Boellner v. Clinical Study Ctrs., LLC
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Cite as 2011 Ark. 83
SUPREME COURT OF ARKANSAS
No.
SAMUEL BOELLNER,
MARILYN BOELLNER
M.D.,
10-348
AND
APPELLANTS
VS.
CLINICAL STUDY CENTERS, LLC;
JOHN M. GIBLIN, M.D.; ANTHONY
JOHNSON, M.D.; AND GORDON
GIBSON, M.D.
APPELLEES
Opinion Delivered February
24, 2011
APPEAL FR O M TH E PU LASKI
COUNTY CIRCUIT COURT,
NO. CV07-9816,
HON. ELLEN BASS BRANTLEY,
JUDGE
AFFIRMED ON DIRECT APPEAL;
AFFIRMED ON CROSS-APPEAL.
COURTNEY HUDSON HENRY, Associate Justice
Appellants Samuel Boellner, M.D., and Marilyn Boellner appeal a Pulaski County
jury’s verdict in favor of appellees Clinical Study Centers, LLC (CSC); Dr. John Giblin; Dr.
Anthony Johnson; and Dr. Gordon Gibson. For reversal, appellants argue that substantial
evidence does not support the jury’s verdicts on tortious interference with business
expectancy, breach of contract, defamation, and damages. Appellants also challenge the
circuit court’s jury instructions. On cross-appeal, appellees argue that the exemption statute
for an individual retirement account (IRA), contained in Arkansas Code Annotated section
16-66-220(a)(1) (Repl. 2005), conflicts with the plain language of article 9, section 2 of the
Arkansas Constitution. Our jurisdiction is proper pursuant to Arkansas Supreme Court Rule
1-2(a)(1) (2010). We affirm both on direct appeal and on cross-appeal.
Cite as 2011 Ark. 83
I. Facts
On February 19, 1998, appellant Samuel Boellner (Boellner) founded CSC to perform
drug studies or clinical trials for certain pharmaceutical companies. CSC performed these
clinical trials under the authority of and oversight by the Federal Drug Administration (FDA).
FDA regulations require that each clinical study be conducted by a principal investigator (PI),
who agrees to conduct or supervise the study in accordance with FDA regulations and
protocol. Institutional review boards (IRBs) review, approve, and monitor proposed
research protocols. Under FDA regulations, an IRB must approve, monitor, and review
each clinical study involving biomedical research.
From CSC’s formation in 1997 until August 1, 2006, Boellner served as CSC’s chief
executive officer. In 2000, Gibson joined CSC and became a fifty percent (50%) owner. On
August 1, 2006, Boellner and Gibson agreed to transfer ninety-two percent (92%) of their
collective ownership in CSC to Giblin, Johnson, and Bryan Jeffrey, a certified public
accountant, for the sale price of $150,000. Gibson retained four percent (4%) ownership.
As part of the agreement, Boellner became a consultant by contract and retained four percent
(4%) ownership in CSC. Under the sale contract, Boellner received an annual consulting fee
of $60,000 and additional compensation on a negotiated basis for new studies beginning July
31, 2006. In 2007, Boellner served as a PI for two studies: Arkansas IRB, which was
sponsored by Abbott Laboratories, and Copernicus Group IRB, which was sponsored by
Shire Pharmaceuticals.
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Within two months of CSC’s sale, Boellner expressed his dissatisfaction with the
purchase of CSC and its new management. After January 1, 2007, CSC made no payments
to Boellner for his fixed consulting fee or for his percentage of new study revenues.
According to appellees’ complaint, from January 2007 through June 25, 2007, Boellner
engaged in a systematic pattern of conduct that included demands for personal compensation
without regard for company priorities, such as rent, payroll, utilities, and salaries. Appellees
alleged that their attempts to discuss financial issues brought (1) threats by Boellner to cancel
studies; (2) personal calls to client sponsors; (3) absenteeism; (4) refusal to sign documents;
(5) and harassment of sponsors’ financial representatives, study monitors, and clinic staff.
According to appellees, Boellner directed personal slurs, profanity, and insults directly toward
Giblin and Johnson. Boellner’s conduct allegedly continued until his termination, despite
appellees’ attempts to satisfy Boellner’s financial demands. The parties allegedly reached a
verbal agreement, but Boellner disavowed the agreement the following day. On June 25,
2007, CSC terminated its consulting agreement with Boellner.
As a result of the
termination, CSC informed Boellner that he no longer remained the PI on the studies
monitored by Arkansas IRB or Copernicus IRB. CSC also denied Boellner access to his
office and the monitoring facilities.
On that same day, Boellner sent a letter to the chairperson of Copernicus IRB,
notifying the IRB of CSC’s actions and that Giblin, the newly proposed PI, was “under
weekly follow-up treatment for previous drug abuse.” Boellner continued that, although he
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believed Giblin “[was] very capable as an investigator, [Boellner] question[ed] if [Giblin]
should be the principal investigator on a study with a controlled substance.” Subsequently,
on July 3, 2007, Boellner also faxed a letter to Dr. John E. Slaven, chairperson of Arkansas
IRB, with a copy to the study sponsor. In the letter, Boellner notified the IRB of CSC’s
actions and that Giblin, its new PI, was required by the Arkansas State Medical Board to
“attend a weekly drug abuse program which he still attends and receives frequent random
drug tests.”
On August 6, 2007, appellees filed a complaint against appellants for breach of
contract, tortious interference with business expectancy, defamation, and declaratory
judgment on the parties’ agreement. Specifically, appellees alleged (1) breaches of contract
for a covenant not to compete, a nonsolicitation agreement, and a confidentiality agreement;
(2) tortious interference with business expectancy; (3) defamation; (4) and injunctive relief.
Giblin asserted a separate claim for defamation against Boellner. On September 5, 2007,
appellants counterclaimed for breach of contract, wrongful termination, and declaratory
judgment on the noncompete agreement.
The circuit court held a jury trial in Pulaski County Circuit Court in June 2009.
During the jury-instruction conference, appellees conceded that they did not have a breachof-contract claim against Marilyn Boellner and dropped the claim. At the conclusion of the
trial, the jury returned the following awards: (1) $325,000 to appellees for breach of contract
against Boellner; (2) $325,000 to appellees for tortious interference with business expectancy
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against appellants; (3) $325,000 in punitive damages for tortious interference with business
expectancy to appellees against Boellner; (4) $75,600 in compensatory damages for
defamation to Giblin against Boellner; and (5) $250,000 in punitive damages for defamation
to Giblin against Boellner. The jury also returned verdicts in favor of Boellner in the amount
of $403,696.04. On July 21, 2009, the circuit court entered its order reflecting these jury
awards. After applying a credit toward the verdict based upon Boellner’s recovery, the court
awarded judgment in favor of appellees in the amount of $571,202.96. The court also
entered a judgment in favor of Giblin against Boellner for a total amount of $325,600.
On August 4, 2009, appellants timely filed posttrial motions for JNOV, remittitur, and
new trial, which the court orally denied from the bench on August 24, 2009. The circuit
court did not enter an order within thirty days; therefore, the motions were later deemed
denied. Appellants timely filed a notice of appeal on September 23, 2009.
Appellees learned, during the course of postjudgment discovery and collection
proceedings, that Boellner owned an IRA valued in excess of $1.1 million at the time of the
judgment. Boellner filed a brief in support of claimed exemptions, arguing that this account
was exempt from collection. Appellees responded with an objection to the claimed
exemption and a motion to declare Arkansas Code Annotated section 16-66-220(a)(1)
unconstitutional. In their motion, appellees argued that the circuit court should not exempt
the IRA because the statute is in conflict with article 9, section 2 of the Arkansas
Constitution. After two hearings on the IRA exemption issue, the circuit court entered an
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order declaring the entire IRA account exempt based upon section 16-66-220(a)(1). On
January 27, 2010, appellees timely filed a notice of cross-appeal.
II. Points on Appeal
On appeal, appellants make five arguments: (1) the verdict for tortious interference
with business expectancy must be reversed because the business expectancy was subject to
a contingency; (2) substantial evidence did not support a verdict against appellants for breach
of contract; (3) neither the amount nor the cause of damages was supported by substantial
evidence; (4) the defamation verdict should be reversed because substantial truth is an
absolute defense; and (5) the circuit court erred in its jury instructions. On cross-appeal,
appellees argue that Arkansas Code Annotated section 16-66-220(a)(1) conflicts with the
Arkansas Constitution.
Appellants appeal from the circuit court’s denial of their motion for directed verdict
and judgment notwithstanding the verdict as to proof of tortious interference with business
expectancy, breach-of-contract claims, defamation, and resulting damages, which collectively
constitute a challenge to the sufficiency of the evidence. Conagra, Inc. v. Strother, 340 Ark.
672, 676, 13 S.W.3d 150, 153 (2000) (“[A] motion for JNOV is technically only a renewal
of the motion for a directed verdict made at the close of the evidence.”). Our standard in
reviewing the sufficiency of the evidence is well settled: (1) the evidence is viewed in the
light most favorable to the appellee; (2) the jury’s finding will be upheld if substantial
evidence supports it; and (3) substantial evidence is that of sufficient force and character to
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induce the mind of the fact-finder past speculation and conjecture. Callahan v. Clark, 321
Ark. 376, 901 S.W.2d 842 (1995).
We do not try issues of fact but examine the record to determine whether there is
substantial evidence to support the jury’s verdict. Conagra, 340 Ark. at 676, 13 S.W.3d at
152. Thus, when testing the sufficiency of the evidence on appellate review, we need only
consider the testimony of appellees and evidence that is most favorable to appellees. WalMart Stores, Inc. v. Dolph, 308 Ark. 439, 825 S.W.2d 810 (1992). We defer to the jury’s
resolution of the issue unless we can say there is no reasonable probability to support the
appellee’s version. Wheeler Motor Co. v. Roth, 315 Ark. 318, 867 S.W.2d 446 (1993).
A. Tortious Interference with Business Expectancy
For the first point on appeal, appellants argue that the verdict for tortious interference
with business expectancy must be reversed because the expectancy included a contingency.
Specifically, appellants assert that CSC sought damages for alleged interference with six
prospective clinical studies, but in one study, two documents signed by Giblin included the
contingency that Shire, as the study sponsor, may “suspend or prematurely terminate the trial
at any time for whatever reason,” and Shire decided to terminate the clinical trial and gave
written notice to CSC. Appellants contend that, because appellees’ business expectancy
included the contingency of early termination by Shire, no actionable claim for tortious
interference lies, and the jury verdict for tortious interference with business expectancy must
be reversed.
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Appellees respond that appellants’ argument regarding tortious interference is barred
as a matter of law because it is raised for the first time on appeal. Appellees argue that
appellants failed to make this specific argument in their motion for directed verdict and in
their JNOV motion.
We do not consider arguments raised for the first time on appeal. A party cannot
change the grounds for an objection or motion on appeal, but is bound by the scope and
nature of the arguments made at trial. Yant v. Woods, 353 Ark. 786, 120 S.W.3d 574 (2003).
Additionally, we will not address an argument on appeal if a party has failed to obtain a ruling
below. Simpson Housing Solutions, LLC v. Hernandez, 2009 Ark. 480, ___ S.W.3d ___.
In the present case, appellants failed to preserve this issue. At trial, appellants made
their motion for directed verdict as to the tortious-interference claim, but appellants did not
include the contingency argument. Rather, in their motion for directed verdict, appellants
argued that Boellner was a party to the clinical studies and, because he was under a
contractual duty, he could not have interfered with a contract to which he was already a
party. The circuit court flatly denied appellants’ directed-verdict motion without comment.
Subsequently, in a JNOV motion, appellants made a tortious-interference argument
in the context of the jury’s damage awards for breach of contract and for appellants’ claimed
interference. Specifically, appellants asserted that, contrary to appellees’ position at trial, there
was no evidence that appellants’ actions resulted in CSC’s failure to obtain profits from six
proposed clinical studies, particularly when one study sponsor, Shire, elected to exercise its
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right to terminate the study before it began. Appellants also asserted in their motion that
substantial evidence did not support punitive damages against Marilyn Boellner for tortious
interference. In response, CSC raised the argument in the context of damages and limited
its argument to Marilyn Boellner’s actions (i.e., withholding information, aiding other studies
in competition with CSC, tampering with CSC’s mail, and obstructing CSC from competing
in the marketplace). The circuit court never ruled on the JNOV motion in a written order,
but the posttrial motions were later deemed denied.
We have observed that a motion for a directed verdict is a condition precedent to
moving for JNOV. Thomas v. Olson, 364 Ark. 444, 220 S.W.3d 627 (2005). Because a
motion for JNOV is technically only a renewal of the motion for a directed verdict made at
the close of the evidence, it cannot assert a ground not included in the motion for a directed
verdict. Id. Here, although appellants arguably raised the contingency argument in their
JNOV motion, they failed to make the argument in their directed-verdict motion. Further,
the circuit court did not rule on appellants’ contingency argument. Therefore, we hold that
appellants’ contingency argument is not preserved for review. See Simpson Housing Solutions,
supra.
B. Breach of Contract
For the second point on appeal, appellants argue that no substantial evidence supports
a verdict for breach of contract. Specifically, appellants contend that appellees failed to
present substantial evidence that Boellner breached the covenant not to compete,
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nonsolicitation, or confidentiality agreement. Appellants further assert that Arkansas does not
recognize a cause of action for breach of the covenant of good faith and fair dealing and that
appellees did not plead any such claim.
Appellees respond that substantial evidence supported the judgment for breach of
contract. Appellees contend that, although their complaint specifically referenced breaches
of the noncompete, nonsolicitation, and confidentiality provisions, the complaint makes only
one claim for breach of contract. Therefore, appellees assert that they only had to prove that
Boellner breached one provision of the contract.
The issue presented to this court is whether there is substantial evidence that Boellner
breached his contract with CSC to support the jury’s verdict. When performance of a duty
under a contract is contemplated, any nonperformance of that duty is a breach. Zufari v.
Architecture Plus, 323 Ark. 411, 914 S.W.2d 756 (1996). As a general rule, the failure of one
party to perform his contractual obligations releases the other party from his obligations.
Stocker v. Hall, 269 Ark. 468, 602 S.W.2d 662 (1980). However, a relatively minor failure
of performance on the part of one party does not justify the other in seeking to escape any
responsibility under the terms of the contract; for one party’s obligation to perform to be
discharged, the other party’s breach must be material. Id. An influential circumstance in the
determination of the materiality of a failure to fully perform a contract is the extent to which
the injured party will obtain the substantial benefit that she reasonably anticipated. Id.
Appellees alleged one general count of breach of contract, which included that
[appellants] have engaged in verbal and written communications with thirdparty sponsors of [appellees], threatened one or more third-party study
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monitors, threatened one or more of the members of the plaintiff CSC,
harassed sponsors’ financial representatives, planned and acted to engage in
direct competition, absenteeism, and refused to sign documents. In addition,
Dr. Boellner has demanded payment for work which he has not performed
either by absenteeism or work that has been done in a manner inconsistent with
his duties and responsibilities pursuant to a consulting agreement entered into
on the 1st day of August, 2006.
Dr. and Mrs. Boellner both have engaged in behavior inconsistent with
their professional responsibilities set out in the contract and, as such, have
created a hostile work environment for the [appellees] and employees. All of
these actions are in direct violation of the contracts between the parties . . . .
Specifically, appellees alleged a breach of the covenant not to compete, breach of the
nonsolicitation agreement, and breach of the confidentiality agreement.
The parties’ agreement contained provisions that CSC entered into a consulting
agreement and noncompetition, nonuse, and nonsolicitation agreement (collectively
“noncompetition agreements”) with appellants. The consulting agreement provided that
CSC would terminate the agreement if the consultant “commit[ted] an act of fraud against
[CSC]; upon the disclosure of authorized confidential information by the consultant; in the
event that the consultant fail[ed] to perform the services contemplated by [the] agreement
with diligence or competence, or the consultant materially breache[d] this agreement.”
Similarly, the noncompetition agreements required the parties to enter into a covenant not
to compete, to protect confidential information, and to refrain from soliciting, accepting, or
engaging in any business in competition with CSC for a period of three years.
With these provisions in mind, we turn to appellants’ breach-of-contract argument.
At the outset, we note that the jury returned a verdict for breach of contract without
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specifying which particular breach occurred. We further note that the jury rendered the
breach-of-contract verdict against Boellner rather than his wife.
Here, Johnson testified that “every interaction with Dr. Boellner after [Johnson’s
return to CSC] was either rudeness or not talking to me or him yelling at me, accusing me
of not knowing what I was doing, and basically totally unwilling to work with me.”
According to Johnson, Boellner berated Phil Schmidt, a former CSC employee, as well.
During one meeting, Boellner began to berate Johnson, who proceeded to leave the meeting.
Johnson testified that, on December 7, 2006, he conducted a meeting with Boellner “[t]o
come to terms on how we could move forward positively at [CSC].” However, Johnson
opined that “over the next three months, the behavior, the way I was treated, the lack of
ability to work together basically continued[.]” According to Johnson, Boellner agreed when
he signed the consulting agreement that he would continue to bring in more studies, but
according to Johnson, Boellner said, “I’m not going to do what I said I was going to do in
the agreement.”
Gibson testified that he worked on a clinical study with Boellner, but at a critical point
during the study, Gibson realized that Boellner was out of town and believed that Boellner
was attending an investigator meeting in Florida. Gibson also testified that Boellner displayed
volatile behavior toward Johnson and that he overheard Boellner tell an Abbott representative
that “we have a drug addict and a used car salesman running this company.” Additionally,
Giblin testified that Boellner repeatedly discussed quitting studies. According to Giblin,
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Boellner stated that Wyeth, one potential sponsor, was not interested in continuing a study,
but Dr. Aukstolis, a non-CSC physician, testified that he and Boellner had ongoing
communications with Wyeth about Aukstolis’s potential participation in the Wyeth study.
Giblin also testified that Boellner informed Pfizer that CSC was not interested in performing
two studies, but Giblin salvaged CSC’s participation in those studies after Boellner attempted
to cancel them.
Further, Schmidt testified that Boellner told a CSC customer that Giblin should not
have been a PI on that particular study; that the company should not do business with CSC
because Boellner was not getting paid; and that the work environment at CSC was toxic and
dysfunctional. Vonnetta Hockaday, a former receptionist at CSC, testified that Boellner met
with six people from Arkansas Research Solutions, one of CSC’s competitors, and gave them
copies of information about CSC’s clinical study business. Jennifer Gentry, a nurse at CSC,
testified that Boellner, at times, could be heard yelling and screaming in the clinic, and she
was concerned that patients would overhear him.
Viewing this evidence in the light most favorable to appellees, we hold that substantial
evidence supports the jury’s verdict that Boellner materially breached his contract with CSC.
This evidence particularly supports that Boellner attempted to undermine CSC’s efforts in
achieving clinical studies with certain companies, sabotaging CSC’s business in violation of
his noncompetition agreement, and failing to perform his duties with diligence and
competence. Thus, we affirm the jury’s verdict on this issue. Because substantial evidence
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supported the jury’s breach-of-contract verdict, we decline to reach appellant’s argument
concerning appellees’ allegation of a breach of an implied covenant of good faith and fair
dealing.
C. Damages
For the third point on appeal, appellants argue that substantial evidence does not
support the amount of damages awarded to appellees. Specifically, appellants contend that the
damage calculations presented to the jury were based upon the “optimistic projections of an
owner” and constituted speculation and conjecture. Appellants urge that substantial evidence
did not support a finding that they caused CSC to lose any clinical studies. In response,
appellees argue that substantial evidence supported both the amount and the cause of damages.
Appellees further assert that the damage calculations presented to the jury were consistent with
accepted methods of calculating lost-profit damages.
Case law principles governing the award of damages for lost profits are well established.
Lost profits are consequential damages in that they do not flow directly and immediately from
a breach of a contract, but flow from some consequence or result of the breach. See Smith v.
Walt Bennett Ford, Inc., 314 Ark. 591, 864 S.W.2d 817 (1993). When a party who has
suffered a breach of contract seeks recovery of anticipated profits, had the contract not been
breached, he or she must present a reasonably complete set of figures to the fact-finder and
should not leave it to speculate as to whether there could have been any profits. See Interstate
Oil & Supply Co. v. Troutman Oil Co., 334 Ark. 1, 972 S.W.2d 941 (1998). Lost profits must
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be proven by evidence showing that it was reasonably certain the profits would have been
made had the other party carried out its duties under the contract. Id. Such proof is
speculative when based upon projected sales if there are too many variables to make an
accurate projection. Id. However, if it is reasonably certain that profits would have resulted
had the contract been carried out, then the complaining party is entitled to recover. Id.; Jim
Halsey Co. v. Bonar, 284 Ark. 461, 683 S.W.2d 898 (1985). Proof of an established business’s
past profits is sufficient proof of its lost future profits. See Mine Creek Contractors, Inc. v.
Grandstaff, 300 Ark. 516, 780 S.W.2d 543 (1989). Lost net profits, not lost gross profits, are
recoverable. See Interstate Oil & Supply Co., supra. In Interstate Oil, we discussed nonspeculative lost-profit damages. We stated that a party seeking to recover lost-profit damages
must present a reasonably complete set of figures that does not leave the jury to speculate as
to whether there could have been any profits. Id. at 6. Lost profits must be proven by
evidence showing that it was reasonably certain the profits would have been made had the
other party carried out the agreement. Id.
In the present case, both parties’ experts presented damages based on the gross revenues
from six clinical studies and the relevant deductions that they calculated as variable costs.
Appellees’ expert, Dr. Ralph Scott, presented a set of calculations based upon proposed study
budgets for CSC’s loss of clinical studies. These studies included four Shire studies, a Wyeth
study, and an Abbott study; projected revenues from each study; incremental costs; and lost
incremental profits for a total economic loss of $1,579,024.97. For his calculations, Scott
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relied upon Giblin and other CSC employees in studying CSC’s budgets and in determining
fixed and variable costs. Scott testified that his calculations represented a conservative estimate
of the damages because he only identified the six specific studies that CSC lost during that
time period. In contrast, appellant’s expert, Jay Marsh, testified that overhead expenses, such
as rent and full-time salaries, equaled variable costs. However, Marsh agreed that, assuming
CSC had obtained the six studies, CSC would have obtained the stated contractual amounts.
We have stated that a jury determines the credibility of the witnesses and the weight
and value of their evidence, and it may believe or disbelieve the testimony of any one or all
of the witnesses, though such evidence is uncontradicted and unimpeached. Kempner v.
Schulte, 318 Ark. 433, 885 S.W.2d 892 (1994). Here, the jury heard dueling experts on the
subject of lost-profit damages and chose to believe Scott’s testimony. For these reasons, we
cannot say that the jury’s award of damages was in error.
Further, appellants argue that neither the amount nor the proximate cause of damages
was supported by substantial evidence. Citing Stewart Title Guaranty Co. v. American Abstract
& Title Co., 363 Ark. 530, 215 S.W.3d 596 (2005), appellants contend that, in proving
causation, CSC had to produce substantial evidence that the drug companies refused to
award the studies to CSC and that the refusal was induced or caused as the result of improper
interference by appellants. This argument goes to the heart of appellees’ tortious-interference
claim. There are four elements of a tortious-interference claim: (1) the existence of a valid
contractual relationship or a business expectancy; (2) knowledge of the relationship or
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expectancy on the part of the interfering party; (3) intentional interference inducing or
causing a breach or termination of the relationship or expectancy; and (4) resultant damage
to the party whose relationship or expectancy has been disrupted. Belin v. West, 315 Ark. 61,
864 S.W.2d 838 (1993). Here, appellants’ argument involves the causation element of
appellees’ allegation of tortious interference. Because we previously held that appellants did
not preserve their sufficiency argument on tortious interference, we decline to reach
appellants’ argument on this issue.
D. Defamation
For the fourth point on appeal, appellants argue that substantial evidence does not
support the jury’s defamation verdict. Specifically, appellants contend that substantial truth
is an absolute defense to defamation and that they were truthful about Giblin’s diagnosis of
drug addiction and subsequent treatment. Appellees respond that the defamation verdict
should be affirmed on the basis that the jury properly determined the factual question of
whether the statements made by Boellner were substantially true.
The following elements must be proven to support a claim of defamation: (1) the
defamatory nature of the statement of fact; (2) that statement’s identification of or reference
to the plaintiff; (3) publication of the statement by the defendant; (4) the defendant’s fault in
the publication; (5) the statement’s falsity; and (6) damages. Faulkner v. Ark. Children’s Hosp.,
347 Ark. 941, 69 S.W.3d 393 (2002); Brown v. Tucker, 330 Ark. 435, 954 S.W.2d 262 (1997);
Minor v. Failla, 329 Ark. 274, 946 S.W.2d 954 (1997).
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In defamation actions, there must be evidence that demonstrates a causal connection
between defamatory statements made and the injury to reputation. Ellis v. Price, 337 Ark.
542, 990 S.W.2d 543 (1999). A plaintiff must establish actual damage to his reputation, but
the showing of harm may be slight. Id. A plaintiff must prove that the defamatory statements
have been communicated to others and that the statements have affected those relations
detrimentally. Id. It is not necessary to prove the literal truth of the accusation in every detail
but that the imputation is substantially true, or as it is often put, to justify the gist, the sting,
or the substantial truth of the defamation. Pritchard v. Times Sw. Broadcasting, Inc., 277 Ark.
458, 642 S.W.2d 877 (1982).
Appellants cite Pritchard for the proposition that Boellner’s statements about Giblin
were substantially true and that no reasonable jury could conclude that the substantial gist or
sting of those statements were untrue. However, in viewing the evidence in the light most
favorable to appellees, the jury disbelieved Boellner’s statements about Giblin and found
substantial evidence to support a defamation verdict. Here, Giblin testified that Boellner and
Gibson hired him in September 2002. Initially, Giblin interviewed with Boellner and
applied for a position held by Dr. Alex Zotos, whom Giblin knew from his association with
Alcoholics Anonymous (AA) and the Physician’s Health Committee. Giblin testified that
he told Boellner about his alcohol abuse during his service with the Navy and his
rehabilitation in 1993. Giblin maintained that he shared with Boellner what he learned in
his AA meetings. However, Giblin stated that he never had any discussions with Boellner
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about prescription drug use or being a drug addict. Giblin testified that Boellner was aware
of Giblin’s random drug tests, but Giblin claimed that those tests were not ordered by the
Arkansas State Medical Board. Giblin further testified that he remained sober from January
9, 1993, until November 21, 2001, when he entered Talbott Recovery Campus. According
to Giblin, he spent three months in Talbott and a short stint in Serenity Park. Giblin
admitted that, out of ninety-three tests, four were positive. Giblin acquired two positive tests
in 2003 for amphetamines after taking Allegra D and Sudafed and two positive tests in 2006
for opiates, namely Percocet and Darvocet, after a rotator-cuff surgery. Giblin asserted that
he had not had any relapse in abusing alcohol and was “very proud of [his] sobriety.”
Boellner testified that he interviewed Giblin, who stated that he had an addiction
problem in the early 1990s and sought treatment in 1993 for alcohol abuse. According to
Boellner, Giblin informed him that he had attended AA meetings since 1993 and underwent
periodic drug screenings. Boellner testified that, in 2007, Giblin asked him to write a
prescription of Adderall for his wife and, as a result, Boellner was “concerned.” Boellner
admitted that he wrote a letter on June 25, 2007, to the chairperson of Copernicus IRB,
notifying the IRB of CSC’s actions and that Giblin was “under weekly follow-up treatment
for previous drug abuse.” Boellner also testified that he wrote a letter to Slaven, with a copy
to the study sponsor, Abbott, notifying Arkansas IRB of CSC’s actions and that the newly
proposed PI, Giblin, was required by the Arkansas State Medical Board to “attend a weekly
drug abuse program which he still attends and receives frequent random drug tests.”
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The jury also heard testimony from Gibson, Schmidt, and Gentry, who testified that
they heard Boellner tell a potential sponsor that Giblin was a drug addict. Kandi McNeal,
Gibson’s secretary, testified that she heard Boellner tell a prospective Abbott representative
that Giblin was “in rehab” and “had a drug problem.” Additionally, the court admitted into
evidence Boellner’s two letters and Giblin’s file, which included his Talbott medical records,
with the Physician’s Health Committee.
Based upon this evidence, Boellner identified Giblin in his statements, implied that
Giblin had substance-abuse problems, and communicated those statements to third parties.
However, the jury gave weight to that testimony indicating that Boellner’s statements were
not substantially true. We have often stated that it is within the province of the jury to
resolve any conflicts in the testimony and to judge the weight and credibility of the evidence.
McCoy v. Montgomery, 370 Ark. 333, 259 S.W.3d 430 (2007). Therefore, we hold that
substantial evidence supported the jury’s verdict for defamation.
Further, we decline to address appellants’ argument concerning reputational injury, or
the damages element of defamation, to Giblin, as appellants failed to raise this issue in their
motion for directed verdict. We have observed that a motion for a directed verdict is a
condition precedent to moving for JNOV. Thomas, supra. Because a motion for JNOV is
technically only a renewal of the motion for a directed verdict made at the close of the
evidence, it cannot assert a ground not included in the motion for a directed verdict. Id.
Therefore, appellant’s argument on reputational injury is not preserved.
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E. Jury Instructions
For the fifth point on appeal, appellants argue that the circuit court erred in refusing
to give the following instruction they proffered on improper conduct, truth, and reputational
damages. Specifically, appellants contend that the trial court erred in submitting appellees’
modified Arkansas Model Jury Instruction–Civil 404. Appellants further urge that the circuit
court erred in declining their proffered instructions on truth and reputational damages
because the given instructions did not accurately reflect the law. In response, appellees assert
that the circuit court properly gave appellees’ modified AMI Civ. 404 and denied the
remaining two instructions on substantial truth and reputational damages.
Under Arkansas law, a party is entitled to a jury instruction when it is a correct
statement of the law and there is some basis in the evidence to support giving the instruction.
Barnes v. Everett, 351 Ark. 479, 95 S.W.3d 740 (2003). We will not reverse a trial court’s
refusal to give a proffered instruction unless there was an abuse of discretion. Id. Even
where a proffered instruction accurately reflects the case law, however, failure to give the
instruction is not error when an AMI instruction covering the same subject matter is on
point, due to our longstanding preference in favor of AMI instructions over non-AMI
instructions. See Wal-Mart Stores, Inc. v. Kelton, 305 Ark. 173, 806 S.W.2d 373 (1991).
First, we examine appellants’ proffered instruction on improper conduct. AMI Civ.
404 specifically states that “[p]laintiff contends that defendant’s conduct was improper
because [describe succinctly the nature of conduct at issue].” Here, appellants’ proffered
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instruction read: “Plaintiffs [Appellees] contend that the Boellners’ conduct was improper
because Dr. Boellner informed two IRBs and study sponsors that Dr. Giblin had a history
of previous drug abuse, for which he received follow-up treatment.” The circuit court
denied the proffer and opted to give the following instruction proffered by appellees:
Plaintiffs contend that the Boellners’ conduct was improper because of
the June 25, 2007 letter from Dr. Boellner to Copernicus IRB, the July 2 letter
from Dr. Boellner to the chairman of the Arkansas IRB, which was copied to
Abbott representatives, [and] verbal statements made by the defendants to CSC
sponsors regarding Dr. Giblin being a drug addict and in rehab. CSC financial
stability and professionalism [sic]. For statements made by Dr. Boellner to
CSC’s landlord that CSC would be out of business in three months . . . .
[W]ithholding information from new owners, which was necessary to obtain
in business . . . . [P]rocuring studies in the name of Neurology and Clinical
Studies Center. And . . . tampering with CSC’s mail.
Here, the circuit court merely instructed the jury what appellees contended with allegations
in evidence. We hold that the circuit court properly gave this jury instruction because what
appellees contended is simply explanatory and is nothing more than a summary of the case.
Second, we examine appellants’ proffered instructions regarding truth as a defense and
the burden of proof for reputational damages. Appellees proffered the following instruction
on truth as a defense to defamation: “Truth is a defense to defamation, but exact truth is not
required. It is not necessary to prove the literal truth of the accusation in every detail. It is
sufficient to show that the imputation is substantially true.” The court denied giving this
instruction because it was a non-AMI instruction. Finally, appellants proffered an instruction
on reputational damages, which read, “To establish damages for defamation, the claimant
must establish actual damage to his reputation and not merely speculation, but the showing
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of actual harm is slight.” The circuit court denied appellants’ proffered instruction and gave
general instructions on damages.
On the issue of defamation, the circuit court read AMI Civ. 411 to the jury. AMI
Civ. 411 defines defamation as follows:
A defamatory statement is a statement of fact that is false and actually
causes harm to a person’s reputation. In determining whether the statement
was defamatory, it must be considered as a whole, and the words must be
taken in their plain and natural meaning. In determining whether or not a
recipient of the statement reasonably understood the statement in a defamatory
sense, you must take into account the surrounding circumstances known to
the recipient at the time the statement was made.
In this instance, we conclude that AMI Civ. 411 covered the subject of a defamatory
statement as “a statement of fact.” With regard to truth as a defense, AMI Civ. 411 states
that the statement must be false and must be “considered as a whole,” taking into account
the plain meaning of the statement and the circumstances surrounding the statement.
Additionally, the circuit court also allowed counsel to present arguments on substantial truth.
With regard to damages, AMI Civ. 411 clearly states that a defamatory statement “actually
causes harm to a person’s reputation.” The given instruction properly covered the same
subject matter proposed by appellants in their instruction. Therefore, we hold that the
circuit court did not abuse its discretion in refusing to give appellants’ proffered instruction
on defamatory statements.
F. Cross-appeal: IRA Exemption Statute
Appellants requested the exemption of over $1.1 million contained in an IRA,
pursuant to the exemption statute set forth in Arkansas Code Annotated section 16-66-23-
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220(a)(1). On cross-appeal, appellees argue that section 16-66-220(a)(1) conflicts with article
9, section 2 of the Arkansas Constitution, which provides that personal property exempt
from seizure cannot exceed $500.
Appellees assert that the IRA exemption statute
contravenes the plain language of the Arkansas Constitution by allowing personal-property
exemptions in excess of the constitutionally mandated $500. Appellants respond that section
16-66-220(a)(1) is constitutional because the $500 exemption in the Arkansas Constitution
does not restrict or set a cap on exemptions but acts only as a floor below which the
legislature may not descend.
Although the circuit court ruled on this issue from the bench, the final, written order
did not address this issue. In a case where the judge made a constitutional decision from the
bench, we stated, “Pursuant to Administrative Order 2(b)(2), an oral order announced from
the bench does not become effective until reduced to writing and filed.” Oliver v. Phillips,
375 Ark. 287, 290 S.W.3d 11 (2008). When the circuit court makes no ruling on an issue,
the appellate court is precluded from reaching the issue on appeal. Id.
In the present case, the circuit court applied the Arkansas constitutional provision in
its ruling from the bench, stating, “I am of the opinion . . . that probably the Constitution
gives a floor and not a ceiling, so I will not hold that the IRAs are reachable.” However, in
the circuit court’s order, dated December 28, 2009, the court simply stated that the IRA
account is “exempt from attachment, garnishment, and execution” under the provisions of
section 16-66-220(a)(1) and ordered the writ of garnishment to be quashed. The court made
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no ruling on the constitutionality of section 16-66-220(a)(1) in its December 28, 2009 order.
Because the circuit court made no ruling upon the constitutionality of section 16-66220(a)(1), this issue is not preserved for our review, and we are precluded from reaching the
merits of appellees’ cross-appeal.
Affirmed on direct appeal; affirmed on cross-appeal.
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