Cambridge Homes v. Hyundai Const.

• Decision Date: 16 December 2008
• Docket Number: No. COA08-242.,COA08-242.
• Citation: 670 S.E.2d 290
• Court: North Carolina Court of Appeals
• Parties: CAMBRIDGE HOMES OF NORTH CAROLINA LIMITED PARTNERSHIP, Plaintiff v. HYUNDAI CONSTRUCTION, INC.; Ex Deco, Inc. a/k/a Sehwa/Exdeco, Inc., Sewha Decovision Korea; Sedeco Co., Ltd.; Hanwha Chemical Corporation; and Hanwha L & C Corporation, Defendants.

670 S.E.2d 290

CAMBRIDGE HOMES OF NORTH CAROLINA LIMITED PARTNERSHIP, Plaintiff v. HYUNDAI CONSTRUCTION, INC.; Ex Deco, Inc. a/k/a Sehwa/Exdeco, Inc., Sewha Decovision Korea; Sedeco Co., Ltd.; Hanwha Chemical Corporation; and Hanwha L & C Corporation, Defendants.

No. COA08-242.

Court of Appeals of North Carolina.

December 16, 2008.

Appeal by defendants from order entered 26 September 2007 by Judge J. Gentry Caudill in Mecklenburg County Superior Court. Heard in the Court of Appeals 10 September 2008.

Nexsen Pruet, PLLC by David A. Senter and Gregory T. Higgins, Greensboro, for plaintiff-appellee.

Nelson Mullins Riley & Scarborough, LLP by Tracy E. Tomlin and Joseph S. Dowdy, Charlotte, for defendants-appellants, Hanwha Chemical Corporation and Hanwha L & C Corporation.

CALABRIA, Judge.

Hanwha Chemical Corporation ("HCC") and Hanwha L & C Corporation ("HLCC") (collectively referred to as "defendants") appeal an order denying their motions to dismiss plaintiff's complaint for lack of personal jurisdiction. We reverse and remand.

In 2003 and 2004, Cambridge Homes of North Carolina Limited Partnership ("plaintiff") contracted with Hyundai Construction, Inc. ("Hyundai"), a North Carolina company, to provide and install vinyl siding for homes constructed by plaintiff in Mecklenburg and surrounding counties. Hyundai installed vinyl siding manufactured by a Korean company, Sedeco Co., Ltd. ("Sedeco"). Sedeco used chemicals provided by HLCC and HCC in manufacturing the vinyl siding it sold to Hyundai. HCC and HLCC are also Korean companies.

Plaintiff received complaints about the vinyl siding and reported the problems to Hyundai. Hyundai asked HLCC to travel to North Carolina to assist in correcting problems with the siding. In February of 2004, S.M. Lee of HLCC traveled to Charlotte, North Carolina and met with representatives of Hyundai and Sedeco. On 30 March 2004, Seong-Min Lee of "Hanwha General Chemicals" sent a memorandum analyzing the components in the siding for HLCC. Plaintiff alleges it incurred damages from repair and replacement of the siding.

On 28 March 2006, plaintiff filed a complaint against Hyundai, Ex Deco, Inc. a/k/a Sehwa/ExDeco, Inc. ("Ex Deco"), Sewha Decovision Korea, Sedeco, and HCC. Plaintiff asserted claims of breach of implied warranty of merchantability, breach of warranty of fitness for a particular purpose, and negligence against the Hanwha defendants.¹ Sedeco filed an answer to the complaint. Hyundai and Ex Deco filed a joint verified answer to the complaint.

HCC moved to dismiss the complaint for lack of personal jurisdiction. Plaintiff filed a motion to amend the complaint to add HLCC as a party. The trial court granted the motion and plaintiff amended its complaint to add HLCC as a party on 31 August 2006. In the amended complaint, plaintiff alleged defendants provided the chemicals used by Sedeco to manufacture the allegedly defective vinyl siding. Motions to dismiss plaintiff's amended complaint for lack of personal jurisdiction were filed by HCC on 3 October 2006 and HLCC on 4 December 2006. On 26 September 2007, the trial court denied defendants' motions to dismiss. From this order, defendants appeal.

I. Grounds for the Appeal

"The denial of a motion to dismiss for lack of jurisdiction is immediately appealable." Bruggeman v. Meditrust Acquisition Co., 138 N.C.App. 612, 614, 532 S.E.2d 215, 217 (2000) (citing N.C. Gen.Stat. § 1-277(b); Teachy v. Coble Dairies, Inc., 306 N.C. 324, 293 S.E.2d 182 (1982)).

II. Standard of Review

"The standard of 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." Replacements, Ltd. v. MidweSterling, 133 N.C.App. 139, 140-41, 515 S.E.2d 46, 48 (1999) (citation omitted).

Our review of the trial court's order also depends on the procedural posture of the challenge to personal jurisdiction:

Typically, the parties will present personal jurisdiction issues in one of three procedural postures: (1) the defendant makes a motion to dismiss without submitting any opposing evidence; (2) the defendant supports its motion to dismiss with affidavits, but the plaintiff does not file any opposing evidence; or (3) both the defendant and the plaintiff submit affidavits addressing the personal jurisdiction issues.

Banc of Am. Secs. LLC v. Evergreen Int'l Aviation, Inc., 169 N.C.App. 690, 693, 611 S.E.2d 179, 182 (2005).

Plaintiff argues the procedural posture in the instant case does not fit neatly into any of the categories, but is most similar to the second category. When HCC moved to dismiss the original complaint on 30 June 2006, it submitted an affidavit in support of the motion to dismiss. On 3 October 2006, HCC filed a motion to dismiss without any affidavits or supporting materials. On 4 December 2006, HLCC also filed a motion to dismiss without any supporting affidavits. On 18 May 2007, HLCC and HCC both filed affidavits in support of their motions to dismiss. The record also contains "Exhibits attached to Plaintiff's Brief in Opposition to Defendants' Motion to Dismiss." A hearing on the motions to dismiss was held on 29 May 2007. The trial court relied upon affidavits, discovery, and other materials presented in ruling on the motion.

When, as here, the defendant presents evidence in support of his motion, the "`allegations [in the complaint] can no longer be taken as true or controlling and plaintiff[ ] cannot rest on the allegations of the complaint.'" In that event, to determine whether there is sufficient evidence to establish personal jurisdiction, the court must consider: "(1) any allegations in the complaint that are not controverted by the defendant's affidavit and (2) all facts in the affidavit (which are uncontroverted because of the plaintiff's failure to offer evidence)."

Dailey v. Popma, ___ N.C.App. ___, ___, 662 S.E.2d 12, 16 (2008) (internal citations omitted).

III. Analysis

This Court applies a two-step analysis to determine whether a nonresident defendant is subject to personal jurisdiction in North Carolina. Tom Togs, Inc. v. Ben Elias Industries Corp., 318 N.C. 361, 364, 348 S.E.2d 782, 785 (1986); Skinner v. Preferred Credit, 361 N.C. 114, 119, 638 S.E.2d 203, 208 (2006); Cox v. Hozelock, Ltd., 105 N.C.App. 52, 53, 411 S.E.2d 640, 641-42 (1992). First, jurisdiction must be authorized by our "long-arm" statute, N.C. Gen.Stat. § 1-75.4. Tom Togs, Inc., 318 N.C. at 364, 348 S.E.2d at 785; Skinner, 361 N.C. at 119, 638 S.E.2d at 208; Cox, 105 N.C.App. at 53, 411 S.E.2d at 642. "Second, if the long-arm statute permits consideration of the action, exercise of jurisdiction must not violate the Due Process Clause of the Fourteenth Amendment to the U.S. Constitution." Skinner, 361 N.C. at 119, 638 S.E.2d at 208.

There are two types of long-arm jurisdiction. Tom Togs, 318 N.C. at 366, 348 S.E.2d at 786. "Specific jurisdiction exists when the cause of action arises from or is related to defendant's contacts with the forum." Skinner, 361 N.C. at 122, 638 S.E.2d at 210. The Court considers several factors in deciding whether specific jurisdiction exists: "(1) the extent to which the defendant purposely availed itself of the privilege of conducting activities in the State; (2) whether the plaintiff's claims arise out of those activities directed at the State; and (3) whether the exercise of personal jurisdiction would be constitutionally reasonable." Woods Intern., Inc. v. McRoy, 436 F.Supp.2d 744, 748-49 (M.D.N.C.2006) (internal quotation marks omitted). "General jurisdiction exists when the defendant's contacts with the state are not related to the cause of action but the defendant's activities in the forum are sufficiently continuous and systematic." Skinner, 361 N.C. at 122, 638 S.E.2d at 210 (internal quotation marks omitted). "The threshold level of minimum contacts sufficient to confer general jurisdiction is significantly higher than for specific jurisdiction." Woods Intern., Inc., 436 F.Supp.2d at 748 (quoting ALS Scan, Inc. v. Digital Service Consultants, Inc., 293 F.3d 707, 715 (4th Cir.2002) (internal brackets and quotation marks omitted)).

The long-arm statute "is a legislative attempt to allow the courts of this State to assert in personam jurisdiction to the full extent permitted by the Due Process Clause of the United States Constitution, and is accorded a liberal construction in favor of finding personal jurisdiction, subject only to due process limitations." Kaplan School Supply v. Henry Wurst, Inc., 56 N.C.App. 567, 570, 289 S.E.2d 607, 609 (1982) (citations omitted). "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, Inc. v. Stewart, 141 N.C.App. 668, 671, 541 S.E.2d 733, 736 (2001) (quotation and internal brackets omitted).

"In determining whether the exercise of personal jurisdiction comports with due process, the crucial inquiry 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." Id.

The factors to consider when determining whether defendant's activities are sufficient to establish minimum contacts are: (1) the quantity of the contacts; (2) the quality and nature of the contacts; (3) the source and connection of the cause of action to the contacts; (4) the interests of the forum state, and (5) the convenience to the parties.

Cooper v. Shealy, 140 N.C.App. 729, 734, 537 S.E.2d 854, 857-58 (2000) (citation and internal quotation marks omitted). "Minimum contacts do not arise ipso facto from actions of a defendant having an effect in the forum state." DeSoto Trail, Inc. v. Covington Diesel, Inc., 77 N.C.App....