Brown v. Ryan's Family Steak Houses, Inc.

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 04-1351

JEWEL BROWN,

Plaintiff - Appellee,

versus

RYAN’S FAMILY STEAK HOUSES, INCORPORATED;

RYAN’S FAMILY STEAK HOUSE MANAGEMENT,

INCORPORATED; RYAN’S FAMILY STEAK HOUSES EAST,

INCORPORATED; ROD WESSINGER,

Defendants - Appellants,

and

DAVID BARBER,

Defendant.

Appeal from the United States District Court for the District of

South Carolina, at Charleston. Patrick Michael Duffy, District

Judge. (CA-03-2582-23BG)

Argued: October 1, 2004 Decided: October 29, 2004

Before LUTTIG and MICHAEL, Circuit Judges, and Jackson L. KISER,

Senior United States District Judge for the Western District of

Virginia, sitting by designation.

Affirmed by unpublished opinion. Judge Kiser wrote the opinion, in

which Judge Luttig and Judge Michael joined.

ARGUED: Edward Grantland Burns, Michael Stuart Pitts, NEXSEN

PRUETT, Greenville, South Carolina, for Appellants. Tanya Briana

Spavins, STEWART, ESTES & DONNELL, Nashville, Tennessee, for

Appellee. ON BRIEF: Mary L. Hughes, NEXSEN PRUETT, Charleston,

South Carolina, for Appellants. M. Reid Estes, Jr., STEWART, ESTES

& DONNELL, Nashville, Tennessee; Jack D. Cordray, Charleston, South

Carolina, for Appellee.

Unpublished opinions are not binding precedent in this circuit.

See Local Rule 36(c).

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KISER, Senior District Judge:

This appeal arises from a suit under Title VII by appellee

Jewel Brown against appellants Ryan’s Family Steak Houses

(“Ryan’s”), her former employer. Ryan’s filed a motion to dismiss

and a motion to compel arbitration based on an arbitration

agreement (“Agreement”) signed by Jewel Brown (“Brown”) and Pearl

Gassaway (“Gassaway”), her legal guardian. Applying South Carolina

contract law and federal arbitration law, the district court

determined that the Agreement was void on several grounds,

including 1) Brown was a minor at the time of signing the Agreement

and Pearl Gassaway, her guardian, did not have the requisite mental

capacity to enter into a binding contract; 2) the Agreement was not

notarized as stipulated in the terms of the Agreement; 3) Ryan’s

violated the Agreement by failing to provide Brown and Gassaway

with a copy of the rules of the arbitration system established in

the Agreement; and 4) Brown could not effectively vindicate her

Title VII rights in the arbitral forum established in the

Agreement. The district court therefore denied the motion to

dismiss and the motion to compel arbitration. For the reasons set

forth below, we affirm the district court’s decision.

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I.

We will limit our recitation of facts to those which bear on

Gassaway’s lack of mental capacity to execute the Agreement. On

May 25, 2001, one week after her sixteenth birthday, Brown applied

for a position as a server at Ryan’s in North Charleston, South

Carolina. As part of the application process and before she

commenced any work with Ryan’s, Brown was given various forms

including a mandatory arbitration agreement with EDSI, an

arbitration company contracted by Ryan’s. Brown took these forms

to her car to fill them out. Because Brown was a minor at the time

of the signing, Pearl Gassaway, her great-great aunt1 and legal

guardian, also signed the agreement.

Gassaway died in 2002. Gassaway’s sister, Jewel Craig

(“Craig”), testified that Gassaway had two strokes and could not

perform daily tasks such as cooking, driving, or answering the

phone for years leading up to her death. In at least one incident,

Gassaway left the house in the middle of the night, went to a

neighboring house, and could not find her way home. Furthermore,

Dr. John Sanders, Gassaway’s treating physician for sixteen years,

stated that Gassaway had been physically and mentally declining for

three to four years before her death in 2002. Among her various

1

The district court’s opinion refers to Gassaway as a great

aunt. Considering that both the magistrate’s report and

plaintiff’s briefs refer to her as a great-great aunt, we will

assume that the district court simply made an oversight.

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ailments, Gassaway was afflicted by atrophy of the brain and a

subclavian steal syndrome, a disease resulting in decreased blood

flow to the brain and causing her to lose consciousness. In 2001,

there was an investigation into whether she should retain

guardianship of Brown. In March 2001, Dr. Sanders wrote a letter

supporting the retention of custody by Gassaway with “proper

counseling and assistance.”

On August 7, 2003, Brown, sued Ryan’s under Title VII for

sexual harassment, discrimination, wrongful termination, and

retaliation in connection with her employment. On August 27, 2003,

Ryan’s filed a motion to dismiss and petitioned to compel

arbitration under an agreement signed by Ms. Brown at the time of

her job application. The Magistrate Judge issued a report

recommending that Ryan’s motion to dismiss be denied based on the

invalidity of the arbitration agreement. Ryan’s objected to the

Magistrate’s report. On February 27, 2004, the District Court

adopted portions of the Magistrate’s report and denied Ryan’s

motion to dismiss and petition to compel arbitration. Ryan’s filed

a Notice of Appeal on March 8, 2004.

II.

We review de novo a decision of the lower court on a motion to

dismiss pursuant to Rule 12(B)(6). Brooks v. City of Winston-

Salem, N.C., 85 F.3d 178 (4th Cir. 1996). Dismissal under Rule

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12(B)(6) is appropriate when, accepting as true the well-pleaded

facts in the complaint and viewing them in the light most favorable

to the plaintiff, the court finds with certainty that a plaintiff

would not be entitled to relief under any state of facts which

could be proved in support of the plaintiff’s claim. See id. We

also review de novo a district court's denial of a motion to compel

arbitration. Sydnor v. Conseco Financial Servicing Corp., 252 F.3d

302 (4th Cir. 2001).

A district court’s underlying findings of fact, however, are

reviewed for clear error. Giovani Carandola, Ltd. v. Bason, 303

F.3d 507, 511 (4th Cir. 2002). This Court has indicated that a

determination of mental capacity is a factual determination.

Shrader v. Heckler, 754 F.2d 142 (4th Cir. 1985). Furthermore,

South Carolina common law treats determinations of mental capacity

as findings of fact appropriate for juries. See Vereen v. Hardee,

328 S.E.2d 666 (S.C.App.,1985); Byrd v. Byrd, 308 S.E.2d 788 (S.C.

1983) (affirming jury determination concerning mental capacity);

Vereen v. Bell, 182 S.E.2d 296 (S.C. 1971) (stating that

determination of mental capacity to execute a deed was a finding of

fact); Dominick v. Rhodes, 24 S.E.2d 168 (S.C. 1943) (indicating

that a Master’s determination of a businessman’s mental

incompetency was a finding of fact); Gladden v. Southern Ry. Co.,

141 S.E. 90 (S.C. 1928) (holding that the validity of a release

signed by an injured plaintiff based on concerns over her mental

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capacity and duress was an appropriate question for the jury). We

therefore review the district court’s determination of mental

capacity under the clear error standard.

Finally, we review a district court’s evidentiary rulings for

abuse of discretion. General Elec. Co. v. Joiner, 522 U.S. 136,

141-42 (1997).

III.

We disagree with Ryan’s assertion that the district court

erred in finding that Gassaway did not have the mental capacity to

enter into a binding contract. Under South Carolina law, a person

must have the mental capacity to understand or comprehend the

subject of the contract, its nature, and its probable consequences.

Macauly v. Wachovia Bank of South Carolina, N.A., 569 S.E.2d 371,

376 (S.C. Ct. App. 2002). The party alleging lack of capacity

bears the burden of proving incapacity at the time of the

transaction by a preponderance of the evidence. Grapner v. Atl.

Land Title Co., 416 S.E.2d 617, 618 (S.C. 1992). Under the Federal

Rules of Evidence and Supreme Court precedent, expert testimony

must meet certain requirements to be admissible. See Daubert v.

Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993); Fed. R.

Evid. 702. The Fourth Circuit has held, however, that Daubert does

not apply to fact witnesses, such as a medical examiner who

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examines the victim of an accident. Binakonsky v. Ford Motor Co.,

133 F.3d 281 (4th Cir 1998). Furthermore, if a witness is not

testifying as an expert, he may testify to opinions or inferences

which are rationally based on his perception of the facts if it is

helpful to a clear understanding of a fact in issue and not based

on scientific, technical, or specialized knowledge. Fed. R. Evid.

701.

In the present case, Ryan’s argues that the district court

erred in admitting two pieces of evidence offered by Brown. Ryan’s

first objects to a letter from Dr. Sanders, Gassaway’s treating

physician for sixteen years, which stated that Gassaway had been

physically and mentally declining for three to four years before

her death in 2002. In the letter, Dr. Sanders detailed Gassaway’s

various ailments including atrophy of the brain and a subclavian

steal syndrome,2 a disease resulting in decreased blood flow to the

brain and causing her to lose consciousness. Ryan’s argues that

Dr. Sanders’s testimony fails to meet the standards established by

Daubert.

In reviewing the district court’s decision to admit Dr.

Sanders’s letter, we find that the district court did not abuse its

2

Although neither the district court nor the magistrate

specifically mention subclavian steal syndrome, both mentioned that

Dr. Sanders’s letter chronicled the various ailments afflicting

Gassaway and cited the letter as a basis for their rulings. The

letter listed various serious ailments including subclavian steal

syndrome.

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discretion. First, Dr. Sanders’s diagnosis of Gassaway’s ailments

does not have to meet Daubert standards because Dr. Sanders is a

fact witness observing the condition of a patient, like the medical

examiner in Binakonsky. Second, Dr. Sanders’s opinion that

Gassaway could not have reasonably understood the terms of the

Agreement is admissible under Rule 701 of the Federal Rules of

Evidence. Fed. R. Evid. 701. His opinion on Gassaway’s mental

well-being was based on his perception of Gassaway and her

ailments, not on “scientific, technical, or specialized knowledge.”

Furthermore, Dr. Sanders is the most qualified person available to

testify to Mrs. Gassaway’s mental capacity. Gassaway has passed

away and is not available for further medical examination. Dr.

Sanders was her treating physician for sixteen years. The fact

that his practice is internal medicine rather than neurology does

not negate the fact that he is a qualified physician with more

first-hand knowledge concerning Gassaway’s physical and mental

well-being than any other medical professional. The district

court, therefore, did not abuse its discretion in admitting his

letter.

Ryan’s also argues that the district court erred in accepting

the affidavit of Craig, Gassaway’s sister. The affidavit describes

the behavior of Gassaway in the final years of her life and her

ability to perform daily tasks. Ryan’s argues that the affidavit

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is irrelevant because it only describes limitations on Gassaway’s

physical capacity rather than her mental capacity.

These arguments also fail. Deficiencies in mental well-being

often manifest themselves in physical actions. Craig lived with

Gassaway for fifteen years. She described situations in which

Gassaway became lost and confused, and she described Gassaway’s

inability to perform simple daily tasks. Certainly, the district

court could have considered these situations and capabilities as

physical manifestations of her diminished mental capacity such that

it was not clear error for the district court to consider Craig’s

testimony.

Although Ryan’s does not offer any evidence of their own to

rebut Brown’s evidence, Ryan’s does try to assert that the district

court erred because Brown’s evidence actually shows that Gassaway

did have the mental capacity to enter into a binding contract.

Ryan’s argues that a letter written by Dr. Sanders to support

Gassaway’s efforts to retain guardianship of Brown in March 2001

indicates that Gassaway did have the mental capacity to enter into

a binding contract because Dr. Sanders opines that Gassaway had

been a “responsible parent” and should retain guardianship over

Brown.

Again, Ryan’s arguments lack merit. This letter specified that

Gassaway could be a responsible parent with proper assistance and

counseling. A statement that a person needs somebody else to

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assist and counsel them to be responsible does not indicate that

the person has the mental capacity to enter into a binding

contract. Because Dr. Sanders indicated that Gassaway needed

assistance and counseling to be a responsible parent, his letter

does not show that she had the requisite mental capacity.

Finally, Ryan’s argues that the district court failed to

properly consider the affidavit of Brown, the only witness to

Gassaway’s signing of the Agreement. The affidavit does not

mention anything that would indicate a diminished mental capacity

at the time of the signing. Because the only material witness to

the signing did not indicate that Gassaway lacked mental capacity

at the time, Ryan’s argues that the district court erred in finding

that Gassaway lacked the requisite mental capacity to enter into a

binding contract.

We find that the lack of description in Brown’s affidavit of

any mental deficiencies afflicting Gassaway, however, is hardly

determinative or even persuasive in analyzing Gassaway’s mental

capacity. Brown has offered the testimony of Dr. Sanders and Craig

to prove Gassaway’s diminished mental capacity. The simple lack of

a definitive statement in Brown’s affidavit cannot outweigh the

affirmative assertions of Gassaway’s treating physician and live-in

sister. Therefore, the district court did not clearly err in its

consideration of Brown’s affidavit.

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In conclusion, we note that Ryan’s has not offered a shred of

evidence to rebut the evidence offered by Brown. Although the

affidavit of Craig and the letter by Dr. Sanders are by no means

perfect indicators of Gassaway’s mental capacity, we cannot find

that the district clearly erred in determining that Gassaway lacked

the mental capacity to enter into a binding contract at the time

she signed the Agreement. Without countervailing evidence, we must

concur with the district court’s finding that the Agreement was

unenforceable.

Because we find the Agreement is unenforceable on this ground,

we find it unnecessary to address the other grounds of invalidity

found by the district court.

IV.

Because the district court did not abuse its discretion in

admitting and considering evidence offered by Brown to prove

Gassaway’s mental incapacity and Ryan’s offered no proof to rebut

the evidence, the district court did not clearly err in finding

that Gassaway did not have the mental capacity to enter into a

binding contract. Because Brown was a minor at the time of signing

the Agreement and Gassaway lacked the mental capacity to make the

Agreement enforceable, the district court’s decision to deny the

motion to dismiss and the motion to compel arbitration is

AFFIRMED.

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