Court Opinion

ID: 9585940
Source: CourtListenerOpinion
Date Created: 2023-08-21 23:05:22.046479+00
Date Added: 2024-06-11T17:24:17.189690
License: Public Domain

*592ARROWOOD, Judge,
concurring in part and dissenting in part.
I concur with the majority holding insofar as it affirms the trial court’s denial of Defendant Energex’s motion to dismiss for lack of personal jurisdiction. However, I believe that personal jurisdiction is also properly exercised over Defendant Erde. Accordingly, I respectfully dissent from the majority’s reversal of the court’s denial of Erde’s motion to dismiss for lack of personal jurisdiction.
The dispositive issue is whether Erde had the requisite “minimum contacts” with North Carolina such that the exercise of personal jurisdiction over him does not violate his right to due process under the U.S. Constitution. “Whether minimum contacts are present is determined not by using a mechanical formula or rule of thumb but by ascertaining what is fair and reasonable under the circumstances. However, ‘in each case, there must be some act by which the defendant purposefully avails himself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws[.]’ ” Better Business Forms v. Davis, 120 N.C. App. 498, 500, 462 S.E.2d 832, 833-34 (1995) (quoting Tom Togs, Inc. v. Ben Elias Industries Corp., 318 N.C. 361, 365, 348 S.E.2d 782, 786 (1986)). In the instant case, I believe it is beyond dispute that Erde “purposefully avail[ed] himself of the privilege of conducting activities within [North Carolina],” thus subjecting himself to personal jurisdiction here.
The majority states that “plaintiff wholly failed to allege any act committed by Erde occurred within his individual capacity to subject him to personal jurisdiction.” I disagree. Allegations in Plaintiff’s complaint that were not contradicted by Erde’s affidavit include, in relevant part, the following:
4. . . . [A]t all times alleged herein, Erde was Chief Operating Officer, Director and principal shareholder of Plainview and Chief Executive Officer, majority and/or principal shareholder of Energex and a resident of New York County, New York.
6. This court possesses jurisdiction over Defendants based upon their continuous and systematic contacts with North Carolina, including, but not limited to:
(a) Erde and Bleeker, as officers and principal agents of Plainview and Energex, visited SAFT Ltd. in North *593Carolina to tour the facilities and to negotiate a sales agreement between SAFT, Plainview and Energex;
(b) Erde and Bleeker submitted multiple purchase orders to SAFT in North Carolina on behalf of and as officers and principal agents of Plainview and Energex;
(c) Plainview and Energex transmitted payments to SAFT which were received by SAFT in North Carolina;
(d) Erde and Bleeker on behalf of and as officers and principal agents of Plainview and Energex transmitted correspondence to SAFT which was received by SAFT in North Carolina;
(9) Plainview and SAFT have had a business relationship dating back to 1996 during which time SAFT has supplied Plainview with a total of over five million dollars worth of goods.
(10) Until January, 2005, SAFT representatives communicated primarily with Erde, who represented himself to be Chief Operating Officer and owner of Plainview. Erde acted as principal agent of Plainview with the authority to make all business decisions on behalf of Plainview relative to purchases from SAFT.
(14) In January, 2005, Bleeker asked SAFT representatives. to meet with him and Erde to discuss renegotiating the existing credit agreement between SAFT and Plainview[.] . . . During that meeting, and in other discussions, both Bleeker and Erde informed SAFT that Plainview and/or Energex was planning to bid for various large government contracts and that the company would look to SAFT to meet its increased supply needs if SAFT in turn would raise Plainview’s credit limit and extend the current repayment terms. . . .
(15) Accordingly, in February, 2005, Erde, Bleeker and certain SAFT representatives met in New York to discuss new credit terms and Plainview and/or Energex’s increased supply needsf.]
(16) After the February, 2005 Meeting, and based on the representations made by Erde and Bleeker regarding Plainview *594and Energex’s new business model and increased sales, SAFT raised Plainview’s credit limit to $200,000 and extended repayment terms[.]
(18) Upon information and belief, between February, 2005 and December, 2005, SAFT supplied Plainview with over $1,183,000.00 worth of goods. Orders for these goods were always placed by or on behalf of Plainview, regardless of whether the goods were to be used by Plainview or Energex.
As discussed in the majority opinion, Erde admitted in his affidavit that he was the president of Energex and vice president of Plainview, and that he had visited Plaintiff’s factory in North Carolina “in [his] role as a corporate officer of Plainview Batteries, Inc.” Erde’s affidavit and the uncontroverted allegations of Plaintiff’s complaint show that Plaintiff had a long-standing business relationship with Plainview; that Erde is a corporate officer of both Plainview and Engergex; that Erde visited North Carolina at least once in connection with this commercial relationship; and that Erde was personally involved in negotiating and carrying out the contracts that gave rise to the instant lawsuit.
Erde’s connections to North Carolina arose from his actions as officer and principal shareholder of Plainview and Energex. On this basis, Erde asserts that, because his “alleged acts in this case were undertaken in his official capacity and not as an individual,” he “lacked sufficient minimum contacts to permit the exercise of personal jurisdiction over him as an individual.” Erde contends that “any dealings I had with Plaintiff were solely in my capacity as an officer of Plainview Batteries, Inc.” and that without evidence that he “committed any act in his individual capacity that was outside Plainview’s alleged corporate acts in North Carolina,” he cannot be subject to personal jurisdiction. Erde’s position, which was accepted by the majority, apparently is that actions taken by an individual in the course of his employment or in his “official” capacity do not “count” as part of a defendant’s contacts with the forum state. I do not believe that this correctly states the law in North Carolina.
It is certainly true that, as noted by the majority, “personal jurisdiction over an individual officer or employee of a corporation may not be predicated merely upon the corporate contacts with the forum.” Robbins v. Ingham, 179 N.C. App. 764, 771, 635 S.E.2d 610, *595615 (2006) (citing Godwin v. Walls, 118 N.C. App. 341, 348, 455 S.E.2d 473, 479 (1995)), disc. review denied, 361 N.C. 221, 642 S.E.2d 448 (2007). To base personal jurisdiction on the bare fact of a defendant’s status as, e.g., corporate officer or agent, would violate his due process rights. Accordingly, North Carolina precedent has consistently required that, before a defendant is subject to personal jurisdiction, there be evidence that he personally took some action subjecting him to North Carolina’s jurisdiction.
For example, in Rauch v. Urgent Care Pharm., Inc., 178 N.C. App. 510, 632 S.E.2d 211 (2006), a case cited by the majority, the plaintiff sued several individual and corporate defendants for injuries arising from alleged negligence in compounding a medication. The Plaintiff in Rauch attempted to exert personal jurisdiction over Defendant Burns on the basis of his being president of one of the corporate Defendants, and having signed the corporation’s application to conduct business in North Carolina. However, there was “no evidence in the record which suggests that defendant Burns participated in” the allegedly negligent activities. The record indicated that “defendant Burns had no direct involvement with the day-to-day operations of [the corporate] defendant,” that he “had no contact with anyone in North Carolina regarding” the events at issue, and that “in fact, [he] was unaware” of these events until after they were discovered by others. On these facts, this Court properly held that “defendant Bums did not have sufficient minimum contacts with the state of North Carolina, such that a court in our state could exercise personal jurisdiction over him individually without violating his due process rights.” Rauch, 178 N.C. App. at 518, 632 S.E.2d at 217.
Similarly, in Robbins v. Ingham, also cited by the majority, the individual Defendant was an officer and principal shareholder of a corporate defendant. However, there was no allegation or evidence that the he had any contact with Plaintiffs or participated in the actions giving rise to the claims. This Court held that personal jurisdiction could not be exercised based solely upon defendant’s status as a director and principal shareholder of the corporate defendant:
[P]ersonal jurisdiction over an individual officer or employee of a corporation may not be predicated merely upon the corporate contacts with the fomm. The minimum contacts analysis “focuses on the actions of the non-resident defendant over whom jurisdiction is asserted, and not on the unilateral actions of some other entity.”
*596Robbins, 179 N.C. App. at 771, 635 S.E.2d at 615-16 (quoting Centura Bank v. Pee Dee Express, Inc., 119 N.C. App. 210, 213, 458 S.E.2d 15, 18 (1995)).
I agree with the majority that both Rauch and Robbins were correctly decided on the facts of those cases, on the grounds that in both cases the individual defendant’s connection to North Carolina was limited to his status as an agent, employee, or officer of a corporation or business. However, it is important to note that these cases did not hold either that (1) personal jurisdiction over a defendant may only be based on the contacts he has with the state in the course of his private life; or, conversely, that (2) in assessing personal jurisdiction we may not “count” a defendant’s contacts if they were made as part of his employment. Indeed, relevant precedent consistently interprets the requirement that a defendant act in his “individual capacity” to mean only that he must personally have minimum contacts with North Carolina, and not that these contacts must arise from his “personal life.”
This is clearly demonstrated by this Court’s holding in Godwin v. Walls. In Godwin, the nonresident individual defendant was a truck driver who was a resident of Maryland and was employed by a North Carolina trucking corporation. While operating a truck in Virginia, defendant was involved in an accident that killed two North Carolina residents. Plaintiffs sued several defendants, including the truck driver, who argued that North Carolina had no personal jurisdiction over him. This Court first considered the jurisdictional requirements of Plaintiffs’ claims for wrongful death or injury to property, which require that a defendant’s tortious conduct occur in North Carolina. The accident occurred while defendant was working for a North Carolina company. However, this Court held that because the status of the company could not be imputed to him, North Carolina lacked personal jurisdiction over the defendant as regards the claims requiring in-state actions. In contrast, jurisdiction over Plaintiffs’ claims for negligent infliction of emotional distress and loss of consortium, although requiring injury to a North Carolina plaintiff, do not require that the claims be based on tortious conduct occurring in the state. Consequently, this Court held that personal jurisdiction could properly be exercised over defendant for these claims, based on actions personally taken by the defendant:
[T]he emphasis upon the agency relationship ignores the issue for resolution in this appeal, namely, the exercise of personal jurisdiction by North Carolina courts over [the individual defendant], *597not [his corporate employer.] While a corporate entity is liable for any wrongful act or omission of an agent acting with proper authority, it does not follow an agent may be held liable under the jurisdiction of our courts for acts or omissions allegedly committed by the corporation.... [P]laintiffs may not assert jurisdiction over a corporate agent without some affirmative act committed in his individual official capacity.
Godwin, 118 N.C. App. at 348, 455 S.E.2d at 479 (citations omitted). Significantly, this Court refers to a defendant’s “individual official capacity.” It is also notable that the pertinent actions of the Godwin defendant were all taken as part of his employment.
In another case, Carson v. Brodin, 160 N.C. App. 366, 585 S.E.2d 491 (2003), the plaintiffs, North Carolina residents, sued Virginia defendants for damages arising from the breach of a contract for construction of a vacation home in Virginia. When the nonresident individual defendant contested personal jurisdiction, this Court upheld the exercise of personal jurisdiction, based upon the defendant’s commercial transactions with the plaintiffs:
Here, defendant has engaged in sufficient contacts with North Carolina. He entered into a contract with North Carolina residents that those residents executed in North Carolina. ... By negotiating within the state and entering into a contract with North Carolina residents, defendant purposefully availed himself of the privilege of conducting activities within North Carolina with the benefits and protection of its laws. Defendant’s actions in contracting with North Carolina residents establish minimum contacts for specific jurisdiction because the actions are directly related to the basis of plaintiffs’ claim.
Id. at 372, 585 S.E.2d at 496 (citing Hanson v. Denckla, 357 U.S. 235, 253, 2 L. Ed. 2d 1283, 1298 (1958)). Thus, North Carolina precedent does not hold that personal jurisdiction can only be predicated upon a defendant’s contacts with North Carolina in his “personal life.”
In addition,
North Carolina common law interprets G.S. § 1-75.4 to extend jurisdiction to the full extent permitted by the Due Process Clause of the U.S. Constitution. In this regard, [it is significant] that in Calder v. Jones, 465 U.S. 783, 79 L. Ed. 2d 804 (1984), the United States Supreme Court expressly rejected the argument made by the instant Defendants. The Calder defend*598ant, a Florida resident and newspaper reporter, challenged California’s exercise of personal jurisdiction over him on the basis that, notwithstanding his contacts with California, principles of due process prohibited exercise of jurisdiction on the basis of his actions as an employee of the newspaper. The United States Supreme Court disagreed:
“Petitioners are correct that their contacts with California are not to be judged according to their employer’s activities there. On the other hand, their status as employees does not somehow insulate them from jurisdiction. Each defendant’s contacts with the forum State must be assessed individually. ... In this case, petitioners are primary participants in an alleged wrongdoing intentionally directed at a California resident, and jurisdiction over them is proper on that basis.”
Brown v. Refuel Am., Inc., 186 N.C. App. 631, 638, 652 S.E.2d 389, 394 (2007) (quoting Calder, 465 U.S. at 790, 79 L. Ed. 2d at 813).
Furthermore, where a defendant is an officer and principal shareholder of a corporation, the North Carolina Supreme Court has explicitly directed that we consider his corporate actions in determining personal jurisdiction:
We hold that where, as in this case, defendant is a principal shareholder of the corporation and conducts business in North Carolina as principal agent for the corporation, then his corporate acts may be attributed to him for the purpose of determining whether the courts of this State may assert personal jurisdiction over him.
United Buying Group, Inc. v. Coleman, 296 N.C. 510, 515, 251 S.E.2d 610, 614 (1979).
“This Court is bound by decisions of the North Carolina Supreme Court.” State v. Glynn, 178 N.C. App. 689, 697, 632 S.E.2d 551, 557, disc. review denied, 360 N.C. 651, 637 S.E.2d 180 (2006) (citations omitted). “Moreover, this Court has no authority to overrule decisions of our Supreme Court and we have the responsibility to follow those decisions ‘until otherwise ordered by the Supreme Court.’ ” Dunn v. Pate, 106 N.C. App. 56, 60, 415 S.E.2d 102, 104 (1992) (quoting Cannon v. Miller, 313 N.C. 324, 327 S.E.2d 888 (1985), overturned on other grounds by Dunn v. Pate, 334 N.C. 115, 118, 431 S.E.2d 178, 180 (1993)). Buying Group, decided by the North Carolina Supreme Court, has never been overturned and remains the law. *599Consequently, in our determination of whether personal jurisdiction is properly exercised over Erde, we should impute to Erde his corporate actions as principal shareholder and officer of Plainview and its alter ego, Energex.
This Court followed Buying Group in Brickman v. Codella, 83 N.C. App. 377, 350 S.E.2d 164 (1986). In Brickman, the North Carolina plaintiff sued a nonresident defendant to recover on a note under which defendant guaranteed payment of a debt. The record showed that the defendant “made a minimum of one phone call and two mailings to [plaintiff] regarding his business proposal”, Id. at 382, 350 S.E.2d at 167, and that “he mailed four monthly payments due under the lease to the [plaintiffs].” Id. Noting that the defendant had “transacted business in North Carolina as principal agent for the company of which he is president”, Id. at 381, 350 S.E.2d at 166, and relying on “our Supreme Court’s analysis in United Buying Group, Inc. v. Coleman, 296 N.C. 510, 251 S.E.2d 610 (1979),” Id., this Court attributed to Defendant his actions as president of the corporation involved in the underlying controversy for purposes of analyzing personal jurisdiction, and upheld the exercise of personal jurisdiction over the defendant.
In sum, under North Carolina precedent the determination of whether personal jurisdiction is properly exercised over a defendant does not exclude consideration of defendant’s actions merely because they were undertaken in the course of his employment. In particular, the corporate actions of a defendant who is also an officer and principal shareholder of a corporation are imputed to him for purposes of deciding the issue of personal jurisdiction. On the other hand, personal jurisdiction cannot be based solely on a defendant’s employment status as the agent or officer of a company with ties to North Carolina, or on personal connections to North Carolina that fall short of the requisite “minimum contacts.”
For example, in Centura Bank v. Pee Dee Express, this Court considered four individual nonresident defendants. All four had signed personal guarantees for loans pertaining to the subject of the lawsuit. Two were also officers of the company involved in the suit and had additional contacts with North Carolina. The other two were the spouses of these defendants, with no other contact besides the loan guarantees. This Court first noted:
At the outset we note our Supreme Court has held “where . . . defendant is a principal shareholder of the corporation and con*600ducts business in North Carolina as principal agent for the corporation, then his corporate acts may be attributed to him for the purpose of determining whether the courts of this State may assert personal jurisdiction over him.” In the present case [the individual defendants] were officers and the only two shareholders in Pee Dee. . . . Therefore, [their] corporate acts . . . can be imputed to them for the purpose of determining if they had sufficient minimum contacts.
Centura Bank, 119 N.C. App. at 214, 458 S.E.2d at 18 (quoting Buying Group, 296 N.C. at 515, 251 S.E.2d at 614) (citations omitted). The Court held that jurisdiction was properly exercised over the corporate actors with business activity in North Carolina, but not over their wives who merely signed a guarantee.
It is undisputed that Erde (1) was an officer and principal shareholder in both Plainview and Energex; (2) visited North Carolina at least once to conduct business with Plaintiff; and (3) negotiated the terms of pertinent contracts and was otherwise personally involved in the transactions at issue. “The courts of this State are open to defendant for protection of his activities and to enforce the valid obligations which [Plaintiff] assumed by reason of the contract. The contract was to be performed in North Carolina and has a substantial connection with the State. Applying to these facts the law as interpreted by the Supreme Court of the United States, [I would] hold that assumption of in personam jurisdiction over defendant by the courts of this State does not offend traditional notions of fair play and substantial justice within the contemplation of the Due Process Clause of the Fourteenth Amendment and that defendant’s contacts with the State are sufficient to satisfy due process requirements.” Chadbourn, Inc. v. Katz, 285 N.C. 700, 707, 208 S.E.2d 676, 680 (1974).
Because I believe the undisputed allegations of Erde’s actions on behalf of Plainview were sufficient to subject him to personal jurisdiction, I respectfully dissent from that part of the majority opinion reversing the denial of Erde’s motion to dismiss for lack of personal jurisdiction.