Fran's Pecans, Inc. v. Greene

• Decision Date: 06 July 1999
• Docket Number: No. COA98-1053.,COA98-1053.
• Citation: 134 NC App. 110,516 S.E.2d 647
• Parties: FRAN'S PECANS, INC., Plaintiff, v. William A. GREENE and Centennial Foods, Inc., Defendants.
• Court: North Carolina Court of Appeals

516 S.E.2d 647

134 NC App. 110

FRAN'S PECANS, INC., Plaintiff, v. William A. GREENE and Centennial Foods, Inc., Defendants.

No. COA98-1053.

Court of Appeals of North Carolina.

July 6, 1999.

Haynsworth Baldwin Johnson & Greaves LLC, by Robert S. Phifer and Linda M. Fox, Charlotte, for defendant-appellant.

Robinson Bradshaw & Hinson, P.A., by Julian H. Wright, Jr., Charlotte, for plaintiff-appellee.

LEWIS, Judge.

Defendant Centennial Foods, Inc. appeals the trial court's denial of its motion to dismiss for lack of personal jurisdiction or, alternatively, to dismiss on the grounds of forum non conveniens. Defendant William A. Greene ("Greene") is not a party to this appeal. The evidence presented showed that plaintiff is a Georgia corporation with its principal place of business in Charlotte and an office in Harlem, Georgia. Plaintiff acquired space in an office building in Charlotte and established its headquarters there in September 1997. Defendant is a Georgia corporation with its headquarters in Augusta, Georgia. Both corporations sell gifts of specialty foods and do the majority of their business in the holiday buying season from September through the end of December. Prior to August 1997 Greene was the president and a director of plaintiff corporation. In this capacity he had access to information pertaining to the inner workings of plaintiff, specifically customer lists, pricing and profit margin information, customer history, and financial information about plaintiff's debts and profitability. Greene also established the wholesale prices each year by factoring in component costs, information not generally known in the industry.

In 1996 plaintiff attempted to acquire Eilenberger's Bakery, ("Eilenberger's") a commercial bakery based in Texas, for $1.6 million. Greene and Charles Calhoun began their own attempt to purchase both plaintiff and Eilenberger's in October 1996. Since plaintiff knew that Greene wished to acquire both it and Eilenberger's, plaintiff did not pursue the purchase of Eilenberger's further. The anticipated sale to Greene fell through. In May 1997 Greene learned that Eilenberger's was again for sale, this time for less than $1 million. Rather than inform plaintiff, Greene told Calhoun. Calhoun incorporated defendant in Georgia for the purpose of acquiring Eilenberger's. It did so on 15 August 1997. Greene resigned from plaintiff effective 1 September 1997 and began working for defendant on that same day. Greene's employment with defendant included responsibilities for sales and marketing of their product. Defendant mailed 1,937 of its catalogs to North Carolina residents, 239 of whom placed orders totaling $12,323.95 in sales. Plaintiff alleges these sales opportunities were the result of Greene's taking valuable information about trade secrets and proprietary information with him upon his termination of employment with plaintiff.

In its notice of appeal, defendant claims it is entitled to a dismissal under the common law doctrine of forum non conveniens. However, defendant failed to assign error to Conclusion of Law No. 5, in which the trial court stated, "Dismissing or staying this litigation under ... the common law doctrine of forum non conveniens would be inappropriate, as there is insufficient evidence to establish that a substantial injustice would result from Defendant Centennial litigating this case in North Carolina." The appellant must assign error to each conclusion it believes is not supported by the evidence. N.C.R.App. P. 10. Failure to do so constitutes an acceptance of the conclusion and a waiver of the right to challenge said conclusion as unsupported by the facts. Concrete Service Corp. v. Investors Group, Inc., 79 N.C.App. 678, 684, 340 S.E.2d 755, 760, cert. denied, 317 N.C. 333, 346 S.E.2d 137 (1986). Therefore, the denial of the motion to dismiss under forum non conveniens is affirmed.

Defendant also moved for a motion to dismiss for lack of personal jurisdiction. The test for establishing in personam personal jurisdiction over a foreign corporation is two-fold: first, "Whether North Carolina's `long-arm' statute permits courts in this jurisdiction to entertain the action;" and second, "whether exercise of this jurisdictional power comports with due process of law." ETR Corporation v. Wilson Welding Service, 96 N.C.App. 666, 668, 386 S.E.2d 766, 767 (1990). Defendant challenges both prongs of this test.

Defendant first challenges plaintiff's assertion of jurisdiction under our long-arm statute, G.S. Section 1-75.4(4)(a). The statute allows the exercise of personal jurisdiction

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 ...:

a. [s]olicitation or services activities were carried on within this State by or on behalf of the defendant....

N.C. Gen.Stat. § 1-75.4(4)(a) (1996). To exercise personal jurisdiction over a foreign corporation, the plaintiff must establish: 1) an action claiming injury to a North Carolina person or property; 2) that the alleged injury arose from activities by the defendant outside of North Carolina; and 3) that the defendant was engaging in solicitation or services within North Carolina "at or about the time of the injury." Id.

Defendant mistakenly argues that the statute demands plaintiff prove an actual injury to a person or property within the state. However, the statute requires only that plaintiff allege an injury. Vishay Intertechnology, Inc. v. Delta International Corp., 696 F.2d 1062, 1067 (4 th Cir.1982). Plaintiff alleges that defendant misappropriated trade secrets, interfered with prospective business relations and carried on unfair trade practices, thereby harming plaintiff's business. Intangible injuries like these are considered injuries under G.S. Section 1.75-4(4)(a). Munchak Corporation v. Riko Enterprises, Inc., 368 F.Supp. 1366, 1372 (M.D.N.C.1973). Specifically, a plaintiff's claim to loss of potential profits and damage to business reputation constitutes injury under G.S. Section 1-75.4(4)(a). Vishay, 696 F.2d 1062. Furthermore, a defendant's misuse of inside information amounts to an injury to a plaintiff. Hankins v. Somers, 39 N.C.App. 617, 621, 251 S.E.2d 640, 643, disc. rev. denied, 297 N.C. 300, 254 S.E.2d 920 (1979). These claimed injuries all occurred with the implementation of defendant's solicitation and sales to North Carolina customers in the fall of 1997. By this time plaintiff had relocated its headquarters to North Carolina and could then claim injury to its person or property in the state, thus fulfilling the statutory requirement.

Next, these local injuries were the result of activities by defendant outside of North Carolina. Defendant engaged in sales and solicitation activities with North Carolinians in the fall of 1997 via catalog distribution by mail.

Finally, under G.S. Section 1.75-4(4)(a), a defendant need only be carrying on solicitation or services with North Carolinians "at or about the time of the injury." Statutes used to establish personal jurisdiction are to be liberally construed in favor of establishing the existence of personal jurisdiction. Inspirational Network, Inc. v. Combs, 131 N.C.App. 231, 506 S.E.2d 754, 757 (1998). By its own admission defendant engaged in sales and solicitation activities with North Carolina residents during the fall of 1997. These activities contributed to plaintiff's alleged injury and are proximate enough in time to fulfill the statute's requirements. Therefore, we conclude that personal jurisdiction over defendant exists under G.S. Section 1.75-4(4)(a).

Defendant also challenges plai...