Court Opinion

ID: 4112356
Source: CourtListenerOpinion
Date Created: 2016-12-30 15:10:27.676715+00
Date Added: 2024-06-11T14:46:26.280178
License: Public Domain

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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                            WATTS-ROBINSON V. SHELTON

                                  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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                            WATTS-ROBINSON V. SHELTON

                                   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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                            WATTS-ROBINSON V. SHELTON

                                  Opinion of the Court

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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                             WATTS-ROBINSON V. SHELTON

                                  Opinion of the Court

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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               WATTS-ROBINSON V. SHELTON

                     Opinion of the Court

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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                            WATTS-ROBINSON V. SHELTON

                                  Opinion of the Court

             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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                             WATTS-ROBINSON V. SHELTON

                                    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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                             WATTS-ROBINSON V. SHELTON

                                   Opinion of the Court

      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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                           WATTS-ROBINSON V. SHELTON

                                 Opinion of the Court

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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