Richard Lloyd Carr v. Forbes, Inc., et al.

Richard Lloyd Carr, an engineer who develops privately financed
public infrastructure projects, brought this action asserting that
Forbes, Incorporated defamed him by publishing an article casting
doubt on the integrity of his conduct and his representations concern-
ing those projects. Because Carr is a limited-purpose public figure
who has forecast no evidence that Forbes acted with actual malice in
publishing the article, we affirm the district court's grant of summary
judgment to Forbes.

I.

Carr has spent his career managing the development of public
infrastructure projects; he assembles construction proposals, finds
teams of engineers to build such projects, and identifies sources of
funding for them. In 1992, an engineering company that Carr owned
ran into financial trouble leading to its demise and Carr's personal
bankruptcy. Carr then contacted a former employer, the Dana Larson
Roubal Group (DLR), a large national engineering and architectural
firm, and convinced DLR to provide seed money to form a new company, Interwest Management, Inc., through which Carr, as President
and CEO, could continue managing the development of public infrastructure projects with public-private financing methods.

In the early 1990s, Carr contracted to develop a sewer for the town
of Quartzsite, Arizona. Carr served as his firm's public representative
for the project and maintained a prominent profile in the project's
development. The sewer project tapped into local political passions
and, in 1993 when the town elected a new mayor who had campaigned against the sewer system, the town canceled construction of
the sewer and refused to pay Interwest for the work that the firm had
completed. Interwest and the town proceeded to arbitration, resulting
in an award in Interwest's favor. After the town refused to honor the
award, Interwest sued to recover its fees.

As Interwest was developing the Quartzsite project, officials in
Apache Junction, Arizona, who were familiar with Carr's work in
Quartzsite, contacted Carr seeking to develop a sewer system for their
town. In August of 1991, these officials and Carr's firm signed a con-
tract to build a similar sewer in Apache Junction. Regulators had
imposed a building moratorium on Apache Junction, the largest town
in the United States without a sewer, because of its inadequate sewage
disposal system; yet, local voters had twice voted against the tax
increases necessary to finance such a system. Carr proposed that the
town form a private sewer district that could operate the sewer by col-
lecting fees and thereby avoid new taxes. After Carr arranged to
create a sewer district, that district hired Interwest to build and man-
age the project and financed it through the issuance of bonds, all of
which the Allstate Insurance Company, Inc. purchased. However,
Interwest had apparently relied on unreasonably optimistic projec-
tions and an erroneous database of potential customers. Due to a lack
of customers, the sewer district was unable to pay off its bonds and
ultimately filed for bankruptcy. Allstate then sued all members of the
Interwest team for fraud.

In July 1995, as the Apache Junction sewer project neared comple-
tion, South Carolina officials solicited bids to build the Southern Con-
nector, a highway intended to connect I-85 with I-385 in Greenville
County, South Carolina. Carr and Interwest arranged that a new cor-
poration, Interwest Carolina, LLP, be formed to bid for the contract
to build this highway. Carr had no ownership stake in Interwest Caro-
lina, which, like Interwest, was controlled by DLR. The record does
not reveal whether Carr was an officer in Interwest Carolina, but
indisputably he continued to serve as President and CEO of Interwest
itself. Bob Farris, a former Federal Highway Administration Commis-
sioner, was the "public face" of Interwest Carolina. Carr served as the
project's manager and behind-the-scenes facilitator and shared with
Farris joint authority for the project.

After a competitive bidding process in March of 1996, South Carolina selected Interwest Carolina to complete the Southern Connector project. Among the many firms Carr drew together to form the Inter-
west Carolina team was Wilbur Smith Associates.

Controversy immediately ensued over the highway project. Indeed,
its opponents brought suit, contending that the project required a local
referendum, a position the South Carolina Supreme Court ultimately
rejected. When word of the Allstate lawsuit against Interwest reached
South Carolina, state officials developed concerns as to the compe-
tency and honesty of Interwest Carolina. The Allstate suit became the
topic of local news coverage and local officials investigated the alle-
gations in that suit to determine whether Interwest Carolina should
continue on the project. South Carolina officials decided to take no
action and Interwest Carolina continued its work on the Southern
Connector.

In its July 7, 1997 edition, Forbes magazine printed an article enti-
tled "Moonshine Bonds" that was centered on Carr. The article sug-
gested that Carr was a shady businessman with a troubled history. The
article criticized Carr throughout. For example, it alleged that Carr
"smelled money" in public-private financing, that he "exploited" the
tax law, and that he sought to target a larger federal funding program
as "bigger game" which was "right on [his] turf." In the table of con-
tents, the magazine referred to Carr as the "Moonshine Man." Forbes
noted Carr's personal bankruptcy, the failure of his prior business,
and that he had once hired a convicted felon who had served time in
connection with an insurance fraud scheme. The article alluded to the
Quartzsite project -- stating that it "ended in a legal mess" -- and
focused on Carr's involvement with the Apache Junction and South-
ern Connector projects.

Based on the allegations in the Allstate suit, "Moonshine Bonds"
charged Carr with personally defrauding Allstate and the town of
Apache Junction.1 The article explained that the Apache Junction
sewer district had "busted" because "the feasibility study done by
Carr's company had grossly overstated the number of residents who
would sign up for sewage connections." Although the magazine noted
that "Carr has an explanation for all his failures," specifically the
"failure" of Apache Junction, it suggested that any explanation was
false by highlighting the fact that Carr's "company drew $1.5 million
in project management fees" from the project.

* * *

Soon after the Forbes company published "Moonshine Bonds,"
DLR, believing Carr to be a public relations problem and no longer
"marketable," terminated his employment with Interwest. Carr subse-
quently brought this defamation suit in June 1999 against Forbes,
Schifrin, and several John Does (hereafter, collectively "Forbes"). The
district court granted Forbes summary judgment, reasoning that Carr
was a limited-purpose public figure who could not prove by clear and
convincing evidence that Forbes had acted with actual malice. Carr
now appeals.

* * *

Click the case caption above for the full text of the Court's opinion.

Affirmed

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Reported by Kent Morlan