Court Opinion

ID: 2726798
Source: CourtListenerOpinion
Date Created: 2014-09-08 21:08:56.612628+00
Date Added: 2024-06-11T13:26:45.956459
License: Public Domain

An unpublished opinion of the North Carolina Court of Appeals does not constitute
controlling legal authority. Citation is disfavored, but may be permitted in
accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of
A   p   p    e   l   l   a    t   e       P   r    o   c   e   d    u   r   e   .

                                  NO. COA13-1376

                      NORTH CAROLINA COURT OF APPEALS

                            Filed: 19 August 2014

K2 ASIA VENTURES, BEN C. BROOCKS,
AND JAMES G. J. CROW,
     Plaintiffs,

      v.                                    Forsyth County
                                            No. 09 CVS 2766
ROBERT TROTA, VERONICA TROTA,
JOSELITO SALUDO, CAROLYN T. SALUD,
ROLAND V. GARCIA, CRISTINA T.
GARCIA, JIM FUENTEBELLA, MAVIS
FUENTEBELLA, SHARON FUENTEBELLA,
MAX’S BACLARAN INC., CHICKENS R
US, INC., MAX’S MAKATI INC., MAX’S
ERMITA, INC., MAX’S OF MANILA,
INC., THE REAL AMERICAN DOUGHNUT
COMPANY INC., TROFI VENTURES,
INC., AND RUBY INVESTMENT COMPANY
HOLDINGS, INC., KRISPY KREME
DOUGHNUT CORPORATION, AND KRISPY
KREME DOUGHNUTS, INC.,
     Defendants.

      Appeal by plaintiffs from order entered 26 July 2013 by

Judge   Anderson    D.   Cromer    in   Forsyth    County    Superior    Court.

Heard in the Court of Appeals 4 June 2014.

      Watts Guerra LLP, by Christopher V. Goodpastor, pro hac
      vice, and Blanco Tackabery, by Peter J. Juran, for
      plaintiff-appellants.
                                             -2-
      Bell, Davis & Pitt, P.A., by William K. Davis, Alan M.
      Ruley, and Bradley C. Friesen, for defendant-appellees.

      BRYANT, Judge.

      Where the trial court’s order granting a motion to dismiss

for   lack    of   personal       jurisdiction           is    supported       by    competent

evidence, we affirm.

      K2   Asia    Ventures       is    a    Cayman       Island        company      with    its

principal place of business in Austin, Texas.                            K2 Asia Ventures

was formed by Ben C. Broocks, a resident of Texas, and James G.

J. Crow, a resident of Wyoming, for the purpose of creating

Krispy Kreme franchises in Asia — specifically, the Philippines,

Hong Kong, and Thailand.

      After    meeting      with       Krispy      Kreme       to   discuss     franchising

requirements,       Broocks        approached            Carolyn        T.     Salud    about

establishing Krispy Kreme stores in the Philippines.                                   Broocks

chose Salud because she and her extended family operate a large

chain of fried chicken restaurants, known as “Max’s,” in the

Philippines,       Canada,    and      the    United          States.        Salud    and    her

extended      family,       including         Robert          Trota,     Veronica       Trota,

Joselito     Saludo,    Roland         V.    Garcia,      Cristina        T.   Garcia,      Jim

Fuentebella,       Mavis    Fuentebella,           and    Sharon        Fuentebella,        also

operate      several       food    service         businesses,           including       Max's
                                        -3-
Baclaran, Inc., Chickens R Us, Inc., Max's Makati, Inc., Max's

Ermita,   Inc.,    and    Max's    of   Manila,     Inc.,    as    well   as     two

investment and corporate management firms, Trofi Ventures, Inc.,

and Ruby Investment Company Holdings, Inc.                  With the exception

of Max’s of Manila, a California-based corporation, all of the

Salud family’s businesses are based in the Philippines, and all

members of the Salud family are Philippine citizens.

    Carolyn       Salud   and     her    family     agreed    to    enter       into

negotiations with Broocks to establish Krispy Kreme franchises

in the Philippines.        In 2004, Broocks executed a memorandum of

understanding (“MOU”) between K2 Asia Ventures, Max’s Ermita,

Inc.,   and   a   group   of    three   individual    investors.          The    MOU

required Broocks, as a member and manager of K2 Asia Ventures, to

work for the creation of a Krispy Kreme franchise agreement for

Max’s   Ermita,    Inc.     Once    a   franchise    was     awarded,     the    MOU

directed the creation of a new Philippine corporation with all

MOU parties recognized as shareholders.               The MOU also required

that any disputes arising under its terms would be subject to

the laws of the Philippines.

    In 2005, Carolyn Salud signed a confidentiality agreement

with Krispy Kreme on behalf of herself and her family members.

During this same time period, on 26 October 2005, Krispy Kreme
                                          -4-
and   K2    Asia   Ventures     entered     into      a   letter        of    intent       that

contained provisions concerning the confidentiality agreement.

In    her    deposition,      Carolyn    Salud        stated    that         although       the

confidentiality agreement referred to the Krispy Kreme / K2 Asia

Ventures letter of intent which was supposedly attached to the

agreement, the letter was never attached nor provided.

       In January 2006, a meeting was held in South Korea between

Broocks,      Carolyn    Salud,    Robert       Trota,      Cristina          Garcia,       Jim

Fuentebella,       Sharon     Fuentebella,         and     several           Krispy     Kreme

representatives.         After    the    meeting,         Krispy      Kreme     agreed       to

award the Salud family a franchise; the Salud family agreed to

retain      Broock’s    law   firm,     Jackson       Walker,      to    negotiate         the

franchise      agreement.        The    Salud     family       then     created        a    new

business, The Real American Doughnut Company, to develop and

operate the Krispy Kreme franchise.

       Business    relations      between       the   Salud     family        and     Broocks

soured after a “heated conference call” in March 2006 between

Carolyn Salud, Jeff Welch of Krispy Kreme, and Patrick Tobin and

Broocks of the Jackson Walker law firm.                         On 26 April 2006,

Krispy Kreme and The Real American Doughnut Company agreed to a

development agreement for a Krispy Kreme franchise based in the

Philippines.        Under the terms of this development agreement,
                                        -5-
disputes     would    be   first   subject     to   non-binding      mediation    in

Winston-Salem,       North     Carolina;     binding      arbitration   would     be

conducted in New York City, New York under New York law.

      On 7 April 2009, K2 Asia Ventures, Ben C. Broocks, and James

G.   J.    Crow   (“plaintiffs”)       filed    a   complaint     against    Robert

Trota, Veronica Trota, Joselito Saludo, Carolyn T. Salud, Roland

V.   Garcia,        Cristina      T.   Garcia,      Jim     Fuentebella,       Mavis

Fuentebella, Sharon Fuentebella, Max's Baclaran, Inc., Chickens

R Us, Inc., Max's Makati, Inc., Max's Ermita, Inc., Max's of

Manila,     Inc.,    The   Real    American      Donut     Company   Inc.,     Trofi

Ventures, Inc., Ruby Investment Company Holdings, Inc., Krispy

Kreme     Doughnut    Corporation,     and     Krispy     Kreme   Doughnuts,    Inc.

(“defendants”), alleging various causes of action arising from

an alleged breach of a business agreement between plaintiffs and

defendants.       On 19 June and 18 August 2009, defendants Robert

Trota, Veronica Trota, Joselito Saludo, Carolyn T. Salud, Roland

V.   Garcia,        Cristina      T.   Garcia,      Jim     Fuentebella,       Mavis

Fuentebella, Sharon Fuentebella, Max's Baclaran, Inc., Chickens

R Us, Inc., Max's Makati, Inc., Max's Ermita, Inc., Max's of

Manila,     Inc.,    The   Real    American      Donut     Company   Inc.,     Trofi

Ventures, Inc., and Ruby Investment Company Holdings, Inc. (the
                                          -6-
“non-resident defendants”) filed motions to dismiss for lack of

personal jurisdiction.

      On 11 August 2009, plaintiffs served their first set of

interrogatories,       requests     for     production       of     documents,      and

requests for admissions on all defendants; plaintiffs then filed

a 10 March 2010 motion to compel depositions.                     On 19 April 2010,

the     trial      court   granted        plaintiffs’       motion      to     compel

depositions. Defendants appealed to this Court, and on 1 March

2011, this Court dismissed defendants’ appeal as interlocutory.

See K2 Asia Ventures v. Trota, 209 N.C. App. 716, 708 S.E.2d 106

(2010).

      While defendants’ appeal to this Court was pending, on 30

April 2010, plaintiffs filed new motions to compel production of

documents from defendants.            On 15 June 2010, the trial court

granted     plaintiffs’         motions     for        production     of     specific

documents.        Defendants appealed to this Court, arguing that the

trial     court    erred   in    granting       plaintiffs’        motions    because

defendants’ documents were privileged.                  This Court affirmed the

trial     court’s     order,      holding       that     defendants        failed    to

demonstrate that the requested documents were protected under

either the attorney-client or work product privileges.                         See K2
                                        -7-
Asia Ventures v. Trota, 215 N.C. App. 443, 717 S.E.2d 1, review

denied, 365 N.C. 369, 719 S.E.2d 37 (2011).

    On 4 February 2011, plaintiffs filed an amended complaint

against defendants alleging that plaintiff Broocks had expended

time and money for travel and communications between and with

defendants Krispy Kreme Doughnut Corporation and Krispy Kreme

Doughnuts, Inc. (“Krispy Kreme defendants”) “for the purpose of

procuring     franchise      rights”    for     plaintiffs    and    defendants.

Plaintiffs’ amended complaint further asserted claims against

defendants for breach of contract, intentional interference with

contractual    relationship       and    prospective      economic     advantage,

promissory    estoppel,      breach     of    fiduciary    duties,    unfair   and

deceptive     trade        practices,        quantum     meruit,     and    unjust

enrichment.

    On 8 April 2011, the non-resident defendants filed a Rule

12(b)(2)    motion    to    dismiss    plaintiffs’     amended     complaint   for

lack of personal jurisdiction.               On 16 September, plaintiffs and

the Krispy Kreme defendants filed a joint motion for designation

of case as exceptional; the motion was granted on 23 September.

    On 12 September 2012, a hearing was conducted on the non-

resident     defendants’      motion    to     dismiss    plaintiffs’      amended

complaint, the Honorable Anderson D. Cromer, Judge presiding.
                                         -8-
On   26     July   2013,   the   trial    court    granted      the   non-resident

defendants’ Rule 12(b)(2) motion to dismiss for lack of personal

jurisdiction.       Plaintiffs appeal.

                        _________________________________

       At the outset we note that although plaintiffs’ appeal is

interlocutory, it is immediately appealable and properly before

this      Court.      Pursuant   to   North     Carolina     General     Statutes,

section 1-277, “[a]ny interested party shall have the right of

immediate appeal from an adverse ruling as to the jurisdiction

of the court over the person or property of the defendant or

such party may preserve his exception for determination upon any

subsequent appeal in the cause.”                N.C. Gen. Stat. § 1-277(b)

(2013); see also A.R. Haire, Inc. v. St. Denis, 176 N.C. App.

255, 257—58, 625 S.E.2d 894, 898 (2006) (“[M]otions to dismiss

for lack of personal jurisdiction affect a substantial right and

are immediately appealable[.]” (citation omitted)).

                      _____________________________________

       On   appeal,    plaintiffs     contend     the   trial    court   erred   in

granting the non-resident defendants’ motion to dismiss for lack

of personal jurisdiction.         We disagree.

                   The standard of review to be applied by
              a trial court in deciding a motion under
              Rule 12(b)(2) depends upon the procedural
              context confronting the court.    Typically,
                                    -9-
           the    parties    will     present     personal
           jurisdiction   issues    in    one   of    three
           procedural postures: (1) the defendant makes
           a motion to dismiss without submitting any
           opposing   evidence;    (2)     the   defendant
           supports   its   motion    to    dismiss    with
           affidavits, but the plaintiff does not file
           any opposing evidence; or (3) both the
           defendant    and    the     plaintiff     submit
           affidavits     addressing      the      personal
           jurisdiction issues.

Banc of Am. Sec. LLC v. Evergreen Int'l Aviation, Inc., 169 N.C.

App. 690, 693, 611 S.E.2d 179, 182 (2005).

    The non-resident defendants filed a Rule 12(b)(2) motion to

dismiss   plaintiffs’   amended     complaint    for   lack    of   personal

jurisdiction.     This motion was supported by first and second

affidavits made by each of the non-resident defendants asserting

a lack of personal jurisdiction.          Plaintiffs did not file any

affidavits   in   response   to   rebut   the   non-resident    defendants’

motion to dismiss.

                [I]f the defendant supplements his
           motion to dismiss with an affidavit or other
           supporting evidence, the allegations [in the
           complaint] can no longer be taken as true or
           controlling and plaintiff[] cannot rest on
           the allegations of the complaint.    In order
           to determine whether there is evidence to
           support    an     exercise     of    personal
           jurisdiction, the court then considers (1)
           any allegations in the complaint that are
           not   controverted    by   the    defendant's
           affidavit and (2) all facts in the affidavit
           (which are uncontroverted because of the
           plaintiff's failure to offer evidence).
                                     -10-

Id. at 693—94, 611 S.E.2d at 182—83 (citations and quotations

omitted).    “Where, as here, the trial court holds an evidentiary

hearing    including    depositions    and   arguments   of    counsel,    the

trial court [is] required to act as a fact-finder, and decide

the question of personal jurisdiction by a preponderance of the

evidence.”    Berrier v. Carefusion 203, Inc., ___ N.C. App. ___,

___, 753 S.E.2d 157, 161          (citing Deer Corp. v. Carter, 177 N.C.

App. 314, 322, 629 S.E.2d 159, 166 (2006)), cert. denied, 366

N.C. 597, 740 S.E.2d 477 (2014).

            When this Court reviews a decision as to
            personal jurisdiction, it considers only
            whether the findings of fact by the trial
            court are supported by competent evidence in
            the record; . . . [w]e are not free to
            revisit questions of credibility or weight
            that have already been decided by the trial
            court.

Id. at ___, 753 S.E.2d at 161—62 (citation omitted).

    Plaintiffs argue that the trial court erred in granting the

non-resident defendants’ motion to dismiss for lack of personal

jurisdiction.          In   its     order    granting    the   non-resident

defendants’ motion to dismiss, the trial court made seventy-nine

findings     of   fact      and    seventy-six    conclusions      of     law.

Plaintiffs, in their reply brief, challenge findings of fact 6,

11, 15, 18, 22—24, 28, 36—37, 41—53, 63—64, 66, 71, 72, 73, 75—
                                       -11-
79, and conclusions of law 36—44, 49, and 50—54.                       However, in

their initial brief plaintiffs do not specifically challenge any

of the trial court’s findings of fact or conclusions of law.

Rather,     in    both   briefs    plaintiffs        present    broad    arguments

contending the non-resident defendants “failed to controvert a

plethora of [plaintiffs’] evidence regarding [the non-resident

defendants’]      contacts      with   North    Carolina”       and,    thus,    the

exercise     of     personal      jurisdiction       over      the     non-resident

defendants would be fair and reasonable, and comport with due

process.

    In     conducting     its     hearing,     the    trial    court     heard   the

arguments    of    counsel,     reviewed   numerous     pages    of     documentary

evidence, and saw recordings of depositions.                  As such, the trial

court served as the fact-finder and made its decision as to

personal jurisdiction accordingly.              See id. at ___, 753 S.E.2d

at 161—64.       Although plaintiffs now challenge the trial court’s

order on grounds that the trial court’s order was not supported

by competent evidence, we reiterate that

            [w]hen this Court reviews a decision as to
            personal jurisdiction, it considers only
            whether the findings of fact by the trial
            court are supported by competent evidence in
            the record; . . . [w]e are not free to
            revisit questions of credibility or weight
            that have already been decided by the trial
            court.
                                          -12-

Id. at ___, 753 S.E.2d at 161—62 (citation omitted).

       In its order, the trial court made extensive findings of

fact as to the level of activity, or lack thereof, of the non-

resident defendants in the state of North Carolina.                         The trial

court concluded that plaintiffs had not met their burden of

showing     that    the     non-resident         defendants      were     engaged    in

substantial activity within North Carolina such that the non-

resident defendants would be subject to personal jurisdiction.

Further, the trial court concluded, after numerous and relevant

findings    of     fact,    that    the   non-resident         defendants    had     not

consented to jurisdiction in North Carolina.                     Our review of the

record     confirms       the   trial     court’s        findings   of     fact     were

supported    by    competent       evidence      in     the   record.     The     record

indicates that both plaintiffs and the non-resident defendants

presented the trial court with an array of evidence regarding

the extent of the agreements, communications, and other forms of

contact between the plaintiffs, the non-resident defendants, and

the    Krispy     Kreme    defendants.           Although       certain    pieces    of

evidence were disputed by the parties, the trial court was the

appropriate entity to consider the weight and credibility of

such   evidence.       Notwithstanding           that    contrary   findings      could

have been made, as we have noted previously, the findings made
                                      -13-
by   the   trial   court     to   support    its   ultimate   conclusion   are

supported by competent evidence in the record.                    Accordingly,

plaintiffs’ general contention that the trial court erred in not

finding personal jurisdiction as to the non-resident defendants

because    both    parties    presented     disputed   evidence    is   without

merit. Therefore, we affirm the trial court’s order granting the

non-resident defendants’ motion to dismiss for lack of personal

jurisdiction.

      Affirmed.

      Judges CALABRIA and GEER concur.

      Report per Rule 30(e).