Clements v. Clements

An unpublished opinion of the North Carolina Court of Appeals does not constitute
controlling legal authority. Citation is disfavored, but may be permitted in accordance
with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.
NO. COA13-596
NORTH CAROLINA COURT OF APPEALS
Filed: 4 February 2014
DONNA G. CLEMENTS, by and through
her Guardian of the Estate,
Kimberly Batten,
Plaintiff
v. New Hanover County
No. 10-CVS-2451
ROBERT S. CLEMENTS, the ALEXANDRA
LEE CLEMENTS IRREVOCABLE TRUST and
the KYLE DAVIS CLEMENTS
IRREVOCABLE TRUST, by and through
their Trustee MICHAEL GREEN; ALC
TRADING COMPANY; KDC TRADING
COMPANY; JAMES SCOTT CONSTRUCTION,
INC.; and MARIANGELA BARBOSA
CLEMENTS,
Defendants.
Appeal by Defendants from orders entered 13 July 2010, 27
January 2011, and 13 November 2012 by Judge W. Allen Cobb, Jr.,
in New Hanover County Superior Court. Heard in the Court of
Appeals 8 October 2013.
Shipman & Wright, LLP, by W. Cory Reiss, for Plaintiff.
Pennington & Smith, PLLC, by Kristy J. Jackson, Esq., for
Defendants Robert S. Clements, ALC Trading Company, KDC
Trading Company, James Scott Construction, Inc., and
Mariangela Barbosa.
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Vaiden P. Kendrick, Attorney at Law, by Vaiden P. Kendrick,
for Defendants the Alexandra Lee Clements Irrevocable Trust
and the Kyle Davis Clements Irrevocable Trust by and
through their Trustee Michael Green.
J. Albert Clyburn, PLLC, by J. Albert Clyburn, for Charles
D. Meier, Guardian ad Litem for Kyle Davis Clements and
Alexandra Lee Clements.
DILLON, Judge.
The present appeal involves, in substantial part, a dispute
as to who is entitled to the proceeds from the sale of an
ownership interest in Pharmakon, LLC (“Pharmakon”), a privately
held company based in Illinois. Defendant Robert S. Clements
purchased an interest in Pharmakon (hereinafter, the “Pharmakon
shares”) in early 2000 using $400,000.00 that he had received
from his then-wife, Plaintiff Donna G. Clements. In 2004,
shortly after his divorce from Mrs. Clements, Mr. Clements sold
the Pharmakon shares for nearly $3 million and, thereafter,
transferred a significant portion of the sale proceeds
(hereinafter, the “Pharmakon proceeds”) to entities that have
also been named as Defendants in the present action.
Mrs. Clements was adjudicated incompetent in 2008, and
Kimberly Batten, one of Mrs. Clements’ daughters, brought the
claims in the present action as Guardian of her estate. In
substance, Plaintiff asserts that Mr. Clements purchased the
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Pharmakon shares on behalf of Mrs. Clements and that,
accordingly, Mrs. Clements is entitled to the Pharmakon
proceeds. Plaintiff also asserts a claim – unrelated to the
claim regarding the Pharmakon proceeds - to recover from Mr.
Clements monies owed in connection with a $145,000.00 loan (the
“$145,000.00 Loan”) that Mrs. Clements allegedly made to Mr.
Clements sometime prior to 2001.
In this appeal, Defendants seek review of the trial court’s
orders denying their motions to dismiss Plaintiff’s claims
entered 13 July 2010 and 27 January 2011. Further, Defendants
appeal from the trial court’s denial of their summary judgment
motion on Plaintiff’s claims; the trial court’s grant of partial
summary judgment for Plaintiff on her claims pertaining to the
Pharmakon proceeds (but not with respect to the $145,000.00
Loan, a matter which remains pending before the trial court);
and the trial court’s award of damages and other relief to
Plaintiff in conjunction with its grant of Plaintiff’s motion
for partial summary judgment. For the following reasons, we
dismiss in part, and reverse and remand in part for further
proceedings consistent with this opinion.
I. Factual & Procedural Background
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On 13 February 1997, two days prior to their marriage, Mr.
and Mrs. Clements executed a Premarital Agreement, which stated,
in pertinent part, that each party’s respective separate
property and any appreciation thereon would remain that party’s
separate property throughout the marriage. The parties agree
that the Premarital Agreement is valid and enforceable.
On 24 February 2000, Mrs. Clements issued a check to Mr.
Clements in the amount of $400,000.00 to be drawn from a bank
account that Mrs. Clements held as her separate property. Mr.
Clements used these funds to purchase the Pharmakon shares.
In late 2000, Mrs. Clements began having issues with
alcohol addiction and bouts with depression, and she and Mr.
Clements separated for a brief period of time. On 29 December
2000, apparently as part of his reconciliation with Mrs.
Clements, Mr. Clements executed two documents before a notary
public. The first document concerned the $400,000.00 that Mrs.
Clements had provided him to purchase the Pharmakon shares and
stated as follows:
Please let this letter serve as
documentation that Donna Clements has lent
to Robert S. Clements the sum of
[$400,000.00] for the purpose of investment
on her behalf in the Chicago based firm of
Pharmakon LLC. Let it further be known that
Robert S. Clements shall serve at the
pleasure of Donna G. Clements as her
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representative to Pharmakon, LLC.
[Signed by Robert S. Clements.]
The second document concerned the $145,000.00 Loan and stated as
follows:
Please let this letter serve as
documentation that Donna G. Clements has
lent [$145,000.00] to Robert S. Clements for
the purpose of investment in the
Construction business, James Scott
Construction Inc., of which Robert S.
Clements is the President of.
[Signed by Robert S. Clements.]
Mr. and Mrs. Clements reconciled immediately thereafter.
Mrs. Clements continued to have mental health issues
following the parties’ reconciliation, and she was admitted for
alcohol detoxification treatment several times in 2001.
In late 2001, Mrs. Clements purportedly executed two
additional documents concerning her interest in the Pharmakon
shares. In the first document, a letter to Pharmakon management
dated 26 November 2001, Mrs. Clements stated the following:
Please let this letter serve as an outline
of my involvement with Pharmakon. I loaned
Robert Clements funds that he was to invest
at his discretion. I understand that the
investment was in Pharmakon. . . . That
investment was made on his decision and at
his peril. I make no claims on Pharmakon;
only to the original loan with the
conditions that I made to him.
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The second document, captioned “ACKNOWLEDGEMENT AND QUITCLAIM
AGREEMENT” (the “Quitclaim Agreement”) and dated 31 December
2001, was purportedly executed by Mrs. Clements in response to a
redemption offer made by Pharmakon to some of its shareholders.
The Quitclaim Agreement was purportedly prepared by a Pharmakon
attorney and bears the apparent signatures of both Mrs. Clements
and a Pharmakon representative. In the Quitclaim Agreement,
Mrs. Clements describes Mr. Clements as “the record owner” of
the Pharmakon shares, “having previously made a capital
contribution of $400,000.00 to acquire the [shares].” She
states that she had “previously claimed an interest in the
[shares], but thereafter acknowledged in writing that she claims
no interest in the [shares]; and that she held “no claim to the
[Pharmakon shares,]” that “[Mr.] Clements [was] the sole and
legal owner, and possesse[d] all right, title, and interest in
and to, the [shares]”; that she otherwise “quitclaim[ed] to
[Mr.] Clements any and all right, title, and/or interest or
claim in [the Pharmakon shares]”; and that “in executing [the]
agreement, [she was] aware of and decline[d] to accept any right
she may have [had] to the redemption offer.”
In February 2002, Mrs. Clements informed her financial
advisor that she owned the Pharmakon shares. In February 2004,
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Mrs. Clements’ financial advisor listed the Pharmakon shares as
assets solely owned by Mrs. Clements. However, the income tax
returns jointly-filed by Mr. and Mrs. Clements reflect that only
Mr. Clements received distributions made by Pharmakon with
respect to the Pharmakon shares during that time period.
Mr. and Mrs. Clements separated in July 2004. On 26 August
2004, Pharmakon was sold to another company, and Mr. Clements
received the Pharmakon proceeds in the amount of $2,924,500.00.
Mr. Clements used the Pharmakon proceeds to, inter alia, make
payments on a James Scott Construction business line of credit,
create the KDC Trading and ALC Trading entities, establish the
Kyle Davis Clements Irrevocable Trust and the Alexandra Lee
Clements Irrevocable Trust for his son and daughter,
respectively, and pay a debt owed on real estate known as the
Camp Wright Property.
On 13 March 2007, Mr. Clements filed a complaint for
absolute divorce against Mrs. Clements in New Hanover County
District Court (the “District Court action”). Mrs. Clements
filed an answer and counterclaim seeking equitable distribution.
A judgment of absolute divorce was entered on 9 November 2007,
and the court subsequently dismissed Mrs. Clements’ equitable
distribution claim on grounds that, in light of the Premarital
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Agreement, the parties’ dispute concerned only separately-owned
property, and thus “there was no dispute for the family court to
decide in the context of an equitable distribution action under
Chapter 50 . . . .”
On 25 February 2008, Mrs. Clements was adjudicated
incompetent by the New Hanover County Clerk of Court. Mr.
Clements subsequently married Defendant Mariangela Barbosa
Clements and, on 24 September 2008, conveyed the Camp Wright
Property to himself and Ms. Barbosa as tenants by the
entireties.
On 24 May 2010, Plaintiff filed her complaint in the
present action in New Hanover County Superior Court. With
respect to the Pharmakon proceeds, Plaintiff asserted claims
against Mr. Clements for conversion, replevin, breach of
fiduciary duty, constructive fraud, and breach of contract.
Plaintiff’s complaint also requested a declaratory judgment as
to Plaintiff’s rights in the Pharmakon proceeds; imposition of a
constructive trust for the Pharmakon proceeds, much of which, as
previously stated, had been transferred by Mr. Clements to
several of the other named Defendants; and an injunction
prohibiting Mr. Clements “from transferring or otherwise
disposing of assets which had “been purchased, acquired, or
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funded with [Mrs. Clements’] separate property . . . .”
Further, the complaint sought repayment of the $145,000.00 Loan.1
On 8 June 2010, Defendants Clements, ALC Trading, KDC
Trading, and James Scott Construction filed motions to dismiss
Plaintiff’s claims. The trial court denied Defendants’ motions
by order entered 13 July 2010.
On 3 August 2010, Defendants again moved to dismiss
Plaintiff’s claims, asserting, inter alia, that the statute of
limitations barred Plaintiff’s claims; that Plaintiff’s claim
for breach of contract regarding the Pharmakon proceeds related
to the Premarital Agreement “over which the Superior Court ha[d]
no jurisdiction”; and that Plaintiff’s claims seeking equitable
relief were barred by the equitable defenses of laches and
estoppel. Following a hearing on the matter, the trial court
entered an order on 27 January 2011 denying Defendants’ motion
to dismiss.
On 24 July 2012, Plaintiff moved for partial summary
judgment against Defendants with respect to her claims regarding
the Pharmakon proceeds; however, her motion did not encompass
her claim for repayment of the $145,000.00 Loan. Defendants
1
The complaint was subsequently amended to add a claim for
fraudulent conveyance relating to Mr. Clements’ conveyance of
the Camp Wright Property into an estate by the entireties with
his current wife, Mariangela Clements.
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countered with their own motion for summary judgment with
respect to all of Plaintiff’s claims. Both sides introduced
competing expert testimony concerning Mrs. Clements’ mental
capacity in late 2001, when she purportedly executed the two
documents concerning her interest in the Pharmakon shares.
Defendants submitted the affidavit of their expert Dr. James E.
Bellard, which states his opinion, in part, that “[t]he claim or
suggestion that [Mrs. Clements] was similarly incompetent in
2001 is simply not supported by the medical record.” Plaintiff,
in turn, submitted the affidavit of her expert, Dr. George P.
Corvin, in which he criticizes Dr. Bellard’s methods as “not
sufficiently valid and reliable,” since Dr. Bellard had formed
his opinion as to Mrs. Clements’ competency “without conducting
a personal evaluation or examination of Ms. Clements or seeking
to interview those who knew her during the relevant period.”
Also in his affidavit, Dr. Corvin opined that Mrs. Clements “had
frontal lobe damage that permanently changed her from her
baseline ability [and that those] changes directly impaired her
ability in the latter half of 2001 and beyond to manage her own
affairs and to communicate important decisions concerning her
property[.]”
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The summary judgment motions came on for hearing on 7
August 2012. On 13 November 2012, the trial court entered a
declaratory judgment and order granting Plaintiff’s motion for
partial summary judgment and denying Defendants’ motion for
summary judgment. The order sets forth 132 findings of fact,
148 conclusions of law, and 102 footnotes, concluding, inter
alia, that Dr. Corvin’s opinion concerning Mrs. Clements’
competency in 2001 was admissible, but that Dr. Bellard’s
opinion was inadmissible on grounds that it was not formed based
on sufficiently reliable methods; that there was no genuine
issue that Mrs. Clements lacked the requisite mental capacity
beginning in 2000 (when the Pharmakon shares were first
acquired) to make a gift or enter into a contract that,
therefore, any agreement to convey the Pharmakon shares was
void; and that, consequently, Plaintiff was the owner of the
Pharmakon shares and thus entitled to the Pharmakon proceeds.
The trial court ordered that the trusts and accounts funded with
the Pharmakon proceeds be disgorged and that all property
obtained with the Pharmakon proceeds – for instance, the Camp
Wright property – be sold in order to satisfy Defendants’
obligation to Mrs. Clements’ estate.
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On 16 January 2013, the parties executed a memorandum of
consent judgment and order, in which they agreed to stay
execution of the trial court’s summary judgment order and order
on damages, as to all Defendants other than Mr. Clements, and to
liquidate the accounts held by Defendants ALC Trading, KLC
Trading, Kyle Davis Clements Irrevocable Trust, and Alexandra
Lee Clements Irrevocable Trust and transfer the proceeds to the
New Hanover County Clerk of Superior Court pending resolution of
this appeal.
From the trial court’s orders entered 13 July 2010, 27
January 2011, and 13 November 2012, Defendants now appeal.
II. Jurisdiction
Our review of the record reveals that Plaintiff’s claim
with respect to the $145,000.00 Loan remains pending before the
trial court. Accordingly, all of the orders from which
Defendants presently appeal are interlocutory in nature. Veazey
v. City of Durham, 231 N.C. 357, 362, 57 S.E.2d 377, 381 (1950).
“Generally, an interlocutory order is not immediately
appealable.” Builders Mut. Ins. Co. v. Meeting Street Builders,
LLC, __ N.C. App. __, __, 736 S.E.2d 197, 199 (2012) (citing
N.C. Gen. Stat. § 1A-1, Rule 54(b) (2011)). “An exception to
this general rule lies, however, where the order appealed from
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‘affects a substantial right.’” Id. (citing N.C. Gen. Stat. §
1-277(a) (2011); N.C. Gen. Stat. § 7A-27(d)(1) (2011)). “[T]his
Court has previously held that entry of summary judgment for a
monetary sum against one of multiple defendants affects a
substantial right” and is thus “immediately appealable under
N.C. Gen. Stat. §§ 1-277 and 7A-27.” Brown v. Cavit Sciences,
Inc., __ N.C. App. __, __, 749 S.E.2d 904, 907 (2013) (citing
Equitable Leasing Corp. v. Myers, 46 N.C. App. 162, 172, 265
S.E.2d 240, 247 (1980)).
Here, the trial court’s 13 November 2012 orders granted
Plaintiff’s motion for partial summary judgment and entered a
judgment for a monetary sum against Defendants. Execution of
the judgment has not been stayed with respect to Mr. Clements.
Moreover, the accounts of some of the other Defendants have been
liquidated and paid over to the court. We hold under these
circumstances that the trial court’s grant of partial summary
judgment in Plaintiff’s favor affects a substantial right and is
thus immediately appealable. Myers, 46 N.C. App. at 172, 265
S.E.2d at 247.
However, Defendants’ challenges to the trial court’s 13
July 2010 and 27 January 2011 orders denying their motions to
dismiss Plaintiff’s claims and the trial court’s order denying
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their motion for summary judgment are not properly before this
Court at the present time. The trial court did not certify
these interlocutory orders for immediate appellate review
pursuant to N.C. Gen. Stat. § 1A-1, Rule 54(b); and, upon review
of Defendants’ contentions, we conclude that Defendants have not
met their burden in demonstrating that these orders affect a
substantial right.
III. Analysis
Defendants contend that the trial court erred in granting
Plaintiff’s motion for partial summary judgment. We agree.
A motion for summary judgment is appropriately granted
where “the pleadings, depositions, answers to interrogatories,
and admissions on file, together with the affidavits, if any,
show that there is no genuine issue as to any material fact and
that any party is entitled to a judgment as a matter of law.”
N.C. Gen. Stat. § 1A–1, Rule 56(c) (2011). “The burden is on
the moving party to show the absence of any genuine issue of
fact and his entitlement to judgment as a matter of law.” In re
Will of Lamanski, 149 N.C. App. 647, 649, 561 S.E.2d 537, 539
(2002). “If the moving party has established the lack of a
genuine issue of material fact, then the burden shifts to the
non-moving party to present his own forecast of evidence to show
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that a genuine issue of material fact does exist.” Williams v.
Smith, 149 N.C. App. 855, 857, 561 S.E.2d 921, 923 (2002).
In its order granting Plaintiff’s motion for partial
summary judgment, the trial court determined that Mrs. Clements
was the owner of the Pharmakon shares when the shares were sold
in August 2004, reasoning that the evidence established as a
matter of law that Mrs. Clements lacked the mental capacity to
make a $400,000.00 gift to Mr. Clements at the time she issued
him the check for that amount, or, alternatively, lacked such
capacity at the time she signed the Quitclaim Agreement in late
2001.
We believe, however, that there remain genuine issues of
material fact such that Plaintiff was not entitled to judgment
as a matter of law, including a genuine issue concerning Mrs.
Clements’ mental capacity during the relevant time periods.
Regarding Mrs. Clements’ mental capacity, the trial court
concluded that Mrs. Clements “did not possess the required
mental capacity to gift, to execute contracts, or comprehend the
effect of a gift on her estate (in February 2000, November 2001,
or December 20012)[,]” and, therefore, she could not have
2
These dates represent when the Pharmakon shares were purchased
in Mr. Clements’ name; when Mrs. Clements wrote the letter to
Pharmakon management stating that she claimed no interest in the
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relinquished ownership of the $400,000.00 or the Pharmakon
shares purchased with those funds. The trial court based this
conclusion essentially upon its determination that testimony
offered by Plaintiff’s expert witness, Dr. Corvin, constituted
the only admissible expert opinion concerning Mrs. Clements’
competency – which was that Mrs. Clements lacked the requisite
mental capacity to make a gift as early as late 2001. Though
Defendants attempted to introduce Dr. Bellard’s countering
expert opinion, the trial court concluded that Dr. Bellard’s
methodology in forming his opinion was unreliable and thus
inadmissible since, unlike Dr. Corvin, Dr. Bellard had not
actually conducted a face-to-face interview with Mrs. Clements
or with anyone who had had contact with Mrs. Clements in the
early 2000’s.
Even assuming arguendo that the trial court did not err in
excluding Dr. Bellard’s opinion, we believe that the court erred
in concluding that the other evidence was insufficient to raise
a genuine issue concerning Mrs. Clements’ capacity. For
instance, in his affidavit, Dr. Corvin expressed no opinion on
Mrs. Clements’ capacity in 2000 – when Mrs. Clements signed the
Pharmakon shares, but that she had merely loaned $400,000.00 to
Mr. Clements; and when Mrs. Clements executed the Quitclaim
Agreement with Pharmakon.
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$400,000.00 check to Mr. Clements and the Pharmakon shares were
purchased in his name - but only stated his opinion that she
lacked sufficient capacity as of late 2001. Moreover, Dr.
Corvin’s opinion was not dispositive on the issue of Mrs.
Clements’ capacity during that time simply because it was the
only expert testimony admitted, as our Supreme Court has
specifically held that “[u]ncontradicted expert testimony
[concerning a person’s mental state] is not binding on the trier
of fact. Questions of credibility and the weight to be accorded
the evidence remains in the province of the finder of fact.”
Scott v. Scott, 336 N.C. 284, 291, 442 S.E.2d 493, 497 (1994).
As the trial court correctly states in its order, “the
measure of capacity is the ability to understand the nature of
the act in which he is engaged and its scope and effect, or its
nature and consequences, not that he should be able to act
wisely or discreetly, nor to drive a good bargain, but that he
should be in such possession of his faculties as to enable him
to know at least what he is doing,” Ridings v. Ridings, 55 N.C.
App. 630, 633, 286 S.E.2d 614, 617 (1982). In Ridings, this
Court stated that there is a presumption of mental capacity to
contract and that the testimony of an expert witness to the
contrary “would be sufficient to raise a genuine issue of [the
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party’s] ability to grasp the nature and consequences of his
actions.” Id. (emphasis added). Thus, while expert testimony
may be sufficient to raise a genuine issue with respect to an
individual’s lack of capacity, such testimony does not
necessarily establish this lack of capacity as a matter of law.
Id. In this present case, there is other evidence from which a
jury could infer that Mrs. Clements understood the nature of her
acts during the relevant time periods. For instance, Mrs.
Clements’ medical records from 2001, when she was in alcohol
rehabilitation treatment, describe her as “cognitively capable”
and having “cognition [which] appear[ed] intact.” Further, it
could be inferred from Mrs. Clements’ November 2001 letter to
Pharmakon – in which she stated that the risk (and reward)
regarding the success of Pharmakon was being borne entirely by
her husband and that she merely had merely made a loan to him –
that she understood the nature of her acts. Additionally, there
is deposition testimony from individuals who knew Mrs. Clements
and evidence regarding business transactions which she had
engaged in which a jury could infer that she understood the
nature of her business transactions during the relevant time
periods. Accordingly, we hold that the trial court erred in
concluding, as a matter of law, that Mrs. Clements lacked the
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requisite mental capacity to make a gift or a loan in late 2001
because there is a genuine issue as to whether she understood
the nature and consequences of her actions at that time. See,
e.g., McDevitt v. Chandler, 241 N.C. 677, 680, 86 S.E.2d 438,
440 (1955) (holding that the question of capacity to make a deed
is a question of law based on certain facts such as whether the
grantor understood the nature and consequences of his actions).3
Moreover, assuming that the issue of Mrs. Clements’
capacity is resolved in Defendants’ favor, there is evidence
from which a jury could find facts supporting the conclusion
that Mr. Clements was the owner of the Pharmakon shares. For
instance, there is evidence from which it could be inferred that
Mrs. Clements gifted $400,000.00 to Mr. Clements or subsequently
gifted the Pharmakon shares to him. Specifically, the evidence
indicates that Mrs. Clements issued the check to Mr. Clements in
early 2000 and that the proceeds therefrom were used to purchase
the Pharmakon shares in his name only. Our Supreme Court has
held that where the owner or purchaser of shares of stock has
3
Factual determinations concerning Mrs. Clements’ abilities
during various time periods in order to make conclusions on her
capacity and legal competency at these times may be important in
determining the owner of the Pharmakon shares as of 2004 and
also resolving certain issues raised in Defendants’ motions to
dismiss, e.g., the tolling of the applicable statutes of
limitations and the availability of the defenses of equitable
laches and estoppel.
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the certificate issued in the name of another, and so registered
on the books of the corporation, the transaction is regarded as
a gift completed by constructive delivery. Buffaloe v. Barnes,
226 N.C. 313, 318, 38 S.E.2d 222, 225 (1946). Regarding the
trial court’s conclusion that Mrs. Clements “did not intend to
relinquish all her control over the funds[,]” the court’s order
does not reflect any conduct on Mrs. Clements’ part at the time
that she gave her husband the $400,000.00 check indicating that
her intent was something other than to make a gift to her
husband. Rather, the trial court’s order points to statements
and actions made by Mrs. Clements and her attorney at later
times to conclude that there was no genuine issue with respect
to whether she intended to continue exercising control over the
$400,000.00 and the subsequently purchased Pharmakon shares at
the time she issued the check to Mr. Clements. Therefore, we
believe that there is evidence from which a jury could infer
that, at the time that she wrote the check to Mr. Clements and
the Pharmakon shares were purchased in his name alone, she
intended to confer a gift upon her husband, and that she may
have changed her mind regarding the gift only after the fact.
See Courts v. Annie Penn Mem’l Hosp., 111 N.C. App. 134, 141,
431 S.E.2d 864, 868 (1993) (holding that once a gift of shares
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of stock is completed, the law will not recognize any “after-
the-fact” conditions placed on the transaction by the donor).
Additionally, as the trial court found in its order, there
was evidence presented that Mr. Clements – and not Mrs. Clements
- reported the passive income derived from the Pharmakon shares
for tax purposes, evidence from which a jury could infer that
Mrs. Clements viewed Mr. Clements as the owner of the Pharmakon
shares. Further, her handwritten November 2001 letter to
Pharmakon is evidence from which a jury could infer that she
intended the $400,000.00 check to be a loan – rather than a gift
- to Mr. Clements, that she assumed no risk in the fortunes of
Pharmakon but that it was Mr. Clements who had made the
investment “at his own peril,” and, therefore, any claim that
Mrs. Clements might have against Mr. Clements would have been
for repayment of a $400,000.00 loan. We believe that this same
inference could be drawn from the December 2001 Quitclaim
Agreement, in which Mrs. Clements acknowledges that Mr. Clements
was the record owner of the Pharmakon shares, that it was Mr.
Clements who made the capital contribution of $400,000.00 to
acquire the shares, that she claimed no interest in the shares,
and that she quitclaimed any interest she might otherwise have
in the shares to Mr. Clements.
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In sum, we believe that there remain a number of factual
issues which must be resolved by a jury before any conclusion
can be drawn as to whether Mr. Clements or Mrs. Clements was the
owner of the Pharmakon shares. Many of these same factual
issues – such as Mrs. Clements’ competency - may also be
relevant to resolve other issues, such as Defendants’ defenses
based on the statute of limitations and equitable laches.
Although we have already held that the trial court erred in
granting Plaintiff’s motion for partial summary judgment, we
nevertheless choose to address the trial court’s exclusion of
Dr. Bellard’s testimony since this issue is likely to come up in
a trial of this matter. It is well established that a trial
court’s ruling on the admissibility of expert opinion testimony
is reviewable for abuse of discretion. State v. Ward, 364 N.C.
133, 139, 694 S.E.2d 738, 742 (2010) (citing Howerton v. Arai
Helmet, Ltd., 358 N.C. 440, 458, 597 S.E.2d 674, 686 (2004)).
“Abuse of discretion results where the court’s ruling is
manifestly unsupported by reason or is so arbitrary that it
could not have been the result of a reasoned decision.” State
v. Hennis, 323 N.C. 279, 285, 372 S.E.2d 523, 527 (1988).
Here, both Dr. Colvin and Dr. Bellard performed
“retrospective evaluations” of Mrs. Clements in order to form
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their respective opinions concerning her competency – or lack
thereof – during the early 2000’s. However, only Dr. Bellard’s
testimony was excluded as “not sufficiently reliable.” The
trial court made its decision to admit Dr. Corvin’s testimony
but exclude Dr. Bellard’s testimony, in essence, on grounds that
(1) Dr. Corvin had met face-to-face with Mrs. Clements, though
not until 2008, and interviewed others who knew her in the early
2000’s; and (2) Dr. Corvin believed that Dr. Bellard’s methods
were unreliable. Although these bases for distinction may bear
upon the weight accorded to the testimony by a jury, we find
them to be without merit to base a decision to exclude an
opinion from the consideration of a jury in this particular
case. Our Courts have explicitly rejected the notion that an
expert witness must personally interview an individual in order
to offer an opinion on that individual’s mental state, State v.
Daniels, 337 N.C. 243, 271, 446 S.E.2d 298, 315 (1994); Harvey
v. Raleigh Police Dep't, 85 N.C. App. 540, 547, 355 S.E.2d 147,
152 (1987); and we clearly cannot deem expert testimony properly
excludible solely because an expert tendered by the opposing
party denies its credibility.
Careful scrutiny of the testimony offered by Dr. Corvin and
Dr. Bellard further convinces us of the arbitrary nature of the
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court’s decision to exclude only that of the latter. In support
of his affidavit, Dr. Bellard submitted an extensively detailed
report, which documents Mrs. Clements’ medical history and
reflects the methodology that he used in arriving at his
conclusions concerning Mrs. Clements’ mental state. Dr. Corvin,
on the other hand, provided deposition testimony without an
accompanying report and without reviewing all of Plaintiff’s
available medical records. Further, as stated above, Dr.
Corvin’s personal interviews, which evidently served as the
trial court’s primary basis for elevating the reliability of Dr.
Corvin’s methods over those of Dr. Bellard, consisted of
interviewing Mrs. Clements, who was legally incompetent, and
Plaintiff’s two daughters, who have a stake in these proceedings
as Mrs. Clements’ heirs-at-law. Under these circumstances, we
believe that the trial court abused its discretion in excluding
Dr. Bellard’s opinion from consideration.
III. Conclusion
For the foregoing reasons, we dismiss Defendants’ appeals
from the trial court’s 13 July 2010 and 27 January 2011 orders
denying their motions to dismiss and Defendants’ appeal from the
trial court’s order denying their motion for summary judgment;
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and we reverse and remand the trial court’s order granting
Plaintiff’s motion for partial summary judgment.
DISMISSED IN PART; REVERSED AND REMANDED IN PART.
Judges McGEE and McCULLOUGH concur.
Report per Rule 30(e).