Michigan Court of Appeals Rules in ELi’s Favor, Against Scott Chappelle

The Michigan Court of Appeals has now ruled in the lawsuit brought by real estate developer Scott Chappelle against East Lansing Info (ELi) and me. I’m happy to report we have another win.

Nearly two years ago, in April 2021, Chappelle brought a lawsuit alleging defamation. The case centered on two publications I authored: an ELi report from June 2020 on an eight-count federal indictment of Chappelle and a related commentary in the local online discussion forum Public Response. 

In Oct. 2021, Ingham County Judge Joyce Draganchuk dismissed Chappelle’s lawsuit against us, ruling the suit had no merit. 

Following an appeal of the dismissal by Chappelle, late last week a three-judge Michigan Court of Appeals panel affirmed Draganchuk’s decision. 

The judges in the case were Sima Patel, Stephen Borrello and Douglas Shapiro. Their opinion states, “The trial court correctly concluded that the alleged defamatory statements were either substantially true or not capable of defamatory meaning.”

In other words, there was never any real case here.

Brian Wassom of Warner Norcross + Judd has been our attorney throughout this long ordeal. During oral arguments before the Court of Appeals last month, Judge Borrello cut off Wassom during his presentation, telling him he could continue if he wanted, but “I don’t see even a glimmer of a defamation case here.”

Given that, Wassom wasn’t too surprised by the verdict.

“This is a thoughtful and carefully considered opinion,” Wassom said by email. “The panel gave Mr. Chappelle the benefit of every doubt, but still had no difficulty determining that his defamation claims against ELi and Ms. Dreger were baseless. This decision should put an end to his vindictive crusade, and serve as a reassurance to journalists across the state that freedom of the press is still alive and well in Michigan.”

So, our work will continue. Chappelle is currently serving a 38-month sentence in federal prison.

In over eight years of operation, only one person has ever sued ELi. That is Scott Chappelle.

During the years we were actively reporting on Chappelle’s attempts to bring the “City Center II” project to fruition in East Lansing’s downtown, various people warned us that our relentless investigative reporting might lead to a suit by him. Nevertheless, we pursued our mission of being an informational safety net for the people of East Lansing.

Starting around 2002, Chappelle had been working on a redevelopment partnership with the City of East Lansing and the Downtown Development Authority (DDA). 

The properties in the concept plans included the land where The Abbot Apartments and The Graduate Hotel now stand. (Both were built by developers who purchased the properties after Chappelle lost them to foreclosure.)

Chappelle’s $100+ million public-private redevelopment deal was also supposed to include the now-vacant piece of privately-owned land near Valley Court Park, where an affordable-housing rental building is now slated to be constructed. 

And it was set to include land along Evergreen Avenue that the DDA purchased for the redevelopment, land known as “the Evergreen Properties,” for which the DDA still owes over $5 million.

The Court of Appeals opinion noted that, in the lawsuit, Chappelle “[took] issue with the recounting of Chappelle’s failed development efforts and his alleged ‘questionable practices’” when it came to redevelopment work. 

But, the court noted, “Defendants have submitted documents to show that these statements were substantially true.”

Chappelle further objected to our having said he prolonged blight downtown. 

But, the court wrote in its decision, “it was Chappelle’s project and it is therefore difficult to conceive how plaintiffs could prove that none of his actions contributed to the project’s delay and ultimate failure. In any event, defendants identify a concrete action taken by Chappelle that delayed the development of the blighted property, and that is Chappelle’s [legal] objections to the transfer of tax credits to the new developer” who bought the properties following foreclosure. (Read about that here.)

In fact, the court notes Chappelle “[does] not dispute that Chappelle impeded the new developer by claiming that he still had a right to the tax credits.” Chappelle also did “not expressly dispute that Chappelle did in fact receive payment from the new developer in exchange for [relinquishing claims to] the tax credits.”

“To summarize,” the court wrote in the opinion, “after many years Chappelle’s proposed downtown project failed. It would seem to follow that, as the head of the project, at least some of Chappelle’s actions contributed to the failure, and by extension, that Chappelle effectively prolonged the downtown blight.”

Chappelle also objected to our having reported that, “[i]n the City Center II/Park District saga, Chappelle’s maneuvers included making minor children co-owners of the Park District Investment Group (PDIG), claiming that further questions could not be asked by the public ownership of that company because children were now involved.”

The court notes evidence we provided “shows that this statement is substantially true.” Accordingly, it’s not defamatory – truth is an absolute defense to claims of defamation – and in any case, the court said, the claim this reporting was defamatory “has apparently been abandoned by plaintiffs.” 

Chappelle also claimed it was defamatory of me to write that, “thanks to Chappelle, the DDA is saddled with over $5 million in debt on properties along Evergreen Ave.” 

The court notes Chappelle didn’t dispute how the DDA’s debt was acquired; he objected instead to the idea “that Chappelle unjustly saddled the public with millions in debt. This again relates to Chappelle’s contention that he has done nothing wrong with respect to the project and that the project failed because of the global financial crisis.” (Chappelle also tried to blame the global financial crisis in his criminal case.)

But the court wasn’t having it: “Considering that the incurrence of millions in public debt is a matter of public concern, any minor slight conveyed by language such as ‘thanks to Chappelle’ and ‘saddled with debt’ is too trivial to be capable of defamatory meaning.”

Chappelle also objected to what he saw as “self-congratulatory statements” regarding his federal indictment. About that, the Court of Appeals has this to say:

“Plaintiffs argue that there is no ‘self-congratulatory’ defense to defamation, but this completely misses the point….Clearly the indictment itself harms Chappelle’s reputation, but plaintiffs fail to explain how an implication that defendants’ reporting led to the indictment further harms that reputation.” 

This line recalled Wassom’s earlier argument in the case, responding to Chappelle’s claim that ELi and I were worrying his bankers: “It also strains credulity to the point of absurdity to assert that it is Defendants’ news reporting, and not Chappelle’s federal indictment for mortgage fraud, that has caused his lender ‘concern.’”

Chappelle also claimed that the publications at issue implied he had committed prior crimes related to the City Center II project. 

But, the court wrote, “an equally permissible implication of the publications is that a public entity [the City of East Lansing and DDA] should not have been in business with someone who is indicted for multiple federal crimes, even if no crimes were committed in connection with the public project. Clearly one’s conclusion on that matter is subjective and cannot be proven false.”

We didn’t back down.

Chappelle was represented in this lawsuit by R. Christopher Cataldo of the Jaffe Raitt Heuer & Weiss law firm and Daniel A. Powell of Minc LLC. Cataldo had previously represented Chappelle in the failed City Center II deal. Minc specializes in bringing defamation suits.

In his original lawsuit filing, besides suing me and ELi, Chappelle also sued Eliot Singer, a retired folklorist who had doggedly tracked Chappelle’s real estate deals for years as a citizen watchdog. Rather than fight, near the start of the whole matter, Singer issued a blanket apology and retraction.

I did not. I knew I hadn’t committed defamation, and I knew we had to stand up to protect the free press and the truth. The whole reason ELi exists is to protect the public through meaningful, factual news reporting. Our reporting had been aimed at exactly that. If we caved, we would be going against our own mission and signaling we could be intimidated.

At the Appeals Court hearing last month, Judge Borrello asked our attorney why Singer rolled over. (You can watch the seven-minute hearing here.) Wassom said he did not know, but he speculated Singer didn’t want to have to pay for defense.

ELi could not afford to pay for excellent defense and continue operating – we operate on a very tight budget of about $175,000 per year. Because of ELi’s financial limitations plus the fact I was the author of the two pieces at issue, I decided to pay for the defense myself. 

To be clear, I thought I had an insurance policy that would cover this defense. But as often happens when you try to make a claim on a policy, it turned out I had been paying for about 15 years for a useless protection policy. (Now that this case is over, as ELi’s executive director, I am able to pursue a good policy for ELi through the Institute for Nonprofit News.) Until recently, I was not paid by ELi, mostly volunteering over the years for the organization I founded and now, like everyone at ELi, I’m not paid very much. So, I paid for the defense chiefly out of my earnings as a mainstream writer and speaker.

Wassom’s defense has been excellent and well worth the cost. But the cost was far higher than it would have been had Chappelle not elected to pull quite so many legal maneuvers, all of which required Wassom to act on our behalf.

For example, despite all the events at issue having occurred in East Lansing, Chappelle filed the suit in Washtenaw instead of Ingham. He claimed this was because ELi runs off a computer server that’s located in Ann Arbor. Our side speculated Chappelle was trying to avoid Judge Draganchuk’s court in Ingham, as she was familiar with the story at the center of the case – Chappelle’s failed City Center II project. 

In any case, Wassom had to file not just a response to the suit with a request for dismissal but also a backup request to change venue. 

The Washtenaw judge did move the suit to Ingham. Once in Ingham, Chappelle tried to get the case out of Draganchuk’s court again. 

Wassom had to argue to keep it in Draganchuk’s court, which we believed would be the best court for the complex business case. (“This smacks of judge shopping,” Draganchuk said about Chappelle’s attempt to take the case away from her.)

Chappelle also tried to force discovery on me and others, something that could have cost me a fortune if allowed to proceed. So, Wassom had to fight that, too, and did so successfully again.

Chappelle also used multiple opportunities to amend his suit, each of which required Wassom and his team to do more legal work for us.

That said, I really enjoyed working with Mr. Wassom. My Ph.D. is in history, and good defense lawyers are basically good historians who know the law. We worked together to assemble the evidence we needed to show the factual basis for my supposedly “defamatory” claims. And that worked. 

It was very satisfying to see the Court of Appeals using the facts we had assembled.

Can Chappelle appeal further to Michigan’s Supreme Court?

Sure. We’re not worried. As Mr. Wassom said, “Freedom of the press is still alive and well in Michigan.” We’ll keep using that freedom to do great work to inform and protect not just the people of East Lansing, but everyone who may benefit from our investigative work.

My thanks to Mr. Wassom and his great team at Warner Norcross + Judd and also to the Reporters Committee for Freedom of the Press, who recommended him. 

If you’d like to celebrate with me, please make a donation to ELi. We’ll turn it into factual news.

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