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Nethercutt Collection v. Regalia

March 19, 2009


APPEAL from a judgment of the Superior Court of Los Angeles County, Susan Bryant-Deason, Judge. Reversed. (Los Angeles County Super. Ct. No. BC348782).

The opinion of the court was delivered by: Mosk, J.



We hold statements by defendants that plaintiff, an automobile museum president, (1) demanded a commission or a finder‟s fee to which he was not entitled, and (2) was fired because other employees would not work for him and would leave if he stayed, should have been presented to the jury as slander per quod rather than as slander per se. Accordingly, we reverse the judgment in favor of plaintiff. Because the jury found that plaintiff did not suffer actual damages, a necessary element of an action for slander per quod, defendants are entitled to judgment without a retrial.


J. B. Nethercutt, father of defendant and appellant Jack B. Nethercutt II (Nethercutt) and the founder of the Merle Norman Cosmetics Company, began collecting automobiles in 1956. In 1978, plaintiff and respondent Michael Regalia left his position as a partner in an automobile body and paint shop to work for J. B. Nethercutt on J. B. Nethercutt?s private automobile collection, known as the Merle Norman Classic Beauty Collection.

In 1995, the Merle Norman Classic Beauty Collection became The Nethercutt Collection, an automobile museum with restoration facilities.*fn1 J. B. Nethercutt had established The Nethercutt Collection as a not-for-profit foundation funded by his estate. J. B. Nethercutt appointed Regalia as executive vice president of the foundation and thereafter as president of the foundation.

J. B. Nethercutt remained in charge of The Nethercutt Collection until he was hospitalized in August 2004. At that time, Nethercutt assumed control of the overall operations of The Nethercutt Collection, subject to his father?s approval. J. B. Nethercutt died in December 2004.

According to Regalia, he thereafter met with Nethercutt and discussed, inter alia, his, Regalia‟s, compensation with Nethercutt. Regalia stated at that meeting that he had played an integral part in obtaining a donation to The Nethercutt Collection from Betty Locke of her Talbot-Lago automobile, which was appraised at $2.3 million. Regalia also stated that he had been under budget every year he had been president, and that he believed he had earned "consideration for more compensation." Nethercutt offered Regalia a $10,000 raise. Regalia stated that he did not believe that was enough. Nethercutt said he would think about it and let Regalia know his decision the next day. The next day, Nethercutt raised Regalia‟s salary by $35,000, to $160,000 per year. Because J. B. Nethercutt had died recently, Nethercutt believed that Regalia was still needed by The Nethercutt Collection.

Nethercutt testified that Regalia told him that Regalia wanted a 10 percent finder‟s fee for the "Talbot" donation. Nethercutt informed Regalia that 10 percent of the appraised value was $230,000. According to Nethercutt, Regalia acknowledged that was the amount he wanted, and Nethercutt refused to pay Regalia the finder‟s fee. Regalia denied that he asked for a commission for the Talbot-Lago contribution. Nethercutt terminated Regalia‟s employment.

Shortly after Regalia‟s termination, Nethercutt held a meeting of employees of The Nethercutt Collection. According to Christopher Parker, one of the employees at that meeting, Nethercutt stated that he thought that Regalia acted as if he owned the museum. Nethercutt stated that certain people did not want to work for Regalia, and, therefore, Nethercutt had to terminate Regalia. According to Kenneth Sisk, another employee who apparently described the same meeting, Nethercutt said that "people would leave if Mr. Regalia had stayed."

The following week, Nethercutt and his wife Helen Nethercutt, a Nethercutt Collection board member, held a meeting attended by most of the restoration staff. According to Parker, who was present at that meeting, Helen Nethercutt stated that Regalia had said some hurtful things about her and that he wanted a $250,000 finder‟s fee for the Talbot-Lago donation.

According to Nethercutt, in about April 2005, Locke, the donor of the Talbot Lago, was present at The Nethercutt Collection‟s facility having work performed on an automobile. When in the presence of Lisa De Lao, the secretary for The Nethercutt Collection, Locke asked Nethercutt why Regalia had been terminated. Nethercutt stated that Regalia had been terminated for the good of The Nethercutt Collection. Nethercutt informed Locke that Regalia had demanded a finder‟s fee on the donation of her Talbot-Lago. Nethercutt did not think that Locke believed him. Nethercutt also told Locke that "the employees couldn‟t get along with Mike Regalia, or Mike Regalia couldn‟t get along with the employees"; that "people were threatening to leave if [Regalia] stayed"; and that, in his opinion, Regalia "had been abusive." Apparently describing the same conversation, Locke testified that Nethercutt told her that he terminated Regalia because, "if he had not fired him, all of the other personnel would have quit."

According to Bruce Meyer, a board member of The Nethercutt Collection, Nethercutt told him that Regalia demanded a finder‟s fee for helping The Nethercutt Collection acquire Locke‟s Talbot-Lago. Meyer did not believe that Nethercutt would fabricate such an account. If the event actually occurred, Meyer would view such a demand as inappropriate because Regalia was an employee of The Nethercutt Collection, ...

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