Tejal Vyas, LLC v. CARRIAGE PARK, LP

• Citation: 166 NC App. 34,600 S.E.2d 881
• Decision Date: 07 September 2004
• Docket Number: No. COA03-1144.,COA03-1144.
• Court: Court of Appeal of North Carolina (US)
• Parties: TEJAL VYAS, LLC and Dr. P.K. Vyas, Plaintiffs, v. CARRIAGE PARK LIMITED PARTNERSHIP, Vilas Development Corp., Ganesan Isvabharathy, and Stonesan Visvabharathy, Defendants.

600 S.E.2d 881

166 NC App. 34

TEJAL VYAS, LLC and Dr. P.K. Vyas, Plaintiffs, v. CARRIAGE PARK LIMITED PARTNERSHIP, Vilas Development Corp., Ganesan Isvabharathy, and Stonesan Visvabharathy, Defendants.

No. COA03-1144.

Court of Appeals of North Carolina.

September 7, 2004.

Herring McBennett Mills & Finkelstein, PLLC, by Mark A. Finkelstein, Raleigh, for plaintiffs-appellants.

Hafer & Caldwell, P.A., by Colleen Kochanek, Raleigh, for defendants-appellees.

TYSON, Judge.

Tejal Vyas, LLC and Dr. P.K. Vyas ("Dr. Vyas") (collectively, "plaintiffs") appeal the trial court's order granting the motions to dismiss for lack of personal jurisdiction filed by Carriage Park Limited Partnership ("Carriage Park"), Vilas Development Corp., Ganesan Visvabharathy ("Visvabharathy"), and Stonesan Visvabharathy (collectively, "defendants"). We affirm.

I. Background

In 1994, Visvabharathy made a presentation concerning financial investments at a conference for physicians practicing in the southeast region of the United States. Dr. Vyas attended this conference held in Georgia. During the presentation, Visvabharathy discussed real estate investments, such as Carriage Park, and informed the conference attendees of the opportunity to invest in Carriage Park through Vilas Development Corp., the general partner of Carriage Park. Visvabharathy provided attendees with contact information for Vilas Development Corp.

After the presentation, Dr. Vyas approached Visvabharathy to further discuss investment opportunities. Visvabharathy "described the Carriage Park investment to him in general terms." Plaintiffs contacted defendants in Illinois seeking to invest in Carriage Park and invested $100,000.00. The investment was facilitated by plaintiffs' attorneys, both of whom are licensed North Carolina attorneys. A Subscription Agreement was signed by plaintiffs on 18 July 1994 and sent to defendants in Illinois. Plaintiffs and their attorneys communicated with Visvabharathy via telephone and by mail through 2000.

On 6 August 2002, plaintiffs instituted this action against defendants alleging breach of fiduciary duty, breach of contract, and misrepresentation. On 11 October 2002 and 1 February 2003, defendants filed motions to dismiss plaintiffs' complaint pursuant to N.C.R. Civ. P. 12(b)(2) for lack of personal jurisdiction over defendants. Following a hearing, the trial court issued an order on 9 May 2003 containing the following findings of fact:

1. The plaintiff, Tejal Vyas, is a North Carolina Limited Liability Company and the plaintiff, Dr. P.K. Vyas, is an individual citizen and resident of Wake County, North Carolina.

2. Carriage Park Limited Partnership is an Illinois limited partnership and Vilas Development Corporation is an Illinois corporation. Defendant Ganesan R. Visvabharathy is a citizen and resident of Illinois.

3. Defendants made an investment presentation in the State of Georgia to a group of physicians which included the plaintiff[s].

4. Plaintiffs contacted defendants in Illinois to invest in the Carriage Park Investment property.

5. At no time did any of the defendants solicit business in North Carolina.

6. All of the investment property, the documentation regarding the investments, the investor's accountants, and the attorneys regarding the property are located in Illinois.

7. The only parties located in North Carolina are the plaintiffs and the plaintiffs' attorney.

8. There are not sufficient contacts in North Carolina by the defendants to allow the North Carolina courts to assume jurisdiction.

II. Issue

The sole issue on appeal is whether the trial court erred in granting defendants' motions to dismiss for lack of personal jurisdiction.

III. Standard of Review

"The standard of review of an order determining jurisdiction is whether the findings of fact by the trial court are supported by competent evidence in the record; if so, this Court must affirm the order of the trial court." Better Business Forms, Inc. v. Davis, 120 N.C.App. 498, 500, 462 S.E.2d 832, 833 (1995). "If presumed findings of fact are supported by competent evidence, they are conclusive on appeal despite evidence to the contrary." Cameron-Brown Co. v. Daves, 83 N.C.App. 281, 285, 350 S.E.2d 111, 114 (1986).

A court must engage in a two-part inquiry to determine whether personal jurisdiction over a non-resident defendant is properly asserted. Better Business Forms, Inc.,120 N.C.App. at 500,462 S.E.2d at 833. First, the court must determine whether North Carolina's "long-arm" statute authorizes jurisdiction over the defendant. N.C. Gen.Stat. § 1-75.4 (2003). If so, the court must determine whether the court's exercise of jurisdiction over the defendant is consistent with due process. Better Business Forms, Inc.,120 N.C.App. at 500,462 S.E.2d at 833.

IV. North Carolina's Long-Arm Statute

Personal jurisdiction is proper here under two provisions of North Carolina's long-arm statute:

(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:

(a) Solicitation or services activities were carried on within the State by or on behalf of the defendant [and]....

...

(5) Local Services, Goods or Contracts— In any action which:

...

(d) Relates to goods, documents of title, or other things of value shipped from this State by the plaintiff to the defendant on his order or direction.

N.C. Gen.Stat. § 1-75.4(4)(a) and (5)(d) (2003).

The memorandum sent to plaintiffs' attorney in North Carolina to consider defendants' investment proposal constitutes a solicitation under N.C. Gen.Stat. § 1-75.4(4)(a). See Godwin v. Walls, 118 N.C.App. 341, 349, 455 S.E.2d 473, 480, disc. rev. allowed, 341 N.C. 419, 461 S.E.2d 757 (1995) (stating the statute does not require proof of such injury; the plaintiff need only allege an injury). Also, the $100,000.00 check sent from plaintiffs in North Carolina to defendants in Illinois for payment for one investment unit in Carriage Park constitutes a "thing[ ] of value" shipped from this state by plaintiffs to defendants on their order or direction pursuant to N.C. Gen.Stat. § 1-75.4(5)(d). For either of these two reasons, the defendants are subject to jurisdiction under North Carolina's long-arm statute, N.C. Gen.Stat. § 1-75.4.

V. Due Process

Since at least one requirement under North Carolina's long-arm statute allows plaintiffs to assert jurisdiction over defendants, the inquiry becomes whether plaintiffs' assertion of jurisdiction over defendants complies with due process. "When personal jurisdiction is alleged to exist pursuant to the long-arm statute, the question of statutory authority collapses into one inquiry—whether defendant has the minimum contacts with North Carolina necessary to meet the requirements of due process." Hiwassee Stables, Inc. v. Cunningham, 135 N.C.App. 24, 27, 519 S.E.2d 317, 320 (1999) (citing Murphy v. Glafenhein, 110 N.C.App. 830, 431 S.E.2d 241, disc. rev. denied, 335 N.C. 176, 436 S.E.2d 382 (1993)).

The Due Process Clause of the Fourteenth Amendment limits the power of a state to exercise in personam jurisdiction over a non-resident defendant. Hiwassee Stables, Inc., 135 N.C.App. at 28, 519 S.E.2d at 320. In determining whether the exercise of personal jurisdiction comports with due process, the crucial inquiry is whether the defendant has "certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95, 102 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 343, 85 L.Ed. 278, 283 (1940), [reh'g denied, 312 U.S. 712, 61 S.Ct. 548, 85 L.Ed. 1143 (1941)]).

To generate minimum contacts, the defendant must have purposefully availed itself of the privilege of conducting activities within the forum state and invoked the benefits and protections of the laws of North Carolina. International Shoe Co.,326 U.S. at 319,66 S.Ct. at 160,90 L.Ed. at 104; Buying Group, Inc. v. Coleman, 296 N.C. 510, 515, 251 S.E.2d 610, 614 (1979); Hiwassee Stables, Inc.,135 N.C.App. at 28,519 S.E.2d at 320-21; Godwin, 118 N.C.App. at 353,455 S.E.2d at 482. The relationship between the defendant and the forum state must be such that the defendant should "reasonably anticipate being haled into" a North Carolina court. Cherry Bekaert & Holland v. Brown, 99 N.C.App. 626, 632, 394 S.E.2d 651, 656 (1990). The facts of each case determine whether the defendant's activities in the forum state satisfy due process. Perkins v. Benguet Consol. Mining Co., 342 U.S. 437, 445, 72 S.Ct. 413, 418, 96 L.Ed. 485, 492,reh'g denied, 343 U.S. 917, 72 S.Ct. 645, 96 L.Ed. 1332 (1952).

Here, we hold defendants did not engage in sufficient minimum contacts in North Carolina to justify the exercise of personal jurisdiction without violating defendants' due process rights.

Plaintiffs assign error to only two of the trial court's findings of facts: "5) At no time did any of the defendants solicit business in North Carolina;" and "8) There are not sufficient minimum contacts in North Carolina by defendants to allow the North Carolina courts to assume jurisdiction." Finding of fact No. 8 is the ultimate issue on appeal and will be addressed after weighing all of the evidence. See Hiwassee Stables, Inc., 135 N.C.App. at 27, 519 S.E.2d at 317. Evidence to support finding of fact No. 5 shows that after an investment presentation in Georgia, plaintiffs contacted and requested defendants to send investment materials to them from Illinois to North Carolina. Defendants also spoke with plaintiffs' attorneys in North Carolina upon plaintiffs' request after plaintiffs received the investment offering. Our Supreme Court has held that "a contractual relationship between a North...