Williamson Produce, Inc. v. Satcher

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471 S.E.2d 96 (1996)

WILLIAMSON PRODUCE, INC., Plaintiff, v. J.H. SATCHER, Jr., d/b/a J.H. Satcher, Jr. Farms and Weyerhauser Paper Company, Defendants.

No. COA95-476.

Court of Appeals of North Carolina.

June 4, 1996.

*97 Connor, Bunn, Rogerson & Woodard, P.A. by C. Timothy Williford, Wilson, for plaintiff-appellee.

Lee, Reece & Weaver by Cyrus F. Lee and Rachel V. Lee, Wilson, for defendant-appellant.

EAGLES, Judge.

The issue before us is whether the trial court erred in denying defendant Satcher's motion to dismiss for lack of personal jurisdiction. Defendant Satcher argues that under *98 these facts the courts of North Carolina cannot assert personal jurisdiction over him consistent with the due process clause of the Fourteenth Amendment to the United States Constitution. We disagree. Because it is based on due process concerns, defendant Satcher's appeal is properly before us pursuant to G.S. 1-277(b). E.g., Patrum v. Anderson, 75 N.C.App. 165, 167, 330 S.E.2d 55, 56 (1985).

When determining whether a non-resident defendant is subject to the personal jurisdiction of our courts, we apply a two-pronged analysis. CFA Medical, Inc. v. Burkhalter, 95 N.C.App. 391, 393-94, 383 S.E.2d 214, 215 (1989). We must determine first whether the exercise of jurisdiction over the defendant falls within the language of North Carolina's long-arm statute, and second "whether the defendant has sufficient minimum contacts with North Carolina such that the exercise of jurisdiction is consistent with the due process clause of the Fourteenth Amendment to the United States Constitution." Better Business Forms, Inc. v. Davis, 120 N.C.App. 498, 500, 462 S.E.2d 832, 833 (1995).

Defendant Satcher first argues that he is not covered by the broad language of G.S. 1-75.4, often referred to as North Carolina's long-arm statute. We disagree. G.S. 1-75.4 establishes the relevant jurisdictional authority here and provides in pertinent part that:

A court of this State having jurisdiction over the subject matter has jurisdiction over a person ... under any of the following circumstances: .... (5) Local Services, Goods or Contracts.In any action which: a. Arises out of a promise, made anywhere to the plaintiff or to some third party for the plaintiff's benefit, by the defendant to perform services within this State or to pay for services to be performed in this State by the plaintiff; or b. Arises out of services actually performed for the plaintiff by the defendant within this State, or services actually performed for the defendant by the plaintiff within this State if such performance within this State was authorized or ratified by the defendant; or c. Arises out of a promise, made anywhere to the plaintiff or to some third party for the plaintiff's benefit, by the defendant to deliver or receive within this State, or to ship from this State goods, documents of title, or other things of value; or 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; or e. Relates to goods, documents of title, or other things of value actually received by the plaintiff in this State from the defendant through a carrier without regard to where delivery to the carrier occurred.

G.S. 1-75.4 (1983 & Supp.1995). If there is competent evidence in the record to support "a finding which comports with one of the above provisions, jurisdiction will follow under the long-arm statute." Dataflow Companies v. Hutto, 114 N.C.App. 209, 212, 441 S.E.2d 580, 582 (1994).

Generally speaking, the language of the long-arm statute is sufficiently broad that the limits of personal jurisdiction are defined by due process rather than by statute. E.g., Tom Togs, Inc. v. Ben Elias Indus. Corp., 318 N.C. 361, 365, 348 S.E.2d 782, 785 (1986). The provisions of G.S. 1-75.4(5) are to be "liberally construed in favor of finding personal jurisdiction, subject only to due process considerations." Dataflow, 114 N.C.App. at 212, 441 S.E.2d at 582. Here, we conclude that the due process analysis is indeed controlling because no fewer than three subsections of G.S. 1-75.4(5) are applicable to the facts of this case.

Specifically, defendant Satcher fulfills the requirements of G.S. 1-75.4(5)(a) in that he made "a promise ... for the plaintiff's benefit ... to pay for services to be performed in this State by plaintiff...." The promise was the contract between the parties and the services performed were plaintiff's marketing and sale here in North Carolina of defendant's peaches grown in South Carolina. *99 Accordingly, having determined that G.S. 1-75.4(5)(a) is applicable here, we point out in passing that the provisions of G.S. 1-75.4(5)(b) and (d) also would suffice to bring defendant within the reach of our "long-arm" statute.

Turning now to the dispositive question of whether the exercise of jurisdiction comports with due process, we recognize that our State courts may not exercise jurisdiction "unless defendants have had `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.'" Dataflow, 114 N.C.App. at 213, 441 S.E.2d at 582 (quoting Tom Togs, Inc., 318 N.C. at 365, 348 S.E.2d at 786). In determining whether the requisite minimum contacts are present, "it is essential that there be some act by which the defendant purposefully availed [himself] of the privilege of conducting activities within the forum state, thus invoking the benefits and protection of its laws." Cameron-Brown Co. v. Daves, 83 N.C.App. 281, 285, 350 S.E.2d 111, 114 (1986). It is well settled, however, "that a defendant need not physically enter North Carolina in order for personal jurisdiction to arise." Better Business Forms, 120 N.C.App. at 501, 462 S.E.2d at 834.

A contract alone may establish the necessary minimum contacts where it is shown that the contract was voluntarily entered into and has a "substantial connection" with this State. Tom Togs, Inc., 318 N.C. at 367, 348 S.E.2d at 786. When a contract bears a substantial connection to the forum state, a defendant who enters into that contract "can reasonably anticipate being haled into court ..." in the forum state. CFA Medical, 95 N.C.App. at 394-95, 383 S.E.2d at 216 (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S. Ct. 559, 567, 62 L. Ed. 2d 490, 501 (1980)). Here, the evidence is clear that defendant Satcher's contract with plaintiff bears a "substantial connection" to North Carolina and that defendant Satcher "should not be surprised with being haled into a North Carolina court." Chapman v. Janko, U.S.A., 120 N.C.App. 371 376, 462 S.E.2d 534, 538 (1995).

Defendant Satcher contests this conclusion arguing that the assertion of jurisdiction is improper since plaintiff approached defendant Satcher in South Carolina and then travelled to South Carolina to negotiate the contract. Defendant Satcher's argument, however, would have us consider this factor to the virtual exclusion of all others, and that is not the law. Our analysis is not accomplished by using "a mechanical formula or rule of thumb but by ascertaining what is fair and reasonable under the circumstances." Better Business Forms, 120 N.C.App. at 500, 462 S.E.2d at 833.

It is true that plaintiff initiated the original contact in South Carolina with defendant Satcher and secured the original agreement following negotiations taking place entirely in South Carolina. The original contract between the parties provided that plaintiff would have the sole right to market and sell defendant Satcher's peach crop, that plaintiff would receive 8% of the sales price for its efforts, and that plaintiff would advance operating capital to defendant Satcher up to a total of $100,000.00. Were this the only contact, defendant Satcher's due process argument would be considerably more persuasive.

Here, however, the parties made several additional agreements and modifications thereto at defendant Satcher's prompting. On at least three occasions, defendant Satcher contacted plaintiff requesting additional sums of money beyond the $100,000.00 promised as part of the original contract. Defendant Satcher also contacted plaintiff to secure assistance in procuring the necessary packaging boxes for the peach crop. Following this contact, plaintiff agreed to pay Weyerhauser to produce the necessary boxes at its plant in North Carolina and to ship them, on defendant Satcher's order, to defendant's farm in South Carolina. Plaintiff even agreed to pay a surcharge on the cost of each box to help retire a debt owed by defendant Satcher to Weyerhauser that was incurred prior to defendant Satcher's original agreement with plaintiff. At its height, defendant Satcher's indebtedness to plaintiff, including that authorized in the original agreement, totalled $292,000.00.

*100 Additional facts relevant in determining the quantity and quality of defendant Satcher's contacts with North Carolina include the following: that defendant Satcher directly contacted Weyerhauser in North Carolina and ordered the necessary boxes; that the parties installed a dedicated phone line to facilitate communication between plaintiff and defendant Satcher; that plaintiff's marketing and sales efforts took place almost entirely in Wilson, North Carolina, and; that, pursuant to the parties' agreement, plaintiff sent a representative to South Carolina to monitor packaging operations, and sent trucks to South Carolina to pick up the peaches.

Based on this evidence, we conclude that defendant Satcher had sufficient minimum contacts to permit this State to exercise personal jurisdiction over him consistent with the due process clause. E.g., Dataflow, 114 N.C.App. at 209, 441 S.E.2d at 580; Chapman, 120 N.C.App. at 376, 462 S.E.2d at 538. Accordingly, we conclude that the decision of the trial court denying defendant Satcher's motion to dismiss must be affirmed.