Bush v. BASF Wyandotte Corp.

• Decision Date: 20 September 1983
• Docket Number: No. 8227SC840,8227SC840
• Citation: 64 N.C.App. 41,306 S.E.2d 562
• Parties: Barbara Ann BUSH v. BASF WYANDOTTE CORPORATION, Bermil Industries, d/b/a Wascomat of America, Electrolux, AB, CTC Aktiebolaget, Coronaverken Aktiebolaget, Unimax Group, Inc., Magnetic Devices, Ltd, and Boggs and Company, Inc.
• Court: North Carolina Court of Appeals

Page 562

306 S.E.2d 562

64 N.C.App. 41

Barbara Ann BUSH v. BASF WYANDOTTE CORPORATION, Bermil Industries, d/b/a Wascomat of America, Electrolux, AB, CTC Aktiebolaget Coronaverken Aktiebolaget, Unimax Group, Inc., Magnetic Devices, Ltd, and Boggs and Company, Inc.

No. 8227SC840.

Court of Appeals of North Carolina.

Sept. 20, 1983.

Robert & Planer by Joseph B. Roberts, III, Gastonia, for plaintiff-appellant Barbara Ann Bush.

Hollowell, Stott, Hollowell, Palmer & Windham by Grady B. Stott and Jeffrey M. Trepel, Gastonia, for defendant-appellant BASF Wyandotte Corp.

Fairley, Hamrick, Monteith & Cobb by S. Dean Hamrick and F. Lane Williamson, Charlotte, for defendants-appellees CTC-Aktiebologet and Coronaverken-Aktiebologet.

EAGLES, Judge.

I.

The issue involved here is whether, by placing their product into the stream of American commerce so that it reaches consumers in North Carolina by means of the commercial distribution activity of others, CTC and Coronaverken have sufficient contact with North Carolina so that exercise of jurisdiction is lawful when a North Carolina resident is injured by defects in that product. We hold that the North Carolina courts may lawfully assert jurisdiction over the Swedish manufacturers, CTC and Coronaverken.

The question of personal jurisdiction over a foreign corporation must be resolved through a bifurcated inquiry. We must first determine whether a North Carolina statute permits the exercise of jurisdiction over the defendant and, secondly, whether the exercise of that statutory power will violate the due process clause of the United States Constitution's Fourteenth Amendment. Hankins v. Somers, 39 N.C.App. 617, 251 S.E.2d 640, disc. rev. denied, 297 N.C. 300, 254 S.E.2d 920 (1979).

We begin by noting that, under the holding in Marshville Rendering Corp. v. Gas Heat Engineering Corp., 10 N.C.App. 39, 177 S.E.2d 907 (1970), G.S. 55-145(a)(4) does not provide a statutory basis for assertion of jurisdiction over defendant-appellees on the facts of this case. But the language of G.S. 1-75.4(4)b permits the assertion of personal jurisdiction over CTC and Coronaverken under the facts in this case. That statute provides that

A court of this State having jurisdiction of the subject matter has jurisdiction over a person served in an action pursuant to Rule 4(j) of the Rules of Civil Procedure under any of the following circumstances:

(4) Local Injury; Foreign Act.--In any action for wrongful death occurring within this State or in any action claiming injury to person or property within this State arising out of an act or omission outside this State by the defendant, provided in addition that at or about the time of the injury either

* * *

b. Products, materials or thing processed, serviced or manufactured by the defendant were used or consumed, within this State in the ordinary course of trade.

The unverified complaint stated:

4. That the defendants CTC Aktiebolaget, Coronaverken Aktiebolaget and Electrolux AB are Swedish corporations doing business in this state and which manufacture and/or sell goods for use in the ordinary course of business in this state.

The allegation that products manufactured by CTC and Coronaverken were being used in North Carolina in the ordinary course of trade at the time of the injury was sufficient to satisfy the statutory requirements of G.S. 1-75.4(4)b. In general, pleadings need not be verified and no lack of credibility will be implied by the absence of a verification of plaintiff's complaint. G.S. 1A-1, Rule 11(a); Hankins v. Somers, supra. The plaintiff met his initial burden of proving the existence of jurisdiction by a prima facie showing that the statutory requirements had been met, and defendant-appellees did not contradict plaintiff's allegations in their sworn affidavit or their verified answers to plaintiff's interrogatories. Hankins v. Somers, supra. We hold that G.S. 1-75.4(4)b permits the exercise of jurisdiction over defendant-appellees and that the first requirement for assertion of personal jurisdiction over a foreign corporation has been met.

II.

CTC and Coronaverken also assert that plaintiff's method of service of process was insufficient. G.S. 1A-1, Rule 4(j3)(iv) provides that

Where service is to be effected upon a party in a foreign country, in the alternative service of the summons and complaint may be made ... or (iv) by any form of mail, requiring a signed receipt, to be addressed and dispatched by the clerk of the court to the party to be served.

The original record reveals that the Clerk of the Superior Court addressed and dispatched the civil summons and complaint against CTC and Coronaverken to the North Carolina Secretary of State, the defendant-appellees' agent for the purpose of service of process under G.S. 55-145(c). See Shuford, North Carolina Civil Practice and Procedure § 4-12 (2nd ed. 1981). That statute provides

In any case where a foreign corporation is subject to suit under this section and has failed to appoint and maintain a registered agent upon whom process might be served, or whenever such registered agent cannot with reasonable diligence be found at the address given, then the Secretary of State shall be an agent of such corporation upon whom any process in any such cause of action may be served.

The Secretary of State sent the summons and complaint to CTC's and Coronaverken's business addresses in Sweden by registered mail, return receipt requested. This procedure met the service of process requirements of G.S. 1A-1, Rule 4(j3)(iv). We therefore reject defendant-appellees' allegation of insufficient service of process.

III.

We now address the issue of whether, under the facts of this case, assertion of jurisdiction over defendant-appellees pursuant to G.S. 1-75.4(4)b violates the due process clause. Our courts may exercise personal jurisdiction over defendant-appellees only upon a determination that the requirements of due process have been met. In making this determination we gain guidance from decisions in other jurisdictions considering fact situations similar to ours in light of the United States Supreme Court's decision in World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980).

We note that the situation presented in World-Wide is dissimilar to the one we face in this case, but we recognize, as have other courts, that World-Wide contains instructive language suggesting when jurisdiction may be lawfully asserted. See Svendsen v. Questor Corp., 304 N.W.2d 428 (Iowa 1981), Ford Motor Co. v. Atwood Vacuum Machine Co., Fla., 392 So.2d 1305, cert. denied 452 U.S. 901, 101 S.Ct. 3024, 69 L.Ed.2d 401 (1981). The Supreme Court held in World-Wide that the exercise of personal jurisdiction over an automobile retailer and regional distributor, whose sole connection with the forum state consisted of the fact that the automobile-related injury had occurred there, was incompatible with the due process clause. In so holding that Court stated

[T]he foreseeability that is critical to due process analysis is not the mere likelihood that a product will find its way into the forum State. Rather, it is that the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there. See Kulko v. California Superior Court, supra [436 U.S. 84], at 97-98, 98 S.Ct. 1690 [1699-1700] 56 L.Ed.2d 132; Shaffer v. Heitner, 433 U.S. , at 216, 97 S.Ct. 2569 [2586] 53 L.Ed.2d 683 and see id., at 217-219, 97 S.Ct. 2569, at [2586-2587], 53 L.Ed.2d 683 (Stevens, J., concurring in judgment). The Due Process Clause, by ensuring the "orderly administration of the laws," International Shoe Co. v. Washington, 326 U.S. 310, at 319, 66 S.Ct. 154 90 L.Ed. 95, 161 ALR 1057, gives a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit.

When a corporation "purposefully avails itself of the privilege of conducting activities within the forum State," Hanson v. Denckla, 357 U.S. , at 253, 78 S.Ct. 1228 [1240] 2 L.Ed.2d 1283, it has clear notice that it is subject to suit there, and can act to alleviate the risk of burdensome litigation by procuring insurance, passing the expected costs on to customers, or, if the risks are too great, severing its connection with the State. Hence if the sale of a product of a manufacturer or distributor such as Audi or Volkswagen is not simply an isolated occurrence, but arises from the efforts of the manufacturer or distributor to serve, directly or indirectly, the market for its product in other States, it is not unreasonable to subject it to suit in one of those States if its allegedly defective merchandise has there been the source of injury to its owner or to others. The forum State does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State. Compare Gray v. American Radiator & Standard Sanitary Corp., 22 Ill.2d 432, 176 N.E.2d 761 (1961).

444 U.S. at 297-98, 100 S.Ct. at 567, 62 L.Ed.2d at 501-02.

To appreciate fully the significance of this language it is necessary to review the Court's earlier holding in Gray. There an Ohio-manufactured safety valve had been incorporated into a water heater in Pennsylvania prior to the water heater being sold to a consumer in Illinois. The defendant-Ohio manufacturer had not carried on any other business in Illinois, either directly or indirectly. The Supreme Court held that a manufacturer engaged in interstate commerce which expects its products to be used in other states, can reasonably expect to be held amenable to the jurisdiction of these other states' courts. The Court, having distinguished the Gray...