Federated Fin. Corp. of America v. Jenkins, COA10–1349.

Citation719 S.E.2d 48
Decision Date06 September 2011
Docket NumberNo. COA10–1349.,COA10–1349.
PartiesFEDERATED FINANCIAL CORPORATION OF AMERICA, Plaintiff, v. Matt JENKINS, individually and d/b/a/ Shephard Service Company, Defendant.
CourtCourt of Appeal of North Carolina (US)

OPINION TEXT STARTS HERE

Appeal by Defendant from order entered 29 June 2010 by Judge James E. Hardin, Jr., in Wake County Superior Court. Heard in the Court of Appeals 24 March 2011.

Law Offices of Gregory P. Chocklett, Raleigh, by Gregory P. Chocklett, for PlaintiffAppellee.

W. Andrew LeLiever, Raleigh, for DefendantAppellant.

THIGPEN, Judge.

Matt Jenkins, individually and doing business as Shephard Service Company, Inc. (Defendant), a corporation registered in the State of California, entered into a credit card agreement, which contained a forum selection clause designating the State of Utah as the proper venue and jurisdiction for any lawsuit arising from the Agreement. Defendant argues this clause deprived North Carolina courts of jurisdiction. By means of the application of Utah law, we disagree.

I: Substantive Facts

Defendant opened a business credit card account with Advanta Bank Corporation, a Utah corporation. The Advanta Business Card Agreement (“Agreement”) contained the following choice of law provision:

This Agreement shall be governed solely by and interpreted entirely in accordance with the laws of the State of Utah, except as (and to the degree that) such laws are superseded by the banking or other laws of the United States, regardless of where you reside.

The Agreement also contained the following forum selection clause:

I consent to personal jurisdiction in the state and federal courts of Utah and agree that any lawsuit pertaining to the account must be brought only in such courts in Utah, regardless of who files the suit, and may be maintained only in those courts unless and until any party elects arbitration pursuant to the arbitration provision in this agreement.

Defendant relocated to and, at the time of the commencement of this action, was residing and operating a business in North Carolina. Nonbusiness purchases were made on the Advanta Bank Corporation credit card. The account became delinquent. On 10 April 2008, the delinquent account was sold to Federated Financial Corporation of America, a business organized under the laws of the State of Michigan, which purchases and collects from delinquent credit card accounts.

II: Procedural History

On 2 February 2009, Federated Financial Corporation of America (Plaintiff) filed a complaint against Defendant in North Carolina, alleging Defendant entered into a credit card agreement with Plaintiff's predecessor in interest, Defendant failed to make credit card payments when due and is in default, and Defendant breached the credit card agreement. Plaintiff further alleged “there remain[ed] a payoff of Eighteen Thousand Three Hundred Eighty Four and 43/100 Dollars ($18,384.43).”

On 18 March 2009, Defendant filed a motion to dismiss for improper venue, and an order was entered on 8 May 2009 denying this motion to dismiss.

On 29 September 2009, Defendant filed a motion to dismiss for lack of subject matter and personal jurisdiction in North Carolina, stating, according to the Agreement, “any suit brought to enforce the terms of the agreement ‘must be brought only in the State of Utah.’ On 12 October 2009, the trial court denied this motion to dismiss.

On 23 December 2009, Defendant filed a motion to stay proceedings and compel arbitration. On 3 February 2010, the trial court entered an order stating that the “action is going to binding arbitration” and ordering “that this action be dismissed without prejudice to reinstate or reopen the same in the event the action is not disposed of as aforesaid.”

Based on Defendant's alleged failure to comply with the provisions pertaining to arbitration in the Agreement, on 11 February 2010, Plaintiff filed a motion to hold Defendant in contempt of court, lift stay, deny Defendant's request for arbitration and enter discovery sanctions.

On 16 March 2010, the trial court entered an order denying Plaintiff's motion to hold Defendant in contempt of court, lifting the stay of litigation, denying Defendant's request for arbitration, granting Plaintiff's motion for discovery sanctions, ordering default judgment against Defendant and in favor of Plaintiff, and ordering Plaintiff to recover from Defendant the sum of $18,384.43, plus pre-judgment interest at 29.99% per annum and post-judgment interest at 8% per annum, the costs of the action, and attorneys' fees in the amount of $7,879.20.

On 31 March 2010, Defendant filed a motion to set aside the default judgment. The trial court denied this motion in an order entered 29 June 2010. On 28 July 2010, Defendant filed notice of appeal from the order denying his motion to set aside default judgment.

III: Analysis
i: Choice of Law

As a preliminary matter, we must determine whether the choice of law provision in the Agreement necessitates that we review the appeal through application of the law of the State of Utah. We conclude it does.

[A] choice of law provision[ ] names a particular state and provides that the substantive laws of that jurisdiction will be used to determine the validity and construction of the contract, regardless of any conflicts between the laws of the named state and the state in which the case is litigated.” Johnston County v. R.N. Rouse & Co., 331 N.C. 88, 92, 414 S.E.2d 30, 33 (1992) (citation omitted). [W]here parties to a contract have agreed that a given jurisdiction's substantive law shall govern the interpretation of the contract, such a contractual provision will be given effect.” Sawyer v. Mkt. Am., Inc., 190 N.C.App. 791, 794, 661 S.E.2d 750, 752, disc. review denied, 362 N.C. 682, 670 S.E.2d 235 (2008) (quotation omitted). [T]he parties choice of law is generally binding on the interpreting court as long as they had a reasonable basis for their choice and the law of the chosen State does not violate a fundamental public policy of the state or otherwise applicable law.” Id., 190 N.C.App. at 794, 661 S.E.2d at 752 (quotation omitted).

The Agreement in the present case contained a choice of law provision providing that the Agreement would be interpreted under the laws of the State of Utah. At trial, neither party petitioned the trial court to apply Utah law; however, neither did either party challenge the choice of law provision in the Agreement. Similarly, on appeal, neither Defendant nor Plaintiff argue that Utah law does not apply, and neither Defendant nor Plaintiff challenge the choice of law provision in the Agreement. In accordance with the unchallenged terms of the Agreement, we apply Utah law.

ii: Forum Selection Clause

In Defendant's second argument,1 he contends the trial court erred by failing to dismiss the case pursuant to the Agreement's forum selection clause. Specifically, Defendant argues that the forum selection clause deprived the North Carolina trial court of jurisdiction. We disagree.

iii: Utah Jurisdiction

In Utah, as in North Carolina, questions concerning jurisdiction may be raised at any time, even for the first time on appeal. See Jefferies v. Jefferies, 895 P.2d 835, 838 (1995) (“Although raised for the first time on appeal, an issue of jurisdiction may be so raised”).

[W]hile a forum selection/consent-to-jurisdiction clause by itself is not sufficient to confer personal jurisdiction over a defendant as a matter of law, such clauses do create a presumption in favor of jurisdiction and will be upheld as fair and reasonable so long as there is a rational nexus between the forum selected and/or consented to, and either the parties to the contract or the transactions that are the subject matter of the contract.” Phone Directories Co. v. Henderson, 8 P.3d 256, 261 (2000). [T]he rational nexus element does require some connection between Utah and either the parties to or the actions contemplated by the contract[.] Id. (Emphasis in original). One party's connection to Utah is sufficient to satisfy the rational nexus inquiry. See Jacobsen Constr. Co. v. Teton Builders, 106 P.3d 719, 728 (2005).

We believe, through the application of Utah law, the language, “either the parties to or the actions contemplated by the contract[,] Phone Directories Co., 8 P.3d at 261, should be interpreted to reference Plaintiff in this case, not Advanta Bank Corporation, even though Plaintiff is not the original party to the Agreement, but a successor in interest. See Lundeberg v. Dastrup, 28 Utah 2d 28, 497 P.2d 648, 650 (1972) (affirming an award against the final successor in interest to a contract instead of the original party to the contract). Therefore, we review to determine whether there is a rational nexus between either Plaintiff or Defendant and the State of Utah.

In this case, the forum selection clause in the Agreement created a presumption in favor of jurisdiction in Utah. The clause is fair and reasonable so long as there is a rational nexus between Utah and the parties or the transactions that are the subject matter of the contract. We now determine whether such a rational nexus exists.

It is undisputed that Defendant is a citizen and resident of Iredell County, North Carolina, and formerly a resident of California. Plaintiff's corporate headquarters is in Michigan. Both parties agree that charges on the credit card were mostly incurred in California and North Carolina. The only evidence of a rational nexus to the State of Utah is Defendant's assertion that Plaintiff is “registered to do business in the state of Utah and “uses a third party contractor as it[s] registered agent” in Utah. We believe, under Utah law, this is insufficient to establish a rational nexus. See Jacobsen Constr. Co., 106 P.3d at 728 ([T]he nexus between the underlying dispute and the State of Utah must be truly ‘rational[,] [and] [c]onsequently, the mere presence of a post office box maintained in Utah by a litigant, for example, ... would...

To continue reading

Request your trial
4 cases
  • In re Childers-Gray
    • United States
    • Utah Supreme Court
    • May 6, 2021
    ...whether a "class arbitration waiver clause in ... cardmember agreements" was unconscionable"); Federated Fin. Corp. of Am. v. Jenkins , 215 N.C.App. 330, 719 S.E.2d 48, 51–52 (2011) (applying Utah law to determine enforceability of a contract's forum selection clause). This is simply a matt......
  • Irwin v. Fed. Express Corp.
    • United States
    • U.S. District Court — Middle District of North Carolina
    • December 5, 2016
    ...State does not violate fundamental public policy of the state or otherwise applicable law," Federated Fin. Corp. of Am. v. Jenkins, 215 N.C. App. 330, 333-36, 719 S.E.2d 48, 51-53 (2011), neither party cites or challenges the application of this provision even though FedEx has its principal......
  • Gyger v. Clement
    • United States
    • North Carolina Court of Appeals
    • December 18, 2018
    ...concerning subject matter jurisdiction may properly be raised for the first time on appeal, Federated Fin. Corp. of Am. v. Jenkins , 215 N.C. App. 330, 334, 719 S.E.2d 48, 51 (2011), we will address Plaintiff-Mother's argument. A trial court may only grant a Rule 60(b)(4) motion where the u......
  • Niloy, Inc. v. Lowe's Cos.
    • United States
    • U.S. District Court — Western District of North Carolina
    • January 3, 2017
    ...of law provision that identifies North Carolina law as the governing law. (See Doc. 18-2 at 31); see also Federated Fin. Corp. of Am. v. Jenkins, 719 S.E.2d 48, 53 (N.C. Ct. App. 2011) (recognizing validity of choice of law provision); Musarra v. Bock, 684 S.E.2d 741, 743 (N.C. Ct. App. 200......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT