Appeal by defendants from order entered 7 February 2002 by
Judge James R. Vosburgh in Superior Court, New Hanover County.
Heard in the Court of Appeals 24 April 2003.
Daniel Lee Brawley and Barbara Allen Samples for plaintiffs-
appellees.
Robinson, Bradshaw & Hinson, P.A., by David C. Wright, III and
Joshua F. P. Long, for defendants-appellants.
McGEE, Judge.
Halvor Jaeger and Astrid Jaeger (plaintiffs) filed an amended
complaint against Applied Analytical Industries Deutschland GMBH
(AAID) and Frederick Sancilio (Sancilio), collectively referred to
as defendants, on 10 April 2001. Plaintiffs sought an order fromthe trial court instructing defendants to release certain funds to
plaintiffs that were being held pursuant to an escrow agreement.
AAID filed a motion to dismiss dated 11 June 2001, contending among
other things, that the trial court lacked personal jurisdiction
over AAID. AAID's motion alternatively asked the trial court to
stay the action pursuant to N.C. Gen. Stat. § 1-75.12. Sancilio
filed a motion to dismiss dated 11 June 2001 for lack of proper
venue and failure to state a claim or, alternatively, to stay the
action pursuant to N.C. Gen. Stat. § 1-75.12. The parties
subsequently conducted discovery on the jurisdictional issues
relating to AAID's motion to dismiss. Plaintiffs filed a motion to
compel discovery on 15 October 2001.
A hearing was held by the trial court on 6 February 2002. The
trial court entered an order on 7 February 2002 that found AAID was
subject to personal jurisdiction in North Carolina and that the
action should not be stayed. Defendants appeal.
The evidence before the trial court tended to show that
plaintiffs are citizens and residents of Canada. Sancilio stated
in his affidavit that AAID is a limited liability company formed
under German law and registered in the District Court, Memmingen,
Germany. Sancilio is the managing director of AAID and has an
office located in Wilmington, North Carolina.
Plaintiffs and the corporate predecessor to AAID were part of
a business transaction (the purchase agreement) in December 1996,
that included the sale of a company in which plaintiffs owned a
partnership interest. Due to a dispute plaintiffs had with the
Finanzamt Neu-Ulm, a German tax collecting agency, part of the saleproceeds payable to plaintiffs was held pursuant to an escrow
agreement dated 1 February 1997. The Canadian dollar equivalent of
DM 505,000 was placed in escrow in Canada pursuant to the escrow
agreement between plaintiffs and AAID. Under the terms of the
escrow agreement, plaintiffs are entitled to receive the escrowed
funds after the resolution of the tax issue with the Finanzamt Neu-
Ulm. Plaintiffs stated that they attempted to contact defendants
for more than a year to request the release of the funds, but
defendants did not respond.
Sancilio stated in his affidavit and deposition that AAID is
a wholly-owned subsidiary of aaiPharma, Inc, which is headquartered
in Wilmington, North Carolina. Sancilio is the chairman of the
board and the chief executive officer of aaiPharma. Sancilio is
also the managing director of AAID and signs documents on its
behalf. He testified that his personal and business addresses were
in Wilmington, North Carolina.
AAID is a holding company which owns one hundred percent of
AAI Applied Analytical Industries Deutschland
Verwaltungsgesellschaft mbH and AAI Applied Analytical Industries
Deutschland GmbH & Co., KG. Sancilio stated in his deposition that
AAID did not own any other assets. Sancilio stated in his
affidavit that AAID's principal place of business is in Germany and
AAID is not registered or required to register to do business in
North Carolina. Additionally, he stated AAID has never owned or
leased property in North Carolina, paid income or property taxes in
North Carolina, filed a legal action in North Carolina, advertised,
sold goods, or performed services within North Carolina. Sanciliotestified that AAID has a revolving line of credit with Bank of
America, but otherwise has never had a contract with a North
Carolina company. He stated AAID has also served as a guarantor
for a loan obtained by Applied Analytical Industries, Inc. and in
the loan agreement it submitted to the jurisdiction and venue of
the state and federal courts of North Carolina, agreeing that the
bank had the option to enforce its rights under the loan agreement
in the North Carolina courts.
Sancilio stated that he signed the purchase agreement on
behalf of AAID's predecessor in Wilmington, North Carolina.
Sancilio also testified that Forrest Waldon signed the escrow
agreement on behalf of AAID and was serving as managing director of
AAID and general counsel to aaiPharma at the time. The office of
the general counsel is located in Wilmington, North Carolina. The
escrow agreement between plaintiffs and AAID states that "all
notices and other communications under the escrow agreement when
given to AAID should be provided in care of Applied Analytical
Industries, Attention: General Counsel, 5051 New Centre Drive,
Wilmington, North Carolina 28403, U.S.A."
Albert Cavagnaro (Cavagnaro), associate counsel for aaiPharma,
testified that he was assigned to coordinate the outside legal
counsel in this case. Cavagnaro also was involved in the
negotiation of the purchase agreement. Cavagnaro stated that AAID
had no employees and that Sancilio was its only managing director.
He testified that all notices and communications regarding the
escrow agreement were to be sent to AAID in Wilmington, North
Carolina. The letterhead of AAID contains a Wilmington telephonenumber and fax number. Cavagnaro also testified that Forrest
Waldon executed the escrow agreement on behalf of AAID and was
involved in negotiating various elements of the agreement with
plaintiffs.
[1] Defendants argue the trial court erred in denying AAID's
motion to dismiss for lack of personal jurisdiction because the
North Carolina long-arm statute does not permit the exercise of
personal jurisdiction over AAID. Defendants contend plaintiffs did
not meet their burden of proof in that they failed to sufficiently
allege facts in their complaint that allow the inference of
personal jurisdiction over defendants. Defendants also argue the
trial court erred in denying AAID's motion to dismiss because AAID
lacked sufficient minimum contacts with North Carolina to satisfy
due process in the exercise of personal jurisdiction.
Whether the courts of this State may exercise
personal jurisdiction over a nonresident
defendant involves a two-prong analysis: "(1)
Does a statutory basis for personal
jurisdiction exist, and (2) If so, does the
exercise of this jurisdiction violate
constitutional due process?" The assertion of
personal jurisdiction over a defendant
comports with due process if defendant is
found to have sufficient minimum contacts
with the forum state to confer jurisdiction.
Golds v. Central Express Inc., 142 N.C. App. 664, 665-66, 544
S.E.2d 23, 25, disc. review denied, 353 N.C. 725, 550 S.E.2d 775
(2001) (quoting J.M. Thompson Co. v. Doral Mfg. Co., 72 N.C. App.
419, 424, 324 S.E.2d 909, 913, cert. denied, 313 N.C. 602, 330
S.E.2d 611 (1985)).
A plaintiff bears the burden of establishing that some ground
exists for the exercise of personal jurisdiction over a defendant. Golds, 142 N.C. App. at 666, 544 S.E.2d at 26. The trial court may
conduct an evidentiary hearing including testimony or depositions,
but the plaintiff maintains the ultimate burden of proving personal
jurisdiction by a preponderance of the evidence at the evidentiary
hearing or at trial. Bruggeman v. Meditrust Acquisition Co., 138
N.C. App. 612, 615, 532 S.E.2d 215, 217, disc. review denied, 353
N.C. 261, 546 S.E.2d 90 (2000). The trial court is not required to
make findings of fact when ruling on a motion to dismiss, but "it
is presumed that the trial court found facts sufficient to support
its ruling. If these presumed factual findings are supported by
competent evidence, they are conclusive on appeal." Filmar Racing,
Inc. v. Stewart, 141 N.C. App. 668, 672, 541 S.E.2d 733, 737 (2001)
(citation omitted).
North Carolina's long-arm statute provides:
A court of this State having jurisdiction
of the subject matter has jurisdiction over a
person served . . .
(1) Local Presence or Status. _ In any
action, whether the claim arises
within or without this State, in
which a claim is asserted against a
party who when service of process is
made upon such party:
. . . .
d. Is engaged in substantial
activity within this State,
whether such activity is wholly
interstate, intrastate, or
otherwise.
N.C. Gen. Stat. § 1-75.4 (2001).
"This statute is liberally construed to find personal
jurisdiction over nonresident defendants to the full extent allowed
by due process." DeArmon v. B. Mears Corp., 67 N.C. App. 640, 643,
314 S.E.2d 124, 126 (1984), rev'd on other grounds, 312 N.C. 749,325 S.E.2d 223 (1985). Accordingly, "when evaluating the existence
of personal jurisdiction pursuant to G.S. § 1-75.4(1)(d), 'the
question of statutory authorization "collapses into the question of
whether [the defendant] has the minimum contacts with North
Carolina necessary to meet the requirements of due process."'"
Bruggeman, 138 N.C. App. at 617, 532 S.E.2d at 218 (quoting Hanes
Companies v. Ronson, 712 F. Supp. 1223, 1226 (M.D.N.C. 1988)).
Thus, we proceed directly to the due process inquiry to determine
if defendants possess minimum contacts with North Carolina
sufficient to permit jurisdiction over them.
Due process requires that a defendant have sufficient minimum
contacts with the forum state before being subject to suit in that
state's courts. First Union Nat'l Bank of Del. v. Bankers
Wholesale Mortgage, LLC, 153 N.C. App. 248, 252, 570 S.E.2d 217,
221 (2002). The minimum contacts should be of a nature such that
the exercise of personal jurisdiction over the defendant does not
offend "traditional notions of fair play and substantial justice."
International Shoe Co. v. Washington, 326 U.S. 310, 316, 90 L. Ed.
95, 102 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 85 L.
Ed. 278, 283 (1940)).
In determining whether sufficient minimum
contacts exist, the Court should consider (1)
the quantity of contacts between defendants
and North Carolina; (2) the nature and quality
of such contacts; (3) the source and
connection of plaintiff's cause of action to
any such contacts; (4) the interest of North
Carolina in having this case tried here; and
(5) convenience to the parties. In addition
to the 'minimum contacts' inquiry, the Court
should take into account (1) whether
defendants purposefully availed themselves of
the privilege of conducting activities in
North Carolina, (2) whether defendants couldreasonably anticipate being brought into court
in North Carolina, and (3) the existence of
any choice-of-law provision contained in the
parties' agreement.
First Union, 153 N.C. App. at 253, 570 S.E.2d at 221.
In the present case, defendants maintain sufficient minimum
contacts with North Carolina to permit our state's courts to
exercise personal jurisdiction over them. The trial court held a
hearing and received evidence consisting of affidavits and
depositions before ruling that defendants were subject to personal
jurisdiction in North Carolina. Evidence considered by the trial
court shows that AAID maintains an office in Wilmington, North
Carolina and lists a Wilmington telephone number and fax number on
its letterhead. All correspondence and communication relating to
the escrow agreement is directed to Wilmington, North Carolina, as
required by the terms of the escrow agreement. Plaintiffs'
repeated letters to AAID requesting release of the escrowed funds
were accordingly mailed to the Wilmington address.
AAID's current managing director, Sancilio, who signed the
purchase agreement on behalf of AAID, resides and works in
Wilmington. Sancilio is the sole employee of AAID. In his
capacity as managing director of AAID, he also serves as an agent
for service of process upon AAID. AAID's former managing director,
Forrest Waldon, who assisted in negotiations of the escrow
agreement and who signed in Wilmington on behalf of AAID, worked in
Wilmington. Cavagnaro, who testified that he reviewed the purchase
agreement at signing, also resides and works in Wilmington.
Additionally, aaiPharma's general counsel, who also serves as
general counsel for AAID and aaiPharma's subsidiaries, has officesin Wilmington, North Carolina. While not pertinent to the facts of
this case, AAID also maintains a line of revolving credit with Bank
of America under a loan guaranty agreement with its parent company,
aaiPharma. In conjunction with this agreement, AAID has also
submitted to North Carolina jurisdiction and North Carolina law for
the resolution of legal issues arising under that agreement and has
agreed that venue is convenient in North Carolina.
Based on the foregoing evidence, we find that AAID maintains
sufficient minimum contacts sufficient to satisfy the requirements
of N.C.G.S. § 1-75.4 and due process. AAID maintains a continuous
and systematic presence within this state by and through its agent
in Wilmington, North Carolina. AAID holds itself out as engaged in
substantial activity within North Carolina by employing a managing
director and negotiating and signing agreements in Wilmington,
North Carolina, and by denoting Wilmington, North Carolina as the
point of correspondence on its letterhead and in the escrow
agreement. AAID should have reasonably anticipated being haled
into court in North Carolina and, therefore, the exercise of
personal jurisdiction over AAID is proper. The trial court did not
err in finding that AAID was subject to personal jurisdiction in
North Carolina. This assignment of error is without merit.
[2] Defendants next argue the trial court erred in failing to
grant defendants' motions to stay the action under N.C. Gen. Stat.
§ 1-75.12(a) because it would work a substantial injustice on them
to be tried in a North Carolina court. Defendants concede they
have no right to appeal from the trial court's determination on
this issue. N.C. Gen. Stat. § 1-75.12(c) (2001) states that"[w]henever such a motion is denied, the movant may seek review by
means of a writ of certiorari and failure to do so shall constitute
a waiver of any error the judge may have committed in denying the
motion." Defendants have failed to properly petition this Court
for a writ of certiorari and we decline to treat defendants'
assignment of error as a petition for writ of certiorari. This
assignment of error is without merit.
We have reviewed defendants' remaining assignments of error
and arguments and find them to be without merit.
We affirm the order of the trial court.
Affirmed.
Judges MCCULLOUGH and LEVINSON concur.
*** Converted from WordPerfect ***
