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KROCHALIS v. INSURANCE CO. OF NORTH AMERICA

December 19, 1985

WILLIAM J. KROCHALIS and DEBRA Y. KROCHALIS
v.
INSURANCE COMPANY OF NORTH AMERICA, et al.



The opinion of the court was delivered by: VANARTSDALEN

 VanARTSDALEN, J.

 After extensive discovery, defendants have moved for summary judgment in this case which involves a dispute arising from the events that took place during and immediately following the termination of the employment relationship between plaintiff William J. Krochalis and defendant Insurance Company of North America (INA). Plaintiffs' complaint seeks relief on twelve counts: counts one through three for defamation of William Krochalis; count four for assault; count five for false imprisonment; count six for invasion of privacy; count seven for intentional infliction of emotional distress; count eight for negligent infliction of emotional distress; count nine for breach of contract; count ten seeks punitive damages (presumedly on the basis of the liability contended in the preceding counts); count eleven for defamation of Debra Krochalis; and count twelve for Debra Krochalis' loss of her husband's consortium. Defendants have moved for summary judgment on all counts.

 Plaintiff William J. Krochalis worked for defendant INA from January 1979 until February 1982. He was hired originally as Manager of Market Research and was promoted eventually to Director of Market Development. In 1981, INA's Corporate Audit Department conducted an audit of the operations of the Marketing Department including the expense accounts of the employees in the Market Development Department, which was then headed by Krochalis. The audit revealed several irregularities in Krochalis' expense reports, and, on February 1, 1982, Krochalis' supervisor, James E. Malling, gave Krochalis the choice of resigning or being terminated. Krochalis resigned and informed the INA employees in his department of his decision to resign on February 1, 1982. Later that day, after he left the office, Krochalis apparently changed his mind about resigning and dictated two memoranda to his secretary over the telephone. One memorandum, addressed to Malling, stated that Krochalis was not resigning, despite his statements of that morning. The other memorandum, addressed to the employees in his department, stated that Krochalis' subordinates should disregard his earlier statements concerning his resignation, and that business would proceed as usual.

 The next morning, February 2, 1982, Krochalis came to work. Pat Hasson, Director of Personnel, requested that Krochalis come to see him in the Personnel Office. Under Hasson's threat either to have security guards come and bring Krochalis to the Personnel Office or to have security guards remove Krochalis from the premises, Krochalis agreed to go to the Personnel Office to meet with Hasson. Hasson told him that his employment was terminated and instructed him to leave the premises. Krochalis left the building after this meeting with Hasson.

 Later that day, February 2, 1982, Malling conducted a meeting with the employees of the Market Development Department. Krochalis claims that Malling's comments at that meeting regarding Krochalis' resignation and regarding the audit of the Marketing Department contain defamatory innuendo. Malling's comments at that meeting form the basis for Krochalis' slander and defamation claims. The facts relevant to each claim are discussed in greater detail in considering defendants' motion for judgment on each claim.

 In deciding a motion for summary judgment, the court must determine whether the moving party has carried its burden of showing that there are no genuine issues of material fact. See Hollinger v. Wagner Mining Equipment Co., 667 F.2d 402, 405 (3d Cir. 1981). All reasonable inferences from the evidentiary material of record must be drawn in favor of the nonmoving party. Small v. Seldows Stationery, 617 F.2d 992, 994 (3d Cir. 1980). A response to a properly supported summary judgment motion may not rest upon the allegations of the pleadings but must present, by affidavit or otherwise, specific facts sufficient to create a genuine issue of material fact. Fed. R. Civ. P. 56(e); Sunshine Books, Ltd. v. Temple University, 697 F.2d 90, 96 (3d Cir. 1982).

 Plaintiff William J. Krochalis submitted an affidavit in opposition to defendants' summary judgment motion. Defendants have moved to strike paragraphs 11, 13-22, 34 and 35 of Krochalis' affidavit on grounds that those portions of the affidavit are not made on personal knowledge or do not set forth facts that would be admissible in evidence. Fed. R. Civ. P. 56(e). To a great extent, defendants' objections are well-founded, and I will disregard certain portions of Krochalis' affidavit in ruling on defendants' summary judgment motion.

 In paragraphs 13 to 22, Krochalis sets forth the events and statements during and following the February 2, 1982 meeting that Malling held with the employees in Krochalis' department. Although this portion of Mr. Krochalis' affidavit is helpful to the court as a summary of the evidence of record, Mr. Krochalis' reading of other witnesses' depositions is not evidence. Much of this material would more appropriately be part of plaintiffs' brief than part of an affidavit. The material is covered in the depositions, and Mr. Krochalis' recounting of the evidence in depositions and exhibits will not independently be considered as evidence.

 Finally, defendants object to Mr. Krochalis' statements in paragraph 34 as to what he "learned" about the auditors' investigation of his expense accounts and in paragraph 35 as to Krochalis' belief concerning the reasons for his termination. Defendants claim that these statements are not based on Mr. Krochalis' personal knowledge. Although Krochalis has not established by affidavit the basis for his personal knowledge on these matters, I cannot conclude on this record that he had no personal knowledge of these matters. I will consider all of paragraphs 34 and 35 of Mr. Krochalis' affidavit.

 I. The Defamation Counts

 In Count I plaintiff, William Krochalis, seeks to recover from defendants for slander allegedly arising from the comments Malling made to the employees in INA's Marketing Department on February 2, 1982. Malling stated that Krochalis had resigned, that the matter was between Krochalis and the company, and that he would not comment further on the resignation. Toward the end of the meeting, Malling commented on the audit of the Marketing Department. Krochalis contends that the following statements were made by Malling and that they were false and defamatory to Krochalis:

 
(1) "Any reoccurrence of fraudulent activities or misuse of company funds for personal gain will result in immediate termination."
 
(2) "Both the person and the approving manager will be terminated for fraudulent expense vouchers."
 
(3) "I don't know what kind of culture existed here before, but these actions . . . will not be tolerated any longer."
 
(4) "There will be no general amnesty. If you want to confess I will listen."

 Plaintiffs' Memorandum at 12; see also Complaint para. 10. Krochalis contends that those statements were slanderous and that they conveyed to the audience the meaning that he "had committed criminal acts of theft, misuse, embezzlement, and/or fraudulent conversion of company monies." Complaint para. 11.

 Defendants contend that they are entitled to summary judgment on Krochalis' slander claims because Malling's remarks were true, were protected by a qualified privilege and were not uttered negligently, recklessly or with malice. *fn1" In this slander action, Pennsylvania common and statutory law applies as modified by federal constitutional principles of free speech embodied in the first amendment. See Gertz v. Robert Welch, Inc., 418 U.S. 323, 41 L. Ed. 2d 789, 94 S. Ct. 2997 (1974); Rutt v. Bethlehems' Globe Publishing, 335 Pa. Super. 163, 484 A.2d 72 (Pa. Super. 1984).

 Pennsylvania has established by statute the burdens of proof for the parties to a defamation action with respect to the major elements of the cause of action and the state-law defenses.

 
(a) Burden of Plaintiff. -- In an action for defamation, the plaintiff has the burden of proving, when the issue is properly raised:
 
(1) The defamatory character of the communication.
 
(2) Its publication by the defendant.
 
(3) Its application to the plaintiff.
 
(4) The understanding by the recipient of its defamatory meaning.
 
(5) The understanding by the recipient of it as intended to be ...

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