Court Opinion

ID: 9340099
Source: CourtListenerOpinion
Date Created: 2022-12-16 19:46:04.50069+00
Date Added: 2024-06-11T17:15:21.513069
License: Public Domain

ARNOLD, Judge.
The question whether the trial court has personal jurisdiction over defendant involves a twofold determination. First, do the statutes of North Carolina permit the courts of this jurisdiction to entertain this action against defendant? If so, does the exercise of this power by the North Carolina courts violate due process of law? Dillon v. Numismatic Funding Corp., 291 N.C. 674, 231 S.E. 2d 629 (1977).
With respect to the first prong of the determination, plaintiff argues that the trial court has jurisdiction over defendant under N.C.G.S. § 1-75.4, the North Carolina long-arm statute. N.C.G.S. § 1-75.4 sets out the grounds for personal jurisdiction and states that a court has jurisdiction under the following circumstances:
*556(5) Local Services, Goods or Contracts. — In any action which:
* * * *
b. Arises out of services actually performed for the plaintiff by the defendant within this State, or services actually performed for the defendant by the plaintiff within this State if such performance within this State was authorized or ratified by the defendant.
It appears that defendant is subject to personal jurisdiction under N.C.G.S. § l-75.4(5)(b). Plaintiff performed services for defendant within this State by manufacturing certain textiles. The record indicates that defendant was well aware that the textiles ordered from Blue Ridge Fabrics were to be manufactured by plaintiff in North Carolina.
However, even if defendant falls within the reach of the long-arm statute, the exercise of jurisdiction over defendant must comport with due process requirements. See Tom Togs, Inc. v. Ben Elias Industries Corp., 318 N.C. 361, 348 S.E. 2d 782 (1986). Due process requires certain minimum contacts between the nonresident defendant and the forum such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. International Shoe Co. v. Washington, 326 U.S. 310 (1945). In each case, there must be some act by which the defendant purposely avails himself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws; the unilateral activity within the forum state of others who claim some relationship with a nonresident defendant will not suffice. Hanson v. Denckla, 357 U.S. 235 (1958); Tom Togs, Inc., 318 N.C. at 361, 348 S.E. 2d at 782.
The existence of minimum contacts is a question of fact. Parris v. Garner Commercial Disposal, Inc., 40 N.C. App. 282, 253 S.E. 2d 29, cert. denied, 297 N.C. 455, 256 S.E. 2d 808 (1979). The factors to be considered in determining whether minimum contacts exist are (1) quantity of the contacts, (2) nature and quality of the contacts, (3) the source and connection of the cause of action to the contacts, (4) the interest of the forum state, and (5) convenience to the parties. Marion v. Long, 72 N.C. App. 585, 325 S.E. 2d 300, cert. denied, 313 N.C. 604, 330 S.E. 2d 612 (1985).
In the case sub judice, Blue Ridge Fabrics, acting as plaintiffs sales representative, contracted with defendant in *557California for the sale of textiles. The contracts in the record are between defendant and Blue Ridge Fabrics and indicate that the goods were to be shipped from South Carolina. Plaintiff manufactured the textiles in North Carolina and shipped them to South Carolina for finishing. The textiles were then shipped from South Carolina to defendant in California.
In its answers to interrogatories, plaintiff lists the following in support of its proposition that defendant had sufficient minimum contacts to allow North Carolina to exercise personal jurisdiction over defendant:
a. Contracts between Defendant and Blue Ridge Fabrics, Inc. (“Blue Ridge”), in which Defendant expressly, by signing the contract or by failing to object to its terms within 10 days, submitted to jurisdiction in North Carolina.
b. Invoices from Blue Ridge to Defendant, pursuant to which Defendant, by failing to object within 10 days, submitted to jurisdiction in North Carolina.
c. Defendant’s Purchase Orders.
d. Defendant’s Chargeback Invoices.
e. Letters from Defendant to Plaintiff and/or Plaintiffs agents.
f. Plaintiffs Invoices to Defendant.
g. Telephone calls from Defendant to Plaintiff and/or Plaintiffs agents, and vice versa.
Plaintiff asserts that defendant submitted to jurisdiction by entering into contracts with Blue Ridge Fabrics and failing to object to the terms of invoices from Blue Ridge Fabrics. The contracts and the invoice contained in the record include the following terms:
9. This instrument shall be construed, enforced and performed under North Carolina law.
10. Any dispute or claim arising out of this contract shall be settled by arbitration as provided under N.C. law. This agreement is subject to the Uniform Arbitration Act of North Carolina, and the parties to this agreement agree *558to the settlement by arbitration of any controversy hereafter arising between them relating to this agreement or the failure or refusal to perform the whole or any part hereof or hereafter. The parties consent that all arbitration proceedings shall be held and venue, shall be proper in Buncombe County, North Carolina. The parties agree that they shall be amendable to personal jurisdiction in Buncombe County, North Carolina. . . .
Defendant did not expressly submit to personal jurisdiction under the contracts or the invoices. The arbitration term provides that defendant is subject to personal jurisdiction in Buncombe County, North Carolina for the purpose of arbitration. Plaintiff, however, brought suit in Iredell County and chose to file a lawsuit rather than arbitrate the dispute. The arbitration term in the contracts and invoices do not provide a sufficient basis for asserting personal jurisdiction over defendant since plaintiff filed suit rather than pursuing arbitration. See Babitt v. Frum, 606 F. Supp. 680 (S.D.N.Y. 1985).
Plaintiff also asserts that defendant’s purchase orders are grounds for asserting jurisdiction over defendant. There are no copies of any purchase orders in the record. John Fulmer’s affidavit indicates that defendant never purchased goods in North Carolina. The only evidence in the record of any purchase orders is a list of numbers and dates provided by plaintiff. Likewise, defendant’s chargeback invoices do not provide a basis for personal jurisdiction over defendant, especially since there is evidence that the chargeback invoices were copies given to “factors” for Blue Ridge Fabrics for deductions made outside of North Carolina. Finally, the letters and telephone calls concerning the dispute between the parties are not grounds for jurisdiction. See Modern Globe, Inc. v. Spellman, 45 N.C. App. 618, 263 S.E. 2d 859, cert. denied, 300 N.C. 373, 267 S.E. 2d 677 (1980).
Defendant had insufficient minimum contacts with North Carolina to satisfy the requirements of due process. Accordingly, the order of the trial court is
Affirmed.
Chief Judge Hedrick and Judge COZORT concur.