Federal Credit, Inc. v. Greg Fuller.
72 So.3d 5, 2011 WL 1449035, 2011 Ala. LEXIS 51 (2011)
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Rule of Law:
Truth is an absolute defense to a defamation claim. A creditor's notification to a debtor outlining the potential legal consequences of non-payment, such as the assumption of fraudulent intent, is not a false statement and therefore cannot support a claim for defamation.
Facts:
- On September 14, 2001, Greg Fuller borrowed $1,000 from Federal Credit, Inc., and provided three checks to cover the loan and service fee, due on October 5, 2001.
- Fuller failed to pay the amount owed by the due date.
- Shortly thereafter, Federal Credit presented Fuller's checks, which were returned by the bank stamped 'account closed' and 'payment stopped.'
- On October 8, 2001, Federal Credit mailed a '10 Day Legal Notice' to Fuller at his place of employment, Charter Communications.
- The envelope was addressed to 'Charter Communications' in large letters, with 'Mr. Fuller' written in smaller letters below it.
- Three or four of Fuller's coworkers, including his boss, viewed the notice before it was presented to him.
- The notice stated that unless payment was made within ten days, the holder 'may assume that you delivered the instrument with intent of [sic] defraud' and could turn the matter over to authorities for prosecution.
- The notice also contained stamps reading 'DISTRICT COURT FILE EVIDENCE DATA BASE' and 'APPROVED OCT 8 2001 FOR PICKUP TO ALABAMA DISTRICT COURT'.
Procedural Posture:
- Federal Credit, Inc. filed a claim against Greg Fuller in the small-claims division of the Marshall District Court.
- The district court entered a consent judgment against Fuller for the purpose of allowing him to appeal and file a counterclaim in a higher court.
- Fuller appealed the consent judgment to the Marshall Circuit Court.
- In the circuit court, Fuller filed a counterclaim against Federal Credit for defamation and usury.
- A jury trial was held, and the circuit court dismissed the usury claim but allowed the defamation claim to proceed.
- The jury returned a verdict in favor of Fuller on the defamation claim, awarding him $25,000 in compensatory damages and $35,000 in punitive damages.
- Federal Credit filed post-judgment motions for a judgment as a matter of law, a new trial, and remittitur, which were denied by operation of law.
- Federal Credit (appellant) appealed the circuit court's judgment to the Supreme Court of Alabama; Fuller (appellee) did not file a brief in the appeal.
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Issue:
Does a creditor's notice to a debtor, which accurately describes the potential legal consequences of non-payment, constitute defamation when the statements within the notice are factually true?
Opinions:
Majority - Justice Parker
No, a creditor's notice containing factually true statements and warnings of potential legal consequences does not constitute defamation. To establish a prima facie case of defamation, a plaintiff must prove that the defendant published a false statement. In this case, truth serves as a complete and absolute defense. The court found that the allegedly defamatory statements were not false. The statement regarding 'intent to defraud' was not a direct accusation but a conditional warning of a potential legal assumption if the debt was not paid, as permitted by statute. Similarly, the statements that Federal Credit 'utilizes' the District Court and District Attorney's office were factually true, as evidenced by Federal Credit's own lawsuit against Fuller in District Court. Because Fuller failed to meet his burden of proving that any statement in the notice was false, his defamation claim fails as a matter of law.
Analysis:
This decision reinforces the formidable power of the truth defense in defamation law, especially within the context of debt collection practices. It provides legal protection for creditors who use statutorily-suggested language to warn debtors of potential consequences, clarifying that such warnings are not treated as false factual accusations. The court's meticulous parsing of the notice's language distinguishes between a direct, false assertion and a conditional notification of possible future actions. This precedent offers creditors a significant shield, allowing for aggressive but factually accurate communications in their collection efforts without incurring defamation liability.
Unlock the full brief for Federal Credit, Inc. v. Greg Fuller.