Watts-Robinson v. Shelton , 251 N.C. App. 507 ( 2016 )

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA16-599
Filed: 30 December 2016
Mecklenburg County, No. 15 CVS 20925
LENA WATTS-ROBINSON, Plaintiff,
v.
BRANDON SHELTON, Defendant.
Appeal by plaintiff from order entered 11 January 2016 by Judge Linwood O.
Foust in Mecklenburg County Superior Court. Heard in the Court of Appeals 16
November 2016.
Lena Watts-Robinson, plaintiff-appellant, pro se.
Robinson Bradshaw & Hinson P.A., by R. Steven DeGeorge, for defendant-
appellee.
ELMORE, Judge.
Lena Watts-Robinson appeals from an order dismissing her defamation action
against Brandon Shelton, opposing counsel in an employment discrimination case
(the “Billips action”). In her complaint, Watts-Robinson alleged that Shelton defamed
her while testifying before the Disciplinary Hearing Commission of the North
Carolina State Bar (“DHC”) during a hearing investigating allegations that Watts-
Robinson, inter alia, mismanaged entrusted client funds and engaged in professional
misconduct while representing the plaintiff-employee in the Billips action. Shelton
WATTS-ROBINSON V. SHELTON
Opinion of the Court
moved to dismiss Watts-Robinson’s defamation action for failure to state a claim on
the basis that his testimony during the disciplinary hearing was absolutely
privileged, since it was made in the course of a judicial proceeding and was
sufficiently relevant to that proceeding. After a dismissal hearing, the superior court
granted Shelton’s motion and dismissed Watts-Robinson’s defamation action.
Two issues are presented in this appeal: whether Shelton’s allegedly
defamatory statements made during the disciplinary hearing before the DHC were
absolutely privileged from civil action, and whether the trial court erred by refusing
to exclude the resulting discipline order disbarring Watts-Robinson from practicing
law (“disbarment order”) on the basis that its prejudice outweighed its probative
value. We hold Shelton’s challenged statement was absolutely privileged and the
superior court properly refused to exclude the disbarment order. Accordingly, we
affirm.
I. Background
Watts-Robinson was disbarred from the practice of law on 2 December 2014.
According to the disbarment order, Watts-Robinson deposited entrusted client funds
into a bank account that accrued interest and paid herself the earned interest, rather
than disbursing it to her clients or to the North Carolina Interest on Lawyers Trust
Account Program (“IOLTA”) as required by law. Additionally, Watts-Robinson
engaged in other egregious acts of professional misconduct while representing at least
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Opinion of the Court
two of her clients, Billips and N. Burton, including, inter alia, mismanaging entrusted
funds by merging client funds with her own, failing to promptly notify Billips when
she received his settlement proceeds, failing to respond to Billips’ request for his
settlement proceeds, and using entrusted client funds for her own personal benefit by
reimbursing herself from Billips’ settlement proceeds for court sanctions imposed
against her personally.
During Watts-Robinson’s disciplinary hearing, Shelton was called to testify
about his dealings with her as to the settlement proceeds from the Billips action.
Specifically, Shelton was questioned about Watts-Robinson’s objection to a
$96,011.92 settlement check made payable directly to Billips. Shelton explained that
Watts-Robinson notified him that Shelton’s client needed to reissue the check because
Billips owed Watts-Robinson expenses and she was concerned that he would not
reimburse her. When counsel for the State Bar asked Shelton to expand on his stated
concern about Watts-Robinson’s request that the check made payable to Billips be
reissued made payable in a manner she could deposit into her own bank account,
Shelton responded: “My concern was that Ms. Watts-Robinson was potentially trying
to run some kind of scam on Mr. Billips and I did not want my client to be in the
middle of a dispute with Mr. Billips and Ms. Watts-Robinson.” After the disciplinary
hearing, on 4 December 2014 the DHC entered an order of discipline, the disbarment
order, disbarring Watts-Robinson from practicing law.
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Opinion of the Court
On 10 November 2015, Watts-Robinson filed an action against Shelton,
alleging, inter alia, that his “scam” claim defamed her and caused her emotional
distress. Shelton moved to dismiss the action for failure to state a claim under Rule
12(b)(6), attaching the disbarment order to his motion, and arguing that his
statement was absolutely privileged because it was made during the course of a
judicial proceeding and was sufficiently relevant to its subject matter.
On 7 January 2016, the trial court heard Shelton’s motion to dismiss. During
the dismissal hearing, Watts-Robinson objected to the trial court considering the
disbarment order because it was more prejudicial than probative. The trial court
never ruled on her motion, but did consider the disbarment order in reaching its
decision effectively refusing to exclude it. On 11 January 2016, the trial court entered
an order dismissing Watts-Robinson’s defamation action. Watts-Robinson appeals.
II. Analysis
A. Rule 12(b)(6) Dismissal was Proper
Watts-Robinson contends the trial court erred by granting Shelton’s Rule
12(b)(6) dismissal because it applied the improper “palpably irrelevant” standard, not
the proper “sufficiently relevant” standard, when determining whether Shelton’s
statements were absolutely privileged under North Carolina’s defamation law.
Watts-Robinson further contends that Shelton’s statement was not “sufficiently
relevant” to the proceeding and, therefore, should not be absolutely privileged.
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Shelton retorts that Watts-Robinson’s assertion there exist two relevance standards
is merely two sides of the same coin, and, no matter the flip, his statement made
during the disciplinary hearing lands on the side of absolute privilege against a civil
action. We agree with Shelton.
We review de novo a trial court’s ruling on a motion to dismiss for failure to
state a claim under Rule 12(b)(6). Jackson v. Charlotte Mecklenburg Hosp. Auth., 238
N.C. App. 351, 352, 768 S.E.2d 23, 24 (2014) (citation omitted). A Rule 12(b)(6)
dismissal is proper when
(1) the complaint on its face reveals that no law supports
the plaintiff’s claim; (2) the complaint on its face reveals
the absence of facts sufficient to make a good claim; or (3)
the complaint discloses some fact that necessarily defeats
the plaintiff’s claim.
Izydore v. Tokuta, __ N.C. App. __, __, 775 S.E.2d 341, 345 (citation omitted), disc.
review denied, 368 N.C. 430, 778 S.E.2d 92 (2015).
“[A] defamatory statement made in due course of a judicial proceeding is
absolutely privileged and will not support a civil action for defamation, even though
it be made with express malice,” Jarman v. Offutt, 239 N.C. 468, 472, 80 S.E.2d 248,
251 (1954) (citations omitted), unless the statement is “so palpably irrelevant to the
subject matter of the controversy that no reasonable man can doubt its irrelevancy or
impropriety,” Harman v. Belk, 165 N.C. App. 819, 825, 600 S.E.2d 43, 48 (2004)
(citation and quotation marks omitted). “In deciding whether a statement is
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absolutely privileged, a court must determine (1) whether the statement was made
in the course of a judicial proceeding; and (2) whether it was sufficiently relevant to
that proceeding.” Id. at 824, 600 S.E.2d at 47 (citing Harris v. NCNB Nat’l Bank of
N.C., 85 N.C. App. 669, 672, 355 S.E.2d 838, 841 (1987)). Because Watts-Robinson
concedes Shelton’s challenged statement was made during the course of a judicial
proceeding, our review is limited to its relevancy.
During the disciplinary hearing, counsel for the State Bar and Shelton engaged
in the following exchange:
Q Would you tell the [DHC] panel basically about the
substance of [Watts-Robinson’s] communications with you
after receiving the settlement checks [in the Billips
action]?
A Yes, ma’am. Ms. Watts-Robinson was upset or she
disputed the manner in which the payments were made.
The check to her was fine, but the check that was made
payable to Mr. Billips she said was not satisfactory. She
was -- first of all she was upset that we did not deposit
them. I explained why we didn’t deposit them, why we sent
them, and she indicated that the check to Mr. Billips was
incorrect. It should have been made payable to her or Mr.
Billips or deposited directly into her account.
....
Q And once you sent her the check again, did she
deposit it into her account?
A She deposited the check that was made payable to
her. She did not deposit the check that was made payable
to Mr. Billips.
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Q Did she send it back to you a second time?
A She did.
Q And how did you respond at that point?
A I believe we had a phone conversation to discuss
what the underlying problem was in terms of the way the
payments were issued.
Q What’s your understanding or what did Ms. Watts-
Robinson state about the reason why there was an issue
with the check made payable to Mr. Billips?
A She state [sic] that Mr. Billips owed her expenses out
of the payments that were made to him and her concern
was . . . that he would cash his check and not reimburse
her the expenses that are owed to her.
Q At that point, did you then have the checks reissued
as she was requesting?
A Not immediately, no.
Q What did you do after learning what Ms. Watts-
Robinson described as the issue with the check?
A There were concerns on my part in terms of making
-- changing the check in the way that Ms. Watts-Robinson
wanted, so we ultimately ended up drafting an addendum
to the original settlement agreement to clearly kind of
delineate and outline the reasons for and how the checks to
Mr. Billips were ultimately going to be paid.
Q What were your concerns?
A My concern was that Ms. Watts-Robinson was
potentially trying to run some kind of scam on Mr. Billips
and I did not want my client to be in the middle of a dispute
with Mr. Billips and Ms. Watts-Robinson.
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Q I note that in her letter, Plaintiff’s Exhibit 26, she
gives two options for payment “Law Office of Lena Watts-
Robinson or Louis Billips”; and then in the alternative
reissuing the check “Law Office of Lena Watts-Robinson on
behalf of Louis Billips.” Did you choose to reissue the check
in accord with either of these suggested options?
A I believe after the addendum was signed off on by
both parties, including Mr. Billips, that we ended up
issuing the check to Ms. Watts-Robinson on behalf of Mr.
Billips.
(Emphasis added.)
Watts-Robinson argues that since the disciplinary hearing was not focused on
any alleged scam she ran, Shelton’s “scam” claim was not “sufficiently relevant to the
proceeding” but was “palpably irrelevant to [its] subject matter.”
To the contrary, central to the subject matter of Watts-Robinson’s disciplinary
hearing was her alleged mismanagement of entrusted client funds, including the
settlement proceeds from the Billips action. Considering the entire exchange in
context, Shelton’s response to questioning that he was concerned “Watts-Robinson
was potentially trying to run some kind of scam on Mr. Billips” after she requested
the settlement check be reissued in a manner that would permit her to deposit the
check into her own bank account, because she was concerned Billips would not
reimburse her for some expense, was sufficiently relevant such that it was not
palpably irrelevant to the subject matter of the disciplinary proceeding.
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Opinion of the Court
Accordingly, Shelton’s testimony during the disciplinary hearing was
absolutely privileged, and the trial court properly granted his motion to dismiss under
Rule 12(b)(6) for failure to state a claim.
B. No Error Under Rule 403’s “Unfair Prejudice” Balance
Watts-Robinson next contends the trial court erred by admitting over objection
the disbarment order in violation of Rule 403 of the North Carolina Rules of Evidence.
We disagree.
During the dismissal hearing, Watts-Robinson moved to exclude the
disbarment order on the basis that it was more prejudicial than probative. Although
the trial court never explicitly ruled on her motion, see N.C. R. App. P. 10(a)(1) (2016)
(“It is . . . necessary for the complaining party to obtain a ruling upon the party’s
request, objection, or motion.”), it refused to exclude the disbarment order and
considered it in reaching its decision to grant Shelton’s motion to dismiss.
We apply an abuse-of-discretion standard when reviewing a trial court’s Rule
403 decision. Wolgin v. Wolgin, 217 N.C. App. 278, 283, 719 S.E.2d 196, 200 (2011).
“An 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. Ward, 364 N.C. 133, 139–40, 694 S.E.2d 738, 742 (2010) (citations, quotation
marks, and brackets omitted).
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Under Rule 403, a trial court may exclude relevant evidence “if its probative
value is substantially outweighed by the danger of unfair prejudice . . . .” N.C. Gen.
Stat. § 8C-1, Rule 403 (2015). “ ‘Unfair prejudice’ within its context means an undue
tendency to suggest decision on an improper basis, commonly, though not necessarily,
as an emotional one.” Id. § 8C-1, Rule 403 official cmt.
However, excluding evidence under Rule 403’s weighing of probative value
against prejudice has no logical application to bench trials, such as this dismissal
hearing, since we presume trial judges can consider relevant evidence, weigh its
probative value, and reject improper inferences in reaching a decision. See, e.g., In re
J.B., 172 N.C. App. 1, 16, 616 S.E.2d 264, 273 (2005) (“[T]he trial court in a bench
trial ‘is presumed to have disregarded any incompetent evidence.’ ” (citation
omitted)); see also In re Oghenekevebe, 123 N.C. App. 434, 438, 473 S.E.2d 393, 397
(1996) (“In a nonjury trial, if incompetent evidence is admitted and there is no
showing that the judge acted on it, the trial court is presumed to have disregarded
it.” (citation omitted)). Indeed, here the trial court explained: “The Court is not using
the order to determine whether or not you had wrong doings. The Court is simply
trying to determine the relevance of the testimony of the person that appeared before
the State Bar.”
Nonetheless, the disbarment order’s probative value was not substantially
outweighed by unfair prejudice. The disbarment order was relevant to whether
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Shelton’s testimony during the disciplinary hearing was absolutely privileged. It
showed that Watts-Robinson was disciplined, in large part, for misconduct arising
from her representation of Billips (57 of the DHC’s 105 factual findings) and,
specifically, for mismanaging Billips’s settlement proceeds. Although the disbarment
order was prejudicial, Watts-Robinson has not demonstrated that the trial court was
improperly biased by it in reaching its decision. Contrarily, the trial transcript
positively demonstrates otherwise. Accordingly, we hold that the trial court did not
violate Rule 403 by refusing to exclude the disbarment order. See N. Carolina State
Bar v. Adams, __ N.C. App. __, __, 769 S.E.2d 406, 411 (2015) (holding that the DHC
did not violate Rule 403 in admitting evidence when the defendant had not
demonstrated an improper basis on which DHC may have considered it).
III. Conclusion
Shelton’s response to the request by counsel for the State Bar to expand on his
concern about reissuing the settlement check was absolutely privileged. Thus, the
trial court properly dismissed Watts-Robinson’s defamation action under Rule
12(b)(6). The trial court also did not violate Rule 403 by refusing to exclude the
disbarment order during this nonjury dismissal hearing. Accordingly, we affirm.
AFFIRMED.
Judges STEPHENS and DIETZ concur.
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