Opinion
Index No. 158329/2022
05-11-2023
Julia Haart, Plaintiff, v. Silvio Scaglia, LANNY J. DAVIS, LOUIS PONG, and DOES 1 through 10, inclusive, Defendants.
Counsel for plaintiff: Anderson Kill, P.C. by Sheldon Eisenberger, Jeremy Shockett, Jason Erik Kosek; Lavely & Singer PC by Martin D. Singer, Esq., Allison S. Hart, Esq., Todd S. Eagan, Esq Counsel for defendants: Orrick Herrington & Sutcliffe LLP by Lisa Simpson, Peter Andrews Bicks,
Unpublished Opinion
Counsel for plaintiff: Anderson Kill, P.C. by Sheldon Eisenberger, Jeremy Shockett, Jason Erik Kosek; Lavely & Singer PC by Martin D. Singer, Esq., Allison S. Hart, Esq., Todd S. Eagan, Esq
Counsel for defendants: Orrick Herrington & Sutcliffe LLP by Lisa Simpson, Peter Andrews Bicks,
DOUGLAS E. HOFFMAN, J.
In this defamation action brought by Plaintiff Julia Haart, defendants Silvio Scaglia (Scaglia) and Lanny J. Davis (Davis) move, pursuant to CPLR 3211 (a) (7) and (g) and Civil Rights Law § 76-a, to dismiss the complaint with prejudice and for an award, pursuant to Civil Rights Law § 70-a, of their costs and attorneys' fees. Plaintiff Julia Haart opposes the motion.
Background
The following facts are taken from the complaint unless otherwise indicated. Plaintiff Haart and Defendant Scaglia are currently married, and litigating their divorce before the undersigned, in another action, in this Court.
As stated in her complaint in this action, Haart is a fashion designer and author and appears in "My Unorthodox Life," a reality television series airing on Netflix that documents her life after she left the ultra-Orthodox Jewish community in Monsey, New York (NYSCEF Doc No. 2, complaint ¶¶ 2, 9 and 17). Haart served as the Creative Director of La Perla, a retail apparel company, from 2016 to 2018, and as Chief Executive Officer (CEO) and Chief Creative Officer of Elite World Group, LLC (EWG), a talent/media company, from March 2019 until she was terminated in February 2022 (id., ¶¶ 1-2, 17 and 19). Scaglia is Haart's estranged husband (id., ¶ 1). Davis is Scaglia's lawyer and publicist (id., ¶ 14). Defendant Louis Pong (Pong) resides in Hong Kong, China and is the former head of EWG's Asia Division (id., ¶¶ 1 and 15).
Haart first met Scaglia in 2015 at a meeting Pong had arranged to discuss designing a line of shoes for La Perla, then owned by Scaglia (id., ¶¶ 17-18). Shortly thereafter, La Perla and Haart's company, Julia Haart, LLC, entered into a co-branding agreement, and Haart was later appointed La Perla's Creative Director (id., ¶ 18). Haart and Scaglia subsequently entered into a romantic relationship and married in 2019 (id., ¶ 20). Scaglia, who had acquired the "Elite" brand in 2011, formed Freedom Holdings, Inc. (Freedom) in 2018 as a holding company for the couple's business ventures and personal investments (Haart v Scaglia, 2022 WL 3108806, *3, 2022 Del Ch LEXIS 188, *5-6 [Del Ch, Aug. 4, 2022, No. 2022-1045-MTZ], affd -A3d -, 2023 WL 2795968, 2023 Del LEXIS 113 [Del Apr. 5, 2023]). In January 2019, Freedom formed EWG as a wholly owned subsidiary to hold the Elite business (2022 WL 3108806, *3, 2022 Del Ch LEXIS 188, *7). Scaglia appointed Haart as EWG's CEO in March 2019 (NYSCEF Doc No. 2, ¶ 19). In July 2019, Scaglia transferred half of Freedom's common stock to Haart; he owned the remainder and all of Freedom's preferred stock (2022 WL 3108806, *4, 2022 Del Ch LEXIS 188, *8). Scaglia later transferred less than half the preferred stock to Haart (2022 WL 3108806, *12, 2022 Del Ch LEXIS 188, *26).
In January 2021, Haart requested a divorce from Scaglia (NYSCEF Doc No. 2, ¶ 4). As she states in her complaint herein, it was agreed they would remain business partners and delay divorce proceedings until the end of that year (id., ¶ 20). On February 3, 2022, Haart informed Scaglia that she wished to proceed with a divorce and that she no longer wished to remain business partners (id., ¶ 21). Scaglia allegedly retaliated by terminating Haart as EWG's CEO (id.). The complaint alleges that Defendants then embarked upon a public media campaign to defame Haart by publishing allegedly defamatory statements in press releases dated February 14 and March 18, 2022 and in articles appearing on "Page Six" of the New York Post on February 28, March 11 and July 2, 2022.
A. The February 14, 2022 Press Release
Davis issued a press release on February 14, 2022 with the heading "Elite World Group Chairman Silvio Scaglia announces retaining attorney Lanny J. Davis as legal advisor to correct the record from false and misleading public accusations Julia Haart has made against him" (the February Press Release) (NYSCEF Doc No. 2, ¶ 24). The February Press Release includes three allegedly defamatory statements:
1. "an unauthorized transfer by Ms. Haart of $850,000 cash was 'illegal' and constituted a 'misappropriation' of company funds";
2. "agreed not to touch that money"; and
3. "those two words together may fairly be interpreted to mean 'possible criminal conduct that might justify a criminal investigation and action against Ms. Haart'"(id., ¶ 24) (emphasis removed). Haart alleges that Scaglia and Davis accused her directly, implicitly and/or impliedly of criminal conduct even though they knew the statements were false (id., ¶ 25). Haart claims that she withdrew the money as her management fees from an account on which she was an authorized signatory and denies the existence of an agreement (id., ¶¶ 26-27).
B. The March 18, 2022 Press Release
On March 18, 2022, Davis released a press release titled "New attorneys added to Freedom-EWG team, Attorney Lanny Davis announces" (the March Press Release) with two allegedly defamatory statements:
1. "The first team addition is Benjamin Brafman, the well-known NY criminal attorney, and his firm. Mr. Brafman is specifically tasked to conduct a thorough investigation of Ms. Haart as to whether she has violated any federal, state, or local criminal laws, considering Mr. Brafman's extensive experience with the criminal justice system"; and
2. "If Mr. Brafman finds substantial evidence that Ms. Haart has violated criminal laws, then he will make formal referral(s) for further investigation to the offices of the federal Manhattan (Southern District of New York) U.S. Attorney, the New York Attorney General and the New York County District Attorney, upon client approval"(id., ¶ 39) (emphasis removed). Haart alleges the statements falsely portray her as a criminal (id., ¶¶ 40-41).
C. The February 28, 2022 and March 11, 2022 New York Post Articles
In February and March 2022, the New York Post published two articles about a Bentley vehicle leased by SW Vestry Cars, LLC (SW Vestry), an entity owned by Freedom, for Haart's use (id., ¶ 29). The statements are attributed to unnamed sources which Haart, upon information and belief, presumes to be Scaglia or someone acting on his behalf (id., ¶ 30). The two allegedly defamatory statements in the February 28, 2022 article (the February Article), which bears the headline "Julia Haart and ex Silvio Scaglia at war over $132K Bentley" (NYSCEF Doc No. 24, Peter A. Bicks [Bicks] affirmation, exhibit O at 1), are:
1. "Scaglia is accusing Haart of keeping the luxury car without permission"; and
2. "Sources told us that Freedom Holding is allegedly days away from requesting an arrest warrant for theft. 'Ms. Haart still hasn't answered the main question: Why do you have company property, a lease signed by Mr. Scaglia alone, since you have been terminated by the company?' a spokesman for Scaglia said"(NYSCEF Doc No. 2, ¶¶ 30-31) (emphasis removed).
A second article with the headline "My Unorthodox Life's Julia Haart wanted by police for allegedly stealing a car" published on March 11, 2022 (the March Article) repeats the same disputed statements that appeared in the February Article (id., ¶ 34). The March Article also attributes the following statement to Davis: "the company has decided to withdraw its request to the NYPD to summon Ms. Haart to court on the misdemeanor charge of unauthorized use of someone else's vehicle" (id., ¶ 35) (emphasis removed). Haart alleges that these statements falsely accuse her of criminality (id., ¶¶ 37-38). Haart claims that SW Vestry leased the vehicle for her personal use, she paid the amounts due on the lease, and the police determined that there was no criminal conduct (id., ¶¶ 33 and 37).
D. The July 2, 2022 New York Post Article
On July 2, 2022, the New York Post published an article with the headline "'Con artist' Julia Haart allegedly paid to meet her Italian billionaire ex" (the July Article) (id., ¶ 42) (emphasis removed). Haart alleges, upon information and belief, that Scaglia, Pong or someone acting on Scaglia's behalf, were the primary sources for the article. The July Article contains three allegedly defamatory statements attributed to Scaglia:
1. Haart was a "'con artist' who 'misrepresented herself'";
2. "'She [Haart] flew all the way [to Tokyo] just to meet me and I know now that she paid people to be introduced to me'"; and
3. "[S]he claimed to have patents which she did not. This was all to make me fall in love with her"(id., ¶ 43) (emphasis removed). Pong is quoted as stating that Haart "'beg[ged] to meet [Scaglia]' because 'she wanted to seduce Scaglia, who was married to his first wife, Monica, at the time'" (id.) (emphasis removed). Haart alleges that these statements are false (id., ¶ 45).
E. The Other Lawsuits
Since February 2022, Haart and Scaglia have been involved in at least five other lawsuits with each other or entities associated with them in New York and Delaware.
One is a contested matrimonial action captioned Scaglia v Haart, Sup Ct, NY County, Index No. 365088/2022 (the Matrimonial Action) commenced on February 18, 2022 (as discussed in Freedom Holding, Inc. v Haart, 76 Misc.3d 746, 749 [Sup Ct, NY County 2022]). This action has been consolidated with a family offense petition Haart had brought approximately a week earlier, on February 10, 2022, in Family Court, New York County (NYSCEF Doc No. 8, Scaglia aff, ¶ 4; NYSCEF Doc No. 29, Bicks affirmation, exhibit T, oral argument tr at 158).
Another case is titled Freedom Holding, Inc. v Haart, Sup Ct, NY County, Index No. 650661/2022 (the Freedom Action), filed on February 10, 2022, by Freedom, Scaglia, EWG and E1972 Inc. (E1972), an entity owned by Freedom, against Haart and Haart Dynasty LLC (Haart Dynasty), regarding an allegedly unauthorized transfer of $850,000 Haart made from Freedom's bank account on February 8, 2022 to Haart Dynasty (NYSCEF Doc No. 8, ¶ 6; Freedom Holding, Inc., 76 Misc.3d at 751). After a motion to dismiss certain claims was granted in part (Freedom Holding, Inc., 76 Misc.3d at 767), the parties discontinued the action with prejudice (NYSCEF Doc No. 46, Haart aff, exhibit H).
Yet another case is Haart v Scaglia, No. 2022-1045-MTZ, in the Court of Chancery in Delaware (the First Delaware Action), filed by Haart on February 11, 2022, against Scaglia, Freedom and EWG, alleging that she and Scaglia were equal co-owners in Freedom and challenging his decision to remove her from EWG, among other claims. After an expedited trial, at which testimony and documentary evidence was presented, Vice Chancellor Zurn found that Haart did not own equal 50% shares in all classes of Freedom's stock, concluded that Scaglia had authority to remove her from EWG, and issued declarations and judgments conforming to those findings (2022 WL 3108806, *17-19, 2022 Del Ch LEXIS 188, *40-44). Haart's breach of fiduciary duty claim, which was not tried (2022 WL 3108806, *10, 2022 Del Ch LEXIS 188, *23), was dismissed without prejudice (Haart v Scaglia, 2022 WL 4131842 [Del Ch, Sept. 9, 2022, No. 2022-1045-MTZ]). Delaware's Supreme Court unanimously affirmed (Haart v Scaglia, -A3d -, 2023 WL 2795968, 2023 Del LEXIS 113 [Del Apr. 5, 2023]).
Then, on June 8, 2022, EWG and E1972 sued Haart in the Court of Chancery in Delaware for breach of fiduciary duty and other claims in Elite World Group, LLC v Haart, No. 2022-0499-MTZ (the Second Delaware Action) (NYSCEF Doc No. 8, ¶ 7; NYSCEF Doc No. 18, Bicks affirmation, exhibit I, ¶¶ 3, 7 and 28-44). The complaint pleaded the same allegation as in the Freedom Action that Haart had withdrawn funds from Freedom's account without authorization (NYSCEF Doc No. 18, ¶ 27; NYSCEF Doc No. 32, Bicks affirmation, exhibit W, ¶ 34). The parties dismissed this action with prejudice (NYSCEF Doc No. 53 at 1; Elite World Group, LLC v Haart, 2022 WL 17717339 [Del Ch, Dec. 14, 2022, No. 2022-0499-MTZ]).
Further, on July 8, 2022, Haart brought another action in New York, now asserting 11 causes of action, including fraudulent inducement and breach of fiduciary duty, against Scaglia, Jeffrey Feinman, DDK & Company, LLP, Paolo Barbieri and Freedom (Haart v Scaglia, Sup Ct, NY County, Index No. 652373/2022) (the Commercial Action). The court (Borrok, J.) granted in part a motion to dismiss brought by Scaglia and Freedom and dismissed several causes of action against them, but denied the balance of their motion on the remaining claims (see Haart v Scaglia, 78 Misc.3d 1202 [A], 2023 NY Slip Op 50143[U], *16 [Sup Ct, NY County 2023]).
This action was reassigned to the undersigned (NYSCEF doc. 78) in March 2023.
Procedural History
At the same time as the parties are litigating their various lawsuits in an attempt to sever their personal and business relationship, Haart brings this action for libel against Scaglia, Davis and Does 1 through 10 based on the February and March Press Releases (first cause of action) and slander against all defendants based on the February, March and July Articles (second cause of action). Haart alleges that the statements are defamatory per se. Haart does not include in her complaint the numerous published articles about Scaglia, including those that she admitted were provided to the media by her counsel or other agents. Haart does not include in her complaint the statements in her public Netflix show, apparently including regarding the breakup and lawsuits. To say that the end of this two-year marriage and business relationship (when both parties decided to schedule Scaglia's "move out" from the former marital residence for Haart's Netflix show, and Scaglia then moved out, on camera, on that scheduled date, and then, both parties have readily admitted litigating these cases in the press) is resulting in a remarkable scorched-earth approach to litigation on both sides would be an understatement.
The court decides the motion to dismiss on the complaint, referenced herein documents, and the applicable law.
In lieu of serving an answer, Scaglia and Davis (together, defendants) move to dismiss the complaint on the grounds the complaint fails to plead actual malice; certain statements are protected under the fair reporting privilege in Civil Rights Law § 74; and certain statements are true. Additionally, defendants contend that New York's anti-SLAPP statute applies, which subjects a SLAPP suit plaintiff to a heightened standard of proof to avoid dismissal. Submitted on the motion are copies of the complaint; the publications in which the statements appear; Scaglia's affidavit; decisions, hearing transcripts and court filings; and other exhibits.
Pong has not appeared in this action, and NYSCEF does not reflect the filing of an affidavit of service of the summons and complaint upon him.
Haart argues in opposition that the claims have a substantial basis in law and that defendants acted with actual malice. She relies on her affidavit; an affidavit from Tania Cohen (Cohen), Scaglia's former executive assistant; text messages; a lease application with Bentley Manhattan; account statements from Bentley Financial Services; and other exhibits.
Discussion
On a motion to dismiss pursuant to CPLR § 3211 (a) (7), the court must "'accept the facts as alleged in the complaint as true, accord plaintiff[ ] the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory'" (Connaughton v Chipotle Mexican Grill, Inc., 29 N.Y.3d 137, 141 [2017], quoting Leon v Martinez, 84 N.Y.2d 83, 87-88 [1994]). Although factual allegations in a complaint are afforded a favorable inference, bare legal conclusions and inherently incredible facts are not entitled to preferential treatment (Matter of Sud v Sud, 211 A.D.2d 423, 424 [1st Dept 1995]).
Strategic lawsuits against public participation, or SLAPP suits, "are characterized as [actions] having little legal merit but are filed nonetheless to burden opponents with legal defense costs and the threat of liability and to discourage those who might wish to speak out in the future" (600 W. 115th St. Corp.v Von Gutfeld, 80 N.Y.2d 130, 137 n 1 [1992], rearg denied 81 N.Y.2d 759 [1992], cert denied 508 U.S. 910 [1993]). Civil Rights Law § 76-a, the State's anti-SLAPP statute, is meant to "broaden[ ] the protection of citizens facing litigation arising from their public petition and participation" (Mable Assets, LLC v Rachmanov, 192 A.D.3d 998, 1000 [2d Dept 2021]). Civil Rights Law § 76-a (1) (a) reads:
"An 'action involving public petition and participation' is a claim based upon:
(1) any communication in a place open to the public or a public forum in connection with an issue of public interest; or
(2) any other lawful conduct in furtherance of the exercise of the constitutional right of free speech in connection with an issue of public interest, or in furtherance of the exercise of the constitutional right of petition."
The term "'[p]ublic interest' shall be construed broadly, and shall mean any subject other than a purely private matter" (Civil Rights Law § 76-a [1] [d]). Damages are recoverable only "if the plaintiff, in addition to all other necessary elements, shall have established by clear and convincing evidence that any communication which gives rise to the action was made with knowledge of its falsity or with reckless disregard of whether it was false, where the truth or falsity of such communication is material to the cause of action at issue" (Civil Rights Law § 76-a [2]). Stated another way, a SLAPP suit plaintiff must establish that the communication was made with actual malice (Guerrero v Carva, 10 A.D.3d 105, 116 [1st Dept 2004]).
Defendants posit that this action constitutes a SLAPP suit because the statements were published in a public forum and concern matters of public interest. Haart concedes that, for purposes of this motion, the challenged statements involve matters of public interest, as this dispute has been discussed on her Netflix show and in numerous media outlets (NYSCEF Doc No. 36, Haart's mem of law at 12 n 1). Haart also does not dispute whether the statements were made in a public forum. Furthermore, Haart acknowledges that she must demonstrate that her claims have a substantial basis in law. Thus, this action qualifies as a SLAPP suit.
CPLR § 3211 (g) prescribes the procedure for dismissing a SLAPP suit and states that a motion to dismiss pursuant to CPLR § 3211 (a) (7) "shall be granted unless the party responding to the motion demonstrates that the cause of action has a substantial basis in law or is supported by a substantial argument for an extension, modification or reversal of existing law" (CPLR § 3211 [g] [1]). The court in making its determination "shall consider the pleadings, and supporting and opposing affidavits stating the facts upon which the action or defense is based" (CPLR § 3211 [g] [2]). A SLAPP suit plaintiff is subject to "a heightened standard of proof" (Hariri v Amper, 51 A.D.3d 146, 150 [1st Dept 2008]). Thus, to avoid dismissal under CPLR § 3211 (g), the plaintiff must show that the claims "have 'a substantial basis in law,' which requires 'such relevant proof as a reasonable mind may accept as adequate to support a conclusion or ultimate fact'" (Smartmatic USA Corp. v Fox Corp., 213 A.D.3d 512, 512 [1st Dept 2023] [citation omitted]). Should the defendant prevail on securing a dismissal of the action, it is entitled to recover its attorneys' fees from the plaintiff (Civil Rights Law § 70-a [1] [a]).
"Defamation is 'the making of a false statement which tends to expose the plaintiff to public contempt, ridicule, aversion or disgrace, or induce an evil opinion of him in the minds of right-thinking persons, and to deprive him of their friendly intercourse in society'" (Stepanov v Dow Jones & Co., Inc., 120 A.D.3d 28, 34 [1st Dept 2014] [citation omitted]). It may take the form of libel or slander (Ava v NYP Holdings, Inc., 64 A.D.3d 407, 411 [1st Dept 2009], lv denied 14 N.Y.3d 702 [2010]). Because only facts may be proven false, a statement purporting to convey a fact is actionable for defamation (Davis v Boeheim, 24 N.Y.3d 262, 268 [2014]), but a statement of pure opinion is not (Mann v Abel, 10 N.Y.3d 271, 276 [2008]). True or substantially true statements are not actionable (Franklin v Daily Holdings, Inc., 135 A.D.3d 87, 94 [1st Dept 2015]; Dillon v City of New York, 261 A.D.2d 34, 39 [1st Dept 1999]). Whether a statement is defamatory is a matter for the court to determine (Aronson v Wiersma, 65 N.Y.2d 592, 593 [1985]). "The words must be construed in the context of the entire statement or publication as a whole, tested against the understanding of the average reader, and if not reasonably susceptible of a defamatory meaning, they are not actionable and cannot be made so by a strained or artificial construction" (id. at 593-594). In addition, certain communications, though defamatory, may be immune from suit because of an absolute or qualified privilege (Rosenberg v Metlife, Inc., 8 N.Y.3d 359, 365 [2007]). A defamatory statement must cause special damages, defined as "the loss of something having economic or pecuniary value," or constitute defamation per se (Liberman v Gelstein, 80 N.Y.2d 429, 434-435 [1992] [internal quotation marks and citation omitted]). Statements are defamatory per se if they: charge the plaintiff with a serious crime; tend to injure the plaintiff in its business or profession; allege the plaintiff has a loathsome disease; or impute unchastity to a woman (id.). Therefore, to state a cause of action for defamation, the plaintiff must allege: "(1) a false statement that is (2) published to a third party (3) without privilege or authorization, and that (4) causes harm, unless the statement is one of the types of publications actionable regardless of harm" (Stepanov, 120 A.D.3d at 34).
Because the anti-SLAPP statute applies, Haart must demonstrate that her claims have a substantial basis in law, meaning that the complaint and supporting proof must allege facts showing that defendants knew the statements were false or were made with reckless disregard of whether they were false (Civil Rights Law § 76-a [2]; Smartmatic, 213 A.D.3d at 512; Dugan v Berini, 2022 NY Slip Op 33774[U], *7 [Sup Ct, Kings County 2022]). "Reckless disregard means a high degree of awareness of probable falsity" (Rivera v Time Warner Inc., 56 A.D.3d 298, 298 [1st Dept 2008]). This is a subjective inquiry that focuses on the publisher's state of mind at the time of publication (Kipper v NYP Holdings Co., Inc., 12 N.Y.3d 348, 354-355 [2009]). The evidence must be such that it "'permit[s] the conclusion that the defendant in fact entertained serious doubts as to the truth of [the] publication'" (Freeman v Johnson, 84 N.Y.2d 52, 58 [1994], cert denied 513 U.S. 1016 [1994], quoting St. Amant v Thompson, 390 U.S. 727, 731 [1968]). "[A] 'court typically will infer actual malice from objective facts, [such as] the defendant's own actions or statements, the dubious nature of his sources, [and] the inherent improbability of the story [among] other circumstantial evidence'" (Celle v Filipino Reporter Enterprises Inc., 209 F.3d 163, 183 [2d Cir 2000] [citations omitted]). Other factors include:
"(1) whether a story is fabricated or is based wholly on an unverified, anonymous source, (2) whether the defendant's allegations are so inherently improbable that only a reckless person would have put them in circulation, or (3) whether there are obvious reasons to doubt the veracity of the informant or the accuracy of his reports"(Church of Scientology Intl. v Behar, 238 F.3d 168, 174 [2d Cir 2001], cert denied 534 U.S. 814 [2001]). "Actual malice should not be confused with the concept of malice as an evil intent or a motive arising from spite or ill will" (Masson v New Yorker Magazine, Inc., 501 U.S. 496, 510 [1991]). As such, ill will is insufficient to satisfy the actual malice standard (Harte-Hanks Communications, Inc. v Connaughton, 491 U.S. 657, 666 [1989]), but "[e]vidence of ill will combined with other circumstantial evidence indicating that the defendant acted with reckless disregard of the truth or falsity of a defamatory statement may also support a finding of actual malice" (Celle, 209 F.3d at 183).
A. The February Press Release
Defendants argue that the statements in the February Press Release are privileged under Civil Rights Law § 74 and that the complaint's allegations of actual malice are conclusory.
Haart contends that the fair and true report privilege does not extend to statements publicizing sham litigation brought solely to defame an adversary. In this case, Haart alleges that Scaglia brought the Freedom Action solely to defame her because Davis issued the February Press Release just days later. Scaglia then abandoned the action, which Haart contends establishes the lack of merit to his claims. Haart also argues that defendants were aware that the statements alleging she had engaged in criminal conduct are false. She and Scaglia had agreed that EWG would pay 2% of its annual revenue to Freedom as compensation for her services (NYSCEF Doc No. 38, Haart aff, ¶ 25). Haart, who claims she was owed more than $7 million in management fees, withdrew $850,000 from Freedom's JP Morgan Chase account (id., ¶ 30). She attests that the withdrawal was proper since she co-owns Freedom and is a signatory on the account (id., ¶¶ 26 and 30; NYSCEF Doc No. 45, Haart aff, exhibit G). Cohen avers that she spent "several months searching through emails, documents, bank and credit card statements, only to find that not a single dollar had been taken improperly by Ms. Haart" (NYSCEF Doc No. 37, Cohen aff, ¶ 6).
Civil Rights Law § 74 absolutely immunizes a speaker from a civil suit for libel for the "publication of a fair and true report of any judicial proceeding." A report is considered "'fair and true' within the meaning of the statute [where] the substance of the article [is] substantially accurate" (Holy Spirit Assn. for Unification of World Christianity v New York Times Co., 49 N.Y.2d 63, 67 [1979]). "The question is not whether or not the statement is 'true.' The question is whether it is a substantially accurate description of the claims made in the proceeding" (Mulder v Donaldson, Lufkin & Jenrette, 161 Misc.2d 698, 705 [Sup Ct, NY County 1994], affd 208 A.D.2d 301 [1st Dept 1995]). Whether a report is substantially accurate must be interpreted liberally and turns on "whether the published account of the proceeding would have a different effect on the reader's mind than the actual truth, if published" (Daniel Goldreyer, Ltd. v Van de Wetering, 217 A.D.2d 434, 435-436 [1st Dept 1995]). If the report "suggests more serious conduct than that actually suggested in the official proceeding, then the privilege does not attach, as a matter of law" (id. at 436). Malice or bad faith will not defeat the privilege (Weeden v Lukezic, 201 A.D.3d 425, 429 [1st Dept 2022]). A party who maliciously commences an action alleging false and defamatory charges and then circulates a press release publicizing that action, though, cannot invoke Civil Rights Law § 74 to avoid a civil libel suit (Williams v Williams, 23 N.Y.2d 592, 599 [1969]).
As applied here, Haart has failed to demonstrate that the Williams exception to Civil Rights Law § 74 applies. Haart contends that Scaglia and Freedom failed to prosecute the Freedom Action, but the record demonstrates otherwise (see Lacher v Engel, 33 A.D.3d 10, 14 [1st Dept 2006] [no evidence of malicious intent where the underlying action was "pursued vigorously"]). After Freedom and Scaglia discontinued certain claims (NYSCEF Doc No. 25, notice of discontinuance, in the Freedom Action), Haart and Haart Dynasty moved to dismiss some, but not all, of the remaining claims. Freedom and Scaglia opposed the motion. In a decision and order dated July 20, 2022, this court noted that "[d]efendants conceded [at oral argument] that even if they were to succeed on each branch of their motion, the action would not be dismissed in its entirety, and at least two claims (all, again, related to the $850,000 transfer) would remain" (Freedom Holding, Inc., 76 Misc.3d at 752). Haart appealed the decision (NYSCEF Doc No. 41, notice of appeal, in the Freedom Action), but never perfected it. Several months passed before the parties filed a stipulation of discontinuance with prejudice.
The court may take judicial notice of undisputed court records and files (see RGH Liquidating Trust v Deloitte & Touche LLP, 71 A.D.3d 198, 207 [1st Dept 2009], revd on other grounds 17 N.Y.3d 397 [2011]).
Scaglia's decision to discontinue the Freedom Action also does not establish that the lawsuit was a sham. A settlement agreement dated December 12, 2022 between Haart, Scaglia, Freedom, EWG and E1972 resolved the Freedom Action, the Second Delaware Action (together, the Litigations) and Haart's demand for an advance of her expenses incurred in those Litigations (NYSCEF Doc No. 53, Bicks affirmation, exhibit A at 1). The agreement reads, in part:
"The Parties each reserve the right to raise the facts at issue in the Litigations (a) as a defense of truth in the New York action bearing index number 158329/2022 and entitled Julia Haart v. Silvio Scaglia, Lanny J. Davis, Louis Pong, Does 1 through 10, inclusive, (b) to contest as a defense any allegation regarding any alleged nonpayment raised in the New York action bearing index number 652373/2022 and entitled Julia Haart v. Silvio Scaglia, Jeffrey Feinman, DDK & Company, LLP, Paolo Barbieri, and Freedom Holding, Inc., and any related litigations that may later arise, and (c) as a factor for consideration in the matrimonial proceedings bearing index number 365088/2022 and entitled Silvio Scaglia v. Julia Haart. The dismissals shall not operate as a determination on the merits of any claim asserted in the Litigations and neither party (personally or through their agents) shall make any statement claiming otherwise. For the avoidance of doubt, the Parties agree that no claims asserted in the Litigations therein shall be asserted as affirmative claims or counterclaims of any kind against any Party or result in any liability of Haart"(id.). In view of this provision, Haart expressly agreed that dismissal did not resolve the merits of the claims raised in the Freedom Action. Thus, contrary to Haart's assertion, the Freedom Action was not admitted to be a sham action brought solely to discredit her (Weeden, 201 A.D.3d at 428)
The fair and true report privilege applies to commentary on a judicial proceeding (Cholowsky v Civiletti, 69 A.D.3d 110, 114-115 [2d Dept 2009]), and on review of the entire February Press Release, the statements fall within the scope of Civil Rights Law § 74. The document concerns Scaglia's hiring of Davis to assist on "matters in litigation and in contention with Ms. Haart" (NYSCEF Doc No. 22, Bicks affirmation, exhibit N at 1). Haart complains that the statements are defamatory per se but immediately preceding the first challenged statement is:
"As alleged in the complaint, one day after she received the notice of termination letter dated February 7, Ms. Haart - without notice or authorization, and after having agreed to not touch that money - improperly caused $850,000 cash to be transferred by a wire from an account of the parent company of Elite World Group, Freedom Holding Inc., to a company controlled by Haart"(id.). The sentence in which the first statement appears begins with"[i]n the February 10 NY State Supreme Court lawsuit, the legal filing alleged" (id.). The original complaint in the Freedom Action, of which this court takes judicial notice (RGH Liquidating Trust, 71 A.D.3d at 207), alleged "[t]his suit arises from Haart's misappropriation of $850,000 out of the company's bank account" and "Haart illegally transferred $850,000 from Freedom Holding to Defendant Haart Dynasty LLC, a limited liability company controlled by Haart" (NYSCEF Doc No. 1, complaint ¶ 1, in the Freedom Action). Thus, the first statement, "an unauthorized transfer by Ms. Haart of $850,000 cash was 'illegal' and constituted a 'misappropriation' of company funds," is substantially accurate as a statement that essentially summarizes or restates the allegations in the complaint (Napoli v New York Post, 175 A.D.3d 433, 434 [1st Dept 2019], lv denied 35 N.Y.3d 906 [2020]; Lacher, 33 A.D.3d at 17). The first statement is privileged under Civil Rights Law § 74.
The second statement, "agreed not to touch that money," is a substantially accurate summary of that complaint. The original complaint alleged that Haart and Scaglia had agreed that neither would withdraw more than $250,000 each from Freedom's account (NYSCEF Doc No. 1, complaint ¶¶ 10-11 and 16-17, in the Freedom Action). Additional support is found in an email from accountant Jeffrey S. Feinman summarizing the parties' agreement (NYSCEF Doc No. 55, Bicks affirmation, exhibit C). As such, this second statement is privileged as a statement that essentially summarizes or restates the allegations in the complaint (Lacher, 33 A.D.3d at 17).
The third statement, "those two words together may fairly be interpreted to mean 'possible criminal conduct that might justify a criminal investigation and action against Ms. Haart,'" when read in the context, does not suggest more serious conduct than what had been alleged in the Freedom Action such that the statement falls outside the protection of Civil Rights Law § 74 (see Burke v Newburgh Enlarged City Sch. Dist., 195 A.D.3d 674, 676 [2d Dept 2021] [statements did not suggest more serious conduct and "were merely rhetorical flourish and expression of opinions"]). As stated above, the complaint alleged that Haart had illegally withdrawn funds. Because an average reader could reasonably equate "illegality" with criminality, the statement does not charge Haart with having engaged in more serious conduct.
Civil Rights Law § 74 also "extend[s] to reports of judicial proceedings that are mixed with commentary or opinion" (Center of Med. Progress v Planned Parenthood Fedn. of Am., 551 F.Supp.3d 320, 329 [SDNY 2021], affd sub nom. Daleiden v Planned Parenthood Fedn. of Am., 2022 WL 1013982, 2022 U.S. App LEXIS 9086 [2d Cir 2022]; but see Easton v Public Citizens, Inc., 1991 WL 280688, *3, 1991 U.S. Dist LEXIS 18690, *7 [SDNY, Dec. 26, 1991, No. 91 Civ. 1639 (JSM)] [added commentary not privileged under Civil Rights Law § 74]). Haart complains that reference to a potential criminal investigation goes beyond simply reporting on the Freedom Action. Whether a statement is conveying a fact about the plaintiff requires the court to consider the content of the communication as a whole and its tone and apparent purpose (Davis, 24 N.Y.3d at 270). Here, the words "possible" and "might" imply the statement is likely an expression of opinion (GS Plasticos Limitada v Bureau Veritas, 84 A.D.3d 518, 517 [1st Dept 2011] ["it is likely" and "may" suggestive of opinion]) such that "a reasonable reader would understand the statements defendant made about plaintiff as mere allegations to be investigated rather than as facts" (Brian v Richardson, 87 N.Y.2d 46, 53 [1995]) (emphasis in original). Because Haart has failed to show that her claim has a substantial basis in law, the motion to dismiss that part of the first cause of action for libel based on the February Press Release is granted.
B. The March Press Release
Defendants argue that the statements in the March Press Release are true and that the complaint fails to plead actual malice. Haart maintains that the press release falsely infers that she engaged in criminal conduct and that she has adequately pleaded actual malice.
The March Press Release announced the addition of two attorneys, including Benjamin Brafman (Brafman), to Scaglia's legal team (NYSCEF Doc No. 26, Bicks affirmation, exhibit Q at 1). Haart does not allege that these statements are false. Instead, Haart claims that the two statements "Mr. Brafman is specifically tasked to conduct a thorough investigation of Ms. Haart as to whether she has violated any federal, state, or local criminal laws" and "[i]f Mr. Brafman finds substantial evidence that Ms. Haart has violated criminal laws, then he will make formal referral(s) for further investigation" defame her by implication (NYSCEF Doc No. 2, ¶ 39).
"'Defamation by implication' is premised not on direct statements but on false suggestions, impressions and implications arising from otherwise truthful statements" (Armstrong v Simon & Schuster, 85 N.Y.2d 373, 380-381 [1995]; Herbert v Lando, 781 F.2d 298, 307 [2d Cir 1986], cert denied 476 U.S. 1182 [1986] [defamation by implication is "a combination of individual statements which in themselves may not be defamatory might lead the reader to draw an inference that is damaging to the plaintiff"]). Otherwise truthful statements may be actionable "'[i]f the communication, by the particular manner or language in which the true facts are conveyed, supplies additional, affirmative evidence suggesting that the defendant intends or endorses the defamatory inference, the communication will be deemed capable of bearing that meaning'" (Stepanov, 120 A.D.3d at 36, quoting White v Fraternal Order of Police, 909 F.2d 512, 520 [DC Cir 1990]). The omission or strategic juxtaposition of key facts may also give rise to a claim for defamation by implication (see Partridge v State of New York, 173 A.D.3d 86, 90-91 [3d Dept 2019]). To avoid dismissal of such a claim, the plaintiff "must make a rigorous showing that the language of the communication as a whole can be reasonably read both to impart a defamatory inference and to affirmatively suggest that the author intended or endorsed that inference" (Stepanov, 120 A.D.3d at 37-38).
The statements challenged herein fail this rigorous test. The statements do not accuse Haart of criminal conduct on their face. Nor do the statements, when read in the context of the entire press release, reasonably impart a defamatory inference that Haart had engaged in criminal conduct (see Akpinar v Moran, 83 A.D.3d 458, 459 [1st Dept 2011], lv denied 17 N.Y.3d 707 [2011] [reference to a pending criminal investigation insufficient to establish defamation by innuendo]). The press release states only that Brafman will conduct an investigation into whether there was a violation and may make a referral if supported (see Vengroff v Coyle, 231 A.D.2d 624, 625 [2d Dept 1996] [reasonable reader would have understood statements using the words "'apparently', 'rumored', and 'reportedly'" were allegations to be investigated, not fact]). Reference to Brafman as a well-known criminal attorney also does not create a false impression, as Brafman is not affiliated with a law enforcement agency. Moreover, the average reader cannot reasonably conclude that the March Press Release implies Haart engaged in criminal conduct, since not every investigation results in a criminal charge or a conviction (see e.g. Martin v Hearst Corp., 777 F.3d 546, 553 [2d Cir 2015], cert denied 577 U.S. 816 [2015] ["[r]easonable readers understand that some people who are arrested are guilty and that others are not. Reasonable readers also know that in some cases individuals who are arrested will eventually have charges against them dropped"]; Wilson v New York, 2018 WL 1466770, *5, 2018 U.S. Dist LEXIS 49609, *16 [ED NY, Mar. 26, 2018, No. 15-CV-23 (CBA) (VMS)] [granting dismissal where a statement permitted neither a positive nor a negative inference]). At most, a reasonable reader would understand the press release conveyed allegations to be investigated as opposed to specific facts about Haart (Brian, 87 N.Y.2d at 53).
Haart has also failed to demonstrate that defendants intended or endorsed a defamatory reference. This objective inquiry looks not at the publisher's subjective intent but whether "the communication, read or viewed as a whole objectively, conveys that the publisher meant such meaning" (Partridge, 173 A.D.3d at 94-95; Stepanov, 120 A.D.3d at 37 [stating the court must look at "the language of the communication as a whole"]). The language employed in the March Press Release does not objectively suggest that defendants endorsed the defamatory inference (see Golan v Daily News, L.P., 77 Misc.3d 258, 270 [Sup Ct, NY County 2022], affd 214 A.D.3d 558 [1st Dept 2023] [bare allegation that defendants intended to endorse a defamatory inference insufficient to plead defamation by implication]), since it only alludes to allegations that may be investigated (Brian, 87 N.Y.2d at 53). As Haart has failed to carry her burden of demonstrating that her claim on the March Press Release has a substantial basis in law, the motion to dismiss that part of the first cause of action based on the March Press Release is granted.
C. The February and March Articles
Defendants contend that the statements in the February and March Articles about the Bentley are privileged under Civil Rights Law § 74 and are true statements. They also claim that the complaint fails to adequately plead actual malice. Scaglia avers that when Haart was dismissed from EWG, EWG expected Haart to return the Bentley, which SW Vestry had leased as a company vehicle (NYSCEF Doc No. 8, ¶ 35). Scaglia personally guaranteed the lease, and EWG made the payments (id., ¶ 37). Scaglia avers that Haart claimed that she was not required to return the car, an issue which has been litigated in the Matrimonial Action, and after she failed to return the car after a written demand, his assistant "made a complaint to the police" (id., ¶¶ 36 and 38). The Bentley was retrieved on March 4, 2022 from a parking space rented by Haart and returned to Manhattan Motorcars Bentley, whereupon Scaglia terminated the lease (id., ¶¶ 39-40). Scaglia states that he did not pursue any further charges against Haart (id., ¶ 40).
Haart asserts that Civil Rights Law § 74 is inapplicable. She submits that there was no official investigation because the police determined that the alleged theft involved a civil domestic dispute. Haart also maintains that Scaglia knew the statements accusing her of theft were false because the Bentley was acquired for her use during the marriage and was financed by a trade-in of Haart's personal vehicle (NYSCEF Doc No. 38, ¶ 32). She further attests that she attempted to continue the lease payments, but Scaglia prevented her from doing so by unilaterally terminating the lease (id., ¶ 33). Cohen avers that Scaglia knew there was no truth to his claim that Haart kept the vehicle without permission (NYSCEF Doc No. 37, ¶ 8).
Haart's averment appears to contradict the allegation in the complaint that she had "paid the outstanding amounts due on the lease out of her own pocket" (NYSCEF Doc No. 2, ¶ 33).
An official proceeding for purposes of Civil Rights Law § 74 involves "activities which are within the prescribed duties of a public body. The test is whether the report concerns "'action taken by a person officially empowered to do so'" (Freeze Right Refrig. & A.C. Servs. v City of New York, 101 A.D.2d 175, 182 [1st Dept 1984] [citation omitted]). Substantially accurate reports of police investigations (Rodriguez v Daily News, L.P., 142 A.D.3d 1062, 1063 [2d Dept 2016], lv denied 28 N.Y.3d 913 [2017]), arrests (Hayt v Newsday, LLC, 176 A.D.3d 787, 788 [2d Dept 2019]) and arraignments and criminal indictments (Bertgulia v City of New York, 133 F.Supp.3d 608, 649-650 [SD NY 2015], affd 672 Fed.Appx. 96 [2d Cir 2016], cert denied 138 S.Ct. 78 [2017]) are privileged under the statute. Contrary to defendants' assertion, the February Article does not report on an official proceeding. The article states, "[w]e're told that reps for the Italian mogul, along with his attorney, have contacted local police, who advised them to give Haart seven days to return the car before pursuing whether charges could be brought" (NYSCEF Doc No. 24 at 3). The article makes plain that no investigation was taking place or was about to take place at the time it was published. That Scaglia's assistant made a complaint does not establish that the complaint triggered an investigation. Hence, defendants have not shown that the fair and true report privilege extends to the February Article.
Nevertheless, Haart has not established that there is a substantial basis to support the allegation that the statements were made with actual malice. Haart avers that the statements are all part of Scaglia's campaign to destroy her reputation in the media, stating that Scaglia once said he would "' kill [me] in a second,' meaning that he would destroy my professional reputation in a second" (NYSCEF Doc No. 38, ¶ 2) (emphasis in original). Cohen attests that Scaglia caused SW Vestry to cancel the lease "solely out of spite because he knew and had expressed to me that Ms. Haart had a strong personal attachment to the Bentley and wanted to punish/hurt her by having the car taken away from her (NYSCEF Doc No. 37, ¶ 8). These averments exhibit nothing more than Scaglia's personal contempt or vindictiveness directed at Haart, and a "defendant's animosity towards plaintiff[ ] is irrelevant" (Great Wall Med. P.C. v Levine, 74 Misc.3d 1224[A], 2022 NY Slip Op 50219[U], *2 [Sup Ct, NY County 2022]).
This statement was discussed at length in a decision dated August 11, 2022 in the Matrimonial Action (NYSCEF Doc No. 20, Bicks affirmation, exhibit K).
The complaint, supplemented by Haart's submissions, fails to plead actual malice or "'enough facts to raise a reasonable expectation that discovery will reveal actual malice'" (Jacob v Lorenz, 2022 WL 4096701, *7, 2022 U.S. Dist LEXIS 161822, *20 [SD NY, Sept. 7, 2022, No. 21 Civ. 6807 (ER)], quoting Biro v Conde Nast, 807 F.3d 541, 546 [2d Cir 2015]; Rivera, 56 A.D.3d at 298 [granting dismissal where "[p]laintiff did not plead actual malice either explicitly or through facts from which actual malice can be inferred"]). First, the statement "Scaglia is accusing Haart of keeping the luxury car without permission" is substantially true. Scaglia did accuse Haart of keeping the vehicle without permission. The second statement, "[s]ources told us that Freedom Holding is allegedly days away from requesting an arrest warrant for theft. 'Ms. Haart still hasn't answered the main question: Why do you have company property, a lease signed by Mr. Scaglia alone, since you have been terminated by the company?' a spokesman for Scaglia said" (id. at 3), is also substantially true. Haart admitted that she was terminated from EWG and that SW Vestry leased the car (see Carey v Toy Indus. Assn. TM, Inc., - A.D.3d -, 2023 NY Slip Op 02280, *2 [1st Dept 2023] [fact admitted in a complaint considered a judicial admission]). Scaglia is the sole signatory on the lease (NYSCEF Doc No. 56, Haart aff, exhibit D), and the billing statements identified SW Vestry as the sole account holder (NYSCEF Doc No. 57, Haart aff, exhibit F). Freedom owned SW Vestry (NYSCEF Doc No. 38, ¶ 32), and Scaglia controlled the majority of Freedom's stockholder voting power, a fact Haart was "long aware of" (Haart, 2022 WL 3108806, *17, 2022 Del Ch LEXIS 188, *39). As such, it appears that Scaglia controlled SW Vestry, as well, and could seek a return of the vehicle. Thus, it appears defendants had ample support for the statements published in the February Article. Haart pleads no other facts and offers no other relevant proof from which to infer that Scaglia, or others purporting to act on his behalf, knew the statements in the February Article were false, or that they entertained serious doubts as to their truth (see Reus v ETC Hous. Corp., 72 Misc.3d 479, 487 [Sup Ct, Clinton County 2021], affd 203 A.D.3d 1281 [3d Dept 2022], lv dismissed 39 N.Y.3d 1059 [2023] [dismissing a SLAPP suit where the plaintiff failed to furnish any evidence of actual malice]).
Haart did not plead the exact slanderous words spoken by Scaglia or unnamed sources or to whom the statements were made. Instead, the statement "Scaglia is accusing Haart of keeping the luxury car without permission" appears to paraphrase what may have been said (see BCRE 230 Riverside LLC v Fuchs, 59 A.D.3d 282, 283 [1st Dept 2009]).
The March Article fares no better, as it contains the same allegedly defamatory statements "word for word" that appeared in the February Article (NYSCEF Doc No. 2, ¶ 34). The article also includes a statement Davis had issued to the New York Post which reads, in part, "the company has decided to withdraw its request to the NYPD to summon Ms. Haart to court on the misdemeanor charge of unauthorized use of someone else's vehicle" (NYSCEF Doc No. 25, Bicks affirmation exhibit P at 2). Haart alleges that this statement implies that the police believed there was criminal conduct (NYSCEF Doc No. 2, ¶ 37). Haart, though, fails to plead non-conclusory facts that Davis knew the statement was false, made the statement with reckless disregard or entertained serious doubts as to its truth (see Golan, 77 Misc.3d at 272 [conclusory allegations of actual malice in a complaint insufficient on a SLAPP suit]). In Davis's full statement, he recounted that the police visited the garage where the vehicle was located, confirmed it was leased to an EWG-related company and allowed EWG to remove it (NYSCEF Doc No. 25 at 2). When read in its entirety, Davis's statement does not give the false impression that the police believed there was criminal conduct. The statement makes clear it was the "company" that had requested that the police summon Haart to court. It is unclear how the decision "to withdraw a request to the NYPD" is somehow false or inconsistent with Scaglia's averment that no further charges were pursued (see Berrio v City of New York, 212 A.D.3d 569, 570 [1st Dept 2023] [statement released to media outlet was substantially true when made]).
Furthermore, the March Article appears to report on the result of a police investigation, thereby making the fair and true report privilege in Civil Rights Law § 74 applicable (see Rodriguez, 142 A.D.3d at 1063). The article, citing U.S. Weekly as its source, states that "police showed up to take the car into custody but did not wind up taking it" (NYSCEF Doc No. 25 at 2). The article includes statements from Haart's "reps" that "cops have since demurred on the whole thing. It's a civil matter" and "[t]he cops initially engaged. Identified the whole thing as part of an acrimonious divorce and walked away" (id.). Thus, Haart has not sustained her burden of showing that the claims based on the February and March Articles have a substantial basis in law. The motion to dismiss the parts of the second cause of action for slander on these articles is granted.
D. The July Article
Regarding the July Article, defendants argue that the complaint fails to plead actual malice. In his affidavit, Scaglia details the facts and events which led him to conclude that Haart had planned to use his status and money to achieve celebrity (NYSCEF Doc No. 8, ¶¶ 10 and 29). He first describes Haart's "pattern of seeking out wealthy men to extract money and support her lavish lifestyle" (id., ¶ 11). He identifies two men, Moshe Lax and Martin Ehrenfeld (Ehrenfeld), who invested significant sums in Haart's company but were never repaid (id., ¶¶ 12-16). When the latter sought a return of his investment, which Haart had used to pay her personal expenses, Haart filed a criminal complaint against him and caused him to be arrested (id., ¶¶ 15-16). Scaglia cites Haart's memoir, which includes her motto "fake it till you make it" (id., ¶¶ 8 and 12; NYSCEF Doc No. 15, Bicks affirmation, exhibit F at 121), and offers Ehrenfeld's sworn affidavit opposing a bankruptcy petition brought by Julia Haart, LLC describing Haart's "manipulation" tactics in support (NYSCEF Doc No. 10, Bicks affirmation, exhibit A, Ehrenfeld aff, ¶¶ 12-13 and 18).
Next, Scaglia avers that Pong had relayed his belief that Haart was trying to seduce Scaglia (NYSCEF Doc No. 8, ¶ 20). Scaglia attests that he had no reason to doubt Pong due to their longstanding relationship (id., ¶¶ 20 and 48). Scaglia states that after he and Haart became romantically involved, he provided Hart with spending money and paid her personal expenses, (id., ¶ 25). Haart then began pressuring him to purchase her company because she had to satisfy her debts (id., ¶ 26). Scaglia complied, paying nearly $3 million to "bail[ ] her out of bankruptcy, tax, and other debts" (id.). He helped Haart become a director on EWG's board and later CEO, whereupon Haart began spending millions on luxury clothing, accessories and makeup, all paid for by EWG (id., ¶ 29). Haart also pressured him to give her more control over Freedom, including half of Freedom's preferred stock (id., ¶ 30). When Haart began planning their divorce in January 2021, she "surveyed her ownership interest in Freedom and the Elite companies" (id., ¶ 31).
Scaglia also avers that, at their first meeting, Haart claimed to have patented a gel insert for shoes but learned later that she had not applied for a patent before they met (NYSCEF Doc No. 8, ¶ 22). On this point, Scaglia's attorney affirms that a search his firm conducted for patents and patent applications filed on Haart's behalf with the U.S. Patent and Trademark Office revealed that Haart had applied for, and abandoned, a provisional patent application in March 2016 (NYSCEF Doc No. 9, Bicks affirmation, ¶ 2).
For her part, Haart vehemently refutes the "thrust" of Scaglia's statements that she was a con artist who duped him into falling in love with her (NYSCEF Doc No. 38, ¶ 4). She denies that she paid someone to meet Scaglia (id., ¶ 8). Instead, she had agreed to pay a percentage of the revenues generated from the sales of her shoe designs to an unnamed third party who had arranged for her to meet with Pong; Haart had never heard of Scaglia before that meeting (id., ¶ 8). Haart states that it was Pong who suggested she meet with Scaglia to discuss a shoe line (id., ¶ 10), and denies that she ever intended to seduce Scaglia when she met with Pong (id., ¶ 13). She claims that Pong has a motive to lie because he is one of Scaglia's oldest friends (id., ¶ 17), and because she closed Elite Asia's offices due to Pong's mismanagement (id., ¶ 20). On the issue of patents, Haart avers that she informed Scaglia of her intent to seek patents for her designs and never claimed that her company had already obtained patents (id., ¶ 21). Haart further states that Scaglia was aware of the status of the patent applications because La Perla purchased Julia Haart, LLC's assets and entered into a license agreement for its intellectual property (id., ¶¶ 22-23).
Here, Haart's "repeated and persistent denials as to the truth of the statements" fail to establish a substantial basis to support her allegation of actual malice (see Brimelow v New York Times Co., 2021 WL 4901969, *2, 2021 U.S. App LEXIS 31672, *5-6 [2d Cir 2021], cert denied 142 S.Ct. 1210 [2022]; Edwards v National Audubon Society, 556 F.2d 113, 121 [2d Cir 1977] ["'clear and convincing proof' standard cannot be predicated on mere denials, however vehement; such denials are so commonplace in the world of polemical charge and countercharge that, in themselves, they hardly alert the conscientious reporter to the likelihood of error"]). Haart's pointed rebuttals to the July Article are plainly insufficient to reveal Scaglia's attitude to the truth of his statements (see Konifkoff v Prudential Ins. Co. of Am., 234 F.3d 92, 99 [2d Cir 2000] [actual malice focuses on "the defendant's attitude toward the truth"]).
Nor has Haart proffered persuasive evidence of actual malice (see Comic Strip Promotions, Inc. v Envivo LLC, 2023 NY Slip Op 31112[U], *5 [Sup Ct, NY County 2023] [lack of persuasive evidence of actual malice warrants dismissal]). Scaglia is quoted as saying, "she paid people to be introduced to me" (NYSCEF Doc No. 27 at 3). Haart alleges that his statement is false because she had paid to meet Pong, not Scaglia, but whether Scaglia's statement is "inaccurate in some respect would not be sufficient to demonstrate, prima facie, that [Scaglia] knew or should have known of the inaccuracy at the time [he] made the communication" (International Shoppes, Inc. v At the Airport, LLC, 131 A.D.3d 926, 936 [2d Dept 2015]). Scaglia attests that, in early 2022, he learned that Haart had paid $3,000 to be introduced to Pong, who was La Perla's then-head of operations in Tokyo (NYSCEF Doc No. 8, ¶ 15), and that Haart had emailed her investors on February 18, 2015 claiming that she needed $300,000 for travel expenses and to "look good and make the owner of la perla fall in love w [sic] me and my brand and do what I do best" (NYSCEF Doc No. 14, Bicks affirmation, exhibit E at 2). Thus, the basis for this first statement does not rest solely on what Haart perceives is Pong's subjective bias.
In the second statement, Scaglia is quoted as saying, "[s]he claimed to have patents which she did not. This was all to make me fall in love with her" (NYSCEF Doc No. 27 at 3). Haart states Scaglia knew this statement was false because she "never claimed the company already had patents" (NYSCEF Doc No. 38, ¶ 21). Haart's averment is too conclusory to plead facts from which to infer actual malice. Her reliance on a letter agreement between Julia Haart, LLC and La Perla Global Management (UK), Limited is also unavailing. Haart assumes Scaglia is intimately familiar with the agreement, which refers to the provisional patent applications filed in March 2016 (NYSCEF Doc No. 44, Haart aff, exhibit F at 15). The agreement, though, was executed by La Perla's director, Paolo Barbieri (id. at 7). Haart has not alleged any facts showing that Scaglia was aware of the specific terms of this agreement and chose to ignore them (see e.g. Palin v New York Times Co., 940 F.3d 804, 814 [2d Cir 2019] [plausible inference of actual malice where the defendant failed to reacquaint himself with contrary articles that contradicted the defendant's editorial]).
Last, Haart complains that Scaglia referred to her as a "'con artist' who 'misrepresented herself'" (NYSCEF Doc No. 2, ¶ 42). Haart's forceful objections fail to establish actual malice or plead facts indicating that Scaglia knew this statement was false when it was made or that he harbored serious doubts as to its truth (see Brimelow, 2021 WL 4901969, *2, 2021 U.S. App LEXIS 31672, *5-6). The July Article discusses the bases for Scaglia's statement, and Scaglia explained in his affidavit what additional events led him to conclude that Haart was a "con artist." Because Haart has failed to furnish relevant proof showing that a claim grounded on the July Article has a substantial basis in law, the motion to dismiss the parts of the second cause of action for slander predicated on this article is granted.
The term "con artist" appears in the article's last sentence, "[s]aid the entrepreneur: 'Today I must say I recognize that she is a master con artist" (NYSCEF Doc No. 27 at 7). "[M]isrepresented herself" appears in a caption beneath a photograph of Haart and Scaglia which reads, "Silvio Scaglia, her estranged husband, said Haart mis-represented herself as a successful business woman" (id. at 3).
Given the backdrop against which this statement was published, in the midst of several acrimonious lawsuits between Haart and Scaglia, the phrase "con artist" may not even be reasonably susceptive of a defamatory connotation (see Huggins v National Broadcasting Co., 1996 WL 763337, *3 [Sup Ct, NY County 1996] [finding that "con artist" was not actionable because it was incapable of being proven false, and when the contextual background was considered, a reasonable listener would have concluded that the defendant was speaking subjectively and conveying her personal belief, as opposed to verifiable facts of criminal behavior by the plaintiff]).
Therefore, the action will be dismissed as to movants, and then severed and continued against the remaining defendants. To date, Haart has not filed an affidavit of service on remaining defendants, Pong and Does 1-10, although 120 days have passed since her September 28, 2022 filing of the summons and complaint (NYSCEF docs. 1, 2). CPLR 306-b. Within 20 days of herein Order, Haart shall either (i) file proof of service on the remaining defendants, (ii) seek permission to extend the time for service upon good cause shown or in the interest of justice, or (iii) show cause why the action should not be dismissed against the remaining defendants. Id.; see also Leader v. Maroney, Ponzini & Spencer, 97 N.Y.2d 95, 101 [2001].
Pursuant to Civil Rights Law § 70-a (1) (a), defendant may recover its damages, including costs and attorney's fees, from the plaintiff if it is shown the action "was commenced or continued without a substantial basis in fact and law and could not be supported by a substantial argument for the extension, modification or reversal of existing law."
Defendants have demonstrated their entitlement to their attorneys' fees under Civil Rights Law § 70-a (1) (a) (see Golan v Daily News, L.P., 214 A.D.3d 558, 559 [1st Dept 2023]).
"The party seeking fees bears the burden of demonstrating that its requested fees are reasonable. lodestar-the product of a reasonable hourly rate and the reasonable number of hours required by the case-creates a 'presumptively reasonable fee.' An analysis of hourly rates turns on 'what a reasonable, paying client would be willing to pay, given that such a party wishes to spend the minimum necessary to litigate the case effectively.' As to hours, the Court conducts 'a conscientious and detailed inquiry into the validity of the representations that a certain number of hours were usefully and reasonably expended.'" Charles v. Seinfeld, 2022 WL 889162, at *3 [SDNY 2022] (collecting cases). In awarding fees, the court would consider, among other factors, "the nature and extent of the services rendered, the complexity of the issues involved, and the reasonableness of counsel's performance and fees under the circumstances." Deborah R. v Dean E.H., 183 A.D.3d 500, 501 [1st Dept 2020].
Accordingly, it is
ORDERED that the motion brought by defendants Silvio Scaglia and Lanny J. Davis to dismiss the complaint herein (motion sequence no. 001) is granted, and the complaint is dismissed in its entirety as against said defendants, with costs and disbursements to said defendants as taxed by the Clerk of the Court, and the Clerk is directed to enter judgment accordingly in favor of said defendants; and it is further
ORDERED that the action is severed and continued against the remaining defendants; and it is further
ORDERED that the caption be amended to reflect the dismissal and that all future papers filed with the court bear the amended caption; and it is further
ORDERED that the amended caption is as follows:
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK:
x
JULIA HAART, Plaintiff, against
LOUIS PONG and DOES 1 through 10, inclusive, Defendants.
x
Index No. 158329/2022
; and it is further
ORDERED that counsel for the moving party shall serve a copy of this order with Form 8019(c) https://iappscontent.courts.state.ny.us/NYSCEF/live/forms/notice.to.county.clerk.pdf upon the Clerk of the Court and the Clerk of the General Clerk's Office, who are directed to mark the court's records to reflect the change in the caption herein; and it is further
ORDERED that within 20 days of herein Order, Haart shall either (i) file proof of service on the remaining defendants, (ii) seek permission to extend the time for service upon good cause shown or in the interest of justice, or (iii) show cause why the action should not be dismissed against the remaining defendants; and it is further
ORDERED that the issue of the amount of attorneys' fees, costs and expenses incurred by defendants Silvio Scaglia and Lanny J. Davis in this action, to which they is entitled to recover from plaintiff Julia Haart under Civil Rights Law § 70-a, is referred to a Special Referee to hear and report; and it is further
ORDERED that a Judicial Hearing Officer ("JHO") or Special Referee shall be designated to hear and report to this court on the amount of attorneys' fees, costs and expenses incurred by defendants Silvio Scaglia and Lanny J. Davis in this action which is hereby submitted to the JHO/Special Referee for such purpose; except that, in the event of and upon filing a stipulation of the parties as permitted by CPLR § 4317, the Special Referee shall determine the aforesaid issues; and it is further
ORDERED that the powers of the JHO/Special Referee shall not be limited beyond the limitations set forth in the CPLR; and it is further
ORDERED that this matter is hereby referred to the Special Referee Clerk (Room 119, 646-386-3028 or spref@nycourts.gov) for placement at the earliest possible date upon the calendar of the Special Referees Part (Part SRP), which, in accordance with the Rules of that Part (which are posted on the website of this court at www.nycourts.gov/supctmanh at the "References" link), shall assign this matter at the initial appearance to an available JHO/Special Referee to hear and report as specified above; and it is further
ORDERED that counsel shall immediately consult one another and counsel for defendants Silvio Scaglia and Lanny J. Davis shall, within 15 days from the date of this Order, file via NYSCEF and submit to the Special Referee Clerk by fax (212-401-9186) or e-mail an Information Sheet (accessible at the "References" link on the court's website) containing all the information called for therein and that, as soon as practical thereafter, the Special Referee Clerk shall advise counsel for the parties of the date fixed for the appearance of the matter upon the calendar of the Special Referees Part; and it is further
ORDERED that the parties shall appear for the reference hearing, including with all witnesses and evidence they seek to present, and shall be ready to proceed with the hearing, on the date fixed by the Special Referee Clerk for the initial appearance in the Special Referees Part, subject only to any adjournment that may be authorized by the Special Referees Part in accordance with the Rules of that Part; and it is further
ORDERED that, except as otherwise directed by the assigned JHO/Special Referee for good cause shown, the trial of the issue(s) specified above shall proceed from day to day until completion and counsel must arrange their schedules and those of their witnesses accordingly; and it is further
ORDERED that counsel shall file memoranda or other documents directed to the assigned JHO/Special Referee in accordance with the Uniform Rules of the Judicial Hearing Officers and the Special Referees (available at the "References" link on the court's website) by filing same with the New York State Courts Electronic Filing System (see Rule 2 of the Uniform Rules); and it is further
ORDERED that any motion to confirm or disaffirm the Report of the JHO/Special Referee shall be made within the time and in the manner specified in CPLR § 4403 and Section 202.44 of the Uniform Rules for the Trial Courts (unless a CPLR § 4317 stipulation had been entered into).
This original Decision and Order is filed by the Court on NYSCEF, which shall constitute filing and entry. Defendant is hereby directed to file a Notice of Entry of herein Decision and Order within 10 days.