Power Products and Services Co. v. Kozma
| Decision Date | 20 June 2008 |
| Docket Number | No. 4417.,4417. |
| Citation | 665 S.E.2d 660,379 S.C. 423 |
| Court | South Carolina Court of Appeals |
| Parties | POWER PRODUCTS AND SERVICES COMPANY, INC., Appellant, v. Robert A. KOZMA, Longdrive Partners, Ltd., Cheryl C. Ferguson, James V. Hobbs, Lakeland Engineering Corporation, Timothy H. Montgomery, individually and d/b/a River Technologies, LLC, Respondents. |
Richard C. Detwiler and Ian D. McVey, both of Columbia, for Appellant.
David J. Mills, of Georgetown; and Robert L. Widener, of Columbia, for Respondents.
Power Products and Services Company, Inc., (Power Products) appeals the trial court's grant of Respondents'1 motion to dismiss for lack of personal jurisdiction. We affirm.
Power Products is a Virginia corporation, formed in 1983, which moved its principal place of business to Georgetown, South Carolina in 1998. Power Products provides radiological control and decontamination equipment to the nuclear industry. The individual Respondents all had some form of working relationship with Power Products as employees and/or independent contractors, and had ceased their relationship with Power Products at the time this action was initiated. Subsequent to this termination of their working relationships, Kozma, Ferguson, Hobbs, and Montgomery formed an entity to distribute products in the nuclear power industry and in May 2004 submitted documents to the Virginia State Corporation Commission to form River Technologies, LLC. River Technologies resells products produced by a manufacturer named Norclean. These products are used for the removal of radiological and environmental waste. Power Products contends Kozma and Ferguson misappropriated trade secrets during their working relationship with Power Products and conspired with the other individual respondents to use the misappropriated trade secrets.
Power Products sued Respondents, alleging six causes of action: violation of the South Carolina Trade Secrets Act, breach of employee's duty of loyalty and fidelity, breach of employment agreement, breach of contract (specific to Hobbs), breach of the duty of good faith and fair dealing, and civil conspiracy. In its complaint, Power Products alleged: (1) Kozma resides in Georgetown County and was formerly employed by Power Products; (2) Longdrive exists under South Carolina laws, has a principal place of business in South Carolina, and is the alter-ego of Kozma; (3) Ferguson is a citizen of Virginia and committed the acts complained of while employed by Power Products in South Carolina; (4) Hobbs is a citizen of Maryland and was a former associate of Power Products, acting as an independent contractor; (5) Lakeland is a Maryland corporation and the alter-ego of Hobbs; (6) Montgomery is a Virginia citizen and was formerly employed by Power Products; (7) River technologies is a de facto partnership of one or more defendants; and (8) the complained of acts occurred in South Carolina. In particular, Power Products alleged that Kozma and Ferguson were terminated in or around July 2003 and, "on information and belief had already misappropriated all of the Trade Secrets of Power Products with a plan toward opening a competitive business."
Respondents moved to dismiss based on a lack of personal jurisdiction, asserting each were citizens or corporate citizens of a state other than South Carolina and there was an insufficient nexus from their actions to support jurisdiction in this state. Respondents submitted affidavits in support of their motion to dismiss. Ferguson's affidavit shows she is a citizen and resident of Virginia and was employed with Power Products from July 1992 through July 2003. She worked solely in Virginia from 1992 until 1999, at which time she began to commute to South Carolina to work during the week, but maintained her residency in Virginia, continued to perform some of her work duties from her home in Virginia, and filed for unemployment in Virginia following her termination from Power Products in July 2003. Kozma filed an affidavit averring that he is a citizen and resident of Virginia and has been since September 2003. From November 1993 to March 1994 and from November 2001 to September 2003, Kozma performed services for Power Products in his capacity as an employee of Longdrive, a New York corporation that served as a marketing and sales consultant for Power Products. Hobbs' affidavit indicates he is a citizen and resident of Maryland and has never been a resident of South Carolina. He was associated with Power Products as an independent contractor through Lakeland, a Maryland corporation that performed certain engineering services for Power Products. Lakeland last performed services for Power Products in May 2003. Finally, Montgomery's affidavit indicates he is a citizen and resident of Virginia, never having resided in South Carolina. He was formerly employed by Power Products in a sales capacity from 1986 to 1994, during which time he was always based in Virginia. South Carolina was never included in his sales territory. Power Products terminated his employment in 1994 after Montgomery suffered a back injury, and he has had no contact with Power Products since that time.
Power Products maintained jurisdiction was proper in South Carolina because (1) many of Respondents' tortious actions occurred while Respondents were in South Carolina and (2) the respondents have minimum contacts with South Carolina because they were current or former residents of this state, they committed numerous torts in this state, and they are using the misappropriated trade secrets to sell or attempt to sell their products in this state. Power Products submitted the affidavits of Al Burns and Jeffrey R. Rogers to support its contention Respondents were misappropriating Power Products' trade secrets and conducting business in South Carolina. Power Products further included within its filings a printout of River Technologies' website, to show River Technologies was currently doing business or attempting to do business in South Carolina. Lastly, Power Products submitted a decree of divorce showing Kozma had lived with his wife in South Carolina until their separation in July 2003.
The trial court granted Respondents' motion to dismiss for lack of personal jurisdiction. The court found "all Defendants are out-of-state residents and have so resided at all times pertinent to this litigation" and the "entities named as Defendants are likewise corporate citizens of other states." Further, the court found Power Products is a corporation organized and registered in Virginia. Additionally, the trial court stated:
[Power Products] argues that if [Respondents] are competing in the nuclear industry, they must be doing so using trade secrets taken from [Power Products]. However, this Court finds such conclusory statements an insufficient basis for the assertion of in personam jurisdiction. The record establishes that fewer than seventy-two (72) nuclear power facilities exist in the United States, and the existence of these facilities (and their purchasing departments) are in no way "secret" or "confidential." The record further reflects that there are presently four or five businesses which compete with [Power Products] in the nuclear market. The Court thus rejects [Power Products'] argument that all nuclear industry sites are "its customers" and any contact with them constitutes evidence that these [Respondents] misappropriated trade secrets. Moreover, [Power Products] did not submit any evidence that the "off the shelf" products re-sold by the [Respondents] were products developed pursuant to anything "taken" from [Power Products].
The trial court held Power Products' "conclusory allegations fail to establish the contacts necessary to invoke personal jurisdiction over these [Respondents] either generally or specifically." After analyzing the matter under South Carolina's Long-Arm Statute and under due process requirements, the court concluded Power Products failed to establish the necessary requisites to confer jurisdiction pursuant to both this state's Long-Arm Statute and the minimum contacts required to afford due process. This appeal follows.
Personal jurisdiction over a nonresident defendant is a question to be resolved upon the facts of each particular case. Cockrell v. Hillerich & Bradsby Co., 363 S.C. 485, 491, 611 S.E.2d 505, 508 (2005). "The decision of the trial court should be affirmed unless unsupported by the evidence or influenced by error of law." Id. The party seeking to invoke personal jurisdiction over a non-resident defendant by using South Carolina's long-arm statute bears the burden of establishing jurisdiction. S. Plastics Co. v. S. Commerce Bank, 310 S.C. 256, 259, 423 S.E.2d 128, 130 (1992). "At the pretrial stage, the burden of proving personal jurisdiction over a nonresident is met by a prima facie showing of jurisdiction either in the complaint or in affidavits." Moosally v. W.W. Norton & Co., 358 S.C. 320, 328, 594 S.E.2d 878, 882 (Ct.App.2004). When a nonresident defendant attacks the allegations of a complaint based on jurisdiction, the court is not confined to the allegations of the complaint but may resort to affidavits or other evidence to determine jurisdiction. Coggeshall v. Reprod. Endocrine Assocs. of Charlotte, 376 S.C. 12, 16, 655 S.E.2d 476, 478 (2007).
Power Products maintains the trial court erred in finding it lacked personal jurisdiction over the Respondents. We disagree.
Traditionally, our courts have employed a two-step analysis in determining whether it is proper to exercise personal jurisdiction over a nonresident defendant. S. Plastics Co. v. S. Commerce Bank, 310 S.C. 256, 423 S.E.2d 128 (1992). First, the trial court must determine that the South Carolina long-arm statute applies. Second, the trial court must determine that the nonresident's contacts...
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