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WENZ v. BECKER

December 17, 1996

RICHARD E. WENZ, Plaintiff, against ARTHUR P. BECKER and TIME, INC., Defendants.


The opinion of the court was delivered by: KRAM

 SHIRLEY WOHL KRAM, U.S.D.J.

 In this defamation action, defendant Arthur P. Becker ("Becker") moves for summary judgement pursuant to Federal Rule of Civil Procedure 56 on the ground that his allegedly defamatory statement is protected as a fair and true report on a judicial proceeding under New York Civil Rights Law Section 74. For the reasons set forth below, Becker's motion is denied.

 BACKGROUND1

 From February 14, 1992 through September 26, 1994, plaintiff Richard E. Wenz ("Wenz") was employed as the chief executive officer of ProGroup, Inc. ("ProGroup"), a Tennessee corporation. During the time that Wenz was the chief executive officer of ProGroup, Becker was the chairman of the board of directors of ProGroup.

 Upon termination of his employment on September 26, 1994, Wenz entered into a separation agreement and general release (the "Separation Agreement") with ProGroup. Pursuant to the Separation Agreement, Wenz relinquished certain rights under his employment agreement and in return, ProGroup agreed to pay him certain funds in the future. Subsequently, however, ProGroup failed to make payments to Wenz as required by the terms of the Separation Agreement.

 As a result of ProGroup's non-payment, on November 21, 1994, Wenz filed a complaint against ProGroup in Tennessee state court in an action entitled Richard E. Wenz v. ProGroup, Inc., No. 94-75158 (the "Tennessee Lawsuit") seeking damages pursuant to the terms of the Separation Agreement or, alternatively, his employment agreement. On May 19, 1995, ProGroup filed its answer denying liability to Wenz under either agreement. In addition, ProGroup asserted four affirmative defenses to Wenz's claims and counterclaimed for fraud, breach of fiduciary duty and breach of contract. Specifically, ProGroup claimed that when it entered into the Separation Agreement, it was unaware that it would have been justified in terminating Wenz "for cause" since Wenz had in fact perpetrated a fraud upon the company during his employment. ProGroup's Second Affirmative Defense alleges that:

 
ProGroup was entitled to terminate Richard E. Wenz ("Wenz") for cause . . . because Wenz had engaged in fraud, malfeasance, misfeasance, and non-feasance in the performance of his duties, engaged in acts or omissions not in good faith and which involved intentional misconduct and knowing violation of civil and criminal law which had not been disclosed to, and was concealed from, ProGroup's Board of Directors prior to it entering the Separation Agreement of September 26, 1994.

 ProGroup's Answer and Counterclaims, annexed to the Affidavit of Harry S. Mattice, Jr., sworn to June 18, 1996, as Exh. "B," at P 24.

 On June 12, 1995, Fortune magazine published an article about ProGroup entitled "How Arnie Hit Into The Rough With Golf Clubs" (the "Article"). *fn2" In general, the Article reported on the financial history and control of ProGroup. The Article also specifically referred to the Tennessee Lawsuit as follows:

 
Last September, Becker asked Wenz to resign, and the two drew up a separation agreement that would pay Wenz his salary until 1988. But after going through ProGroup's books, Becker says he became convinced that Wenz could be terminated for cause and decided not to pay him anything. In late November, Wenz sued ProGroup for breaching the separation agreement and demanded his salary plus over $ 100,000 for a lost deposit on a house, unreimbursed business expenses, and accrued vacation time. Wenz also demanded $ 75,000 that he said in court papers he had paid to settle a claim of alleged sexual harassment, which he says he did with the expectation of continuing to work for ProGroup.

 Fortune Magazine Article, annexed to the Complaint as Exh. "A."

 In the action presently before this Court, Wenz claims that the Becker defamed Wenz by stating that "after going through ProGroup's books, . . . he became convinced that Wenz could be terminated for cause and decided not to pay him anything." Id.; see also Complaint at PP 10-11. According to Wenz, Becker gave this statement to Fortune magazine during one or more interviews in March 1995, after the complaint had been filed but a few months before ProGroup filed its answer and counterclaims. About this same time, Fortune magazine also contacted Wenz and asked for his comments on the forthcoming article on ProGroup. Wenz claims that the Fortune representative neither asked him about his departure from ProGroup nor informed him that Becker had made any statements concerning his termination. In ...


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