Marion v. Long

• Decision Date: 05 February 1985
• Docket Number: No. 8422SC540,8422SC540
• Parties: Joseph S. MARION v. Robert R. LONG, Import Performance Centre, Ltd. and William Ferretti d/b/a Thompson Industries.
• Court: North Carolina Court of Appeals

Page 300

325 S.E.2d 300

72 N.C.App. 585

Joseph S. MARION v. Robert R. LONG, Import Performance Centre, Ltd. and William

Ferretti d/b/a Thompson Industries.

No. 8422SC540.

Court of Appeals of North Carolina.

Feb. 5, 1985.

Henry P. Van Hoy, II, Mocksville, for plaintiff.

Brock & McClamrock by Grady L. McClamrock, Jr., Mocksville, for defendants.

WELLS, Judge.

To determine if foreign defendants may be subjected to in personam jurisdiction in this state, we apply a two-pronged test. First, we determine whether North Carolina jurisdictional statutes allow our courts to entertain the action. Second, we determine whether our courts can constitutionally exercise such jurisdiction consistent with due process of law. See Dillon v. Funding Corp., 291 N.C. 674, 231 S.E.2d 629 (1977); Sola Basic Industries v. Parke County, 70 N.C.App. 737, 321 S.E.2d 28 (1984).

Statutory jurisdiction arises under N.C.Gen.Stat. § 1-75.4 (1983), the North Carolina "long-arm" statute, which is a legislative attempt to assert in personam jurisdiction to the full extent permitted by the United States Constitution. Dillon v. Funding Corp., supra. The statute should receive liberal construction, in favor of finding jurisdiction. Leasing Corp. v. Equity Associates, 36 N.C.App. 713, 245 S.E.2d 229 (1978). The burden is on plaintiff to establish prima facie that one of the statutory grounds applies. See Public Relations, Inc. v. Enterprises, Inc., 36 N.C.App. 673, 245 S.E.2d 782 (1978); Bryson v. Northlake Hilton, 407 F.Supp. 73 (M.D.N.C.1976). Jurisdiction here lies under G.S. § 1-75.4(4):

Local Injury; Foreign Act.--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:

a. Solicitation or services activities were carried on within this State by or on behalf of the defendant; ....

The Bentley, in North Carolina and property of the North Carolina plaintiff, allegedly was damaged by the wrongful acts of the Georgia defendants in removing and retaining certain parts. Defendants admitted coming to North Carolina and discussing the repairs and then loading and transporting the car. Construing the statute liberally, we conclude that the statutory time and place requirements were met and that defendants carried on "service activities" in North Carolina. Accordingly, we hold that there were statutory grounds for exercise of jurisdiction.

We do not agree with the trial court that such jurisdiction could constitutionally be exercised in this case. The constitutional question requires application of the familiar "minimum contacts" test. International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). The existence of minimum contacts cannot be ascertained by mechanical rules, but rather by consideration of the facts of each case in light of traditional notions of fair play and justice. Id.; Dillon v. Funding Corp., supra. The factors to be considered are (1) quantity of the contacts, (2) nature and quality of the contacts, (3) the source and connection of the cause of action to the contacts, (4) the interest of the forum state, and (5) convenience to the parties. Sola Basic Industries, Inc. v. Parke County Rural Electric Membership Corp., supra; see also United Advertising Agency, Inc. v. Robb, 391 F.Supp. 626 (M.D.N.C.1975); Annot. 62 L.Ed.2d 853 (1981).

The existence of minimum contacts in this case can depend on only two contacts: (1) the advertisement placed in a national car collectors' magazine by Ferretti, and (2) defendants' trip to North Carolina and the alleged closing of the contract here. This court had held that jurisdiction cannot constitutionally rest solely on placement of advertisements in national magazines. 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). Due process requires more. ¹ In Hankins, it was satisfied by defendants' independent marketing program conducted in North Carolina over a period of three years. See also Lane v. WSM, Inc., 575 F.Supp. 1246 (W.D.N.C.1983) (national magazine advertising and direct mail campaigns in North Carolina alone insufficient; but with continuous broadcasts from Tennessee soliciting customers minimum contacts existed); Southern Case, Inc. v. Mgmt. Recruiters Intern., 544 F.Supp. 403 (E.D.N.C.1982) (advertising, together with ongoing franchise contracts, visits by representatives, training, and royalty collection sufficient); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980) (advertising only one of several factors). The advertisement alone thus did not constitute sufficient minimum contacts to support jurisdiction. Plaintiff has not shown any broader solicitation campaign which might support a different ruling.

The trip to North Carolina by defendants came after plaintiff had contacted them in Georgia. While the time and place of formation of the contract is disputed, the uncontradicted record before us shows (1) that it was an oral contract, (2) that it did not specify what law, if any, applied, and (3) that the services contracted for, repair of the Bentley, were to be performed exclusively in Georgia. ² Defendants' affidavits show that their places of business lie exclusively in Georgia. Applying the factors we outlined above, both the quantity and quality of these contacts are minimal indeed. Had defendants not agreed to trailer the Bentley to Georgia, a service entirely incidental to the purpose of the contract, nothing in the record suggests that they would have ever come to North Carolina for any business purpose. On the other hand, the cause of action did arise out of this one contact. The interests of the two states as a forum appear equally balanced. The convenience factor suggests Georgia may be the preferable forum, since (1) the witnesses on the contract performance issue (the actual work done on the Bentley) will more probably be located there, (2) defendants contend, and plaintiff does not deny, that plaintiff has employees in Georgia who visited defendants before the contract was entered into, and (3) the record reflects that both sides have Georgia as well as North Carolina counsel. Based on our evaluation of these factors, in particular the isolated nature of defendants' trip to North Carolina, we conclude that it would be inconsistent with due process of law for North Carolina courts to exercise personal jurisdiction over these defendants in this case based on this contract and the associated visit.

While we are aware that jurisdiction may constitutionally be based on a single contract, McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957); Dillon v. Funding Corp., supra, the single-contract cases finding sufficient contact have, unlike this one, involved other factors beyond simple formation of a contract. These include great disparity in litigation resources, McGee v. International Life Ins. Co., supra; lack of a better forum for plaintiff under circumstances where it would be inequitable to force suit in defendants' home state, Dillon v. Funding Corp., supra; express contract provisions that the law of the forum state would apply, Harrelson Rubber Co. v. Dixie Tire and Fuels, 62 N.C.App. 450, 302 S.E.2d 919 (1983); a longstanding business relationship, Leasing Corp. v. Equity Associates, supra; or substantial other business in North Carolina, Fiber Industries v. Coronet Industries, 59 N.C.App. 677, 298 S.E.2d 76 (1982). None of these factors appears here. Rather this case more closely resembles Phoenix America Corp. v. Brissey, 46 N.C.App. 527, 265 S.E.2d 476 (1980), in which all acts related to the contract, with one exception, occurred outside North Carolina; this court held...