extent that Stedfast's bank accounts constitute personal property that may be the proper subject of a conversion claim,
(iii) With regard to the second element of conversion, there is prima facie evidence that Appellants unlawfully and without authorization exercised dominion or control over Stedfast's bank accounts.
It is also undisputed that in September 2021, Appellants exercised dominion or control over the accounts by taking action to remove Shelley as a signatory, by replacing him with Bookout, and by subsequently depositing the funds from these accounts into a new account at North Dallas Bank and Trust for which Bookout was the sole signatory. Thus, it is undisputed that Appellants exercised dominion or control over Stedfast's bank accounts. The issue then is whether Appellees have presented clear and specific evidence to show that Appellants' actions were "unlawful" and "without authorization." We conclude that they have.
Shelley's affidavit and Stedfast's corporate records, including board minutes, support Appellees' position that Appellants were not directors of Stedfast at the time that they changed the signatories on Stedfast's bank accounts. As this evidence is sufficient to support a rational inference that Appellants acted unlawfully and without authorization when they took control of Stedfast's bank accounts, Appellees have satisfied their burden under the second step of the TCPA. See Lipsky, 460 S.W.3d at 590.
(iv) With regard to the third element of conversion, there is prima facie evidence that Appellees suffered injury.
Generally, the injury suffered by a conversion plaintiff is the loss of the converted property; thus, the measure of damages is generally the fair market value of the property at the time of the conversion. See United Mobile Networks, 939 S.W.2d at 147-48 ("Generally, the measure of damages for conversion is the fair market value of the property at the time and place of the conversion."). Here, Appellees have presented evidence showing that Stedfast's bank accounts contained almost $140,000 at the time Appellants exercised control over them and that Appellants subsequently used $40,000 of these funds to pay their attorneys.
Therefore, we conclude that there is prima facie evidence that Appellees suffered injury.
(v) Appellees were not required to prove that they made a formal demand for the return of the funds.
In their briefing, Appellants make much of the fact that Appellees have presented no evidence that they made a formal demand for the return of the property. However, demand of return is not always required. See First State Bank, N.A. v. Morse, 227 S.W.3d 820, 827-28 (Tex. App.-Amarillo 2007, no pet.) (first citing Autry v. Dearman, 933 S.W.2d 182, 191-92 (Tex. App.-Houston [14th Dist.] 1996, writ denied); and then citing McVea v. Verkins, 587 S.W.2d 526, 531 (Tex. App.-Corpus Christi-Edinburg 1979, no writ)); Burns, 190 S.W.3d at 270 n.2 (citing Presley, 284 S.W.2d at 141); Bures v. First Nat'l Bank of Port Lavaca, 806 S.W.2d 935, 938 (Tex. App.-Corpus Christi-Edinburg 1991, no writ) (first citing McVea, 587 S.W.2d at 531; then citing Loomis v. Sharp, 519 S.W.2d 955, 958 (Tex. App.-Texarkana 1975, writ dism'd); then citing Neyland v. Brammer, 73 S.W.2d 884, 887 (Tex. App.-Galveston 1933, writ dism'd); and then citing Presley, 284 S.W.2d at 140-41)). Specifically, demand and refusal are not required if other evidence establishes the act of conversion, Burns, 190 S.W.3d at 270 n.2, if the demand would have been useless, McVea, 587 S.W.2d at 531, or if the defendant's acts amount to a clear repudiation of the owner's rights. Loomis, 519 S.W.2d at 958; Neyland, 73 S.W.2d at 887. Thus, demand of return is not a required element of a conversion claim. See Truitt, 2021 WL 5742083, at *5 (listing elements); O'Connor's Texas Causes of Action ch. 6, § 1.1 (2022) (same).
As the court explained in Burns, the purpose of demand and refusal is to demonstrate conversion in situations such as bailment where the exercise of unauthorized dominion or control over property cannot otherwise be shown:
190 S.W.3d at 270 n.2. Thus, when the act of conversion is clear, demand and refusal are not required. See id.; Bures, 806 S.W.2d at 938.
Here, Appellants' actions to remove Shelley as a signatory on the accounts and to replace him with Bookout—thereby denying Appellees access to the funds— constituted a clear repudiation of Appellees' rights. Accordingly, demand and refusal were not required.
f. Conversion Step Three: Affirmative Defenses
Having determined that Appellees have established a prima facie case for each essential element of their conversion claim by clear and specific evidence, we must now consider whether Appellants have established an affirmative defense that would entitle them to judgment as a matter of law.
In the trial court, Appellants asserted unclean hands as an affirmative defense to Appellees' conversion claim,
Because Appellees have presented prima facie proof of each essential element of their conversion claim and Appellants have not established an affirmative defense, the trial court did not err in denying Appellants' motion to dismiss this cause of action pursuant to the TCPA. Accordingly, we overrule Appellants' fifth issue.
g. Declaratory Judgment Step Two: Prima Facie Case
As noted above, having determined that Appellants have satisfied their initial burden to invoke the TCPA regarding Appellees' declaratory judgment cause of action, we must now—as step two of our TCPA analysis—consider whether Appellees have presented clear and specific evidence establishing a prima facie case for each essential element of this claim.
(i) There are two essential elements of a declaratory judgment cause of action.
The Uniform Declaratory Judgment Act (UDJA) provides that
Tex. Civ. Prac. & Rem. Code Ann. § 37.004(a). The UDJA "`is to be liberally construed and administered.'" Shannon v. Blair, No. 04-21-00257-CV, 2022 WL 4492801, at *3 (Tex. App.-San Antonio Sept. 28, 2022, no pet. h.) (mem. op.) (quoting Tex. Civ. Prac. & Rem. Code Ann. § 37.002(b)).
"There are two prerequisites for a declaratory judgment action: (1) there must be a real controversy between the parties and (2) the controversy must be one that will actually be determined by the judicial declaration sought."
(ii) Appellees have established both elements of their declaratory judgment cause of action by clear and specific evidence.
As Appellants concede, Appellees have presented evidence that there is a controversy. Indeed, as has been shown above, the controversy regarding whether Appellants or the Shelley Group are the duly elected members of Stedfast's board of directors is at the heart of this entire lawsuit. Thus, on the record before us, the existence of a controversy is unquestionable.
Moreover, the judicial declaration sought by Appellees will resolve this controversy. As set forth in more detail above,
Further, though not strictly necessary to avoid dismissal under the TCPA,
Accordingly, viewing—as we must—the pleadings and other evidence under Section 27.006(a) of the Texas Civil Practice & Remedies Code in the light most favorable to Appellees, we conclude that they have satisfied their step-two prima facie burden on both elements of their declaratory judgment claim.
h. Declaratory Judgment Step Three: Affirmative Defenses
Having determined that Appellees have established a prima facie case for each essential element of their request for declaratory relief by clear and specific evidence, we must now consider—as the third and final step in our TCPA analysis—whether Appellants have established an affirmative defense that would entitle them to judgment on this claim as a matter of law.
The sole affirmative defense asserted by Appellants in response to Appellees' declaratory judgment cause of action is laches. "There are two elements to a laches defense: (1) an unreasonable delay by the party asserting legal or equitable rights, and (2) a good faith change of position by another to his detriment because of the delay." SignAd, Ltd. v. BJZ Invs., LLC, 640 S.W.3d 611, 622 (Tex. App.-Houston [14th Dist.] 2022, pet. denied) (citing City of Fort Worth v. Johnson, 388 S.W.2d 400, 403 (Tex. 1964)). As an affirmative defense, laches must be properly pleaded and proved. Tex. R. Civ. P. 94; Knesek v. Witte, 754 S.W.2d 814, 816 (Tex. App.-Houston [1st Dist.] 1988, writ denied) (citing Culver v. Pickens, 176 S.W.2d 167, 170 (Tex. 1943)). Laches generally may be applied only in cases involving an equitable right and may not be used to resist the enforcement of a purely legal right. Wayne v. A.V.A. Vending, Inc., 52 S.W.3d 412, 415 (Tex. App.-Corpus Christi-Edinburg 2001, pet. denied); see also Att'y Gen. of Tex. ex rel. Ford v. Daurbigny, 702 S.W.2d 298, 300 (Tex. App.-Houston [1st Dist.] 1985, no writ) (holding laches is only available against an assertion of equitable rights, not a claim based on an express statutory duty).
Here, Appellants' laches defense fails for several reasons. First, Appellants failed to plead the defense as required by Rule 94—or even to raise it in their motion to dismiss. See Tex. R. Civ. P. 94; Knesek, 754 S.W.2d at 816. Rather, they raised it for the first time in their reply in support of the motion. As a result, the defense was waived, and we need not consider it. See Cont'l Homes of Tex., L.P. v. City of San Antonio, 275 S.W.3d 9, 15 (Tex. App.-San Antonio 2008, pet. denied) ("Failure to plead an affirmative defense generally waives it." (first citing Shoemake v. Fogel, Ltd., 826 S.W.2d 933, 937 (Tex. 1992); and then citing Komet v. Graves, 40 S.W.3d 596, 602 (Tex. App.-San Antonio 2001, no pet.))); see also Wyly, 502 S.W.3d at 907; Mei-Chiao Chen Wu, 2013 WL 4084721, at *5; LaRue, 167 S.W.3d at 876. Moreover, because laches generally may only be applied in cases involving an equitable right, Wayne, 52 S.W.3d at 415, we question its applicability to an action for declaratory relief under the UDJA, which, "as the Texas Supreme Court observed long ago, `is neither legal nor equitable, but sui generis.'" Craig v. Tejas Promotions, LLC, 550 S.W.3d 287, 298 (Tex. App.-Austin 2018, pet. denied) (quoting Cobb v. Harrington, 190 S.W.2d 709, 713 (Tex. 1945)).
Even apart from these issues, Appellants' laches defense fails on the merits. With respect to the first element, Appellants have not shown that Appellees' failure to file documentation with the Texas Secretary of State reflecting the change in the composition of Stedfast's board constitutes an unreasonable delay in asserting a legal right in the face of Appellants' actions. See Wildman v. Patrizi, No. 05-20-00834-CV, 2022 WL 3655242, at *6 (Tex. App.-Dallas Aug. 25, 2022, no pet.) (mem. op.) ("The defendant must show the plaintiff's delay was unreasonable in the face of the defendant's actions." (citing Dempsey v. Apache Shores Prop. Owners Ass'n, 737 S.W.2d 589, 596 (Tex. App.-Austin 1987, no pet.))). Shelley has testified that he was unaware that he was required to file any such documentation with the Secretary of State. And by all accounts, he exercised control over Stedfast's affairs without incident or challenge until Appellants purported to terminate him and removed him as a signatory on Stedfast's bank accounts. After Appellants took action to challenge the Shelley Group's status as Stedfast's duly elected board of directors, Appellees promptly filed a Restated Certificate of Formation for Stedfast naming the members of the Shelley Group as directors and commenced this lawsuit seeking, among other things, the declaratory relief at issue. This fact pattern is hardly indicative of a party sleeping on his rights. See Condom Sense, Inc. v. Alshalabi, 390 S.W.3d 734, 758 (Tex. App.-Dallas 2012, no pet.) ("A laches defense embodies the principle that `equity aids the vigilant and not those who slumber on their rights.'" (quoting Nat'l Ass'n of Gov't Emps. v. City Pub. Serv. Bd. of San Antonio, Tex., 40 F.3d 698, 708 (5th Cir. 1994))).
Further, even if Appellants could show unreasonable delay on the part of Appellees in asserting a legal right, they have offered no evidence that they changed their position to their detriment in good faith as a result of such delay. See Caldwell v. Barnes, 975 S.W.2d 535, 538 (Tex. 1998). The only supposed change in position to which Appellants point in their briefing is that Romero "maintained that she did not resign as a director." However, this does not reflect the type of good faith detrimental change of position that would satisfy the second element of a laches defense and, in actuality, is not a change of position at all. By maintaining that she did not resign as a director, all Romero did, in essence, was assert a legal position—one which, as has been shown, is at the very center of the present lawsuit. If Appellants' version of events is the correct one, Romero never ceased being a director of Stedfast. Thus, her position has not changed. Nor have Appellants presented any evidence showing that Romero's legal position has been prejudiced in any way by Appellees' delay in filing documentation with the Texas Secretary of State. See Caldwell, 975 S.W.2d at 539 (citing Culver, 176 S.W.2d at 170-71)); see also Condom Sense, 390 S.W.3d at 758 ("Courts commonly define laches as `an inexcusable delay that results in prejudice to the defendant.'" (quoting Elvis Presley Enters., Inc. v. Capece, 141 F.3d 188, 205 (5th Cir. 1998))). Thus, Appellants have failed to establish their laches defense.
Because Appellees established each essential element of their declaratory judgment cause of action by clear and specific evidence and Appellants have not established an affirmative defense that would entitle them to judgment as a matter of law, the trial court did not err in denying Appellants' motion to dismiss this claim under the TCPA. Accordingly, we overrule Appellants' sixth issue.
i. Appellees' Attorney's Fees
In their seventh issue, Appellants assert that the trial court erred in awarding Appellees attorney's fees and costs based upon its finding that Appellants' motion to dismiss was frivolous or filed solely for the purpose of delay.
If the trial court finds that a motion to dismiss under the TCPA is frivolous or solely intended to delay, the court may award court costs and reasonable attorney's fees to the nonmoving party. Tex. Civ. Prac. & Rem. Code Ann. § 27.009(b). We review the trial court's decision to award attorney's fees under the TCPA for an abuse of discretion. Caliber Oil & Gas, LLC v. Midland Visions 2000, 591 S.W.3d 226, 242 (Tex. App.-Eastland 2019, no pet.); Sullivan v. Tex. Ethics Comm'n, 551 S.W.3d 848, 857 (Tex. App.-Austin 2018, pet. denied). A trial court abuses its discretion when it acts arbitrarily or unreasonably or without regard to guiding principles. Caliber, 591 S.W.3d at 242-43; Sullivan, 551 S.W.3d at 857; see also Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985).
The TCPA does not define "frivolous." Caliber, 591 S.W.3d at 243; Sullivan, 551 S.W.3d at 857. However, courts that have addressed this issue have noted that the "common understanding" of the word "contemplates that a claim or motion will be considered frivolous if it has no basis in law or fact and lacks a legal basis or legal merit." Sullivan, 551 S.W.3d at 857; see Caliber, 591 S.W.3d at 243 (following Sullivan); Pinghua Lei v. Nat. Polymer Int'l Corp., 578 S.W.3d 706, 717 (Tex. App.-Dallas 2019, no pet.) (same). "The fact that a TCPA motion to dismiss is ultimately denied is not sufficient, standing alone, to support a finding that the motion was frivolous." Keane Frac, LP v. SP Silica Sales, LLC, 608 S.W.3d 416, 433 (Tex. App.-Houston [1st Dist.] 2020, no pet.) (citing Caliber, 591 S.W.3d at 244).
Appellants argue that the trial court erred in awarding Appellees attorney's fees because at least one of Appellees' claims falls within the scope of the TCPA.
Based on the record before us, we cannot say that the trial court abused its discretion in awarding attorney's fees to Appellees. At the time that Appellants filed their TCPA motion, the trial court had already conducted two evidentiary hearings— one on Appellees' motion for temporary injunction and one on their motion to hold Chase Bank in contempt—and Appellees had presented a great deal of evidence supporting their declaratory judgment and conversion claims. Moreover, Appellees' first amended petition specifically references Bookout's social media posts, including a specific video posted by Bookout, as a basis for Appellees' defamation claim. Given that these videos and social media posts were created by one of the Appellants, they were within the possession or control of Appellants, and the content was well known to them. Accordingly, they should have been aware of the evidence Appellees could marshal to establish a prima facie case of defamation. Thus, we cannot say that the trial court abused its discretion in finding Appellants' TCPA motion to be frivolous. See Pinghua Lei, 578 S.W.3d at 717-18.
Even if Appellants could show that their motion to dismiss was not frivolous, in order to prevail on their seventh issue, they must also show that the trial court erred in finding that their motion to dismiss was filed for the sole purpose of delay. See Sullivan, 551 S.W.3d at 857. As Appellees point out, the record reflects that at the time the motion to dismiss was filed, Appellees were engaged in ongoing efforts to discover the whereabouts of and gain access to the funds Appellants had removed from Stedfast's bank accounts, which ultimately led to the filing of a motion to hold Appellants in contempt. As a motion to dismiss under the TCPA automatically suspends all discovery,
We overrule Appellants' seventh issue.
Having sustained in part and overruled in part Appellants' first issue, we hold that the trial court may exercise subject matter jurisdiction over Appellees' claims; provided, however, that the following statements upon which Appellees base their defamation claim are not actionable under the ecclesiastical abstention doctrine: (1) any of Bookout's statements referring to Stedfast as a "cult" or to Shelley as a "cult leader" and (2) any of Bookout's statements referring to Shelley as a "sodomite" or similar statements by Bookout that according to Shelley "suggest that [Shelley] engage[s] in sexual activities that are condemned by the doctrines of [his] [c]hurch."
Having overruled Appellants' remaining issues,
Tex. R. Civ. P. 91a.1.
Tex. Civ. Prac. & Rem. Code Ann. § 37.004(a) (emphasis added). Appellants' reading of the statute ignores the language emphasized above. Thus, Appellants were not required to prove the existence of a written contract as part of their prima facie case for declaratory relief. Because Stedfast is incorporated as a nonprofit under the laws of Texas, the rights, status, and legal relations of Appellants and the Shelley Group are affected by Chapter 22 of the Texas Business Organizations Code. Therefore, the controversy that Appellees seek to resolve is the proper subject of a declaratory judgment action. Cf. Lee, 2019 WL 1033869, at *1-3 (affirming declaratory judgment regarding, inter alia, the composition of the board of trustees of a church incorporated as a nonprofit corporation under the Texas Business Organizations Code); Hous. Aeronautical Heritage Soc'y, Inc. v. Graves, No. 01-12-00443-CV, 2013 WL 6506301, at *7-10 (Tex. App.-Houston [1st Dist.] Dec. 10, 2013, no pet.) (mem. op.) (addressing merits of appeal from summary judgment granting declaratory relief regarding validity of corporate bylaws and composition of corporation's board of directors).