Valdez-Zontek v. Eastmont School Dist.

225 P.3d 339

154 Wn. App. 147

Patricia VALDEZ-ZONTEK, Respondent and, Cross-Appellant, v. EASTMONT SCHOOL DISTRICT, Appellant.

No. 27197-8-III.

Court of Appeals of Washington, Division 3.

January 12, 2010.

Gerald John Moberg, Jennifer D. Homer, Jerry J. Moberg & Associates, Ephrata, WA, Michael Early McFarland, Jr., Attorney at

Law, Spokane, WA, for Appellant/Cross-Respondent.

Robin Williams Phillips, Mario August Bianchi, Lasher Holzapfel Sperry & Ebberson, Seattle, WA, for Respondent/Cross-Appellant.

BROWN, J.

¶ 1 On appeal, the Eastmont School District challenges the defamation verdict favoring its former employee, Patricia Valdez-Zontek. The District contends (1) no evidence shows a provably false statement, (2) the court erred in ruling Ms. Valdez-Zontek was not a public figure, (3) certain instructions were erroneous, confusing, and misleading, (4) the court erred in not granting attorney fees, costs, and liquidated damages under the anti-SLAPP statute, RCW 4.24.510, and (5) the award to Ms. Valdez-Zontek to alleviate the adverse tax consequences of her recovered legal fees was improper. On cross-appeal, Ms. Valdez-Zontek contends the court erred under RCW 4.56.110 by applying too low an interest rate on the amounts attributable to her statutory discrimination claims. We affirm in all respects.

FACTS¹

¶ 2 Ms. Valdez-Zontek, a person of Hispanic descent, was hired by the District in 1999 as its Special Programs Director. She oversaw administration of several state and federally funded school programs. She also worked closely with the Office of Superintendent of Public Instruction (OSPI) and the Title 1 LAP office. Her school-year employment contracts did not include summer work paid under a supplemental contract. In 2001, two critical events occurred: (1) the District referred Ms. Valdez-Zontek's summer time sheets to the Washington State Auditor for suspected hours not worked, and (2) the perpetuation of a rumor that Ms. Valdez-Zontek, who is married, was having a romantic affair with the District's school superintendent, Joel Thaut, her immediate supervisor until early 2002.

¶ 3 In early August 2001, Ms. Valdez-Zontek submitted a summer time sheet. The District's payroll officer, Sandy Poole, referred it to Assistant Superintendent Beverly Jagla. Ms. Jagla conferred with Assistant Superintendent Mike Brophy. Ms. Valdez-Zontek explained to Mr. Brophy she had an agreement with Mr. Thaut that she could work extra hours over the summer. Ms. Jagla and Mr. Brophy discussed the time sheet with Mr. Thaut, who said he would take care of the matter. Two weeks later, the District's business manager, Jean Gunderson, reported to Ms. Jagla that she had a second time sheet for Ms. Valdez-Zontek, signed by Mr. Thaut containing the same number of hours.

¶ 4 The new time sheet did not satisfy Ms. Jagla. According to Mr. Thaut, Ms. Jagla suggested the motive for his approving Ms. Valdez-Zontek's time sheets was the alleged affair; Mr. Thaut denied it. Ms. Jagla then investigated Ms. Valdez-Zontek's 2000 summer work activities for improper pay under two employment contracts. By September, Ms. Valdez-Zontek complained to Mr. Thaut that she had not received her summer 2001 pay. He directed Ms. Poole to make an interim payment of $1,500. Ms. Jagla and Mr. Brophy disputed the payment.

¶ 5 Ms. Jagla and Mr. Brophy initiated an executive school board session to address allegations that Mr. Thaut's refusal to resolve Ms. Valdez-Zontek's time sheet disparities was leading to misuse of public funds. As part of her explanation to the board, Ms. Jagla submitted an inaccurate modified time sheet purporting to bear Ms. Valdez-Zontek's signature in two places. Ms. Jagla actually created the document herself and traced Ms. Valdez-Zontek's signature. Ms. Valdez-Zontek was not allowed to explain her position to the board.

¶ 6 In November 2001, District Board President Roy Miller submitted a formal written audit request for all District personnel to the Washington State Auditor's Office, specifying that the District learned that a misuse of state monies may have occurred relating to (1) inappropriate and/or inaccurate submission of time sheets by certain District personnel for claimed supplemental work performed during summer 2001, and (2) duplicate billing of the District for alleged supplemental work performed by certain District personnel during the 2000 summer.

¶ 7 Later, Mr. Miller told the Washington State Audit Manager, Scott Renick, to limit the investigation to Ms. Valdez-Zontek and her secretary. Ms. Jagla then supplied the limited documents to Mr. Renick, including the modified time sheet she created but with the word "sample" added. Report of Proceedings (RP) at 2389. According to Mr. Renick, on November 27, 2001, Ms. Jagla asked him to investigate the alleged affair. He told her that was not within the scope of his audit or authority to investigate.

¶ 8 Mr. Renick ultimately cleared Ms. Valdez-Zontek of wrongdoing that resulted in monetary benefit to her. Trial evidence revealed the District's longstanding practice of allowing additional hours to be filled in on days not worked and allowing summer work without signed supplemental contracts, or after-the-fact approval of such work. Time sheets for administrators Chris Hall and Dennis Gibson not submitted for audit in 2001 later proved to be miscoded and resulted in funds being misappropriated.

¶ 9 After Mr. Thaut denied the alleged affair, he learned from board member Andy Gale that Ms. Jagla had told the board the pair was having an affair and that it was upsetting the administrative team. Mr. Thaut told Mr. Gale the rumor was not true. Board President Roy Miller began investigating. Mr. Miller spoke with school principals Dennis Gibson, Bob Busk, and Beverly Baugh about what he termed a possible "inappropriate relationship" that could present a conflict of interest in the spending of public funds. RP at 2214. Based upon those discussions, Mr. Miller found no evidence of inappropriate conduct.

¶ 10 The jury heard evidence that Ms. Jagla told Mr. Busk that the board would likely ask for Mr. Thaut's resignation because of rumors he was having an affair with Ms. Valdez-Zontek. Mr. Busk met with elementary school principals Marsha Reynolds, Kay Fusson, and Beverly Baugh and discussed the alleged affair with them. Ms. Baugh said Mr. Busk discussed it as "a sexual relationship or affair that was going on." RP at 549. Other witnesses related having spread the affair rumor or having heard it. For example, Ms. Jagla alleged to Mr. Renick that Mr. Thaut and Ms. Valdez-Zontek were having an affair. Ms. Jagla ultimately admitted at trial, however, that she did not recall anyone spreading the rumor to her and that she had absolutely no basis to say that the alleged affair was true.

¶ 11 Mr. Thaut and Ms. Valdez-Zontek each denied any affair to individuals who broached the subject in 2001 and 2002, and repeated their denials at trial.

¶ 12 The evidence showed the Board took no steps to stop the rumor. It ultimately spread throughout the District and local community, as well as among school personnel in the Wenatchee, Moses Lake, Yakima, Spokane, Quincy and Seattle school districts, and to OSPI. Partly due to controversy between Ms. Valdez-Zontek and the District's administration, the District demoted Ms. Valdez-Zontek to a lesser paying nonadministrative position in the spring of 2002. She instead resigned and took a position in Yakima.

¶ 13 The case went to the jury on claims of disparate treatment discrimination based upon race or sex in the terms and conditions of employment, and by constructive discharge; retaliation by transfer to a non-administrative position and by constructive discharge; outrage (in the manner the affair rumor was investigated), negligent infliction of emotional distress (as to affair rumor investigation); defamation (as to affair rumor investigation); and invasion of privacy (limited to false light claim).

¶ 14 The jury found the District liable for each claim of disparate treatment discrimination and retaliation; negligent infliction of emotional distress and defamation for the manner in which it investigated the romantic affair rumor. The jury found the District committed defamation per se. The jury awarded Ms. Valdez-Zontek $35,000 in economic damages, $75,000 in noneconomic damages, and $75,000 in presumed damages. On appeal, the District solely challenges the defamation verdict.

ANALYSIS

A. Provably False Statement Establishing Defamation

¶ 15 The issue is whether substantial evidence shows any District official made a provably false statement regarding the alleged romantic affair between Ms. Valdez-Zontek and Mr. Thaut.

¶ 16 A defamation plaintiff must establish four elements: (1) falsity, (2) an unprivileged communication, (3) fault, and (4) damages. Mohr v. Grant, 153 Wash.2d 812, 822, 108 P.3d 768 (2005); Bender v. City of Seattle, 99 Wash.2d 582, 599, 664 P.2d 492 (1983). The degree of fault necessary to make out a prima facie case of defamation depends on if the plaintiff is a private individual or a public figure or official. Bender, 99 Wash.2d at 599, 664 P.2d 492. The negligence standard of fault applies if the plaintiff is a private individual; negligence is established by a preponderance of the evidence. Id. A plaintiff who is a public figure or official must prove "actual malice," i.e., knowledge of falsity or reckless disregard of the truth or falsity, by clear and convincing evidence. Id. (quoting Gertz v. Robert Welch, Inc., 418 U.S. 323, 342, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974)) (citations omitted); Moe v. Wise, 97 Wash.App. 950, 957, 989 P.2d 1148 (1999).

¶ 17 To establish the falsity element of defamation, the plaintiff must show the offensive statement was "provably false." Schmalenberg v. Tacoma News, Inc., 87 Wash.App. 579, 590-91, 943 P.2d 350 (1997). "Expressions of opinion are protected by the First Amendment...