What should your association do when there seems to be evidence that an ex-officer might have misappropriated association funds? An internal investigation is a likely option. Sometimes there may be public accusations. Incriminating statements, talk and emails may lead to inuendo and rumors. What is next? It is not unusual for the accused to fight back with a defamation claim.
Recently, a Florida appellate court ruled that it was up to the jury to decide whether a former employer defamed a former president when the former president was accused of misappropriating funds. The facts in Kieffer v. Atheists of Florida, Inc., 44 Fla. L. Weekly D 1129 (Fla. 2nd DCA, May 1, 2019) indicate Kieffer was sued by his former employer regarding the alleged misappropriation.
Kieffer, then counter sued for defamation. The claim was based on statements that Kieffer misappropriated funds. The statements regarded two payments to the employer. The first totaling $5,045.00 which Kieffer deposited into a newly created bank account. The second was for $18,000.00 and payable to an attorney.
Interestingly, Kieffer was found to have committed “conversion” of the first amount, the $5,045.00. The second payment was not determined. The trial court then granted summary judgment for the employer on Kieffer’s defamation claim finding that the statements regarding misappropriation were substantially true. Kieffer appealed the judgment as to the defamation claim.
The Florida appellate court agreed with Kieffer and disagreed with the trial court’s summary judgment. When dealing with defamation, the “substantial truth doctrine” applies, meaning that a statement does not have to be “perfectly” accurate so long as the “gist” of it is true. In other words, the court “overlooks minor inaccuracies and concentrates upon substantial truth.” Here the finding of Kieffer’s “conversion” did not include any determination of wrongful intent.
The former employee’s accusation of “misappropriation” created the issues. It will be up to a jury to decide whether that term “misappropriation” conveyed wrongful intent. Perhaps if the former employee only said “conversion” the result would have been different.
For Florida community associations obviously a claim of misappropriation of funds must be treated very seriously and investigated. But just as important, representatives of the association, officers, directors and employees must be careful making accusations regarding misappropriated funds. The last thing you would want is to face a defamation lawsuit because you used the wrong word for example “misappropriation” instead of “conversion”
Frequently, because public statements do not help meet the goal of recovering monies, the best option is not to say anything in public, especially avoiding emails!!