Libel

Texas Court Reverses $1.2 Million Libel Decision Based on Yelp Review Complaining About Earlier Unpaid Judgment

The libel claim, the court held, was foreclosed by an agreement settling the lawsuit that had indirectly led to the review.

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From Gharavi v. Khademazad, decided Friday by the Texas Fifth Court of Appeals (Dallas), in an opinion by Justice Ken Molberg joined by Justices Amanda Reichek and Erin Nowell:

Sean Gharavi appeals from a judgment of the trial court following a bench trial that awarded Behrooz Khademazad monetary damages in his libel, libel per se, business disparagement and negligence suit against Gharavi. Because we conclude Khademazad released his claims against Gharavi, we reverse the trial court's judgment and render judgment that Khademazad take nothing….

Khademazad hired Gharavi's company, Aidris, Inc., to develop an online marketing strategy to promote Khademazad's dental business. When Khademazad failed to pay for the services, Aidris instituted arbitration proceedings to recover what it was owed. The arbitrator found in Aidris's favor. Khademazad refused to voluntarily pay the arbitration award. The award was thereafter reduced to a judgment in Tarrant County. Khademazad refused to pay the trial court judgment.

Some seven months later, Gharavi, in his frustration over the judgment having not been paid, posted the following Yelp review on Khademazad's dental practice site:

This is a review for the Grand Prairie Family Dental and Dr. Khademazad. Dr. Khademazad is not to be trusted. Grand Prairie Family Dental and Dr. Khademazad refused to pay money owed since 10/2010. Even after winning a major court judg[ ]ment in 06/16, we still have[ ] not received a penny of what is owed. Grand Prairie Family Dental and Dr. Khademazad can't even be trusted with a court order!! Why would you trust him with your health?!

The review was removed by Yelp several months later and there is no evidence that anyone other than Yelp personnel and the parties viewed the post.

After another series of months with the judgment still unpaid, Aidris filed an application for turnover and receivership. A short time later, Khademazad's attorney initiated settlement negotiations by sending an email to Aidris's lawyer containing the following language:

[M]y offer is based on Dr. Khademazad's ability to pay the judgment versus simply filing bankruptcy and starting all over. His ex-wife has already taken him to the cleaners and thus, filing bankruptcy and starting all over can be rather appealing if his back is pushed against the wall. And then, there are the defamation claims arising from the Yelp posting which adversely affected Dr. Khademazad's practice as well as his reputation. Under Defamation Per Se, Dr. Khademazad does not have to plead and prove special damages and can recover general damages including loss of reputation and mental anguish. [Emphasis added.]

Thereafter, the parties entered into a settlement agreement of Aidris's claims against Khademazad. Paragraph 4.B. of the agreement contains a broad-form mutual release of claims. It provides, in part:

For and in consideration of the execution of this Mutual Release, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, [Khademazad] hereby releases, acquits and forever discharge[s] [Aidris], its agents, servants, employees, attorneys and all persons, natural or corporate, in privity with [Aidris], for any and all claims or causes of action of any kind whatsoever at common law, statutory, or otherwise which [Khademazad] has or might have, known or unknown, now existing or that might arise hereafter, directly or indirectly attributable to the transaction or occurrences made the basis of this lawsuit, it being intended to release all claims of any kind which [Khademazad] might have against those hereby released, regarding the events which are the subject of this lawsuit, whether asserted in the above captioned suit or not. This release shall not act to prevent enforcement of this agreement in the event of default. [Emphasis added.]

Less than two months after signing the agreement, Khademazad sued Gharavi for libel, libel per se, business disparagement, and negligence. All these claims were based on the single Yelp post in which Gharavi voiced frustration over the unpaid judgment.

Gharavi moved for summary judgment on various grounds. Among them was Gharavi's contention that the release barred Khademazad's claims.

The motion went undecided and a one-day bench trial followed. Thereafter, the trial judge entered a judgment for Khademazad on all of his claims, awarding Khademazad monetary damages of approximately $1.2 million. Gharavi timely appealed ….

Khademazad agreed to release all claims "directly or indirectly attributable to the transaction or occurrences made the basis of this lawsuit," namely Khademazad's failure to pay for services Aidris provided and the resulting lawsuit. The benefit of the release extends to Aidris's "agents, servants, employees, attorneys and all persons, natural or corporate, in privity with [Aidris]," and the parties agree that Gharavi is an agent of Aidris.

Without question, the Yelp review was, if not directly, then indirectly attributable to Khademazad's failure to pay for Aidris's services and the lawsuit that followed. {The Yelp review mentions both the non-payment and the lawsuit.} Khademazad's claims here are clearly within the subject matter of the release. Moreover, the libel, disparagement, and negligence claims asserted against Gharavi were specifically contemplated by the parties during their negotiations to resolve Aidris's claims against Khademazad….

We conclude that Khademazad's claims against Gharavi are barred by the release. We reverse the trial court's judgment and render judgment that Khademazad take nothing.

NEXT: Knee Defenders and Virtual Laps—Part 2

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  1. Wow, you’d have thought that Khademazad having failed to pay the earlier judgment would have guaranteed that lawsuit would be a loser, by itself. Was Gharavi unrepresented at the bench trial, or something like that? How could he have possibly prevailed, against a truth defense?

    1. Brett – it very well could be incompetent council.

      FWIW – It was the 101st district court Dallas county judge staci williams. I live in Dallas county which has become solid democrat county. suffice it to say, I vote in the democrat primary hopefully to reduce the likelihood getting of judges such as staci williams voted in. Bad ruling at district court likely a combination of bad council and incompetent judge

    2. Defense trial counsel was Haynes & Boone. If you read the briefs, it’s clear just how out of line the trial court ruling was.

      1. Strike that. Haynes & Boone wasn’t brought on until after the initial judgment. Defense counsel at the bench trial was a solo attorney whose hourly rate of $190 is on the first page of his website.

        1. Coming soon: The bench trial attorney’s libel suit for the impending Yelp review.

        2. But, seriously, how bad would your counsel have to have been to have reasonably lost this case? I think it has to be on the judge, mostly.

          1. IANAL, but for a bench trial where the Judge is weighing the evidence, doesn’t the Yelp review defend itself? It provides an opinion, which are the inherent purpose of reviews, grounded in indisputable fact. Do you need a lawyer to remind the judge what the law is? I guess the answer is yes.

            But would the best lawyer have been able to overturn whatever apple carts are in the judge’s head?

            1. Honestly, the merits of, and defenses to, the libel claim are a red herring. The release is the important thing.

              I cannot understand not only how the plaintiff prevailed at trial, but that he didn’t get D’s attorney fees assessed against him.

              1. Gharavi prevailing was over-determined several times over, all I can think is that the judge was biased somehow, or his attorney seriously incompetent, or maybe it would require both at once.

                1. I doubt it could be attorney incompetence. If he had failed to raise any of the dispositive issues at trial (the only way he could legitimately have lost), then the appeal would have failed too.

                  1. I am in Dallas County, and while I cant comment on this judge in particular (Staci Williams as I recall), All the judges are democrats. The comments I get from the civil litigators here in Dallas is that they have to spend considerable time in court educating the judges. There was a shift from solid republican judges to a solid slate of democrat judges circa 2000-2002.

                    1. Bingo. This is a direct, foreseeable, and in the case of many big-money Democratic donors who are trial lawyers practicing routinely on the plaintiffs’ side, intentional outcome from flipping the trial court benches. Look for this to recur, more and more frequently, in not just Dallas, but also Harris, Bexar, and Travis Counties.

              2. Honestly, the merits of, and defenses to, the libel claim are a red herring. The release is the important thing.

                Empirically true, since that’s all the appellate court ruled on. “The release controls, so we don’t have to address any of these other issues that you spent 40 pages developing.”

  2. I don’t understand this at all. What was found libelous about the Yelp posting? It looked 100% truthful to me.

    Clearly I agree with the judge that the release for “future cause of action” that the dentist signed screwed his pooch for the libel claim. But I don’t understand how there was even ever a libel case.

    1. The phrase in the findings of fact and conclusions of law is “attacking Dr. Khademazad’s competency as a dentist because of his refusal and/or inability to pay a judgment he owed to Aidris, Inc.” and “accused Dr. Khademazad of professional and business improprieties.”

      This is straight from the plaintiff’s MSJ. The theory was that it the review’s language “… can’t even be trusted with a court order !! Why would you trust him with your health” was false and misleading because the failure to pay a judgment does not mean that a dentist can’t be trusted or lacks professional competence. The MSJ basically just repeats that Dr. Khademazad is a good dentist, and it’s defamatory to say he’s not because he didn’t pay a judgment. This is thoroughly demolished in the appellant’s brief, but apparently carried the day at the bench trial.

      1. The judgment is a red herring. He hired Aidris to perform a service and then didn’t pay them. If he wasn’t able to pay them he shouldn’t have hired them. If his situation changed he likely could have borrower the money to pay them. If that failed he could have made an honest attempt to make good his debt. If he was truly unable to pay he could have filed for bankruptcy. If he can’t be trusted to honor his legal obligation in one instance, by stiffing someone he hired what makes anyone think he would be more scrupulous in honoring his ethical obligation to his customers, like not cutting corners on supplies, hiring qualified assistants, etc.?

      2. ” the failure to pay a judgment does not mean that a dentist can’t be trusted or lacks professional competence.”

        That’s an opinion. Can opinions be libelous in Texas?

  3. I see a lot of settlements, agreements, and contracts shuffle across my desk, and the waiver language always varies. Some of them take up pages and others are “catch alls” like this one. The enforceability is going to be different in every jurisdiction, but I have also seen courts give more credit to a one liner waiver such as this one while straight up finding the multi-page version to be so specific it left out the one hypothetical that is before the court. I’ve also seen settlements for multi-million dollar cases contain absolutely NO waivers or hold harmless clauses which just astounds me.

    Always read every line of a deal before signing it and don’t just assume your counsel put in all the “standard boilerplate” (whatever that is) because sometimes they don’t.

    1. “That never happens.”

      Until it does.

      1. I keep a log of the “it is never going to happen” moments in my career. Maybe it is just me, but I am up for around 50 where someone in authority made such a declaration and then it happened. I don’t think it is unique to my situation though as I have talked to other managers that make have similar files and will go out of their way to document situations where someone made such a declaration as they tend to come back around much later.

        Maybe when I retire, if the various NDA’s permit, I’ll compile some of them into an anonymous type article.

    2. “I see a lot of settlements, agreements, and contracts shuffle across my desk, and the waiver language always varies. Some of them take up pages and others are ‘catch alls’ like this one.”

      Ever see one that waived truth as a defense for libel?

  4. >major court judg[ ]ment

    Did they go out of their way to remove an e?

  5. The trial judge here not only flatly ignored a summary judgment motion that had raised the aettlement waiver and proceeded to trial without deciding it, he found large libel danages for what is clearly a combination of accurately stated fact and inactionable opinion.

    Something about this looks very, very fishy.

    1. One hopes it’s just incompetence and not along the lines of these fine judges:

      404th District Court Abel Limas
      93rd District Court Rudy Delgado
      144th District Court Angus McGinty

  6. For there to have been a libel judgment to overturn, a factfinder has to have found a libel in the defendant’s statements, which means they proved that there was something false in what the defendant said. How the hell did a court get THERE?

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