Judge Moves Developer Scott Chappelle’s Lawsuit Against ELi to Ingham County Courts

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Judge Timothy P. Connors hearing arguments in the case over Zoom on June 24, 2021.

The defamation lawsuit brought against East Lansing Info and ELi founder Alice Dreger by real estate developer Scott Chappelle will move to the court of a yet-to-be-named Ingham County judge. This morning, Washtenaw County Judge Timothy P. Connors granted ELi’s request for that venue change.

Connors noted that Ingham County is where ELi’s and Chappelle’s businesses are located. It is also where Chappelle lost to foreclosure the properties that have been a central subject of ELi’s reporting. 

Alice Dreger for ELi

After Chappelle’s company lost the downtown East Lansing properties in a foreclosure action, the vacant buildings were demolished and the properties redeveloped by a different developer.

Connors denied ELi’s motion to dismiss the case entirely. But Connors denied the motion “without prejudice,” meaning that ELi’s and Dreger’s attorney, Brian Wassom of Warner Norcross and Judd, can seek dismissal on the same grounds once the case has been assigned to a judge here.

This morning’s 9:30 a.m. hearing, held via Zoom, was the first time either party got to argue their side orally before a judge and not merely in writing. 

As ELi reported earlier this month, Chappelle is suing ELi, Dreger, and citizen watchdog Eliot Singer for defamation and interfering with his development business in regard to two publications from June 2020 — one ELi report and one essay published on Public Response — that were published following Chappelle’s federal criminal indictment.

Chappelle’s criminal trial has not yet begun. According to a press release on the criminal indictment, Chappelle allegedly “evaded the payment of more than $830,000 in unpaid taxes by making false statements to the IRS about his and his companies’ assets and income, failing to disclose his vacation house on Lake Michigan, and purchasing real property in nominee names instead of his own.”

Chappelle was also charged with “making false statements to IRS-CI agents during its criminal investigations” and with making false statements and submitting fraudulent documents to a bank when refinancing his lake house mortgage.

Just yesterday, in the federal criminal proceeding against Chappelle, Judge Hala Jarbou ordered a “competency evaluation” — a doctor’s assessment of Chappelle’s ability to understand and participate in the criminal proceedings. 

This follows Chappelle’s attorneys arguing earlier in that case that Covid-19 has caused him mental difficulties. The judge in the criminal case also pushed the trial date back to September 13, 2021. 

Chappelle appeared at today’s Zoom hearing for his case against ELi. He did not speak, as he was not asked to do so. 

Connors rationale for moving the case to the courtroom of a judge in Ingham County was mainly that the actions occurred in Ingham County. 

“All the witnesses, where the action took place, all of that is really East Lansing,” Connors said. He also noted that “Courts are now entered into phase 4, reopening things back up, I anticipate we’ll start to do jury trials beginning in September — so I think, frankly, Ingham County is the place that this should be litigated.”

Early on in the hearing, following an initial argument for dismissal, Connors asked ELi’s attorney Brian Wassom why the case was filed in Washtenaw County. Wassom replied that “we asked ourselves the same question, your Honor.” In his filing, Wassom had suggested that Chappelle is trying to avoid Ingham County judges, who know Chappelle relatively well. 

Attorney Brian Wassom of Warner Norcross and Judd in Zoom-based court on June 24, 2021.

Chappelle’s side has argued that Washtenaw is the proper venue because of ELi’s computer servers being located there.

Additionally, Daniel Powell, a lawyer with Minc Law who is now representing Chappelle in this case, tried to argue today that Chappelle’s failed project in Ann Arbor, known as Broadway Village, is reason to hear the case in Washtenaw. Powell noted that Dreger and Singer had sometimes referred to that troubled project in their past reporting.

Wassom laid out ELi’s case to dismiss, pointing to the various layers of defamation case law that protect journalists in doing their jobs.

“Your Honor, what this boils down to, what you heard repeatedly from Mr. Powell, is that they’re offended by my clients’ schadenfreude,” Wassom said, in response to an argument from one of Chappelle’s lawyers. 

“Schadenfreude is not defamation. It’s not actionable. If our reporters are pleased by the fact that progress is being made by the Park District, if they have a subjective state of feeling that they believe Mr. Chappelle’s indictment is warranted, that’s their opinion. That’s certainly not something the court can hold them liable for.” 

Alice Dreger for ELi

After Chappelle lost the downtown properties to foreclosure, a different set of developers purchased the properties and have now built The Graduate Hotel and The Abbot on them.

Wassom concluded: “Mr. Chappelle’s thin skin does not create a defamation cause of action.”

Wassom stated the above in response to an argument from Powell, who suggested that the articles by ELi and Dreger and comments by Singer were “gloating.”

Powell broadly argued that the two articles taken together and in context — something he said Michigan defamation law requires — rise to the level of defamation. He claimed ELi, Dreger, and Singer spent more than a decade “casting aspersions” about Chappelle, but did not quote or cite any specific text directly to substantiate that argument before Judge Connors.

Powell also claimed the defendants chose to “strike” when Chappelle was “most vulnerable” by publishing the report about his federal criminal indictment shortly after the indictment announcement by the Department of Justice.

Daniel Powell of Minc Law in Zoom-based court June 24, 2021.

“In summary your Honor, we believe that we have sufficiently pled our claims, that our claims are capable of some sort of, you know, evidentiary foundation that can ultimately prevail at trial,” Powell argued. 

But the decision about whether to dismiss this case or let it go to trial is now one for an Ingham County Judge to make. 

“I think [moving it to] Ingham County — this is something that is certainly more geared towards all the witnesses, all the parties, the subject matter that they’re talking about,” Connors said before granting the venue change. “Because I’m not aware of any action, really, here in Ann Arbor.”

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