Beckley v. Priority Auto. Huntersville

Decision Date28 March 2022
Docket NumberCivil Action 3:21-CV-00072-RJC-DSC
CourtU.S. District Court — Western District of North Carolina
PartiesJAMES BECKLEY, Plaintiff, v. PRIORITY AUTOMOTIVE HUNTERSVILLE INC. et. al. Defendants.

AMENDED MEMORANDUM AND RECOMMENDATION

David S. Cayer, United States Magistrate Judge

THIS MATTER is before the Court on Defendant Priority Automotive Huntersville, Inc.'s Motion to Dismiss for Failure to State a Claim (document #17) and Defendants Priority Auto Group, Inc., Dennis Ellmer and Matthew Ellmer's Motion to Dismiss for Lack of Personal Jurisdiction and Failure to State a Claim or, in the Alternative, Transfer of Venue” (document # 18), as well as the parties' briefs and exhibits, Docs. 19 23-25.[1]

This matter has been referred to the undersigned Magistrate Judge pursuant to 28 U.S.C. § 636(b)(1), and these Motions are now ripe for consideration.

Having fully considered the arguments, the record, and the applicable authority, the undersigned respectfully recommends that Defendants' Motions to Dismiss be granted in part and denied in part as discussed below.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

The Court accepts the factual allegations of the Complaint as true.

Plaintiff James Beckley, is a resident of Mecklenburg County, North Carolina. Defendant Priority Automotive Huntersville, Inc., (PAH) is a Virginia Corporation with its primary location in Huntersville, North Carolina. Defendant Priority Auto Group (“PAG”) is a Virginia Corporation with its primary location in Chesapeake, Virginia. Dennis Ellmer, President of PAG and former President of PAH, and Matthew Ellmer, Chief Operating Officer (“COO”) of PAG and former COO of PAH, are both Virginia residents.

PAG provides human resources, payroll, marketing, accounting, legal, and financial services for PAH. On or about June 14, 2019, a PAG executive began recruiting Plaintiff to become the General Manager of PAH. On July 2, 2019, Defendant Matthew Ellmer traveled to Charlotte to discuss hiring Plaintiff as General Manager of PAH. This meeting occurred at a restaurant in Huntersville. Plaintiff alleges that they discussed the General Manager position, his current employment, and a future equity arrangement with PAH.

That same day, Dennis Ellmer flew to Charlotte to meet with Plaintiff. Plaintiff, Dennis Ellmer, and Matthew Ellmer met in the Concord Airport for two hours to discuss the job opportunity. Again, the potential for equity ownership was mentioned and Dennis Ellmer “assured Beckley that Priority Auto Group intended to remain in the Charlotte market and that Priority Huntersville would not be sold.” (Complaint ¶ 58).

From July 8-9, 2019, Plaintiff traveled to Virginia to meet PAG managing partners, discuss their equity arrangements and attend a monthly General Manager dinner and a monthly status meeting. On July 9, after Plaintiff had returned to North Carolina, he received a text from Matthew Ellmer stating that PAG was putting together an offer. On July 10, 2019, Matthew Ellmer emailed Plaintiff an offer of employment as General Manager of PAH in Huntersville. Attached to the email was a “Pay Plan” that included a “One Year Guarantee: A minimum compensation of $40, 000 Per month [to] be paid . . .” (Complaint ¶ 64). Plaintiff accepted the job offer on July 15, 2019, but informed Matthew Ellmer that his wife still had concerns about the position. Matthew Ellmer met with Plaintiff and his wife on July 19, 2019 in North Carolina to further discuss the position.

During the employment negotiations, Plaintiff let Matthew and Dennis Ellmer know that he would not accept an offer without a promise of equity ownership and assurance that PAG would not sell PAH. Plaintiff alleges that Matthew and Dennis Ellmer told him what he needed to hear to secure [his] acceptance of their job offer” but did not actually intend to offer Plaintiff an equity position or discontinue marketing PAH for sale. (Complaint ¶ 70).

After accepting employment as General Manager of PAH, Plaintiff heard from several industry sources that PAG was continuing to search for a buyer for PAH. Between August 2019 to April 2020, at least four different individuals told him that PAH was being sold.

Nine months after beginning employment, Plaintiff was not offered an equity stake in PAH.

In March 2020, PAG reduced the amount of Plaintiff's guaranteed pay from $40, 000 to $30, 000 per month due to the COVID pandemic. This pay reduction was communicated to Plaintiff over phone while he was physically located in North Carolina. Plaintiff was not provided a written notice of the reduction in his monthly guaranteed minimum. Defendants owe him $50, 000 in wages for this reduction.

Plaintiff alleges that Defendants also unlawfully withheld or deducted approximately $32, 000 of earned wages … during the course of his employment.” (Complaint ¶ 82).

On or about September 9, 2020, Matt and Dennis Ellmer visited Plaintiff at PAH and informed him that they had sold the dealership and that pursuant to the sales agreement PAG could not employ him for two years.

Plaintiff filed his Complaint alleging (1) multiple violations of the North Carolina Wage and Hour Act (“NCWHA”), (2) breach of contract, (3) fraudulent inducement and misrepresentation, and (4) negligent misrepresentation. Plaintiff has since voluntarily dismissed his claim for breach of contract.

Defendants PAG, Dennis Ellmer, and Matthew Ellmer moved to dismiss all claims against them for (1) lack of personal jurisdiction pursuant to Rule 12(b)(2) and (2) failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(6). See document #18. In the alternative, Defendants moved to transfer this case to the Eastern District of Virginia, Norfolk Division, pursuant to 28 U.S.C. § 1404(a). Id. Defendant PAH also moved to dismiss all claims for failure to state a claim. See document #17.

II. DISCUSSION
A. Motion to Dismiss for Lack of Personal Jurisdiction

In evaluating a motion to dismiss for lack of personal jurisdiction, all factual disputes must be resolved in favor of the non-moving party. The non-moving party must make a prima facie showing that the exercise of personal jurisdiction is proper. See Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989); Vishay Intertechnology, Inc. v. Delta International Corp., 696 F.2d 1062, 1064 (4th Cir. 1982); General Latex and Chemical Corp. v. Phoenix Medical Technology, Inc., 765 F.Supp. 1246, 1248 (W.D. N.C. 1991). A plaintiff must prove facts sufficient for the Court to find that it has personal jurisdiction. New Wellington Fin. Corp. v. Flagship Resort Dev. Corp., 416 F.3d 290, 294 (4th Cir. 2005).

Plaintiffs must show that the exercise of personal jurisdiction over defendants complies with the forum state's long-arm statute and the constitutional requirements of due process. Ellicott Mach. Corp. v. John Holland Party Ltd., 995 F.2d 474, 477 (4th Cir. 1993). Since “the North Carolina long-arm statute [ N.C. Gen. Stat. § 1-75.4] has been interpreted as the legislature's attempt to allow the exercise of personal jurisdiction in all cases where such jurisdiction does not contravene due process, [the] normal two-step inquiry merges into one.” Id., citing Dillon v. Numismatic Funding Corp., 291 N.C. 674, 676, 231 S.E.2d 629, 630 (1977). See also Thomas Centennial Communications Corp., No. 3:05CV495, 2006 WL 6151153, at *2 (W.D. N.C. December 20, 2006).

To be consistent with the limitations of due process, a defendant must have “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 (1945). Minimum contacts may be established by showing “general” or “specific” jurisdiction. Helicopteres Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 414 (1984).

A court may exercise general jurisdiction over a non-resident defendant if that defendant has contacts with the State that are so “continuous and systematic” as to render them “essentially at home in the forum State.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S.Ct. 2846, 2851 (2011). Clearly, Defendants PAG, Dennis Ellmer, and Matthew Ellmer have not had continuous and systematic contacts with North Carolina.

In the absence of general jurisdiction, a court may exercise specific jurisdiction over the defendant in a cause of action arising from that defendant's activities in the forum state. The Fourth Circuit has “synthesized the due process requirement for asserting specific personal jurisdiction in a three-part test . . . (1) the extent to which the defendant purposefully availed itself of the privilege of conducting activities in the State; (2) whether the plaintiffs' claims arise out of those activities directed at the State; and (3) whether the exercise of personal jurisdiction would be constitutionally reasonable.” Consulting Engineers Corp. v. Geometric Ltd., 561 F.3d 273, 278 (4th Cir. 2009) (quoting ALS Scan, Inc. v. Digital Serv. Consultants, Inc., 293 F.3d 707, 712 (4th Cir. 2002)).

As the Fourth Circuit has explained, “our reasonableness analysis is designed to ensure that jurisdictional rules are not exploited ‘in such a way as to make litigation so gravely difficult and inconvenient that a party unfairly is at a ‘severe disadvantage' in comparison to his opponent.' Christian Sci. Bd. of Directors of First Church of Christ, Scientist v. Nolan, 259 F.3d 209, 217 (4th Cir. 2001) (quoting Burger King Corp. v Rudzewicz, 471 U.S. 462, 478 (1985)). As the Fourth Circuit stated in the final analysis, [f]airness is the touchstone of the jurisdictional inquiry.” Tire Eng'g. & Distribution, LLC v. Shandong Linglong Rubber Co., Ltd.,...

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