Jaeger v. APPLIED ANALYTICAL INDUSTRIES

• Decision Date: 15 July 2003
• Docket Number: No. COA02-877.,COA02-877.
• Citation: 159 NC App. 167,582 S.E.2d 640
• Court: North Carolina Court of Appeals
• Parties: Halvor JAEGER and Astrid Jaeger, Plaintiffs-Appellees, v. APPLIED ANALYTICAL INDUSTRIES DEUTSCHLAND GMBH and Frederick Sancilio, Defendants-Appellants.

582 S.E.2d 640

159 NC App. 167

Halvor JAEGER and Astrid Jaeger, Plaintiffs-Appellees, v. APPLIED ANALYTICAL INDUSTRIES DEUTSCHLAND GMBH and Frederick Sancilio, Defendants-Appellants.

No. COA02-877.

Court of Appeals of North Carolina.

July 15, 2003.

Daniel Lee Brawley and Barbara Allen Samples, Wilmington, for plaintiffs-appellees.

Robinson, Bradshaw & Hinson, P.A. by David C. Wright, III and Joshua F.P. Long, Charlotte, for defendants-appellants.

McGEE, Judge.

Halvor Jaeger and Astrid Jaeger (plaintiffs) filed an amended complaint against Applied Analytical Industries Deutschland GMBH (AAID) and Frederick Sancilio (Sancilio), collectively referred to as defendants, on 10 April 2001. Plaintiffs sought an order from the trial court instructing defendants to release certain funds to plaintiffs that were being held pursuant to an escrow agreement. AAID filed a motion to dismiss dated 11 June 2001, contending among other things, that the trial court lacked personal jurisdiction over AAID. AAID's motion alternatively asked the trial court to stay the action pursuant to N.C. Gen.Stat. § 1-75.12. Sancilio filed a motion to dismiss dated 11 June 2001 for lack of proper venue and failure to state a claim or, alternatively, to stay the action pursuant to N.C. Gen.Stat. § 1-75.12. The parties subsequently conducted discovery on the jurisdictional issues relating to AAID's motion to dismiss. Plaintiffs filed a motion to compel discovery on 15 October 2001.

A hearing was held by the trial court on 6 February 2002. The trial court entered an order on 7 February 2002 that found AAID was subject to personal jurisdiction in North Carolina and that the action should not be stayed. Defendants appeal.

The evidence before the trial court tended to show that plaintiffs are citizens and residents of Canada. Sancilio stated in his affidavit that AAID is a limited liability company formed under German law and registered in the District Court, Memmingen, Germany. Sancilio is the managing director of AAID and has an office located in Wilmington, North Carolina.

Plaintiffs and the corporate predecessor to AAID were part of a business transaction (the purchase agreement) in December 1996, that included the sale of a company in which plaintiffs owned a partnership interest. Due to a dispute plaintiffs had with the Finanzamt Neu-Ulm, a German tax collecting agency, part of the sale proceeds payable to plaintiffs was held pursuant to an escrow agreement dated 1 February 1997. The Canadian dollar equivalent of DM 505,000 was placed in escrow in Canada pursuant to the escrow agreement between plaintiffs and AAID. Under the terms of the escrow agreement, plaintiffs are entitled to receive the escrowed funds after the resolution of the tax issue with the Finanzamt Neu-Ulm. Plaintiffs stated that they attempted to contact defendants for more than a year to request the release of the funds, but defendants did not respond.

Sancilio stated in his affidavit and deposition that AAID is a wholly-owned subsidiary of aaiPharma, Inc, which is headquartered in Wilmington, North Carolina. Sancilio is the chairman of the board and the chief executive officer of aaiPharma. Sancilio is also the managing director of AAID and signs documents on its behalf. He testified that his personal and business addresses were in Wilmington, North Carolina.

AAID is a holding company which owns one hundred percent of AAI Applied Analytical Industries Deutschland Verwaltungsgesellschaft mbH and AAI Applied Analytical Industries Deutschland GmbH & Co., KG. Sancilio stated in his deposition that AAID did not own any other assets. Sancilio stated in his affidavit that AAID's principal place of business is in Germany and AAID is not registered or required to register to do business in North Carolina. Additionally, he stated AAID has never owned or leased property in North Carolina, paid income or property taxes in North Carolina, filed a legal action in North Carolina, advertised, sold goods, or performed services within North Carolina. Sancilio testified that AAID has a revolving line of credit with Bank of America, but otherwise has never had a contract with a North Carolina company. He stated AAID has also served as a guarantor for a loan obtained by Applied Analytical Industries, Inc. and in the loan agreement it submitted to the jurisdiction and venue of the state and federal courts of North Carolina, agreeing that the bank had the option to enforce its rights under the loan agreement in the North Carolina courts.

Sancilio stated that he signed the purchase agreement on behalf of AAID's predecessor in Wilmington, North Carolina. Sancilio also testified that Forrest Waldon signed the escrow agreement on behalf of AAID and was serving as managing director of AAID and general counsel to aaiPharma at the time. The office of the general counsel is located in Wilmington, North Carolina. The escrow agreement between plaintiffs and AAID states that "all notices and other communications under the escrow agreement when given to AAID should be provided in care of Applied Analytical Industries, Attention: General Counsel, 5051 New Centre Drive, Wilmington, North Carolina 28403, U.S.A."

Albert Cavagnaro (Cavagnaro), associate counsel for aaiPharma, testified that he was assigned to coordinate the outside legal counsel in this case. Cavagnaro also was involved in the negotiation of the purchase agreement. Cavagnaro stated that AAID had no employees and that Sancilio was its only managing director. He testified that all notices and communications regarding the escrow agreement were to be sent to AAID in Wilmington, North Carolina. The letterhead of AAID contains a Wilmington telephone number and fax number. Cavagnaro also testified that Forrest Waldon executed the escrow agreement on behalf of AAID and was involved in negotiating various elements of the agreement with plaintiffs.

Defendants argue the trial court erred in denying AAID's motion to dismiss for lack of personal jurisdiction because the North Carolina long-arm statute does not permit the exercise of personal jurisdiction over AAID. Defendants contend plaintiffs did not meet their burden of proof in that they failed to sufficiently allege facts in their complaint that allow the inference of personal jurisdiction over defendants. Defendants also argue the trial court erred in denying AAID's motion to dismiss because AAID lacked sufficient minimum contacts with North Carolina to satisfy due process in the exercise of personal jurisdiction.

Whether the courts of this State may exercise personal jurisdiction over a nonresident defendant involves a two-prong analysis: "(1) Does a statutory basis for personal jurisdiction exist, and (2) If so, does the exercise of this jurisdiction violate constitutional due process?" The assertion of personal jurisdiction over a defendant comports with due process if defendant is found to have sufficient minimum contacts with the forum state to confer jurisdiction.

Golds v. Central Express Inc., 142 N.C.App. 664, 665-66, 544 S.E.2d 23, 25, disc. review denied, 353 N.C. 725, 550 S.E.2d 775 (2001) (quoting J.M. Thompson Co. v. Doral Mfg. Co., 72 N.C.App. 419, 424, 324 S.E.2d 909, 913, cert. denied, 313 N.C. 602, 330 S.E.2d 611 (1985)).

A plaintiff bears the burden of establishing that some ground exists for the exercise of personal jurisdiction over a defendant. Golds, 142 N.C.App. at 666,544 S.E.2d at 26. The trial court may conduct an evidentiary hearing including testimony or depositions, but the plaintiff maintains the ultimate burden of proving personal jurisdiction by a preponderance of the evidence at the evidentiary hearing or at trial. Bruggeman v. Meditrust Acquisition Co., 138 N.C.App. 612, 615, 532 S.E.2d 215, 217,disc. review denied, 353 N.C. 261, 546 S.E.2d 90 (2000). The trial court is not required to make findings of fact when ruling on a motion to dismiss, but "it is presumed that the trial court found facts sufficient to support its ruling. If these presumed factual findings are supported by competent evidence, they are conclusive on appeal." Filmar Racing, Inc. v. Stewart, 141 N.C.App. 668, 672, 541 S.E.2d 733, 737 (2001) (citation omitted).

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