Harvey v. Sys. Effect, L.L.C.

Citation: 2020 Ohio 1642Docket: 28497

Court: Ohio Court of Appeals; April 24, 2020; Ohio; State Appellate Court

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Anne C. Harvey, the Plaintiff-Appellant, appeals a summary judgment favoring Defendants-Appellees, Systems Effect, LLC, Claudia Jordan, and Steve Jordan. Harvey argues that the trial court incorrectly combined false light and defamation torts for the statute of limitations application, asserting genuine issues of material fact regarding her false light claim. She also contends the trial court erred in granting summary judgment on her statutory claim under R.C. 2741.02 for name appropriation and in finding that Appellees' conduct was protected by a qualifying privilege.

The trial judge based the decision on two main points: (1) Harvey's false light claim was barred by the one-year statute of limitations for defamation claims, and (2) her claim under R.C. 2741.02 did not apply because the use of her persona pertained to newsworthy content. The trial court found no genuine issues of material fact and dismissed Harvey's case.

The appellate court affirmed the trial court's decision, agreeing that the statute of limitations applied to the false light claim, making it barred as it was not filed within one year. Additionally, the court upheld the summary judgment regarding Harvey's statutory claim, stating that the Appellees were exempt under R.C. 2741.09 due to the newsworthiness of the material and the connection to public interest reporting. The issue regarding qualified privilege was rendered moot due to the resolution of the first two points.

The case stems from the 2011 sale of a Kettering, Ohio residence by Harvey to Andrew and Sarah Seitz, following previous litigation (Seitz v. Harvey). The Seitzes sued for fraudulent misrepresentation, concealment, and non-disclosure related to sewer/plumbing issues and termites. In a March 2013 jury trial, the jury ruled in favor of the Harveys regarding sewer/plumbing but found against them on all fraud claims concerning termites, awarding the Seitzes $68,276 in compensatory damages.

The Harveys purchased the home in 2003 and were informed of prior wood-boring insect treatment through a disclosure form and an inspection report, which noted visible evidence of infestation but deemed it inactive. When the Harveys later sold the house in 2005 and again in 2009, they denied knowledge of wood-boring insects on the disclosure form. After unsuccessful attempts to sell, they remodeled the house.

The Seitzes moved in January 2011, but a month later, Mr. Seitz discovered damage believed to be caused by termites. After treatment and further inspection, it was also revealed that tree roots had damaged the sewer tiles, causing drainage issues. The Seitzes filed suit in September 2011, resulting in a judgment in their favor.

Subsequent to post-judgment motions, the Seitzes filed a notice of appeal in August 2013, which included a cross-appeal regarding punitive damages and enforcement of a settlement agreement. In January 2015, the appellate court partially affirmed and partially reversed the trial court's judgment, addressing the Harveys' claims regarding the jury’s findings on obvious and hidden defects.

The patent and latent fraud claims were based on different grounds. The patent fraud claim centered on the Harveys' failure to disclose termite damage to the hardwood floors, violating R.C. 5302.30(C), which mandates sellers to act in good faith and disclose material facts about the property's physical condition. Evidence showed the Harveys were aware of the damage from a 2003 disclosure form and termite inspection report but did not remediate it. The court concluded that the damage was obvious to potential buyers, who were on notice of prior termite issues, thus lacking justifiable reliance for fraud claims. As such, the trial court should have directed a verdict in favor of the Harveys on this aspect.

The latent fraud claim involved termite damage discovered by the Seitzes’ assessor when examining the property. It was asserted that the Harveys were aware of this damage due to the prior inspection and their remodeling of adjacent areas. Although it was undisputed that the Harveys did not disclose any termite damage, the court found the assessor's opinion lacked a proper foundation. However, no directed verdict was warranted as the evidence was presented to the jury.

The second assignment of error addressed the latent defect claim, where the verdict was deemed against the manifest weight of the evidence. The court criticized the assessor's testimony as speculative and noted a lack of evidence regarding the age of the damage. Consequently, the judgment on this issue was reversed, but the Seitzes were entitled to a new trial regarding the latent defect. The Harveys were not exonerated in either situation.

On cross-assignments of error, the issue of punitive damages was considered moot due to the retrial, and despite a tentative agreement for the Harveys to pay approximately $68,721.93, the court found no abuse of discretion in concluding that a formal agreement had not been reached. Ultimately, the case was settled after remand, and dismissed with prejudice on August 25, 2015. The appeal was filed in August 2013, with the judgment issued on January 16, 2015, amid media coverage of the trial court case.

Claudia Jordan, a licensed realtor, developed continuing education training materials for her online company, Training Cove, which included references to the Seitz case. Alongside her husband, Steve, they operate Diamondback Realty and Training Cove. Claudia edited classes, wrote blogs, and managed customer communications, holding final approval over seminar content. 

The training classes, marketed primarily in packages for $79, included a specific class titled "Drugs, Disasters, and Other Disclosures," which featured three slides on the Seitz case, a small portion of a nearly 200-page course. Claudia sought to update the course for Ohio by researching fraud cases online, where she found the highly publicized lawsuit of attorney Anne Harvey against buyers Andrew and Sarah Seitz, which involved undisclosed termite damage.

Claudia authored the class content between July and November 2014, checking the verdict through online resources rather than visiting court records. The course was offered for sale in June 2015, with the slides detailing the case. The first slide provided an overview of the sale and omission of termite issues by Harvey. The second slide outlined fraudulent behaviors, including damage concealed by personal items left by the seller. The third slide presented the jury's verdict, emphasizing the importance of full disclosure in real estate transactions to avoid fraud. Harvey was ordered to pay over $68,000 for her misconduct in the sale.

In November 2017, Harvey discovered that Appellees were utilizing a trial court case in an online course, identifying her as a Dayton attorney. She filed a lawsuit against them on December 12, 2017, citing seven causes of action: false light, defamation (both per se and per quod), negligence, gross negligence, piercing the corporate veil, civil conspiracy, and seeking injunctive relief, along with compensatory and punitive damages. Harvey later amended her complaint to replace the gross negligence claim with a statutory claim under R.C. 2741.02.

In December 2018, Appellees filed for summary judgment. Subsequently, Harvey dismissed several claims, leaving only the false light and the R.C. 2741.02 claims. After Harvey responded to the summary judgment motion, a magistrate ruled in favor of Appellees on January 18, 2019. Harvey objected to this ruling, but the trial court upheld the magistrate’s decision with modifications and dismissed her claims. Harvey appealed the trial court's judgment.

Her first assignment of error challenged the trial court's finding that Appellees were entitled to summary judgment on her false light claim. She argued that the trial court conflated false light with defamation and incorrectly applied the shorter statute of limitations for defamation. The trial court agreed with the magistrate’s conclusion that the false light claim was barred by a one-year statute of limitations under R.C. 2305.11(A). It noted that, unlike defamation, truth is not a defense in false light claims, and determined that the evidence showed no material issues of fact remained, leading to the dismissal of her claim. Harvey maintained that the trial court misapplied the law by conflating the two claims, and the appellate court would review the summary judgment de novo, without deferring to the trial court's conclusions.

Harvey's claims for defamation and false light were subject to the statute of limitations under R.C. 2305.11(A), which mandates that such actions must be initiated within one year of the defamatory publication. Since the publication occurred in June 2015 and the complaint was filed in December 2017, the defamation claim was barred as it exceeded the one-year limit. Although the Supreme Court of Ohio recognized the tort of false light in 2007 without specifying a statute of limitations, R.C. 2305.09(D) suggests a four-year limit for non-contractual injuries. However, courts have established that false light claims overlapping with defamation claims are bound by the same one-year statute of limitations. This alignment prevents the circumvention of the defamation statute by allowing a longer period for similar claims.

The Supreme Court of Tennessee acknowledged the overlap between false light and defamation, noting that recognizing false light could reduce judicial efficiency by requiring consideration of two similar claims. Nonetheless, the need to uphold privacy rights was deemed more significant. While the Supreme Court of Ohio did not address the statute of limitations in the Welling case, the prevailing judicial approach supports applying the one-year limit when allegations could substantiate both claims. In this instance, the court concluded that the allegations did support both defamation and false light claims.

For a false light claim to succeed, the plaintiff must demonstrate that the publicity placed them in a false light that would be highly offensive to a reasonable person, and that the defendant acted with knowledge of or reckless disregard for the falsity of the information. It is crucial that the published matter is untrue, as emphasized by the Supreme Court of Ohio, which noted that the potential for frivolous claims is mitigated by stringent requirements that make false light claims challenging to prove.

A statement must be false and publicized to constitute defamation, which injures a person's reputation or adversely affects their profession. Harvey's claims of defamation and false light arose from alleged false statements in an online course; thus, the one-year statute of limitations for defamation was correctly applied, barring her false light claim since it was not filed in time. 

In her Second Assignment of Error, Harvey argued that the trial court incorrectly granted summary judgment on her statutory name appropriation claims under R.C. 2741.02. She contended that her claim fell under the statute and challenged the trial court's interpretation of terms like "audiovisual work" and "account," as well as the assertion that her name lacked commercial value. The trial court's ruling was based on three findings: the slides did not use Harvey’s persona for commercial promotion; they were solely informative; and the statute aims to protect against the commercial exploitation of famous individuals' personas, which did not apply to her case.

R.C. 2741.02(A) prohibits using an individual's persona for commercial purposes without consent, although exceptions exist for uses related to news or public affairs. "Persona" includes various personal attributes with commercial value, while "commercial purpose" refers to usage in connection with commercial activities. The right of publicity is defined as the property right to use an individual’s persona commercially, and R.C. 2741.06(A) allows for a private right of action by individuals or authorized representatives regarding publicity rights.

R.C. 2741.06, enacted in 1999, established a private right of action, but there has been no subsequent Ohio case law addressing it. Similarly, case authority for actions under R.C. 2741.02 is limited. R.C. 2741.08 clarifies that remedies under R.C. Chapter 2741 are supplementary to other state or federal laws, indicating that Harvey could have pursued a common law claim for misappropriation of her identity, though she did not include it in her complaint, focusing instead on false light and a statutory violation of R.C. 2741.02.

The court affirmed that Harvey did not need "celebrity status" to seek recovery under R.C. 2741.02, but referenced previous cases (James, Amazon, Landham) for context. In James, the court found misappropriation of name but ruled against the plaintiff due to lack of proof of damages. The court also highlighted the distinction made by the Supreme Court of Ohio between incidental use of a person's name and actionable appropriation of identity benefits.

The right of publicity, an emerging intellectual property right, protects individuals from unauthorized commercial exploitation of their identity, particularly for celebrities. The case law concerning this right is sparse, prompting courts to consider the entire body of related case law. In Landham, a fringe actor sued for unauthorized marketing of an action figure based on his character in a film, underscoring the importance of protecting personal identity against commercial appropriation.

The right of publicity allows a celebrity to control the commercial use of their identity, emphasizing the necessity for a plaintiff to demonstrate the commercial value of their identity in order to assert this right. The court highlighted that a plaintiff does not need to be a national celebrity but must prove significant commercial value linked to their identity, supported by evidence of distinctiveness and recognition among the target audience. In relevant case law, such as Cheatham v. Paisano Publications, the court underscored that the remedy for right of publicity claims is reserved for individuals whose identities possess commercial value.

In Ohio State Univ. v. Skreened Ltd., the court ruled against defendants who used Urban Meyer’s name and likeness on t-shirts without authorization, indicating that Meyer had assigned his publicity rights to the university. In another case, Stewart v. M. M Headgear, the court allowed a plaintiff to proceed with her claim after finding that her likeness had commercial value in both the initial contract and subsequent product packaging.

Applying these principles, the court concluded that while the plaintiff, Harvey, did not need to be a celebrity, she failed to provide evidence of significant or any commercial value associated with her name, asserting instead that she was not a public figure but engaged in a private sale.

The use of Harvey's full name in a 200-page presentation is deemed not newsworthy and was incidental, appearing only in three slides. R.C. 2741.09 provides exemptions to liability under R.C. Chapter 2741, which includes protections for literary, dramatic, audiovisual works, and materials with political or newsworthy value. The trial court found that the slides did not exploit Harvey’s persona for commercial gain, as they were purely informative. Little legal precedent exists interpreting R.C. Chapter 2741, but case law related to the right of publicity can provide guidance. The right of publicity, recognized in Ohio through the case Zacchini, is closely related to the federal Lanham Act's false endorsement claim. The Ohio Supreme Court has referenced the Restatement of the Law 2d, Torts, Section 652 in defining the right of publicity, which was later incorporated into the Restatement (Third) of Unfair Competition, emphasizing that unauthorized use of a person's identity for trade purposes can lead to liability. However, courts may be hesitant to broadly interpret the right of publicity, as its justifications are not as compelling as those for trademark or trade secret protections.

Additional incentives related to the right of publicity may hold minimal significance, as the commercial value derived from an individual's identity is often incidental and not tied to their personal investments. This diminishes the justification for protecting such rights based on property and unjust enrichment principles. The public interest in preventing misleading endorsements or sponsorships can be addressed through deceptive marketing claims, leading courts to be cautious about broadly interpreting the right of publicity.

The Sixth Circuit noted that the right of publicity is constrained by public and constitutional interests in freedom of expression. Specifically, using an individual's identity for informative or expressive purposes typically does not constitute a violation of their right to publicity. While both ETW Corp. and the Restatement of the Law emphasize these principles, they align with Ohio's legal provisions concerning publicity rights.

Ohio's Supreme Court decision in Zacchini reflects a tendency to prioritize freedom of expression when evaluating claims related to publicity rights. The Restatement indicates that protections for users of an individual's likeness are not applicable if the usage is solely for unrelated works, and the privilege can be forfeited if the work involves significant falsifications. Ohio's statute, R.C. 2741.09(B), reinforces that existing constitutional rights remain unaffected.

The shift of publicity rights from privacy invasion to unfair competition suggests a focus on the commercial value of a person's name and their capacity to market it. This is supported by R.C. 2741.06(A)(1), which allows individuals or groups collectively owning a right of publicity to pursue legal action, emphasizing the necessity to demonstrate the commercial value of their name, identity, or likeness. Although the Zacchini court acknowledged that the use of identity does not need to be strictly commercial, the overall emphasis remains on the economic aspects of publicity rights.

The court concluded that the use of an individual's name or likeness does not equate to its value, emphasizing that the relevant statute, R.C. Chap. 2741, governs this matter rather than common law rights of publicity. The trial court found no genuine issues of material fact, confirming that the Appellees were exempt from R.C. 2741 due to the newsworthy nature of the slides used, as indicated by Harvey's acknowledgment of media coverage regarding the Seitz case. The Appellees' use of Harvey's persona was deemed appropriate in connection with public interest reporting, eliminating the need for her consent under R.C. 2741.02(D)(1). The court noted that satisfying any single exemption in R.C. 2741.09(A) suffices to avoid liability.

Regarding Harvey's claim of qualified privilege under R.C. 2317.05, the court found this assignment moot due to the dismissal of her other claims and noted that the relevant finding was made by the magistrate, which the trial court had not addressed. Ultimately, the court affirmed the trial court's judgment, overruling all of Harvey's assignments of error. The dissenting opinion acknowledged disagreement with the majority's interpretation but underscored that any claims related to false light invasion of privacy were barred by the statute of limitations, as they were based on statements made over a year prior to the suit.