PIPM PARTIES' STATEMENT OF FACTS IN SUPPORT OF THEIR RESPONSES TO MOTIONS FOR SUMMARY JUDGMENT IN 96 CVS 7140, 99 CVS 2628, AND 00 CVS 2178   

 

1.                  In 1993, Philip, Ingeborg and Mercedes sold their stock in a family soft drink business called Panamco.  On June 8, 1993, both Mercedes and Ingeborg authorized Philip to receive and handle their sale proceeds.  Ingeborg Dep., pp. 358-359;  Philip Dep., pp. 106, 108, 110; June 8, 1993 Appointment of Seller’s Agent (P&S App 51).  

 

2.                  Prior to the actual sale of the stock, Tom, with the knowledge and consent of Philip, as well as a POA specifically executed by Philip to act as his agent in regard to this account, opened the PIM Account at a branch of CB in Winston-Salem, North Carolina to receive the sale proceeds.  Philip Dep, p. 281; June 25, 1993 Appointment of Agent and Power of Attorney from Philip to Tom (P&S App 140).  Tom and his then wife, Jerri, were the only authorized signatories on the PIM Account.  Jerri Dep, p. 307; PIPM Exh 13, Signature Card for PIM Group Clearing Account (9065), Dep Exh 382.   In July and August 1993, over $119 million dollars in proceeds from the stock sale were wired into the PIM  Account, pursuant to written instructions from Philip.  Philip Dep, pp. 332-334;  CB Statement (Ingeborg et al Exh 6).

 

3.                  PIPM is a non-profit pain clinic operated by the PIPM Parties to provide medical pain management services to patients, regardless of income, in the community and to conduct a research program.   Clinic Proposal (P&S App 179);  September 9, 1994 Letter from IRS granting PIPM tax-exempt status (P&S App 255).  At the time of its inception in 1993, the PIPM Parties were initially advised by Tom and Jerri, and then later by CB and P&S, that the extensive monies needed to fund a non-profit pain clinic were being provided through a charitable foundation and charitable trusts for charitable purposes, and that Tom was the authorized agent of the wealthy prospective donors, Ingeborg and Philip.   Meloy Dep, pp. 10, 259;   Martin Dep, pp. 13-15, 275-276;    Faller Dep, pp. 103-104, 114-116;  Jarvis Dep, pp. 67, 74,  446;  Wrenn Dep, p. 518;  Twiddy Dep, pp. 11-13, 16-19, 23, 43-44, 48, 56;   Philip Dep, p. 197;  October 21, 1994 Grant Letter from Staton Foundation ( P&S App 88);  October 21, 1994 Grant Letter from Staton Foundation (P&S App 263).

 

4.                  With that understanding, the funding framework, i.e. that a charitable foundation, the Foundation, was to be funded by CLUTs funded with Philip and Ingeborg’s money,  and then the Foundation would fund the pain clinic, was created by P&S and CB, who created the clinic as well (see paragraph 9).  December 6, 1993 P&S Letter to Parties (P&S App 422). The Foundation offered and PIPM accepted contracts consisting of two grants, each providing an immediate initial payment of $2,000,000 for start-up costs, and annual payments for 20 years of $900,000 and $1,000,000, respectively, to provide for the continued operation of PIPM.  Philip and the Foundation have argued that it is “clear” that the two grant letters did not constitute two separate contracts but rather one represented a draft of the other.  See, e.g. Philip brief, n.3.  Philip and the Foundation have construed the letters in the light most favorable to them.  However, neither letter was marked “draft.”  Both letters were prepared by P&S on different dates.  There is no language in either letter that one revokes or cancels the other.  There is no disclosure of any intent to substitute or cancel a prior letter commitment.  The letters combine to grant 1.9 million dollars a year to plaintiffs for twenty years which is more consistent with Tom’s promise to the PIPM Parties of 2 million dollars a year for twenty years than Philip and the Foundation’s assertion that the letters granted PIPM only $900,000 a year for twenty years.  Thus, in the light most favorable to the PIPM Parties, there are two separate grant letters - or contracts - in this case.  Davis Dep, pp. 211-213; Twiddy Dep, p. 45, 152;  November 2 & 9, 1993 Handwritten Notes of Hugh Davis (P&S App 166);  October 21, 1994 Grant Letter from Staton Foundation (P&S App 88);  October 21, 1994 Grant Letter from Staton Foundation (P&S App 263).  The initial single payment of $2,000,000 to PIPM was made on October 21, 1994, pursuant to the grants.  CB Checking Deposit of $2,000,000 to PIPM (Ingeborg et al Exh 13).

 

5.                  CB and P&S were instrumental in establishing the PIPM Parties’ and PIPM’s relationship with Ingeborg and Philip, as well as the funding framework for PIPM.  The PIPM Parties relied on representatives from CB and P&S for information, advice and legal services.  Meloy Dep, pp. 13, 22-23, 270, 275, 287-290, 343;   Martin Dep, pp. 13-15, 22-24, 275-279;    Faller Dep., pp. 103-104, 114-116;   Twiddy Dep, pp. 20-22, 61, 64, 69, 81, 83, 100, 131,183, 186, 188, 195, 205, 206, 215, 220, 241, 262, 271, 273, 286, 291, 300, 306, 332, 350, 367, 390, 394, 416, 425, 455;  Philip Dep., pp. 192-194;   PIPM Exh 31, Johnston Dep, pp. 12-14, 17, 20-21, 197-198.   

 

6.                  On November 1, 1993, prior to discussing any firm plans for the pain clinic with the PIPM Parties, several CB officials, Dan Wrenn, Dick Jarvis and Dennis Bellefeuille, met with Tom and Jerri to discuss the funding framework.  Jarvis told Wrenn that Tom and Jerri had the authority to disburse funds from the PIM Account, and that he would forward Tom and Jerri’s POAs to Wrenn.  Jarvis Dep, pp. 96-97; Wrenn Dep, pp. 15-16, 25, 33-34.   The next day, Wrenn spoke with Hugh Davis and Curtis Twiddy,  P&S attorneys, to discuss the detailed and complex plan needed to establish PIPM, the non-profit pain clinic to be funded by Ingeborg and Philip’s money through a charitable foundation and charitable trusts, again before the actual plan was discussed with any of the PIPM Parties.  Davis Dep, p. 162, 176-177;  Twiddy Dep, pp. 10-12, 18-19, 68, 133;  November 2 & 9, 1993 Handwritten Notes of Hugh Davis (P&S App 166); PIPM Exh 15, P&S invoices, Dep Exh 408.  On November 3, 1993, CB precipitously transferred $2,000,000.00 of Philip’s money from the PIM Account to a separate account for the  Foundation before it even existed.   Twiddy Dep, pp. 37-39; PIPM Exh11, November 3, 1993 Letters from Tom Brame to CB regarding transfer of funds from PIM Account to Foundation, Dep. Exh. 367;  November 3, 1993 CB Advice of Debit regarding transfer of $2,000,000 from PIM Group to  Foundation (P&S App 125).   

 

7.                  On November 5, 1993, the PIPM Parties met with Tom and Jerri, as well as CB officials, Jarvis and Everett Wells.  Jarvis and Wells seemed to be well informed about the proposed clinic and its funding, and gave the doctors their complete assurances that Tom had the authority and the funds to make the commitment to fund the clinic at the level of $2,000,000.00 for twenty years.  At this meeting, the bank officials recommended that all parties retain P&S (whom the bank had already spoken to) to perform the necessary legal work, stating that P&S was outside counsel for the bank and an excellent and reputable law firm.  PIPM Exh 3, Meloy Affidavit.

 

8.                  All parties agreed to the proposal by CB to use the services of P&S and on December 6, 1993, signed a letter contract.  The letter was signed by Twiddy on behalf of P&S, by  Wrenn on behalf of CB, by the PIPM Parties, and by Tom as attorney-in-fact for Philip and Ingeborg.  December 6, 1993 P&S Letter (P&S App 422).  P&S  undertook the representation of all interested parties to the funding framework: Philip and Ingeborg, CB and the PIPM Parties.  Id.;  Philip Dep. 193-194; PIPM Exh 31, Johnston Dep., pp. 17, 20-21, 197-198; PIPM Exh23, December 14, 1993 P&S Invoice to PIPM, Dep Exh 675; PIPM Exh21, December 1, 1994 Letter from Jerri to PIPM re: P&S expenses, Dep Exh 661; PIPM Exh662, December 5, 1994 Letter from Meloy to Jerri re:  P&S legal services, Dep Exh 662;  PIPM Exh 18, December 6, 1995 P&S Invoice to PIPM, Dep Exh 428.

 

9.                  P&S performed all of the legal work concerning the CLUTs, the  establishment of the Foundation and key aspects of the non-profit pain clinic itself, including its incorporation,  its tax-exempt status, its lease of office space, its initial grant application to the Foundation and the written confirmation of the initial grant on behalf of the Foundation.  P&S led the PIPM Parties to believe that the establishment of PIPM and the entities necessary to fund it was done with the consent and legal authority of Philip and Ingeborg.   Twiddy Dep, pp. 22, 31, 54, 69, 78, 88-90.  In addition, P&S prepared the 1993 POAs which Twiddy felt were necessary to authorize the funding framework, specifically including provisions for making of charitable gifts and establishing charitable trusts and foundations.   The 1993 POAs also authorized Tom and Jerri to conduct a variety of business and financial transactions on behalf of Philip, Ingeborg and Mercedes.  Twiddy Dep, pp. 24, 27-28;  1993 POAs (P&S App 19, 24, 29).   Philip personally executed his own POA and executed Ingeborg’s and Mercedes’ as their attorney-in-fact.   Id.;  Philip Dep, pp. 328-329, 344-345, 383.

 

10.               CB performed the banking tasks to make funds available to the entities created by P&S, including repeatedly transferring millions of dollars from the PIM Account into the Foundation and the CLUTs, and assuring the PIPM Parties that the funds were indeed available and accessible to fund the non-profit pain clinic.  CB Advice(s) of Debit(s) from PIM Account to (4) CLUTs from December 13, 1993 through October 24, 1994 (P&S App 123); PIPM Exh 20, March 2, 1994 Letter from Wrenn to Meloy regarding Staton Trust account assets, Dep Exh 524. 

 

11.              On December 6, 1993, Tom executed the trust indenture which established the Foundation, which was declared to be a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code.   Foundation Charitable Trust Indenture (P&S App 34).  CB was one of the initial trustees of the Foundation.  Id.  The other trustees were Tom, Jerri and Philip.  Id.

 

12.              On December 8, 1993, Tom, as Philip’s attorney-in-fact, executed a trust agreement establishing the first of two CLUTs for Philip.  Philip’s CLUT #1 (P&S App 81).  The first CLUT was funded with $5 million from the PIM Account.  Philip Dep., p. 404; Advice(s) of Debit(s) from PIM Account to CLUTs  (P&S App 123).   On October 24, 1994, Tom, again acting as attorney-in-fact for Philip, established a second CLUT, which was funded with $4 million from the PIM Account.  Philip Dep, p. 409; Philip’s CLUT #2 (P&S App 91).  At the time that these CLUTs were established, Philip’s 1993 POA was in full force and effect.  Philip Dep, p. 401;  Philip’s 1993 POA (P&S App 19).   Contemporaneously with the establishment of Philip’s two CLUTs, Tom, as attorney-in-fact for Ingeborg, executed trust agreements establishing identical CLUTs for Ingeborg.   Philip Dep, pp. 404, 412; Ingeborg Dep, p. 420; Ingeborg’s CLUTs #1 & #2 (P&S App 43 & 100). 

 

13.              At least by December, 1993, Philip knew from conversations with Tom that a charitable trust had been established in his name.   Philip believed that $10 million from the PIM Account would be used to fund his initial CLUT, rather than an initial $5 million investment followed by a $4 million investment. He anticipated that he would receive tax benefits from the funding framework for the pain clinic.   Philip did not object to Tom or anyone else about the funding framework and only attempted to revoke the CLUTs in late 1995 to March, 1996, after he was informed that the tax benefits were not advantageous.  Philip Dep, pp. 368-370, 375-401, 739-741.

 

14.              Ingeborg contends that she did not learn about the Foundation or her CLUTs until late December, 1995.  Ingeborg Dep., p. 381.  Hirsh, her accountant, initially discussed the funding framework with her sometime in the fall of 1995.  Hirsh Dep, p. 984.  However, she did testify that she was aware of Tom’s involvement in her financial affairs, and further knew as of December, 1993 that Philip had delegated management responsibility of her financial affairs to Tom.  Philip Dep, p. 358;   Ingeborg Dep, p. 368.   She testified, “I trusted Philip.  And Philip, in turn trusted Tom.”  Ingeborg Dep, p. 394; September 23, 1994 Letter from Inge to Tom and Jerri (P&S App 118).

 

15.              In or about February, 1995, PIPM commenced its operation, and for the following months was successful in its mission.  PIPM Exh 3, Meloy Affidavit;  Professional Services Agreements between PIPM  and PIPM Parties (P&S App 402, 284, 315).

 

16.              In early 1995, Charles Hirsh, the Florida accountant for Philip, Ingeborg, Tom and Jerri, became aware, through Jerri, of the existence of PIPM, the Foundation, and the CLUTs, and began taking steps to determine how these entities worked.  He eventually concluded that the funding of the Foundation through the CLUTs would have adverse tax consequences for Philip and Ingeborg, and so advised Jerri.  In September, 1995, Hirsh informed Philip, who had been aware of the establishment of the CLUTS, the Foundation and PIPM for some time, of the adverse tax consequences.  Philip was upset by the news, and immediately demanded that the trusts and foundation be dismantled to terminate funding to PIPM.  Hirsch determined and stated that the trusts were irrevocable, and could only be dismantled with the approval and consent of all parties.   Hirsh Dep, pp. 979-980, 1126, 1094-1097, 1120-1124, 1360-1363; Philip Dep, pp. 296-297, 341, 378-379, 739-741, 888-889, 915, 963;  PIPM Exh 32, Philip Dep (11/9/00), pp. 20, 22;  PIPM Exh 7, May 23, 1995 Notes of Hirsh, Dep Exh 40;   PIPM Exh 9, August 5, 1995 Notes of Hirsh, Dep Exh 70;  PIPM Exh 24, August 28, 1995 Memo from Hirsh to Jerri Brame, Dep. Exh. 707;   PIPM Exh 25, September 5, 1995 Facsimile from Hirsh to Jerri, Dep Exh 708;  PIPM Exh 8, November 16, 1995 Handwritten Notes of Hirsh, Dep Exh 60;  December 14, 1995 Letter from Hirsh to Philip re: 1993 IRS Form 1040, CLUTs, Foundation (P&S App 1).

 

17.              At least by late 1995 or early 1996, Ingeborg learned of the trusts and PIPM, and the tax consequences of the financial commitment which had been made (see paragraph 14), and was very upset.   Ingeborg Dep, pp. 377, 380, 420-424, 540, 581, 929.

 

18.              Upon Philip’s demands, in October, 1995 Hirsch contacted P&S and CB  and was assured that they would cooperate with revising the funding framework.  In or about February, 1996, Philip advised CB, personally and through his counsel, that he, as well as Ingeborg and Mercedes, were contesting the use of their funds on deposit at CB.   PIPM Exh 32, Philip Dep (11/9/00), pp. 22-24, 33;  October 9, 1995 Handwritten Notes of Johnston (P&S App 171);  October 9, 1995 Letter from Hirsh to Davis regarding  Foundation (P&S App 173);  PIPM Exh 8, November 16, 1995 Handwritten Notes of Hirsh, Dep Exh 60;  November 16, 1995 Fax to Coghill from Hirsh regarding Foundation, Dep Exh 422 (P&S App 154); December 9, 1995 Foundation Charitable Trust Amendment (P&S App 126).

 

19.              All of the parties involved in the funding framework were aware of the plan to withdraw from the funding framework in February-March, 1996, other than the PIPM Parties.  All of the parties planned, directly or indirectly, through their agents and attorneys, to induce the PIPM Parties to withdraw from the funding framework.   Philip Dep, p. 964; Twiddy Dep, pp. 85, 91, 321, 325, 353, 357;   PIPM Exh 10, January 16, 1996 Letter from Philip to Hirsh re: PIPM, Dep Exh 256;  PIPM Exh 27, February 15, 1996 Memo from Zeydel to Stiver re: CLUTs, Dep Exh 944;  PIPM Exh 28, February 19, 1996 Notes, Dep Exh 945;   March 12, 1996 Letters from West to Ingeborg and Mercedes (Ingeborg et al Exh 42 & 43);   PIPM Exh32, Philip Dep (11/9/00), pp. 44, 47. 

 

20.              Ingeborg’s attorney, William West, took the lead, and in doing so, acted as the defacto agent for the  Foundation and Philip.  Meloy Dep, p. 182;  Martin Dep, pp. 40-42, 106; Twiddy Dep, p. 92;  March 12, 1996 Letters from West to Ingeborg and Mercedes Staton (Ingeborg et al Exh 42 & 43); PIPM Exh 30, Fouts Statement in Open Court (07/18/00). 

 

21.              During this same time period, the PIPM Parties had been left completely in the dark as to any problems concerning the needed funding.  Meloy had requested payment which had been due in October, 1995, repeatedly, and had been assured by officials of CB and attorneys or agents of Philip and Ingeborg, that the contracts were valid and that funding would be forthcoming.  In November, 1995, the PIPM Parties also sought reassurance from P&S that the funding framework was sound, and were advised by Johnston that Twiddy indicated the documentation was sufficient.  PIPM Exh 31, Johnston Dep, pp. 124-126, 230-232;   PIPM Exh 17, Facsimile from PIPM Parties to P&S re: Foundation Commitment to PIPM, Dep Exh 427.  In March, 1996, concerned by problems at GSM, Meloy and Martin telephoned  Wrenn, a CB official and asked about continued funding for PIPM.  Wrenn assured them that funding would continue.  PIPM Exh 3,  Meloy Affidavit; PIPM Exh 1, Martin Affidavit;  PIPM Exh 31, Johnston Dep., p. 74.  In  March, 1996, shortly after Jerri resigned from PIPM’s board of directors, Meloy telephoned Philip twice  and also wrote him a letter inviting him to be a director of PIPM.  During the first telephone conversation, Philip told Meloy he would think about Meloy’s request and call him back in about a week.  When he did not hear from Philip, Meloy called again and this time Philip responded that Meloy should speak with his attorney, Gregory Rupert.   Neither time did Philip tell Meloy he wanted to terminate the funding framework.  Meloy followed up with a telephone call to Rupert, and Rupert assured him that funding would be continued (even though the decision had already been made to terminate funding).  Meloy Dep, pp.  18, 25-26, 30-32, 46-47, 142-143;  Martin Dep, pp. 22-30;   Faller Dep, 110-111; PIPM Exh 31, Johnston Dep., pp. 32, 57;  PIPM Exh 8, November 16, 1995 Handwritten Notes of Hirsh, Dep Exh 60.  On March 11, 1996, Philip sued Tom and Jerri, alleging misappropriation of his funds.  See Complaint, 96 CVS 1409.  None of the parties made the PIPM Parties aware of Philip’s lawsuit.

 

22.              On March 13, 1996, Ingeborg and Mercedes hired West to represent them in attempting to terminate funding of the CLUTs and Foundation, among other things.  West had a retainer agreement with Ingeborg and Mercedes which permitted him to recover, on a contingency basis, 25% percent of all funds recovered in dismantling Ingeborg’s CLUTs.  PIPM Exh33, West Dep (09/13/00), pp. 74-77;   March 12, 1996 Letters from West to Ingeborg and Mercedes  (Ingeborg et al Exh 42 & 43).   On behalf of Ingeborg, West filed an intervener’s complaint in Philip’s action.  See Intervener Complaint, 96 CVS 1409.  Again, PIPM was never made aware of Ingeborg’s intervention in Philip’s lawsuit. 

 

23.              On or about March 26 or 27, 1996, West called Meloy, told him he represented Ingeborg, and requested an immediate meeting to discuss the pain clinic and its operation.  At the time, PIPM and the PIPM Parties were represented by P&S.  PIPM Exh 3, Meloy Affidavit.  Meloy and Martin met West at his office, and West told them (contrary to the information and representations which the doctors had been receiving for months from the Statons and their agents, as well as P&S and CB) that Ingeborg had not authorized the funding framework for the pain clinic and that she had hired him to get her money out of the CLUTs at CB.  West told the doctors that he had scheduled a meeting with CB officials on March 29, 1996 in an effort to resolve this matter and stated that the doctors should attend this meeting.  Meloy Dep, pp. 182-183;   Martin Dep, pp. 40-42, 77-79, 174; PIPM Exh 1, Martin Affidavit;  PIPM Exh 3, Meloy Affidavit.

 

24.              Immediately after the first meeting with West, Martin called Johnston at P&S and advised her that Ingeborg was claiming that she had no knowledge of the project, had not authorized the creation of the foundation or trusts, and wanted her money back.  Martin asked someone from P&S to attend the meeting scheduled at CB for March 29, 1996 and represent PIPM.   At this time, Johnston did not inform Martin that there were any problems with the funding framework or the Foundation which P&S and CB had known about since October, 1995, or possible problems with Ingeborg’s 1993 POA prepared by P&S, even though P&S and CB were aware, or should have been, that Ingeborg did not personally sign this document.   Twiddy Dep, pp. 326, 357, 260; PIPM Exh 31, Johnston Dep., pp. 63, 123;  October 9, 1995 Handwritten Notes of Johnston  (P&S App 171);  October 9, 1995 Letter from Hirsh to Davis regarding  Foundation (P&S App 173); November 9, 1995 Letters from CB to P&S (P&S App 131 & 132).   Despite this knowledge, neither P&S nor CB expressed any concern to PIPM or advised PIPM of the legal impact of P&S failures or CB’s failures.  PIPM Exh 3, Meloy Affdavit; PIPM Exh 1, Martin Affidavit. 

 

25.              On March 27, 1996, Wells and Jarvis, CB officials, resigned from the Board of Directors of PIPM.  On the same date, CB resigned as a trustee of the Foundation.  PIPM Exh 12, March 27, 1996 Resignation of CB as Trustee of Foundation, Dep Exh 369;  March 28, 1996 Letter from Adams Kleemeier to Meloy & PIPM conveying March 27, 1996 Resignations of  Wells and Jarvis from Board of Directors of PIPM (Ingeborg et al Exh 41).

 

26.              On March 28, 1996, Johnston called Meloy and agreed that she and Twiddy would attend the March 29 meeting which had been scheduled at CB.  She specifically agreed that P&S would represent PIPM at the meeting.  Again, she did not advise Meloy that Ingeborg had not signed the 1993 POA prepared by P&S.  PIPM Exh 3, Meloy Affidavit; PIPM Exh 1, Martin Affidavit;  Meloy Dep, p. 453;   Martin Dep, p. 235; PIPM Exh 31, Johnston Dep., pp. 64, 75, 85-87, 94, 235-236;  Twiddy Dep, p. 360;   March 28, 1996 Notes of Johnston (P&S App 133); PIPM Exh 14, Notes of Davis, dated March 28, 1996, Dep Exh 385.

 

27.              On March 28, 1996, West called Johnston and requested copies of any POAs and correspondence indicating Ingeborg’s involvement.   Johnston advised West that P&S was still looking for the documents.  PIPM Exh  31, Johnston Dep., pp. 64, 137-138; March 28, 1996 Notes of Johnston (P&S App 133).

 

28.              On March 29, 1996, a meeting was held at CB.   Attorneys Johnston and Twiddy from P&S attended as PIPM’s legal representatives.  Exh 31, Johnston Dep., pp. 64, 75, 85-87, 94, 235-236.    Wells, Jarvis and John Flemming (in-house counsel for CB) attended as CB’s official representatives.   In addition, Attorney Winburn King was also present as CB’s legal representative.  Gregory Rupert, Philip’s attorney was present, as was West, Ingeborg’s attorney.  West, who had called the meeting, led the meeting and informed everyone present of Ingeborg’s position that there was no authority for the creation of the funding framework and that she had never authorized anyone to commit any of her money to fund a pain clinic.  West demanded that the parties produce any authority or POAs in their possession which would justify their actions.  King stated, on behalf of CB, that they were looking for the powers of attorney, even though CB had faxed Philip’s 1993 POA to P&S the day before the meeting.  PIPM Exh 16, March 28, 1996 Facsimile from CB to P&S, Dep. Exh. 426. Johnston and Twiddy, the attorneys from   P &S, said nothing. Twiddy Dep, p. 96.  Rupert, Philip’s attorney, stated that Philip would no longer fund the foundation or the pain clinic.  No one produced any documents at this meeting, although both P&S and CB knew that Philip had personally signed his 1993 POA, and no one offered any response at all to West’s allegations that no authority existed for the entire project, thereby giving  credibility to West’s demands.    PIPM Exh  16, March 28, 1996 Facsimile from CB to P&S, Dep Exh 426.  West stated his intention to institute legal action to freeze the needed funding of PIPM.   PIPM Exh 3, Meloy Affidavit; PIPM Exh 1, Martin Affidavit;  PIPM Exh 31, Johnston Dep., pp. 31-32, 50-51, 56-57, 69-70, 189;  Twiddy Dep, pp. 92, 353, 364;  Meloy Dep, pp. 83, 171, 178, 184, 190, 199, 204-206, 227, 300, 448, 453;  Faller Dep, pp. 110, 129, 138, 145;  Martin Dep, pp. 43-45, 63, 77-79, 105-106, 235, 287, 307;   March 29, 1996 Notes of Johnston (P&S App 135).

 

29.              Immediately following the March 29, 1996 meeting, P&S attorneys, Johnston and Twiddy, met with the PIPM Parties and told them that they might have to withdraw from representing PIPM.  They did not advise PIPM as to what actions they should or should not take as a result of West’s threats and the others’ silence. The PIPM Parties were devastated.  It appeared to the PIPM Parties from statements made and the failure of any of the other parties to respond to West, that the entire funding framework was invalid and that those who had set up the legal apparatus which would insure the operation of PIPM for 20 years had abandoned them.   PIPM Exh 3, Meloy Affidavit; PIPM Exh 1, Martin Affidavit;   Meloy Dep, pp. 172, 448;  Martin Dep, 236-237, 240-243, 247; Faller Dep, p. 147;   PIPM Exh 31, Johnston Dep., p. 31, 161.

 

30.              On Saturday morning, March 30, 1996, West again contacted Martin and Meloy and requested another meeting.  During this meeting, he again conveyed his position that the funding framework was invalid and that there were no POAs to authorize the framework; and he reiterated his intent to file a temporary restraining order to freeze the funding framework, including PIPM’s operation, on the following Monday, and advised them that their only course was to abandon their claims to funding and resolve all issues with the Statons.    PIPM Exh 33, West Dep (09/13/00), pp. 92-94;  PIPM Exh 3, Meloy Affidavit; PIPM Exh 1, Martin Affidavit;  Meloy Dep., pp. 174-175;   Martin Dep., pp. 77-79.  West did not say anything about the POAs, other than no one had any and they did not exist.  West also informed them that they had no attorney because P&S was withdrawing, but that in an effort to be helpful to the doctors, he would call a local attorney to come that same Saturday to represent the doctors in discussions with Philip and Ingeborg.   PIPM Exh 1, Martin Affidavit; PIPM Exh 3, Meloy Affidavit;  Meloy Dep, pp. 173, 499;  Martin Dep, 78, 238, 307.

 

31.              The PIPM Parties reasonably believed, based on the representations of Philip and Ingeborg’s attorneys at the meeting, as well as the apparent acquiescence of CB and P&S, that there was no documentation or legal authority for the funding framework and that their contracts with the  Foundation were invalid.  They felt that they had no choice but to agree to the termination of the funding framework and to accept whatever payment Philip was willing to give them.  The PIPM  Parties were under extreme stress and influence of the unanimous and concerted representations of CB, P&S, Ingeborg and Philip that the funding framework was invalid and legally ineffective.  Meloy Dep, pp. 177, 184-185, 189-190, 192, 204, 209, 227, 450;    Martin Dep, 45-47, 49-51, 53, 104, 243-244, 270-271;  Faller Dep, 88, 122, 124-125.

 

32.              On that same date, the PIPM Parties agreed to be represented by Edward Powell, the local attorney contacted by West (who also happened to be a former law partner of West).   PIPM Exh 33, West Dep (09/13/00), pp. 92-94.   Powell received the same information which had been conveyed to the PIPM Parties—that the funding framework was legally invalid because there was no authority from Philip and Ingeborg.  Based on those representations, Powell and Philip and Ingeborg’s attorneys discussed a purported release agreement within hours of the time he had been introduced to plaintiffs.  Powell was only hired to protect the reputation of the PIPM Parties and obtain whatever monies he could from Philip.  Meloy Dep, p. 179;  Martin Dep, 79, 238, 241, 307;   PIPM Exh 4, Powell Affidavit.

 

33.              The purported release agreement provided for a payment of $365,000 to the PIPM Parties in exchange for a release of Philip, Ingeborg and the Foundation from their obligations under the funding framework.  The monetary payment represented a fraction of the total value of the funding framework to PIPM.    Martin Dep, pp. 100, 103, 107;  Faller Dep, p. 88;  Settlement Agreement (P&S App 109);   April 16, 1996 Foundation Check to PIPM  (Ingeborg et al Exh 22).   Neither the PIPM Parties nor their attorney, Powell, would have entered into the purported release if they had been informed that there was documentary and other evidence demonstrating that Philip and Ingeborg had provided sufficient authority to Tom to set up the funding framework, and that all or part of the funding framework was valid.   PIPM Exh 3, Meloy Affidavit; PIPM Exh 1, Martin Affidavit.

 

34.              On April 1, 1996, after PIPM had orally entered a purported agreement to release their rights on March 31, 1996 and in writing on April 3, 1996, Johnston called Meloy to advise him that CB would not waive their conflict and that P&S would not be able to represent PIPM.  On the same date, Johnston called West to tell him that copies of certain documents (presumably POAs), had been located, but West informed Johnston that he would no longer need the documents.  On April 4, 1996, Johnston sent a fax memo to Powell, along with all the other parties, offering to provide copies of documents from P&S’ file, conditional upon the agreement of all the parties.  PIPM Exh 31, Johnston Dep, pp. 85, 138; PIPM Exh 26, Settlement Agreement and Release, Dep Exh 889; Johnston Affidavit (P&S App 1115).

 

35.              On April 8, 1996, Ingeborg terminated her relationship with West, and hired her present counsel.   Letter from Ingeborg to West (Inge et al Exh 20); PIPM Exh 33, West Dep (09/13/00), pp. 74-77.  On April 11, 1996, a proposed release agreement, signed by PIPM, was faxed to the office of Ingeborg’s new counsel, Fred Harwell.   Facsimile from Shulman Rogers to Harwell (Inge et al Exh 36).  He informed the other parties that she would no longer be a party to the purported release agreement.  At no time did Ingeborg express any objection to any payments to be made by the Foundation under the agreement.  Ingeborg has since repudiated the settlement, and sued the PIPM Parties for the relatively small amount which they received.  See 99 CVS 2628 Complaint.

 

36.              On April 16, 1996, the purported release agreement was completed. 

 

37.              On June 4, 1996, P&S sent a letter to PIPM withdrawing from its representation of PIPM, and noting that “we recently withdrew from representing PIPM in connection with certain matters relating to Staton Foundation.”  PIPM Exh 430, June 4, 1996 P&S Letter to PIPM, Dep Exh 430.

 

38.              Following settlement, the PIPM Parties and their attorney, Powell, learned for the first time during discovery in the related actions that Philip and Ingeborg may have given specific authority for the funding framework, both in documentary and verbal representations.  Philip’s 1993 POA to Tom and Jerri (P&S App 19); Numerous POAs of Ingeborg and Philip from April, 1991 through February 28, 1995 (P&S App 10, 18, 60, 68, 140, 489, 493, 497, 513, 517, 521, 536, 540, 544, 501, 505, 509, 525, 528, 532);   PIPM Exh 16, March 28, 1996 Facsimile from CB to P&S re: Philip’s 1993 POA, Dep Exh 426.

 

 

 

 

This the ___ day of March, 2001.

 

 

_______________________

Robert M. Elliot

Attorney for PIPM Parties

 

_______________________

Ellen R. Gelbin

Attorney for PIPM Parties

 

 

OF COUNSEL:

 

ELLIOT, PISHKO, GELBIN & MORGAN, P.A.

The Loewy Building, Suite 210

426 Old Salem Rd.

Post Office Box 20545

Winston-Salem, NC 27120

(336) 724-2828

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                        CERTIFICATE OF SERVICE

 

The undersigned hereby certifies that he is the attorney for Piedmont Institute of Pain Management, Dr. T. Stuart Meloy, Dr. Nancy I. Faller, and Dr. William Joseph Martin in this case and is a person of such age and discretion as to be competent to serve process.

 

That on March 5,  2001, he served a copy of the foregoing PIPM Parties’ Brief in Opposition  to __________________________ Motion for Summary Judgment by placing said copy in a postpaid envelope addressed to the persons hereinafter named, at the place and address stated below, which is the last known address, and by depositing said envelope and its contents in the United States Mail at Winston-Salem, North Carolina.

 

Addressees:

 

 

 

 

______________________________________

Robert M. Elliot (7709)

Attorney for PIPM Parties

 

 

OF COUNSEL:

 

ELLIOT, PISHKO, GELBIN & MORGAN, P.A.

The Loewy Building

Suite 210, 500 West Fourth Street

Post Office Box 20545

Winston-Salem, NC 27120-0545

(336) 724-2828