ELi and Dreger Move to Get Costs Paid Back In Now-Dismissed Defamation Suit; Chappelle Files For Appeal (Updated)
[Update appears at end of article.]
While East Lansing Info and its Publisher and Executive Director Alice Dreger move to ask the court to recoup costs incurred by the now-dismissed defamation lawsuit against them, real estate developer Scott Chappelle — who filed the suit — has filed a claim of appeal.
A hearing on ELi and Dreger’s “motion for sanctions” is scheduled for Dec. 22 at 3:15 p.m. before Judge Joyce Draganchuk of Ingham County’s 30th Circuit Court.
Draganchuk, who presides over Ingham County’s business court, is the judge who adjudicated Chappelle’s suit against ELi and Dreger — a suit between two companies and their respective officers — and ruled in ELi’s favor, dismissing the suit in its entirety on Oct. 27.
Chappelle’s appeal — by its nature a distinct legal proceeding from the original case — will involve a longer process. The “claim of appeal” filed by Chappelle and his attorneys is just the first of several steps to appealing Draganchuk’s verdict, meaning there will be little, if any, substantive action on that until 2022.
To understand these processes better, we briefly spoke with Brian Wassom, the attorney with the Warner, Norcross and Judd firm representing ELi in this case, and also received a statement on the matter from Dreger.
What is happening at the hearing in Draganchuk’s court on Dec. 22?
Essentially, ELi and Dreger are requesting that Draganchuk order Chappelle Development Company and/or Chappelle himself pay for the “costs and fees incurred in this action.”
To date, the costs for defending ELi and Dreger have been paid for by Dreger.
“Chappelle sued ELi and also me as an individual,” Dreger said in her statement. “Paying for the legal bills out of ELi’s funds would have meant cutting back on vital reporting services. Because of that, and because I was personally a co-defendant, I’ve been covering the legal costs. So, obviously, I’m hoping the court does award us fees and I get reimbursed for the costs of this prolonged yet baseless lawsuit.”
Her statement continued: “Liability insurance is expensive and it is one reason why small news organizations struggle to make ends meet, especially in places like Michigan that lack anti-SLAPP legislation to protect us. The Institute for Nonprofit News, of which ELi is a member, has been working on cost-free insurance for member organizations like ours, but that is not yet in place. It’s worth keeping in mind that the judge found this suit to be baseless. Anyone can sue, but if we had an anti-SLAPP law in Michigan, there would be fewer baseless suits like this one challenging news organizations like ours.”
According to the Reporters Committee for Freedom of the Press, anti-SLAPP laws help protect reporters and news organizations “from the financial threat of a groundless defamation case.”
Getting the court to rule in favor of this motion for sanctions is no small burden, though, according to Wassom. The default is for plaintiffs and defendants to pay for their own legal representation, which is what has happened so far.
Along with affirming her previous ruling, that Chappelle’s defamation claims against ELi and Dreger were baseless as a matter of law, Draganchuk would need to find that Chappelle’s suit was frivolous, with no “arguable, legal merit,” Wassom said.
“And that’s a hard hill to climb,” he added. “That’s an uphill battle.”
In the submitted motion for sanctions, Wassom works to make the case. It begins as follows: “Having already been charged with mortgage fraud by the U.S. Department of Justice, there was never any chance that Plaintiffs (collectively, ‘Chappelle’) could have possibly prevailed in a defamation suit brought against journalists for reporting on those charges and on other public controversies surrounding Chappelle’s real estate developments.”
It continues: “From the outset, this case was a frivolous attempt by Chappelle to silence the critics — nonprofit, award-winning local journalists — who had best succeeded at getting under his thin skin, and not to vindicate any arguably meritorious legal claims.”
Wassom, in the filing, also points to the fact that Chappelle and his attorneys originally filed the lawsuit in Washtenaw County, where the servers that host ELi’s website are physically located, despite all the parties involved in this matter being primarily in Ingham County.
The judge there agreed with ELi’s argument that it was in the wrong court and sent it to Ingham. Chappelle’s filing in the wrong court ultimately prolonged the matter and correspondingly increased the costs to the defendants, particularly since Chappelle amended his complaint before it got to a judge in Ingham, meaning Wassom had to amend his clients’ response.
Chappelle also tried to pull the case out of Draganchuk’s court but was unsuccessful, as ELi reported. Because Wassom had to respond to all of these maneuvers, the legal costs increased further. Draganchuk said the efforts to remove the matter from her court “smack[ed] of judge shopping.”
Wassom writes in his request for sanctions that Chappelle “made crystal-clear that his various tort claims did not rest on any good-faith interpretation of defamation law or the First Amendment. Instead, they were merely his vehicle for vindicating his perception of events and punishing ELI for reporting uncomfortable facts.”
And what of the appeal process?
Because Draganchuk ruled on the case as a matter of law — basically, finding that none of Chappelle’s claims were capable of rising to the level of defamation and thus circumventing the need to explore any further the facts of the case — the appeals court will “take a fresh look at the case,” according to Wassom.
“They look at the same record and they decide if she interpreted the law correctly here,” Wassom said. “They don’t owe her decision any deference.”
When asked about the chances of Draganchuk’s ruling getting overturned, Wassom expressed his confidence.
“Well, I might be biased,” he said, “but I don’t think there’s any likelihood of that happening. You never can tell what a court will decide to do, but we think that we’re right this time around for all the same reasons we thought we were right before.”
Though she is not as bullish as her attorney, Dreger expressed confidence, too.
“We’ll get through this,” she wrote. “It is stressful . . . but we have truth on our side. And the support of the people of East Lansing, too.”
UPDATE, Dec. 22, 5 pm:
Judge Joyce Draganchuk ruled against ELi and its Publisher/Executive Director Alice Dreger in their motion for sanctions (cost reimbursement) on Wednesday afternoon (Dec. 22, 2021).
In denying the motion, Draganchuk said the claims brought by Chappelle and Chappelle Development Company — despite being dismissed — were not devoid of “arguable” legal merit. Additionally, Draganchuk noted that she can’t say that the intended purpose of Chappelle’s lawsuit was to injure, harass or intimidate ELi and Dreger.
The suit is pending appeal by Chappelle. The appeal has not yet been filed.