Court Opinion

ID: 2728970
Source: CourtListenerOpinion
Date Created: 2014-09-08 21:37:54.714987+00
Date Added: 2024-06-11T13:26:03.940664
License: Public Domain

NO. COA13-868

                   NORTH CAROLINA COURT OF APPEALS

                         Filed:      18 March 2014

CHRISTOPHER BROWN, D.D.S.,
     Plaintiff,

    v.                                   Mecklenburg County
                                         No. 11 CVS 18370
ARTISAN 2510, INC., ARTISAN 2510,
INCORPORATED, ANTHM DESIGN CO.,
INC., ANTHONY MURPHY, and MICHAEL
FERRONE,
     Defendants.

    Appeal by Michael Ferrone from order filed 9 March 2012 by

Judge W. Robert Bell, order filed 4 February 2013 by Judge H.

William   Constangy,   and   order    filed   16   April   2013   by     Judge

Richard D. Boner, each in Mecklenburg County Superior Court.

Heard in the Court of Appeals 10 December 2014.

    JAMES, McELROY & DIEHL, P.A., by Preston O. Odom, III, Fred
    B. Monroe, and John R. Brickley, for plaintiff.

    HIGGINS BENJAMIN PLLC, by           Gilbert    J.   Andia,    Jr.,    for
    defendant Michael Ferrone.

    ELMORE, Judge.

    Michael Ferrone (Ferrone), the sole appellant-defendant in

the instant action, appeals the trial court’s denial of his

motion to dismiss pursuant to Rule 12(b)(2) for lack of personal
                                       -2-
jurisdiction     and    the    entry   of    the   order        granting   summary

judgment against him on Dr. Chris Brown’s (Dr. Brown) claims of

breach     of   contract      and   violations     of     the    North     Carolina

Securities Act under Chapter 78A.              He also appeals the trial

court’s award of attorney’s fees and costs of $37,981.31.                      After

careful consideration, we affirm in part, reverse and remand in

part, and vacate in part.

                              I.    Factual Background

    The evidence in the record shows that Ferrone and Anthony

Murphy (Murphy) formed, managed, and operated Artisan 2510, Inc.

(Artisan    2510),     an   apparel    company.         Murphy    was    the   Chief

Executive Officer whose role was to direct the design/artistic

side of the apparel company, while Ferrone was the President and

Chief Financial Officer whose role was to handle the promotion

of the company.        Each were 50 percent owners.                There is some

dispute as to whether Artisan 2510 was first formed (perhaps

incorrectly) as a Nevada corporation, and later licensed to do

business in New Jersey.1            Murphy is a New Jersey resident and

Ferrone is a resident of Massachusetts.

1
  Ferrone believed that Artisan was originally created as a
Nevada corporation but he was later provided documentation that
Artisan was licensed to do business in New Jersey.
                                                -3-
       In early June 2010, Ferrone contacted Dr. Brown, a resident

of North Carolina, to solicit a $100,000 investment in Artisan

2510.        Dr.    Brown        and     Ferrone         had    known    each     other      for

approximately 8 years and had previously engaged in business

dealings together.              Ferrone and Murphy represented to Dr. Brown

that     Artisan       2510       was     a        growing     clothing        company,      and

specifically        offered       to     sell      him    a    ten    percent    shareholder

interest, which amounted to 222,000 shares of stock in Artisan

2510.       In addition, Dr. Brown alleges that they offered to pay

him 15 percent interest per year on his investment.

       In    negotiating         the    deal,       Ferrone      communicated         with   Dr.

Brown via phone, text, and email.                        On or about 10 June 2010, Dr.

Brown       received       a     PowerPoint          presentation,        which       included

photographs of clothing and information about the company.                                     In

an email dated 23 June 2010, Ferrone informed Dr. Brown that his

investment        would    be     used    to       defray      product    development        and

production        expenses       and    secure        showroom       space.      At    no    time

during      the    negotiations          did       Ferrone      or    Murphy     maintain      a

physical presence in North Carolina.

       Based on Murphy and Ferrone’s representations, Dr. Brown

agreed      to    invest       $100,000       in    Artisan     2510.         Ferrone    had    a

Purchase Agreement drafted and emailed to Dr. Brown on or about
                                         -4-
22 June 2012.       Dr. Brown sent two separate $50,000 checks made

payable to Artisan 2510, Inc.              The first check was sent 27 June

2010, and the second was sent on or about 13 July 2010.                         Dr.

Brown understood that the stock certificates would be issued and

sent to him upon receipt of each check.

       Despite    Dr.    Brown’s     payment,      Artisan    2510     failed    and

refused to deliver the stock share certificates.                    Throughout the

remainder    of    2010,    Dr.    Brown    contacted      Ferrone    on   numerous

occasions to request the stock certificates—to no avail.                        Upon

Dr.    Brown’s    information,      he   alleges    that    Ferrone    and   Murphy

never applied his investment towards Artisan, but instead used

the money to fund Anthm and/or Artisan 2, separate clothing and

design companies, and to cover their personal expenses.

       Dr. Brown demanded the return of his investment, and he and

Ferrone began negotiating the terms of a payback settlement (the

settlement agreement).         Dr. Brown points to two emails dated 14

April 2011 as evidence of the terms of a mutually agreed upon

settlement agreement.             In the first email, Ferrone offered a

total payback sum of $150,000, and stated that as “a gesture of

good    faith”     Dr.     Brown    would      receive     $5,000     towards   the

settlement on or before 28 April 2011.                   In a second email sent

approximately 30 minutes later, Ferrone included a definitive
                                              -5-
repayment schedule, which was to commence on 25 May 2011.                                  Dr.

Brown    received       the     “good      faith”    payment       of     $5,000,    but    no

additional       payments       were       made     pursuant       to     the     settlement

agreement.

    Dr.     Brown       filed    a    complaint         against    Artisan       2510,    Inc.

Artisan    2510,    Incorporated,            Anthm      Design     Co.,    Inc.,     Anthony

Murphy,     and    Michael        Ferrone         for     1)     breach     of     contract,

specifically the settlement agreement; 2) unjust enrichment; 3)

fraud;     4)    facilitation         of     fraud/conspiracy;            5)     unfair    and

deceptive       trade    practices;          6)   conversion;        7)    violations       of

Chapter 78A; 8) piercing the corporate veil; and 9) punitive

damages.        He alleged that Ferrone and Murphy were the owners,

agents, and alter egos of Artisan, Artisan 2, and Anthm and that

the three corporate entities are indistinguishable.                                 As such,

Ferrone and Murphy are jointly and severally liable for each

cause of action.

    The trial court granted Dr. Brown’s motion for entry of

default pursuant to Rule 55 against Artisan 2510, Inc. Artisan

2510, Incorporated, Anthm Design Co., Inc., and Anthony Murphy.

Thereafter,       the    trial       court    granted      Dr.     Brown’s       motion    for

Summary Judgment against Ferrone on the claims of breach of

contract and violations of Chapter 78A.                        Ferrone now appeals.
                                                -6-
                                  II.    Personal Jurisdiction

       Ferrone argues that the trial court erred in finding that

it   could     exercise          in    personam       jurisdiction         over    him.      We

disagree.

       We    review     a    trial        court’s      order       determining       personal

jurisdiction to see “whether the findings of fact by the trial

court are supported by competent evidence in the record; if so,

this     Court    must       affirm        the    order      of     the     trial     court.”

Replacements, Ltd. v. MidweSterling, 133 N.C. App. 139, 140-41,

515 S.E.2d 46, 48 (1999).                   However, under Rule 52(a)(2) “the

trial court is not required to make specific findings of fact

unless      requested       by    a     party.        When   the    record        contains   no

findings of fact, [i]t is presumed . . . that the court on

proper evidence found facts to support its judgment.”                                 Banc of

Am. Secs. LLC v. Evergreen Int'l Aviation, Inc., 169 N.C. App.

690, 694, 611 S.E.2d 179, 183 (2005) (citations and quotations

omitted) (alteration in original).

       In   the   case      sub       judice,    the    record      does    not     show   that

either party requested the trial court to make specific findings

of fact.      We presume that the trial judge made factual findings

sufficient to support his ruling based on the affidavits of the

parties, the pleadings, authorities presented, and arguments of
                                           -7-
counsel.    However, we do not have a copy of the transcript as

part of the record on appeal.              Accordingly, we review this issue

for sufficiency of the evidence based on the record before us.

Cameron-Brown Co. v. Daves, 83 N.C. App. 281, 285, 350 S.E.2d

111, 114 (1986).

    “A two-step test is utilized to resolve a question of in

personam jurisdiction over a non-resident defendant: (1) Does a

basis for jurisdiction exist under the North Carolina ‘long-arm’

statute,    []   and     (2)   If     so,        will    the     exercise    of    this

jurisdiction     over    the   defendant          comport       with   constitutional

standards of due process?”                 Id. at 283, 350 S.E.2d at 113.

Ferrone    concedes     that   a   basis     for    jurisdiction        exists    under

North Carolina’s “long-arm” statute, and, therefore, we need not

address the first step of the test.

    “To     satisfy      the   due     process          prong     of   the   personal

jurisdiction     analysis,         there     must       be     sufficient    ‘minimum

contacts’ between the nonresident defendant and our state such

that the maintenance of the suit does not offend ‘traditional

notions of fair play and substantial justice.’”                           Skinner v.

Preferred Credit, 361 N.C. 114, 122, 638 S.E.2d 203, 210 (2006)

(citing Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.

Ct. 154, 158, 90 L. Ed. 95, 102 (1945) (quoting Milliken v.
                                                   -8-
Meyer, 311 U.S. 457, 463, 61 S. Ct. 339, 343, 85 L. Ed. 278, 283

(1940)).       The United States Supreme Court has recognized two

bases    for     finding       sufficient              minimum      contacts:             (1)    general

jurisdiction and (2) specific jurisdiction.                                Evergreen, 169 N.C.

App. at 696, 611 S.E.2d at 184.                            General jurisdiction may be

maintained          “even    if    the       cause        of    action          is    unrelated         to

defendant’s         activities         in        the    forum       as    long       as    there       are

sufficient          ‘continuous             and        systematic’             contacts          between

defendant      and     the     forum         state.”            Id.      (quotation             omitted).

“Specific jurisdiction exists when the controversy arises out of

the defendant’s contacts with the forum state[,]” making the

cause of the action the basis for the exercise of in personam

jurisdiction.         Id. (quotation omitted).

    In      determining            whether             minimum        contacts            exist,       the

following      factors       are       to    be        considered         in    relation          to   the

circumstances of the case:                       “(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.”        New Bern Pool & Supply Co. v. Graubart, 94 N.C. App.

619, 624, 381 S.E.2d 156, 159 (1989), aff'd, 326 N.C. 480, 390
                                           -9-
S.E.2d 137 (1990) (quotation omitted).                      All factors are to be

considered.

      “A    contractual         relationship        between     a     North     Carolina

resident and an out-of-state party alone does not automatically

establish    the       necessary       minimum     contacts    with     this     State;”

however, a single contract “may establish the necessary minimum

contacts where it is shown that the contract was voluntarily

entered    into     and     has    a    ‘substantial      connection’         with    this

State.”     Evergreen, 169 N.C. App. at 696, 611 S.E.2d at 184

(citation     and       quotation         omitted).          The      parties’       prior

negotiations and actual course of dealing, along with the terms

of the contract, are relevant factors in a ‘minimum contacts’

analysis.     See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 85

L.   Ed.   528     (1985).        Further,       “[w]hich     party    initiates          the

contact is taken to be a critical factor in assessing whether a

nonresident defendant has made ‘purposeful availment’ [of the

privilege    of    conducting          activities   within     the    forum     State].”

Evergreen, 169 N.C. App. at 698, 611 S.E.2d at 185 (citation and

quotation     omitted)          (alteration        in   original).        “[W]here          a

defendant     is       an   officer       and    principal      shareholder          of    a

corporation,       .    .   .     we    consider    his     corporate     actions          in

determining       personal        jurisdiction[.]”            Saft     Am.,    Inc.       v.
                                          -10-
Plainview Batteries, Inc., 189 N.C. App. 579, 598, 659 S.E.2d

39, 51 (2008), rev'd in part, 363 N.C. 5, 673 S.E.2d 864 (2009).

A. Quantity, Nature, and Quality of the Contacts & Due Process

    In    the    present       case,      Dr.    Brown    offered    the       following

evidence to support a finding of specific jurisdiction.                          In his

affidavit, Dr. Brown alleged that Ferrone “systematically and

repeatedly”     contacted          him   in   North    Carolina     via    email    and

telephone to convince him to invest in Artisan 2510.                            At that

time,    Dr.    Brown        and    Ferrone      had     been   acquaintances       for

approximately 8 years, had previously invested together, and had

sat on the same board of directors.

    Additionally, Ferrone sent an offer via email on 21 June

2010, wherein he promised to provide Dr. Brown with 220,000

shares   of    stock    in    Artisan     2510    in   exchange     for    a   $100,000

investment.      Ferrone then emailed Artisan’s business plan and a

PowerPoint presentation regarding the financials of the company

to Dr. Brown.      Once Dr. Brown decided to invest, Ferrone had a

Purchase Agreement drafted and sent electronically to Dr. Brown.

Dr. Brown signed and returned the Purchase Agreement to Ferrone

and subsequently mailed two $50,000 checks from North Carolina.

    Ferrone’s affidavit also describes systematic and repeated

contact with Dr. Brown in North Carolina: “On March 11, 2011, I
                                       -11-
sent an email to [p]laintiff with a proposed Promissory Note for

$150,000;” “I emailed a revised copy of the Purchase Agreement

to   [pl]aintiff;”      “[a]     series     of      emails     are      attached    []

demonstrating a string of communication” with plaintiff; “[a]s I

mentioned in our chat last night, we are in the process of

accounting and figuring how to return your funds and profit.”

     Additionally, the record contains evidence that Dr. Brown

and Ferrone negotiated a settlement agreement, and Dr. Brown

received the first $5,000 repayment in North Carolina per its

terms.       Importantly,      the    record        also     shows    that      Ferrone

initiated contact with Dr. Brown, which, again, is considered a

critical     factor   in   assessing        ‘purposeful        availment.’          See

Evergreen,     supra.          Upon    review,       we      conclude     that      the

relationship between       Ferrone and the forum               was    such that he

should reasonably have anticipated being haled into court.                          The

contact     between     Ferrone       and     Dr.     Brown     had      substantial

connections     to    North    Carolina,       and,        therefore,     Dr.     Brown

purposefully availed himself of the protection and benefit of

our laws.

B. The Interest of the Forum State & the Convenience to the

Parties
                                               -12-
       When    the       trial    court        “concludes       that     a   defendant         has

purposefully         established            minimum     contacts       within     the        forum

State, the court must also consider those contacts in light of

other factors to determine whether the assertion of personal

jurisdiction         would       comport       with     fair     play     and    substantial

justice.”          Evergreen, 169 N.C. App. at 699, 611 S.E.2d at 186

(quotation and ciation omitted).                      In doing so, we consider “(1)

the interest of North Carolina and (2) the convenience of the

forum to the parties.”                Id.

       In    regards       to    North       Carolina's      interest,       Ferrone     argues

that    it    is     New     Jersey,         not   North       Carolina,       that     is     the

appropriate         forum       for    litigation       as     the    Purchase        Agreement

contained      a    choice-of-law            provision     favoring      New    Jersey        law.

However, we have held that “[w]hile choice of law clauses are

not    determinative         of       personal     jurisdiction,        they    express        the

intention of the parties and are a factor in determining whether

minimum contacts exist and due process was met.                                 This factor

does not, therefore, favor one party over the other.”                                   Id. at

700,    611    S.E.2d        at       186.    (quotation        and     citation       omitted)

(alteration         in   original).             Here,     the    record      reflects         that

neither Ferrone nor Murphy signed the Purchase Agreement, and we

give little weight to its terms.                        More importantly, Dr. Brown
                                              -13-
has sued to enforce the parties’ settlement agreement, not the

original investment contract.

       With     respect       to    the     convenience      to     the    parties,    North

Carolina is certainly the more convenient forum for Dr. Brown,

and    this     State     has      a   “manifest         interest    in    providing      its

residents       with      a   convenient          forum     for    redressing     injuries

inflicted       by    out-of-state          actors.”        Baker     v.    Lanier    Marine

Liquidators, Inc., 187 N.C. App. 711, 716, 654 S.E.2d 41, 45

(2007) (citation and quotation omitted).                          As Ferrone has failed

to    convince       us   otherwise,        we    hold    that    North    Carolina      is   a

convenient forum to determine the rights of the parties.

                                    III. Standard of Review

       “Our standard of review of an appeal from summary judgment

is de novo; such judgment is appropriate only when the record

shows that ‘there is no genuine issue as to any material fact

and that any party is entitled to a judgment as a matter of

law.’”       In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572,

576    (2008)    (quoting          Forbis    v.    Neal,    361    N.C.    519,   524,    649

S.E.2d 382, 385 (2007)).                    “The burden on the moving party to

show that no genuine issues of fact exist may be met by proving

that    an    essential       element       of    the     opposing    party’s     claim       is

nonexistent or by showing through discovery that the opposing
                                    -14-
party cannot produce enough evidence to support an essential

element of his claim.”        Miller v. Rose, 138 N.C. App. 582, 585-

86, 532 S.E.2d 228, 231 (2000) (citation and quotation omitted).

                                 IV. Discussion

      We next address whether the trial court erred in finding

that Mr. Ferrone was personally liable to Dr. Brown for breach

of contract.      Dr. Brown alleges:         “There are two independent

bases under which this Court can affirm Mr. Ferrone’s personal

liability     under   the   aforementioned    agreement:           piercing   the

corporate veil and Mr. Ferrone’s personal guaranty.”

  A. Personal Liability and Piercing the Corporate Veil

      In Dr. Brown’s 5 October 2011 complaint, the eighth claim

for relief is “Piercing the Corporate Veil/Alter Ego.”                 However,

in a document entitled “Voluntary Dismissal Without Prejudice,”

filed 12 April 2013, Dr. Brown stated that he “hereby dismissed,

without prejudice, the claims against Defendant Michael Ferrone

for   which     Plaintiff     was   not      granted       summary    judgment.

Specifically,    Plaintiff    hereby   dismisses       .   .   .   piercing   the

corporate veil/alter ego[.]”        Accordingly, we decline to address

Dr. Brown’s argument as to piercing the corporate veil/alter ego

on appeal.

  B. Guaranty Contract
                                            -15-
      The only remaining theory that Dr. Brown offers to hold

Ferrone    personally         liable      for   the    breach     of     the   settlement

agreement is due to a guaranty contract.

      Generally, a promise to answer for another’s debt falls

within    the   statute       of    frauds      and   must   be     in    writing   to   be

enforceable.      N.C. Gen. Stat. § 22-1 (2013) mandates that “[n]o

action shall be brought . . . to charge any defendant upon a

special promise to answer the debt . . . of another person,

unless the agreement upon which such action shall be brought, or

some memorandum or note thereof, shall be in writing, and signed

by the party charged therewith[.]”                     In addition, a promise to

personally      repay   the        debt    of   another      must    be    supported     by

sufficient consideration.                 “A guaranty contract is supported by

sufficient consideration if it is based on a benefit passing to

the   guarantor    or     a    detriment        to    the    guarantee.         When     the

guaranty, as in this case, involves a preexisting debt, it must

be supported by some new consideration other than the original

debt.”    Carolina E., Inc. v. Benson Agri Supply, Inc., 66 N.C.

App. 180, 182, 310 S.E.2d 393, 395 (1984) (citations omitted).

      However, there exists an exception to the general rule.

Under the “main purpose rule” a promise to pay the debt of

another falls outside the statute of frauds “if it is concluded
                                        -16-
that the promisor has the requisite personal, immediate, and

pecuniary interest in the transaction in which a third party is

the primary obligor[.]”          Terrell v. Kaplan, 170 N.C. App. 667,

670,    613    S.E.2d    526,    528     (2005)   (quotation     and     citation

omitted).      In such cases, “the promise is said to be original

rather than collateral and therefore need not be in writing to

be binding.”      Id.; see also, e.g., Stuart Studio, Inc. v. Nat'l

School of Heavy Equip., Inc., 25 N.C. App. 544, 546, 214 S.E.2d

192,   193    (1975)    (Where   “the    main   purpose   and   object    of   the

promisor is not to answer for another, but to subserve some

pecuniary or business purpose of his own, . . . his promise is

not within the statute [of frauds][.]” (quotation omitted).).

       In the case sub judice, Dr. Brown contends that the main

purpose rule is applicable to these facts.                 Specifically, Dr.

Brown argues that Ferrone had the requisite personal, immediate,

and pecuniary interest in the transaction:                “Ferrone certainly

had a personal interest in Dr. Brown investing in Artisan 2510

as an officer and/or shareholder, and because he had similarly

invested in the business.”              However, after carefully reviewing

the record, we find a genuine issue of material fact exists as

to (1) whether an oral guaranty was given, and (2) whether an

application of the main purpose rule is warranted on the facts
                                    -17-
of   this   case.      Accordingly,    we     find   summary    judgment     was

improperly   granted     on   Dr.   Brown’s    claim   for     breach   of   the

settlement agreement.

C. Violation of Chapter 78A

      Ferrone argues that the trial court erred in granting Dr.

Brown’s motion for summary judgment on his claim for violations

of the North Carolina Securities Act under Chapter 78A.                       We

agree.

      Because Dr. Brown alleges that Ferrone and Murphy were the

owners, agents, and alter egos of Artisan, he brought this claim

against Ferrone under the theory of joint and several liability.

As such, we look to Ferrone’s primary liability under N.C. Gen.

Stat. § 78A.        From the face of the order, we presume that the

trial court found that Ferrone violated N.C. Gen. Stat. § 78A-

56(a)(2), which imposes civil liability upon any person who:

            Offers or sells a security by means of any
            untrue statement of a material fact or any
            omission to state a material fact necessary
            in order to make the statements made, in
            light of the circumstances under which they
            were made, not misleading (the purchaser not
            knowing of the untruth or omission), and who
            does not sustain the burden of proof that he
            did not know, and in the exercise of
            reasonable care could not have known of the
            untruth or omission[.]

N.C. Gen. Stat. § 78A-56 (a)(2) (2013).
                                            -18-
    We further note that any person who directly or indirectly

controls a person liable under N.C. Gen. Stat. § 78A-56(a) “is

also liable jointly and severally . . . unless able to sustain

the burden of proof that the person did not know, and in the

exercise    of    reasonable         care    could       not    have      known,     of     the

existence    of    the       facts   by    reason       of   which    the       liability   is

alleged to exist.”           N.C. Gen. Stat. § 78A-56(c)(1) (2013).

    A      statement         is   material        if     “there      is     a    substantial

likelihood       that    a    reasonable         [purchaser]         would      consider     it

important in deciding [whether or not to purchase].                                 State v.

Williams, 98 N.C. App. 274, 280, 390 S.E.2d 746, 749 (1990), or

if a reasonable purchaser “would have viewed the total mix of

information       made       available      to     be    significantly           altered     by

disclosure of the fact.”              Dunn v. Borta, 369 F.3d 421, 427 (4th

Cir. 2004)).       A question of materiality is generally fact based

and for the jury to decide.                Tharrington v. Sturdivant Life Ins.

Co., 115 N.C. App. 123, 127, 443 S.E.2d 797, 800 (1994).

    In the present case, Dr. Brown alleged in his complaint

that “[d]efendants represented that they would pay [Dr. Brown]

15% interest per year on his investment.”                         Ferrone denied this

allegation in his answer.                 Additionally, Dr. Brown alleged that

“[b]ased on [d]efendants’ representations, [Dr. Brown] agreed to
                                      -19-
invest    $100,000       in   Artisan[.]”      Ferrone    also    denied   this

allegation in his answer.            Dr. Brown further alleged in his

complaint that “[d]efendants also represented that [Dr. Brown’s]

investment was sound because the clothing product line doubles

the company’s net profit each clothing season, and that there

are eight seasons per year.”          Ferrone denied this allegation in

his answer.       The record indicates that there remains a genuine

issue of material fact as to whether Ferrone made any misleading

statements to Dr. Brown in violation of N.C. Gen. Stat § 78A-

56(a)(2).       This issue involves a genuine issue of material fact

and is for a jury to decide.          See id. As such, we cannot sustain

the trial court’s decision to grant summary judgment on this

issue.

       Finally, we recognize that Judge Richard D. Boner granted

Dr. Brown’s motion for attorney’s fees and costs pursuant to

N.C.     Gen.    Stat.    §    78A-56(a)     based   on   Judge   H.   William

Constangy’s order.            However, as we determined that the trial

court erred in granting summary judgment against Ferrone for

violating Chapter 78A,           we vacate the order which grants           Dr.

Brown’s motion for attorney’s fees and costs.

                                    V. Conclusion
                                     -20-
      In sum, the trial court did not err in denying Ferrone’s

pre-answer motion to dismiss for lack of personal jurisdiction.

The exercise of in personam jurisdiction over Ferrone does not

violate his due process rights.         However, the trial court erred

in granting summary judgment on Dr. Brown’s claims for breach of

contract and violations of Chapter 78A.              The issue of whether

Ferrone is personally liable for the breach of the settlement

agreement is best placed before a jury.             Further, the record is

insufficient    to   support   the   trial   court’s   determination    that

Ferrone is liable for violations of Chapter 78A.               Accordingly,

the   trial    court’s   order   granting     Dr.    Brown’s   motion   for

attorney’s fees and costs is vacated.          We reverse and remand to

the trial court for further action consistent with this opinion.

      Affirmed in part; reversed and remanded in part; vacated in

      part.

      Judges McGEE and HUNTER, Robert, C., concur.

      Report per Rule 30(e).