Richmar Development v. Midland Doherty Services

• Decision Date: 19 July 1989
• Docket Number: No. C-C-88-535-P.,C-C-88-535-P.
• Citation: 717 F. Supp. 1107
• Parties: RICHMAR DEVELOPMENT, INC., Plaintiff, v. MIDLAND DOHERTY SERVICES, LTD., Philip H. Nicely, WTC Finance Group, Inc., and Strongbow Security, Ltd., Defendants.
• Court: U.S. District Court — Western District of North Carolina

717 F. Supp. 1107

RICHMAR DEVELOPMENT, INC., Plaintiff, v. MIDLAND DOHERTY SERVICES, LTD., Philip H. Nicely, WTC Finance Group, Inc., and Strongbow Security, Ltd., Defendants.

No. C-C-88-535-P.

United States District Court, W.D. North Carolina, Charlotte Division.

July 19, 1989.

COPYRIGHT MATERIAL OMITTED

Hayden J. Silver, III, Moore & Van Allen, Charlotte, N.C., for plaintiff.

Jonathan E. Buchan and L.D. Simmons, II, Smith Helms Mulliss & Moore, Charlotte, N.C., for defendants.

ORDER

ROBERT D. POTTER, Chief Judge.

I. PRELIMINARY STATEMENT

THIS MATTER is before the Court on Defendant Midland Doherty Services, Ltd.'s Motion to Dismiss, filed February 13, 1989, pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. Defendant Midland Doherty Services, Ltd. ("Midland Doherty") asserts in its Motion to Dismiss that Richmar Development, Inc.'s claims against Midland Doherty should be dismissed because this Court lacks personal jurisdiction over Midland Doherty—a foreign corporation. Plaintiff opposes Defendant Midland Doherty's Motion to Dismiss and has requested a hearing.

Plaintiff and Defendant Midland Doherty, the sole remaining defendant,¹ have conducted discovery on the personal jurisdiction issue and have filed briefs, reply briefs, affidavits, and other discovery materials to support their respective positions on the motion now before this Court. The Parties have briefed the issues adequately, and, therefore, this Court is of the opinion that oral argument would not significantly aid this Court's decision-making process; a decision can be made by referring to the briefs and the affidavits, Fed.R. Civ.P. 43(e).²

As will be explained in more detail below, Midland Doherty's Motion to Dismiss will be denied because the forum state's statutory law provides a basis for the assertion of personal jurisdiction over Midland Doherty and because Midland Doherty has sufficient minimum contacts with the forum state making it fair, reasonable, and substantially just to require Midland Doherty to appear and defend in the forum state against Plaintiff's claims, which arose from Midland Doherty's contacts with the forum state.

II. QUESTIONS PRESENTED

The instant motion presents this Court with two questions:

(1) Does North Carolina's statutory law provide a basis for the assertion of personal jurisdiction over Defendant Midland Doherty?

(2) If North Carolina's statutory law does permit the assertion of personal jurisdiction over Defendant Midland Doherty, then does such assertion of personal jurisdiction meet the due process requirements of the federal constitution?

III. FACTS³

This case arises from Plaintiff's unsuccessful attempt to secure financing for Plaintiff's purchase of the First Union National Bank Building, the accompanying land, and an adjoining vacant lot—all located at or near 444 Seabreeze Boulevard, Daytona Beach, Florida (the "Florida Property").

Plaintiff Richmar Development, Inc. ("Richmar") is a North Carolina corporation that is primarily engaged in developing, and investing in, residential and commercial real estate. Richmar is based in Charlotte, North Carolina, and it is controlled by Richard G. Hoefling ("Hoefling") and Mark W. McGroarty ("McGroarty"). (McGroarty Aff. Exh. C).

Hoefling is the President of Plaintiff Richmar, and he acted in that capacity at all times relevant to the present case. McGroarty is the Secretary of Plaintiff Richmar, and he acted in that capacity since at least January 1988. (See McGroarty Aff. Exh. C ("In 1987, Mr. McGroarty became a 50% owner in Richmar Development, Inc.")). McGroarty is a Canadian citizen who—with his family—now resides in Charlotte, North Carolina; McGroarty moved to Charlotte in August 1987. (McGroarty Aff. at 1). Prior to moving to Charlotte, McGroarty spent a substantial amount of time in Charlotte establishing residential and commercial real estate developments in the Charlotte area. (McGroarty Aff. at 1).

Defendant Midland Doherty is a Canadian corporation that has its principal office and place of business in Toronto, Canada. (McKenna Aff. at 2; Plaintiff's Response to Request for Admissions of Defendant Midland Doherty at 1, para. 1 hereinafter Plaintiff's Admissions). Midland Doherty is a wholly owned subsidiary of Midland Doherty Ltd., which is owned by Midland Doherty Financial Corporation, a holding company whose shares are traded on the Toronto Stock Exchange. (McGroarty Aff. Exh. B). Since 1977, Midland Doherty has been engaged in business as a residential and commercial mortgage broker. (McKenna Aff. at 2). In its business as a mortgage broker, Midland Doherty typically locates for borrowers various potential sources of funds, including, but not limited to, commercial banks, lending institutions, trust companies, and life insurance companies. (McKenna Aff. at 2). Midland Doherty completes approximately seventeen hundred mortgage transactions each year. (McKenna Aff. at 5).

Scott Douglas McKenna ("McKenna") is a Vice-President of Midland Doherty, and he was employed in that capacity at all times relevant to the present case. McKenna's principal duty for Midland Doherty is analyzing real estate investment portfolios, including residential and commercial real estate financing projects. (McKenna Aff. at 2). McKenna has never travelled to North Carolina. (McKenna Aff. at 5).

Midland Doherty markets its services as a mortgage broker by relying primarily upon its reputation; Midland Doherty's formal advertising efforts appear to be directed solely at the Canadian market. (McKenna Aff. at 4).

Midland Doherty does not own any real or personal property located in North Carolina, and it does not have an office or any employees or agents in North Carolina. (McKenna Aff. at 3-4; Plaintiff's Admissions at 2-3, paras. 7, 8, 12). Midland Doherty does not have any existing contracts with any individuals or business entities in North Carolina. (McKenna Aff. at 4). In 1986, however, Midland Doherty arranged financing for a German client that owned real property in Charlotte, North Carolina; the German client initially solicited Midland Doherty's services, and Midland Doherty, subsequently, arranged the required financing through a Canadian insurance company licensed and authorized to conduct business in the United States. (McKenna Aff. at 5; Plaintiff's Supplemental Admissions at 3, para. 13).

Defendant Philip H. Nicely ("Nicely") is an individual citizen and resident of the Commonwealth of Virginia. Defendant WTC Finance Group, Inc. ("WTC Finance") is a corporation existing under the laws of a state other than North Carolina, and it has its principal office and place of business in Bethesda, Maryland. Defendant Strongbow Security, Ltd. ("Strongbow") is a corporation organized and existing under the laws of Ireland, and it has its principal office and place of business in Dublin, Ireland.

For the purposes of determining the personal jurisdiction issue now before this Court, McKenna and McGroarty are the principal characters. Prior to January 1988, McGroarty had known McKenna for several years. (McGroarty Aff. at 1). At some point, McKenna informed McGroarty that Midland Doherty had been involved in the financing of the Arnold Palmer Center located in Charlotte (the "Arnold Palmer Center"),⁴ and McKenna requested that McGroarty take a picture of the Arnold Palmer Center and forward it to him; McGroarty complied with this request. (McGroarty Aff. at 1). On or about February 25, 1986, McKenna sent to McGroarty, who was then living in Toronto, Canada, a letter on Midland Doherty's stationery, which states, in pertinent part, the following:

Firstly, let me say that it was indeed a pleasure having the opportunity to meet with both yourself and Herb and discuss your past achievements as well as your future endeavors in the construction/development field.

We hope that we afforded you both a little insight into Midland Doherty's Mortgage and Real Estate Divisions and how we may be of service to you in both the Canadian and U.S. markets. I trust we may be given the opportunity to prove ourselves effective allies.

With respect to the Arnold Palmer Center in Charlotte, we would very much appreciate taking you up on your kind offer of photographing the property at your leisure.

(McGroarty Aff. Exh. A (emphasis added)). Prior to February 25, 1986, McGroarty had told McKenna of McGroarty's real estate projects in North Carolina. (McGroarty Aff. at 2). Since February 25, 1986, McKenna stated to McGroarty on several occasions that Midland Doherty remained interested in doing business with McGroarty in North Carolina and asked that McGroarty contact McKenna regarding any business opportunities in North Carolina for Midland Doherty. (McGroarty Aff. at 2).

After McGroarty moved to Charlotte in August 1987, McKenna telephoned him to inquire about several real estate projects McGroarty was then pursuing. (McGroarty Aff. at 2). McKenna again told McGroarty that Midland Doherty wanted to do more business in North Carolina and that McGroarty should contact him if he needed McKenna's services as a mortgage broker. (McGroarty Aff. at 2). While in Charlotte, McGroarty received brochures and other promotional literature, which describe, among other things, Midland Doherty's mortgage services in both Canada and the United States.⁵ (McGroarty Aff. Exh. B) ("The Mortgage Department's specialists have arranged the sale and purchase of existing mortgages ... to institutional clients throughout Canada, Europe, Australia, and the United States. In addition to its activities within the secondary mortgage market, we arrange financing in the primary mortgage market through our subsidiaries, Midland Doherty Services Ltd. and Midland Doherty Capital Corp.").

In January 1988, Richmar was considering the purchase of several different office buildings, including the Florida Property. (Hoefling Aff. at 1; McGroarty Aff. at 2). In late January 1988, McGroarty...