ADAMS, KLEEMEIER, HAGAN, HANNAH v. Jacobs

• Decision Date: 17 June 2003
• Docket Number: No. COA02-789.,COA02-789.
• Citation: 158 NC App. 376,581 S.E.2d 798
• Court: North Carolina Court of Appeals
• Parties: ADAMS, KLEEMEIER, HAGAN, HANNAH & FOUTS, PLLC, Plaintiff, v. Robert JACOBS and Elliot Jacobs and David Queller and Ira born, Defendants.

581 S.E.2d 798

158 NC App. 376

ADAMS, KLEEMEIER, HAGAN, HANNAH & FOUTS, PLLC, Plaintiff, v. Robert JACOBS and Elliot Jacobs and David Queller and Ira born, Defendants.

No. COA02-789.

Court of Appeals of North Carolina.

June 17, 2003.

Adams, Kleemeier, Hagan, Hannah & Fouts, by J. Alexander S. Barrett, Greensboro, for plaintiff-appellant.

Davis & Harwell, P.A., by Fred R. Harwell, Jr., and Caleigh H. Evans, Winston-Salem, for defendants-appellees David Queller and Ira Born.

LEVINSON, Judge.

Plaintiff (law firm of Adams, Kleemeier, Hagan, Hannah & Fouts, hereafter `Adams, Kleemeier') appeals from an order granting a motion by defendants (David Queller and Ira Born) to dismiss plaintiff's suit for lack of personal jurisdiction. We affirm.

The pertinent facts are summarized as follows: Born and Queller, both residents of Florida, are two of eleven defendants named in New Horizon of NY, LLC v. Robert Jacobs, et al., 5:97-CV-126-BR(2) (EDNC). During the course of litigation, the New Horizon defendants hired the law firm of Patton Boggs, LLP, which at that time had offices in Washington, D.C.; Dallas, Texas; and Raleigh and Greensboro, North Carolina. Patton Boggs attorneys Read McCaffrey of the Washington office, and Steven Hedges of the Greensboro office, participated in the New Horizon trial, conducted in Raleigh, North Carolina. In mid July, 1999, judgment was returned against the New Horizon defendants in federal district court in the amount of $21,000,000.00. A week after the verdict, Patton Boggs closed its North Carolina offices. McCaffrey remained with the Patton Boggs office in Washington, D.C., while Hedges joined Greensboro law firm Adams, Kleemeier, plaintiff herein.

The contract between Patton Boggs and the New Horizon defendants did not include representation on appeal. Following the trial, Patton Boggs remained counsel of record for the New Horizon defendants until November, 1999. On 29 July 1999, McCaffrey wrote defendant Born and informed him that Hedges had left Patton Boggs and was working for a different law firm. Between July and October 1999, Hedges sent defendants Born and Queller several unanswered letters on behalf of Adams, Kleemeier, proposing that defendants hire plaintiff to provide appellate representation and suggesting various terms and payment arrangements. However, the record indicates that on appeal to the 4th Circuit Court of Appeals, defendants were represented by attorneys from three other law firms: Miller, Cassidy, Larroca & Lewin, L.L.P., Washington, D.C. (`Miller, Cassidy'); Smith, Helms, Mullis & Moore, Raleigh, N.C. (`Smith, Helms'); and Blanchard, Jenkins & Miller, P.A., Raleigh, N.C. See New Horizon of N.Y. LLC v. Jacobs, 231 F.3d 143 (4th Cir.2000),

cert. denied, 532 U.S. 1052, 121 S.Ct. 2192, 149 L.Ed.2d 1024 (2001).

On 25 September 2001, plaintiff filed suit against defendants and co-defendants Robert and Elliott Jacobs; the present appeal concerns only defendants Born and Queller. Plaintiff alleged that it had been hired to represent defendants on appeal and had performed legal services for defendants for which it had not been paid. Plaintiff asserted claims for breach of contract and damages in quantum meruit, and sought damages of $33,020.19 from Queller, and $18,527.75 from Born, as well as costs and attorney's fees. On 5 February 2002, defendants filed a motion to dismiss plaintiff's complaint under N.C.G.S. § 1A-1, Rule 12(b)(2), for lack of personal jurisdiction. Defendants submitted accompanying affidavits and copies of the letters that plaintiff had sent them. On 5 March 2002, Hedges executed an affidavit in support of plaintiff's opposition to the dismissal motion, accompanied by copies of letters sent to defendants. On 20 March 2002, the trial court entered an order dismissing plaintiff's claim against defendants for lack of personal jurisdiction. From this order plaintiff appeals.

Plaintiff argues that by dismissing its complaint for lack of personal jurisdiction, the trial court committed reversible error. We disagree.

"Jurisdiction has been defined as `the power to hear and to determine a legal controversy; to inquire into the facts, apply the law, and to render and enforce a judgment[.]' " High v. Pearce, 220 N.C. 266, 271, 17 S.E.2d 108, 112 (1941) (quoting McIntosh, Practice and Procedure, sec. 5) (citations omitted). "Personal jurisdiction refers to the Court's ability to assert judicial power over the parties and bind them by its adjudication." Japan Gas Lighter Asso. v. Ronson Corp., 257 F.Supp. 219, 224 (D.N.J.1966). A trial court ruling on the defendant's challenge to the exercise of personal jurisdiction may either (1) decide the matter based on affidavits, or (2) conduct an evidentiary hearing with witness testimony or depositions. N.C.G.S. § 1A-1, Rule 43(e) (2001). Either way, "[t]he burden is on the plaintiff to prove by a preponderance of the evidence that grounds exist for the exercise of personal jurisdiction over a defendant." Filmar Racing, Inc. v. Stewart, 141 N.C.App. 668, 671, 541 S.E.2d 733, 736 (2001); Murphy v. Glafenhein, 110 N.C.App. 830, 431 S.E.2d 241,disc. review denied, 335 N.C. 176, 436 S.E.2d 382 (1993). Moreover, "when the defendant supplements its motion [for dismissal] with affidavits or other supporting evidence, the allegations of the plaintiff's complaint `can no longer be taken as true or controlling and plaintiff[] cannot rest on the allegations of the complaint,' but must respond `by affidavit or otherwise ... setting forth specific facts showing that the court has jurisdiction.'" Wyatt v. Walt Disney World Co., 151 N.C.App. 158, 163, 565 S.E.2d 705, 708 (2002) (quoting Bruggeman v. Meditrust Acquisition Co., 138 N.C.App. 612, 615-16, 532 S.E.2d 215, 218,disc. review denied, 353 N.C. 261, 546 S.E.2d 90 (2000)) (citation omitted).

The trial court's determination regarding the existence of grounds for personal jurisdiction is a question of fact. Hiwassee Stables, Inc. v. Cunningham, 135 N.C.App. 24, 519 S.E.2d 317 (1999). "`The standard of [appellate] review of an order determining personal jurisdiction is 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.'" Wyatt, 151 N.C.App. at 163, 565 S.E.2d at 708 (quoting Replacements, Ltd. v. Midwesterling, 133 N.C.App. 139, 140-141, 515 S.E.2d 46, 48 (1999)). "Where no findings are made, proper findings are presumed, and our role on appeal is to review the record for competent evidence to support these presumed findings." Bruggeman, 138 N.C.App. at 615, 532 S.E.2d at 217-218 (citing Sherwood v. Sherwood, 29 N.C.App. 112, 223 S.E.2d 509 (1976)).

In its determination regarding the existence of personal jurisdiction, the trial court undertakes a two part analysis.

First, the North Carolina long-arm statute must permit the exercise of personal jurisdiction. Second, the exercise of personal jurisdiction must comport with the due process clause of the Fourteenth Amendment of the United States Constitution. `However, when personal jurisdiction is alleged to exist pursuant to the long-arm statute, the question of statutory authority collapses into one inquiry—whether defendant has the minimum contacts necessary to meet the requirements of due process.'

Filmar Racing, 141 N.C.App. at 671, 541 S.E.2d at 736 (quoting Hiwassee Stables, 135 N.C.App. at 27, 519 S.E.2d at 320) (citations omitted).

N.C.G.S. § 1-75.4 (2001), North Carolina's "long-arm statute," confers jurisdiction over non-residents. In the instant case, plaintiff did not reference G.S. § 1-75.4 in its complaint. However, "[t]he failure to plead the particulars of jurisdiction is not fatal to the claim so long as the facts alleged permit the inference of jurisdiction under the statute." Williams v. Institute for Computational Studies, 85 N.C.App. 421, 428, 355 S.E.2d 177, 182 (1987). On appeal, plaintiff argues that statutory authority for the assertion of personal jurisdiction exists under N.C.G.S. § 1-75.4(5), which, in pertinent part, confers jurisdiction on actions:

a. Aris[ing] out of a promise, made anywhere to the plaintiff or to some third party for the plaintiff's benefit, by the defendant to perform services within this State or to pay for services to be performed in this State by the plaintiff; or b. Aris[ing] out of 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[.] ...

N.C.G.S. § 1-75.4(5)(a) and (b) (2001). Plaintiff alleges that it performed legal services for defendants, and that defendants either authorized or promised to pay for these services. We conclude plaintiff's have asserted sufficient facts to support a statutory basis for the exercise of personal jurisdiction over defendants. We next consider whether minimum contacts consistent with constitutional principles exist.

"The Due Process Clause of the Fourteenth Amendment operates to limit the power of a state to assert in personam jurisdiction over a non-resident defendant." Hiwassee Stables, 135 N.C.App. at 28, 519 S.E.2d at 320 (citing Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 413, 104 S.Ct. 1868, 1872, 80 L.Ed.2d 404, 410 (1984)). The pivotal inquiry for a court's determination of whether the exercise of personal jurisdiction comports with due process is whether the defendant has "certain minimum contacts with [the forum state] 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, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95, 102 (1945)

(quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 343, 85 L.Ed. 278, 283 (1940)) (citation omitted).

"In addition, `[t]he United States Supreme Court has noted two types of long arm jurisdiction: `specific jurisdiction,' where the...