Court Opinion

ID: 9561592
Source: CourtListenerOpinion
Date Created: 2023-08-21 18:12:35.230182+00
Date Added: 2024-06-11T09:14:00.964898
License: Public Domain

Judge Greene
dissenting.
I dissent from the majority’s ruling on the admissibility of Dr. Baarda’s testimony that the defendants “abused their discretion” and “breached” certain “fiduciary duties.” Despite the adoption of Rule 704, Dean Brandis has stated the continuing validity of state precedent that an expert may not opine on whether a legal standard has or has not been fulfilled in a specific case:
In attempting to relate the facts it often happens that a witness will use words which, though familiar to the layman’s vocabulary, also have a legal meaning. Whether such usage will violate the opinion rule depends upon the sense in which the words are used and the nature of the issues in the case. Thus a witness may state that he was in ‘possession’ of land or chattel ... or that the prosecutrix was ‘raped’ ... if the words are employed in a popular sense to describe the facts rather than their legal consequences. Where the legal relations growing out of the facts are in dispute, and the witness’s words appear to describe the relations themselves, the same words may be objectionable. Under these circumstances it is improper for a witness to testify whether a transaction was ‘bona fide’ or induced by ‘fraud’ ... or whether he was an ‘agent’ . . . and a witness may not testify to the legal effect of a contract or to its meaning when that is a question for the court to decide from the writing itself; but he may testify to his own intention and understanding where they are relevant.
1 H. Brandis, Brandis on North Carolina Evidence Sec. 130 at 579-82 (3rd ed. 1988) (emphasis added).
It is true that the federal courts have been generally reluctant to overrule a trial judge who allows expert opinion that arguably states relevant legal standards have been met. E.g., Specht v. Jensen, 832 F. 2d 1516, 1527 (10th Cir. 1987) (en banc) (permit*17ting constitutional expert to state opinion on dispositive issue whether “search” occurred under Fourth Amendment). However, even after this state’s adoption of Rule 704, our own Supreme Court and this court have followed a more conservative course which confirms Dean Brandis’s observation. See, e.g., State v. Weeks, 322 N.C. 152, 167, 367 S.E. 2d 895, 903 (1988) (psychiatric testimony that defendant did not act in “cool state of mind” and was unable to conform behavior to legal requirements improperly stated legal standard had not been met); State v. Ledford, 315 N.C. 599, 340 S.E. 2d 309 (1986) (expert precluded from stating that injuries were “proximate cause” of death); State v. Smith, 315 N.C. 76, 337 S.E. 2d 833 (1985) (dictum) (court noted it would bar expert testimony that defendant “raped” victim in rape trial); Murrow v. Daniels, 85 N.C. App. 401, 355 S.E. 2d 204, rev’d on other grounds, 321 N.C. 494, 364 S.E. 2d 392 (1987) (expert’s opinion that defendant’s lack of security was “gross negligence” was improper legal conclusion) (cited with approval by Supreme Court in Weeks)-, Williams v. Sapp, 83 N.C. App. 116, 349 S.E. 2d 304 (1986) (error to allow attorney to give expert opinion that plaintiff was legally entitled to easement by implication); but see State v. Franks, 262 N.C. 94, 124 S.E. 2d 537 (1962) (where defendant charged with selling unregistered securities, expert could state that debentures must be registered under state securities law).
Dr. Baarda testified as an expert with degrees in law and agricultural economics. He testified extensively concerning the nature of agricultural cooperatives and the use of revolving certificates for their financing. The majority summarizes Dr. Baarda’s testimony as “testimony that the directors abused their discretion in failing to redeem plaintiff’s certificate.” That simple paraphrase does not do justice to the breadth of Dr. Baarda’s extensive testimony concerning the legal effect of key provisions of the certificates, as well as Dr. Baarda’s opinion that defendants abused their discretion and breached their fiduciary duties to plaintiff in failing to redeem the certificates:
Q. All right. I am trying to deal with the subject of discretion, Dr. Baarda. What discretion is available to the Board under this Section [of the certificate] that you are reading from?
A. That this cooperative gives the discretion to the Board of Directors to redeem.
*18Q. I’d like to ask whether you have an opinion as to whether there is an additional type of discretion permissible to the Board of Directors?
A. (Reading over paragraph.) Yes, there is an additional discretion.
Q. What is that discretion?
A. [The] discretion ... to revolve [the certificates] out of order . . . under some extraordinary circumstances . . . spelled out in the by-laws [such as] to compromise or settle the dispute between the owner thereof and the association, and then for other purposes such as settling an estate or when an owner moves from the territory.
Q. Based upon your experience, and your review of materials which you have previously testified to, do you have an opinion satisfactory to yourself as to whether the Board of Directors of Raeford abused its discretion in failing to redeem HAJMM’s Class B revolving fund certificate?
A. [M]y opinion is that the Board of Directors did abuse its discretion in failing to redeem this equity.
Q. Do you have an opinion satisfactory to yourself as to when the abuse of discretion occurred?
A. In my opinion the abuse occurred when demand was made on the cooperative to pay it back and the cooperative refused to do so.
Q. Do you have an opinion satisfactory to yourself as to whether the abuse of discretion is a continuing matter?
A. Yes, this decision can be made at any time, so it is a continuing problem.
Q. Do you have an opinion satisfactory to yourself as to whether there was a fiduciary duty both by Raeford and the defendant, Marvin Johnson, to the HAJMM Company?
A. In my opinion . . . there was such a relationship.
*19Q. Do you have an opinion satisfactory to yourself as to whether the fiduciary duty was breached?
A. I believe that the fiduciary duty was breached.
Q. Do you have an opinion satisfactory to yourself as to when the fiduciary duty was breached?
A. I believe it was breached when the Evans family made demand on the cooperative to pay it back, and the cooperative refused to do so.
Q. Do you have an opinion satisfactory to yourself as to whether this breach is continuous?
A. Yes, this, this is a continuing duty.
The court submitted issues to the jury concerning whether defendant breached its by-laws by refusing to retire the certificates in the reasonable exercise of its discretion, and whether defendants breached a fiduciary duty by refusing to retire the certificates. Contrary to the majority’s assertion, this case may not be distinguished from the state precedents cited earlier: irrespective of how complex the factual issues were in those cases, they did not involve legal standards which were necessarily less complex than those relevant to this case. Once Dr. Baarda clarified the admittedly complex facts concerning the operation and financing of this agricultural cooperative and stated criteria pertinent to judging its financial transactions, the jury was in as good a position as Dr. Baarda to apply the relevant legal standards given by the trial judge to the facts of this case. I question the helpful “expert” nature of the conclusion that defendants breached their “fiduciary” duties to plaintiff since the legal meaning of the term “fiduciary” is nearly identical to its meaning to laymen. Compare Webster’s Third New Int’l Dictionary at 845 (1968) with Black’s Law Dictionary at 753-54 (1968). Thus, given the minimal helpfulness of the specific legal conclusions stated above, the unfair prejudice to defendants of Dr. Baarda’s weighty legal conclusions warrants their exclusion under Rule 403.
Although the federal courts would arguably apply the rules of evidence to permit these opinions under these facts, we are bound by the unqualified state precedents cited earlier. Given those authorities, the erroneous admission of Dr. Baarda’s opinions were *20not cured by the trial judge’s pattern instructions on credibility and expert testimony. As I believe there is a reasonable likelihood a different result might have been reached had Dr. Baarda’s legal conclusions been excluded, I would grant defendants a new trial of the issues embraced by his testimony.
Furthermore, by establishing defendants’ breach of fiduciary duty (and therefore their constructive fraud), Dr. Baarda’s testimony also significantly affected plaintiff’s deceptive trade claims. Thus, while I agree with the majority that the trial court erroneously dismissed plaintiff’s deceptive trade claims, I would remand for a new trial of all claims, including the deceptive trade claims.