ITG Brands, LLC v. Funders Link, LLC

• Citation: 2022 NCCOA 454
• Decision Date: 05 July 2022
• Docket Number: COA22-32
• Parties: ITG BRANDS, LLC, Plaintiff, v. FUNDERS LINK, LLC and WORLD GLOBAL CAPITAL, LLC, Defendants. FUNDERS LINK, LLC, v. ZOOM INSIGHTS INC. and TIMOTHY MATTHEWS, Third Party Defendants
• Court: Court of Appeal of North Carolina (US)

2022-NCCOA-454

ITG BRANDS, LLC, Plaintiff, v. FUNDERS LINK, LLC and WORLD GLOBAL CAPITAL, LLC, Defendants.

FUNDERS LINK, LLC, v. ZOOM INSIGHTS INC. and TIMOTHY MATTHEWS, Third Party Defendants

No. COA22-32

Court of Appeals of North Carolina

July 5, 2022

Heard in the Court of Appeals 8 June 2022.

Appeal by defendant from order entered 1 June 2021 by Judge William A. Wood in Guilford County Superior Court,, No. 20 CVS 7312

Brooks, Pierce, McLendon, Humphrey &Leonard, LLP by Clint S. Morse and James M. Lowdermilk for plaintiff-appellee.

Smith, Debnam, Narron, Drake, Saintsing &Myers, LLP by Byron L. Saintsing and Joseph Alan Davies for defendant-appellant.

TYSON JUDGE.

¶ 1 Funders Link, LLC ("Funders Link") appeals from order entered denying their motion to dismiss for lack of personal jurisdiction. We affirm.

I. Background

¶ 2 ITG Brands, LLC ("Plaintiff") is a limited liability company chartered in Texas, with a principal place of business situate in North Carolina. Plaintiff manufactures tobacco products.

¶ 3 Funders Link is a limited liability company chartered in and with a principal place of business situate in Florida. World Global Capital, LLC is a limited liability company chartered in and with a principal place of business situate in New York. Both Funders Link and World Global are finance companies.

¶ 4 In 2018, Plaintiff entered into a contract with Zoom Insights, Inc. ("Zoom") for it to provide marketing services. The contracts were negotiated and entered into in North Carolina. Zoom was both chartered and headquartered in North Carolina. ITG prepaid approximately $4 million to Zoom as consideration for the contracts. Zoom failed to perform the marketing services for Plaintiff as contracted and collapsed in July 2019. Plaintiff sued Zoom on 16 August 2019 to recover damages for breach of contract and obtained a judgment for $3.3 million.

¶ 5 During the litigation, Plaintiff gained access to Zoom's bank records, which showed financial distress. Zoom was heavily leveraged and resorted to merchant cash advances to meet its ongoing finance requirements. After servicing debt, Zoom's cash flow was virtually non-existent.

¶ 6 In August 2018, Zoom entered into a financing agreement with Kabbage, Inc. to provide funding to Zoom in exchange for its pledge and a security interest in Zoom's accounts receivable. Also during August 2018, World Global entered into an agreement to provide cash advances to Zoom. Zoom assigned its receipts to World Global. Between August 2018 and May 2019, World Global provided $547,000.00 in loans to Zoom. Zoom paid World Global approximately $957,000.00.

¶ 7 In December 2018, Funders Link entered into an agreement with Zoom to provide cash advances. As a part of the agreement, Zoom also assigned its receipts to Funders Link. HOP Capital, an entity alleged to be owned by Funders Link, filed a UCC-1 financing statement in North Carolina to perfect its security interest in Zoom's collateral and loaned $1,715,000.00 to Zoom.

¶ 8 Zoom agreed to pay "10% of daily deposits equal to $17,000 a day until fully paid." Between 19 February 2019 and July 2019, Zoom paid HOP Capital almost $1 million. On 1 August 2019, HOP Capital asserted Zoom still owed it $1.9 million.

¶ 9 Funders Link asserts it does not contract with merchants and only collects payments from merchants. Funderz.net, LLC ("Funderz.net") contracts to purchase Funders Link's accounts receivable. Funderz.net is a limited liability company chartered in New York with principal places of business located in both New York and Florida. Funders Link asserts they are the servicing agent for Funderz.net.

¶ 10 After Plaintiff obtained the $3.3 million judgment against Zoom, it filed a complaint against Defendants on 25 September 2020, for violating North Carolina's Unfair and Deceptive Trade Practices Act and the Uniform Voidable Transactions Act. See N.C. Gen. Stat. §§ 39-23.4 et seq, 75-1.1 et seq (2021). Funders Link filed an answer, motion to dismiss, affirmative defenses, and a third-party complaint. Following a hearing, the trial court denied Funders Link's motion to dismiss by order entered 1 June 2021. Funders Link appeals.

II. Jurisdiction A. Interlocutory Appeal

¶ 11 Funders Link correctly concedes this appeal is interlocutory, but asserts its substantial rights will be impacted without immediate review. See N.C. Gen. Stat. § 7A-27(b)(3)(a) (2021). "Generally, there is no right of immediate appeal from interlocutory orders and judgments." Goldston v. American Motors Corp., 326 N.C. 723, 725, 392 S.E.2d 735, 736 (1990).

¶ 12 Our Supreme Court has held:

A final judgment is one which disposes of the cause as to all the parties, leaving nothing to be judicially determined between them in the trial court. An interlocutory order is one made during the pendency of an action, which does not dispose of the case, but leaves it for further action by the trial court in order to settle and determine the entire controversy.

Veazey v. City of Durham, 231 N.C. 357, 361-62, 57 S.E.2d 377, 381 (1950) (citations omitted).

¶ 13 "This general prohibition against immediate [interlocutory] appeal exists because [t]here is no more effective way to procrastinate the administration of justice than that of bringing cases to an appellate court piecemeal through the medium of successive appeals from intermediate orders." Harris v. Matthews, 361 N.C. 265, 269, 643 S.E.2d 566, 568 (2007) (citations and internal quotations omitted).

B. Lack of Personal Jurisdiction.

¶ 14 Our General Statutes recognize a limited right to immediate appeal from an interlocutory order denying a motion to dismiss for lack of personal jurisdiction. See N.C. Gen. Stat. § 1-277(b) (2021) ("Any interested party shall have the right of immediate appeal from an adverse ruling as to the jurisdiction of the court over the person or property of the defendant[.]").

¶ 15 The denial of a "motion[] to dismiss for lack of personal jurisdiction affect[s] a substantial right and [is] immediately appealable." A.R. Haire, Inc. v. St. Denis, 176 N.C.App. 255, 257-58, 625 S.E.2d 894, 898 (2006) (citations omitted). This exception is narrow: "the right of immediate appeal of an adverse ruling as to jurisdiction over the person, under [ N.C. Gen. Stat. § 1-277(b)], is limited to rulings on 'minimum contacts' questions, the subject matter of Rule 12(b)(2)." Love v. Moore, 305 N.C. 575, 581, 291 S.E.2d 141, 146 (1982).

III. Issue

¶ 16 Funders Link argues the trial court erred in denying their motion to dismiss for lack of personal jurisdiction.

IV. Rule 12(b)(2) Motion

¶ 17 North Carolina applies a two-step analysis to determine whether a non resident defendant is subject to personal jurisdiction in North Carolina: "First, jurisdiction must be authorized by our 'long-arm' statute, N.C. Gen. Stat. § 1-75.4. 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." Cambridge Homes of N.C. Ltd. P'ship v. Hyundai Constr., Inc., 194 N.C.App. 407, 411, 670 S.E.2d 290, 295 (2008) (citations and internal quotation marks omitted).

A. Standard of Review

¶ 18 "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[.]" Bell v. Mozley, 216 N.C.App. 540, 543, 716 S.E.2d 868, 871 (2011) (citations and quotation marks omitted). "When jurisdiction is challenged, plaintiff has the burden of proving that jurisdiction exists." Stetser v. TAP Pharm. Prods., Inc., 162 N.C.App. 518, 520, 591 S.E.2d 572, 574 (2004) (citation omitted).

¶ 19 "[I]t is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 85 L.Ed.2d 528, 542 (1985) (citation omitted).

¶ 20 "We review de novo the issue of whether the trial court's findings of fact support its conclusion of law that the court has personal jurisdiction over a defendant." Bell, 216 N.C.App. at 543, 716 S.E.2d at 871 (citation omitted).

B. Competent Evidence

¶ 21 Funders Link argues Plaintiff's unverified allegations are not competent evidence and should not have been considered by the trial court. Funderz.net, Plaintiff and Funders Link submitted dueling affidavits. The trial court ruled upon the motion based on the affidavits presented by the parties.

¶ 22 "[W]hen a motion is based on facts not appearing of record, the court may hear the matter on affidavits presented by the respective parties, but the court may direct that the matter be heard wholly or partly on oral testimony or depositions." N.C. Gen. Stat. § 1A-1, Rule 43(e) (2021). In this instance, "the trial judge must determine the weight and sufficiency of the evidence [presented in the affidavits as] much as a juror." Fungaroli v. Fungaroli, 51 N.C.App. 363, 367, 276 S.E.2d 521, 524 (1981).

¶ 23 The trial court did not make findings of fact in either the oral rendition or the filed order. When the record contains no findings of fact, "it is presumed . . . that the court on proper evidence found facts to support its judgment." Id. (citation and internal quotation marks omitted).

¶ 24 After reviewing the affidavits, the trial court decided to accept Plaintiff's contentions, as contained in the affidavits. See id. On appeal, this Court is not "free to revisit questions of credibility or weight that have already been decided by the trial court." Banc of Am. Sec. LLC v. Evergreen Int'l Aviation, Inc., 169 N.C.App....