HIWASSEE STABLES, INC., GORDON S. CALHOUN and TINA A. CALHOUN,
Plaintiffs v. CHRIS CUNNINGHAM, d/b/a CHRIS CUNNINGHAM INSURANCE
AGENCY, AMERICAN RELIABLE INSURANCE COMPANY, TEMPLETON & FRANKLIN
VETERINARY ASSOCIATES, ZACHARY FRANKLIN, JAIRO ORTIZ, BLOOD HORSE
DYNASTY, INC., FRANK L. DIAZ AS ATTORNEY-IN-FACT FOR JAIRO ORTIZ
AND BLOOD HORSE DYNASTY, INC., FRANK L. DIAZ, P.A. JURIS DOCTOR
AS ATTORNEY-IN-FACT FOR JAIRO ORTIZ AND BLOOD HORSE DYNASTY, INC.
and ENERGY EQUINE INSURANCE AGENCY, INC., Defendants
Jurisdiction--personal--motion to dismiss improperly denied--minimum contacts not
satisfied
The trial court erred by denying defendants' motion to dismiss for lack of personal
jurisdiction since minimum contacts were not satisfied because: (1) plaintiffs made the initial
contact with defendants in Florida; (2) the contract was performed in Florida; (3) none of the
alleged acts of negligence occurred in this forum;(4) defendants never shipped anything to North
Carolina beyond the one billing statement and fertility examination certificate form; (5)
defendants never solicited business or advertised their services in North Carolina; and (6) while
defendants have clients other than plaintiffs that now live in North Carolina, those individuals
became clients while they resided in Florida and subsequently moved to North Carolina.
Judge JOHN dissents. Appeal by defendants Templeton and Franklin Veterinary
Associates and Zachary Franklin from judgment entered 16 April
1998 by Judge Timothy L. Patti in Mecklenburg County Superior
Court. Heard in the Court of Appeals 19 May 1999.
James, McElroy & Diehl, P.A., by William K. Diehl, Jr. and
John R. Buric, for plaintiff-appellees.
Hedrick, Eatman, Gardner & Kincheloe, L.L.P., by Hatcher
Kincheloe, Jennifer Ingram Mitchell and Holly L. Saunders,
for defendant-appellants Templeton & Franklin Veterinary
Associates and Zachary Franklin.
HUNTER, Judge.
Defendants Templeton and Franklin Veterinary Associates
(“TFVA”) and Zachary Franklin appeal the trial court's denial of
their motion to dismiss for lack of personal jurisdiction.
The evidence presented to the trial court indicates that
plaintiffs Gordon Calhoun and Tina Calhoun are adult citizens and
residents of Mecklenburg County, North Carolina. Plaintiff
Hiwassee Stables, Inc. is a North Carolina corporation with its
principal place of business in Mecklenburg County, North
Carolina. In December 1995, plaintiffs contracted with Jairo
Ortiz and Blood Horse Dynasty, Inc., a Florida resident and
Florida corporation, respectively, to purchase a stallion named
Nevado for the exclusive and disclosed purpose of using Nevado'ssemen, through artificial insemination, for a breeding business
run in North Carolina. This lawsuit arose after plaintiffs were
informed that Nevado's semen was not adequate for artificial
insemination and that Nevado could not be used for the purpose
for which he was purchased.
Before the purchase of Nevado was finalized, plaintiffs
contacted defendant Chris Cunningham, d/b/a Chris Cunningham
Insurance Agency (“Cunningham”), of Lincolnton, North Carolina,
regarding insurance for Nevado. Plaintiffs presented evidence
that Cunningham recommended to plaintiffs that they use TFVA to
perform insurance, breeding soundness, and fertility exams, as
she had recommended TFVA to her other North Carolina clients.
Dr. Zachary Franklin and Dr. Richard Templeton are veterinarians
who practice as TFVA, in Miami, Florida, and neither are licensed
to practice veterinary medicine in North Carolina. The exams of
Nevado were necessary to determine whether he could be used for
breeding and was eligible for insurance.
On 9 December 1995, plaintiff Tina Calhoun called TFVA in
Florida requesting their services. Dr. Templeton returned the
call to North Carolina and contracted with Ms. Calhoun, informing
her that Dr. Franklin would perform the examination. Ms. Calhoun
told Dr. Templeton that Nevado would be brought to North Carolina
after he was purchased. Cunningham and Tina Calhoun delivered to Dr. Franklin, in
Florida, a fertility examination certificate form (“Form”). This
Form was to be completed by the examining veterinarian and
delivered to the insurance carrier to assist the insurer in
determining whether Nevado could be covered by insurance. Dr.
Franklin examined Nevado while he was in quarantine at Miami
International Airport. Subsequently, TFVA completed the Form and
delivered it to plaintiffs in North Carolina. Based on the
results contained in the Form, Cunningham insured Nevado. When
the horse was released from quarantine, it was transported by
representatives for defendant Jairo Ortiz to the farm of his
brother Edgar Ortiz in the Ocala, Florida area. Plaintiffs took
possession of the horse at Edgar Ortiz's farm and transported it
to North Carolina.
TFVA submitted a billing statement to plaintiffs in North
Carolina charging them for services Dr. Franklin provided for
plaintiffs in Miami. Plaintiffs paid TFVA for its services with
a check drawn on a North Carolina account, which was mailed to
defendants in Florida. Defendants cashed the check in Florida.
The evidence in the trial court also disclosed that in
December 1995, Drs. Franklin and Templeton were both members of
the American Association of Equine Practitioners (“AAEP”). The
Equine Connection, an international locator service for AAEPmembers, placed advertisements in national and international
equine publications, including Practical Horseman and Horse
Illustrated, as well as on the Internet. Since before December
1995, plaintiffs received these national magazines at their home
in North Carolina. While TFVA has approximately four clients
that presently reside in North Carolina, those clients became
associated with the defendants when they resided in Florida, and
defendants have never performed veterinary services in this
state.
Based on its findings of fact, the trial court concluded
that the exercise of personal jurisdiction over the defendants is
proper because: (1) the contract entered into between plaintiffs
and defendants has a “substantial connection” to this state; (2)
solicitation activities were carried on within this state by oron behalf of defendants; (3) the money shipped by plaintiffs in
North Carolina to defendants in Florida is considered a “thing of
value” pursuant to N.C. Gen. Stat. § 1-75.4(5)(d) (1996); and (4)
money was shipped to defendants from North Carolina on their
order or direction.
The determination of whether jurisdiction is statutorily and
constitutionally permissible due to contact with the forum is a
question of fact. See Chadbourn, Inc. v. Katz, 285 N.C. 700, 208
S.E.2d 676 (1974); Parris v. Disposal, Inc., 40 N.C. App. 282,
253 S.E.2d 29, disc. review denied, 297 N.C. 455, 256 S.E.2d 808
(1979). The standard of review of an order determining personal
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 lower court. Better Business
Forms, Inc. v. Davis, 120 N.C. App. 498, 462 S.E.2d 832 (1995).
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. Murphy v. Glafenhein, 110 N.C. App. 830, 431 S.E.2d
241, disc. review denied, 335 N.C. 176, 436 S.E.2d 382 (1993).
Plaintiffs assert that personal jurisdiction over defendants
is proper under N.C. Gen. Stat. § 1-75.4(5)(d), which providesthat such jurisdiction is proper, as to local services, goods, or
contracts, in any action which “[r]elates 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.” A money
payment is a “thing of value” within the meaning of the long-arm
statute. Pope v. Pope, 38 N.C. App. 328, 248 S.E.2d 260 (1978).
In Cherry Baekert & Holland v. Brown, 99 N.C. App. 626, 394
S.E.2d 651 (1990), this Court held that “[b]ecause defendant
directed plaintiff to send his monies to him in Alabama and
plaintiff distributed the money from North Carolina,” defendant
was subject to personal jurisdiction pursuant to N.C. Gen. Stat.
§ 1-75.4(5)(d). Id. at 631, 394 S.E.2d at 655. It was
irrelevant that defendant did not specify that payment be sent
from this state. Id. Likewise, in the present case, defendants
directed plaintiffs to send payment due them to Florida, and
plaintiffs distributed the payment from North Carolina. Payment
was sent from this state in the form of a check drawn on a bank
in this state. Based on Pope and Cherry, we agree that personal
jurisdiction is proper under N.C. Gen. Stat. § 1.74.4(5)(d);
therefore, we need not address plaintiff's arguments regarding
additional long-arm statutes. Our inquiry now turns to whether
the exercise of personal jurisdiction satisfies the requirements
of the Due Process Clause of the Fourteenth Amendment of theUnited States Constitution.
The Due Process Clause of the Fourteenth Amendment operates
to limit the power of a state to assert in personam jurisdiction
over a non-resident defendant. Helicopteros, Nacionales v. Hall,
466 U.S. 408, 413, 80 L. Ed. 2d 404, 410 (1984) (citing Pennoyer
v. Neff, 95 U.S. 714, 24 L. Ed. 565 (1878)). In order for
personal jurisdiction to exist, a sufficient connection between
defendant and the forum state must be present so as to make it
fair to require defense of the action in the forum state. Kulko
v. California Superior Court, 436 U.S. 84, 91, 56 L. Ed. 2d 132,
141, reh. denied, 438 U.S. 908, 57 L. Ed. 2d 1150 (1978). The
pivotal inquiry is whether the defendant has established “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, 90 L. Ed. 95, 102 (1945) (quoting Milliken v.
Meyer, 311 U.S. 457, 463, 85 L. Ed. 278, 283 (1940)). The
factors used in determining the existence of minimum contacts
include “'(1) quantity of the contacts, (2) nature and quality of
the contacts, (3) the source and connection of the cause of
action to the contacts, (4) the interest of the forum state, and
(5) convenience to the parties.'” Cherry, 99 N.C. App. at 632,
394 S.E.2d at 655-56 (quoting New Bern Pool & Supply Co. v.Graubart, 94 N.C. App. 619, 624, 381 S.E.2d 156, 159, affirmed
per curiam, 326 N.C. 480, 390 S.E.2d 137 (1990)). To effectuate
minimum contacts, a defendant must have acted to purposefully
avail itself of the privileges of conducting activities within
this state, thus invoking the benefits and protection of our
laws. International Shoe, 326 U.S. at 319, 90 L. Ed. at 103.
Additionally, the relationship between defendant and North
Carolina must be such that defendant “should reasonably
anticipate being haled into court” in this state. Cherry, 99
N.C. App. at 632, 394 S.E.2d at 656 (quoting Tom Togs, Inc. v.
Ben Elias Industries Corp., 318 N.C. 361, 365, 348 S.E.2d 782,
786 (1986)). In considering the foreseeability of litigation,
“the interests of, and fairness to, both the plaintiff and the
defendant must be considered and weighed.” Dillon v. Funding
Co., 291 N.C. 674, 678, 231 S.E.2d 629, 632 (1977). As the
United States Supreme Court has explained, the
“purposeful availment” requirement ensures
that a defendant will not be haled into a
jurisdiction solely as a result of “random,”
“fortuitous,” or “attenuated” contacts, or of
the “unilateral activity of another party or
a third person . . . .” Jurisdiction is
proper, however, where the contacts
proximately result from actions by the
defendant himself that create a “substantial
connection” with the forum State.
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 85 L. Ed. 2d528, 542 (1985) (citations omitted) (emphasis in original).
This Court has held that a continual contractual business
relationship, rather than one or two isolated transactions, is
sufficient to establish in personam jurisdiction. Harrelson
Rubber Co. v. Layne, 69 N.C. App. 577, 317 S.E.2d 737 (1984).
However, a single contract may be a sufficient basis for the
exercise of in personam jurisdiction if it has a substantial
connection to this state. Tom Togs, Inc. v. Ben Elias Industries
Corp., 318 N.C. 361, 348 S.E.2d 782. Our Supreme Court held that
a single contract had a substantial connection to North Carolina
when (1) defendant contacted plaintiff, whom defendant knew to be
located in North Carolina, thus the contract for the manufacture
of shirts was made in North Carolina; (2) defendant was told the
shirts would be cut in North Carolina, and defendant agreed to
send its personal labels to plaintiff in North Carolina to be
attached, thus defendant was aware that the contract would be
performed in this state; and (3) shirts were manufactured and
shipped from this state; and (4) after defendant became
dissatisfied with the shirts, it returned them to this state.
Id.
Unlike the circumstances in Tom Togs, the plaintiffs in the
present case made the initial contact with defendants in Florida.
The contract was performed in Florida, and none of the allegedacts of negligence occurred in this forum. Defendants did
forward the Form and mailed a billing statement here, and
subsequently received one thing shipped from this state -- a
check as payment for their services. Defendants never shipped
anything to this state beyond the one billing statement.
In Stallings v. Hahn, 99 N.C. App. 213, 392 S.E.2d 632
(1990), this Court held that in personam jurisdiction could not
be constitutionally exercised when defendant placed an
advertisement for the sale of her car in a national monthly
magazine distributed in this state, returned the call of
plaintiff to North Carolina, plaintiff mailed a $200.00 cashier's
check to defendant in Pennsylvania, and defendant subsequently
returned the deposit check to plaintiff by mail to North
Carolina. The present case is very similar to Stallings;
however, unlike Stallings, competent evidence does not support
the findings of the trial court that advertisements were
circulated and solicitation activities by or on behalf of the
defendants were carried on within this state. The evidence
indicates that Cunningham testified that she never recommended
TFVA to plaintiffs or solicited plaintiffs on TFVA's behalf.
Drs. Templeton and Franklin testified that they had never
solicited business or advertised their services in North
Carolina. Under the name The Equine Connection, theadvertisements at issue merely provide a telephone number for an
individual to call if he or she wishes to obtain information
about equine veterinarians in their area of the United States.
Therefore, the advertisement does not advertise the defendants'
services in this forum. As shown by the affidavit of Marv Jahde,
the individual responsible for the advertisements, in order for
the defendants to receive a referral, an individual must first
initiate contact with The Equine Connection and then must request
information about veterinarians in the Miami, Florida area.
While plaintiff Gordon Calhoun testified that he was referred to
TFVA upon calling The Equine Connection, he admitted that upon
calling, he stated that he was moving to the Miami area. The
referral letter at issue originated in Shawnee Mission, Kansas
and was sent to Mr. Calhoun in North Carolina only because he
specifically requested information about veterinarian services in
the Miami, Florida area. Therefore, the letter did not amount to
solicitation by or on behalf of defendants in this state.
Similarly, the VetQuest service at issue helps Internet
users locate veterinary services. While a Web browser may
inquire and obtain information about TFVA and other veterinarians
on this Web site, no evidence indicated advertisements or
solicitation by or on behalf of the defendants occurred therein.
We note that Internet Web sites are, by nature, passive. Theycan only be browsed upon the instigation of the Internet user.
While some “interactive” sites may result in direct communication
and possible transactions between the Internet user and the Web
site owner, no evidence indicated direct communication or
transactions occurred between plaintiffs and defendants in the
present case. In addition, the service in question did not go
“on-line” until June of 1996 and was not available at the time
plaintiffs contracted with these defendants for the performance
of insurance examinations. Based on the foregoing, we hold that
competent evidence does not support the findings by the trial
court that defendants solicited or advertised in this state.
While defendants have clients other than plaintiffs that now
reside in North Carolina, those individuals became defendants'
clients while they resided in Florida, and subsequently moved to
this state. Defendants have only performed services for them in
Florida, and have never performed veterinary services for anyone
in North Carolina. While the convenience of plaintiffs would
warrant this state as the appropriate forum, the convenience of
defendants would warrant Florida as the appropriate forum.
Additionally, defendants' business is located in Florida, the
alleged negligent activity took place in Florida, and witnesses
and evidence would be most easily discoverable in that forum.
It is uncontradicted that as the defendant in Stallings, thedefendants in the present case returned the call of plaintiffs to
North Carolina and entered into a contract with them, sent two
communications (Form and billing statement) directed into this
state, and received payment from North Carolina. However, the
communication by the defendant in Stallings included not only the
returned check, but also a direct advertisement in a magazine
circulated within this state. We have previously held that
defendants in the present case did not advertise or solicit their
services in this forum. The record reveals no evidence that they
purposely availed themselves of the privilege of conducting
activities within this forum. Therefore, while the quantity is
the same, the quality of defendants' contacts with this state is
substantially less than those of the defendant in Stallings.
This Court ruled that the defendant in Stallings was not subject
to in personam jurisdiction. To render TFVA and Dr. Franklin
subject to in personam jurisdiction would go against the
precedent established by this Court in that case. Based on the
foregoing, we hold that the contacts in this case do not rise to
the level of satisfying the constitutional minimum under the Due
Process Clause in order to justify the exercise of personal
jurisdiction. Accordingly, the order of the trial court is
reversed.
Reversed and remanded. Judge TIMMONS-GOODSON concurs.
Judge JOHN dissents.
I respectfully dissent. Unlike the majority, I believe the trial court's findings of fact are supported by competent evidence, albeit controverted, are thereby conclusive on appeal, Olivetti Corp. v. Ames Business Systems, Inc., 319 N.C. 534, 541, 356 S.E.2d 578, 582, reh'g denied, 320 N.C. 639, 360 S.E.2d 92 (1987)(trial court's findings of fact conclusive on appeal if supported by competent evidence), and sustain its conclusion that defendants' contacts with this State were sufficient such that exercise of personal jurisdiction “over [them] does not violate the due process clause of the Fourteenth Amendment of the United States Constitution.” See New Bern Pool & Supply Co. v. Graubart, 94 N.C. App. 619, 624, 381 S.E.2d 156, 159 (1989), aff'd per curiam, 326 N.C. 480, 390 S.E.2d 137 (1990)(“existence of minimum contacts cannot be ascertained by mechanical rules, but rather by consideration of the facts of each case in light of traditional notions of fair play and justice”)(citation omitted). Accordingly, I vote to affirm the trial court.
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