NORTH CAROLINA FARM BUREAU MUTUAL INSURANCE COMPANY,
Plaintiff
v.
JULIE S. F. HOLT,
Defendant
Caudle & Spears, P.A., by Harold C. Spears and C. Grainger
Pierce, Jr., for plaintiff-appellant.
Kenneth L. Holland, P.A., by Kenneth L. Holland, for
defendant-appellee.
HUNTER, Judge.
North Carolina Farm Bureau Mutual Insurance Company
(“plaintiff”) appeals from an order dismissing its declaratory
judgment action for lack of jurisdiction. For the reasons stated
herein, we reverse the trial court.
This action arises from an automobile accident that occurred
in Spartanburg, South Carolina on 23 February 1997. A pickup
truck, owned by North Carolina resident Lewis Kelly Holt (“Holt”)
and operated by South Carolina resident Julie S. F. Holt
(“defendant”), collided with a vehicle operated by Lois Elaine
Berry (“Berry”). At the time of the accident, defendant had Holt's
permission to drive his pickup truck, which was insured by
plaintiff. The truck driven by defendant was garaged andregistered in North Carolina and had a North Carolina license
plate. At the time of the accident, Berry was insured under an
automobile policy issued by Allstate Mutual Insurance Company
(“Allstate”) having limits of liability of $15,000 per person.
Defendant suffered injuries in the accident and asserted a claim
against Berry and her insurer, Allstate, alleging that Berry was
negligent in proximately causing the accident and that defendant
was injured as a result thereof. On 11 August 1999, defendant
negotiated and accepted the sum of $15,000 from Berry and Allstate
and executed a Covenant Release and Settlement Agreement in favor
of Berry.
On 10 August 1999, defendant, by letter from her attorney,
notified plaintiff that she was bringing a claim for underinsured
motorist (“UIM”) coverage under the policy since Berry's insurer,
Allstate, tendered the full $15,000 limit of Berry's liability
insurance policy. On 30 December 1999, defendant filed suit
against Berry in the Court of Common Pleas in Spartanburg County,
South Carolina, for the purpose of pursuing a UIM claim against
plaintiff. Defendant's South Carolina suit for damages was served
on plaintiff through the South Carolina Department of Insurance on
10 January 2000. Plaintiff's counsel in South Carolina answered
defendant's damages suit on 28 March 2000, without mentioning any
jurisdictional problems in its answer. Plaintiff's South Carolina
counsel admitted the accident was caused by Berry's simple
negligence. As a defense to defendant's damages action,
plaintiff's South Carolina counsel raised essentially the sameissues as were presented in the North Carolina trial court.
Subsequently, plaintiff moved under Rule 40(j) of the South
Carolina Rules of Civil Procedure to strike her complaint from the
docket. In an order filed 1 May 2001, the South Carolina trial
court granted this motion and noted that the parties agreed that if
the claim was restored upon motion made within one year of the date
of the order, the statute of limitations would be tolled.
On 28 April 2000, plaintiff filed a complaint seeking a
declaratory judgment declaring that no UIM coverage is afforded to
defendant because defendant breached the terms of the insurance
policy and violated plaintiff's statutory rights under N.C. Gen.
Stat. § 20-279.21. Defendant filed her answer on 4 August 2000.
Plaintiff filed a motion for summary judgment on 23 March 2001
asserting that there was no genuine issue as to any material fact
and the plaintiff was entitled to judgment as a matter of law. On
10 May 2001, defendant filed a motion labeled “Motion for Summary
Judgment Dismissing this Action.” Defendant asserted in her motion
that the North Carolina court lacked jurisdiction over her. On 13
June 2001, plaintiff filed an amendment to the complaint, alleging
that the North Carolina court had personal jurisdiction over
defendant, and defendant filed her answer to the amended complaint.
On 17 August 2001, the trial court filed an order dismissing
plaintiff's declaratory judgment action for lack of jurisdiction.
Plaintiff appeals.
The sole issue presented on appeal is whether the trial court
erred in dismissing plaintiff's declaratory judgment action forlack of jurisdiction. We initially note that defendant's motion
was labeled as a summary judgment motion. However, in its order,
the trial court treated the motion as a motion to dismiss pursuant
to N.C. Gen. Stat. § 1A-1, Rule 12(b)(2). We will also treat
defendant's motion as a Rule 12(b)(2) motion since defendant's
motion was based on lack of personal jurisdiction and “[a] motion
is properly treated according to its substance rather than its
label.” Harrell v. Whisenant, 53 N.C. App. 615, 617, 281 S.E.2d
453, 454 (1981).
Plaintiff claims the trial court erred in dismissing the
action because defendant had previously waived the defense of lack
of personal jurisdiction by filing an answer denying allegations in
plaintiff's complaint. However, the issue of waiver apparently is
raised for the first time on appeal. “[I]ssues and theories of a
case not raised below will not be considered on appeal.”
Westminster Homes, Inc. v. Town of Cary Zoning Bd. of Adjust., 354
N.C. 298, 309, 554 S.E.2d 634, 641 (2001). Accordingly, we will
not consider plaintiff's waiver argument because that issue is not
properly before this Court.
“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 trial court.” Replacements, Ltd. v.
MidweSterling, 133 N.C. App. 139, 140-41, 515 S.E.2d 46, 48 (1999).
The inquiry for determining whether a nonresident defendant is
subject to in personam jurisdiction is two-fold --(1) whether theNorth Carolina long-arm statute allows jurisdiction over the
defendant; and (2) whether the exercise of jurisdiction comports
with due process requirements of the Fourteenth Amendment. Fraser
v. Littlejohn, 96 N.C. App. 377, 386 S.E.2d 230 (1989). The
plaintiff has the burden of establishing that one of the statutory
grounds for jurisdiction is applicable. Stallings v. Hahn, 99 N.C.
App. 213, 215, 392 S.E.2d 632, 633 (1990). Our long-arm 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).
Plaintiff contends and we agree that it has met its burden of
establishing that there is statutory authority for a North Carolina
court to exercise jurisdiction over defendant. Defendant's conduct
falls under our long-arm statute, N.C. Gen. Stat. § 1-75.4, which
provides in pertinent part as follows:
A court of this State having jurisdiction
of the subject matter has jurisdiction over a
person served in an action pursuant to Rule
4(j), Rule 4(j1), or Rule 4(j3) of the Rules
of Civil Procedure under any of the following
circumstances:
. . . .
(5) Local Services, Goods or Contracts.
_- In any action which:
. . . .
b. Arises out of . . . services
actually performed for the defendant
by the plaintiff within this State
if such performance within thisState was authorized or ratified by
the defendant[.]
N.C. Gen. Stat. § 1-75.4 (2001). We note that in its amended
complaint, plaintiff failed to specifically cite N.C. Gen. Stat. §
1-75.4(5)b, but instead cited another section and two sections that
do not exist. This Court has stated “[t]he failure to plead the
particulars of jurisdiction is not fatal to the claim so long as
the facts alleged permit the inference of jurisdiction under the
statute.” Williams v. Institute for Computational Studies, 85 N.C.
App. 421, 428, 355 S.E.2d 177, 182 (1987). Therefore, it follows
that although in the instant case, N.C. Gen. Stat. § 1-75.4(5)b was
not specifically cited in plaintiff's amended complaint, we still
may consider whether defendant's conduct falls under this section.
We conclude that defendant's conduct is covered by N.C. Gen.
Stat. § 1-75.4(5)b since the action arises out of services
performed by plaintiff within North Carolina and such performance
was authorized and ratified by defendant. Plaintiff provided
automobile liability insurance coverage for the truck operated by
defendant at the time of the accident. Further, defendant
authorized, ratified, and accepted the benefits of plaintiff's
liability coverage since plaintiff's representative, Dennis Parker,
signed a notice of requirement form in North Carolina and mailed it
to the South Carolina Department of Public Safety, which prevented
the suspension of defendant's South Carolina driving privileges.
In signing the notice of requirement form, Mr. Parker verified that
defendant and the truck she was driving at the time of the accident
were covered under the insurance policy issued by plaintiff to theowner of the vehicle, Mr. Holt. In addition, after defendant
notified plaintiff of her claim for UIM coverage, plaintiff
processed and investigated defendant's claim in North Carolina.
After establishing that statutory authority exists for a North
Carolina court to exercise jurisdiction over defendant, we now turn
to the issue of whether the exercise of jurisdiction over defendant
is consistent with due process requirements of the Fourteenth
Amendment. In order to satisfy the requirements of due process,
minimum contacts must exist between the nonresident defendant and
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)). “This relationship between the defendant and
the forum must be 'such that he should reasonably anticipate being
haled into court there.'” Tom Togs, Inc. v. Ben Elias Industries
Corp., 318 N.C. 361, 365, 348 S.E.2d 782, 786 (1986) (quoting
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 62 L.
Ed. 2d 490, 501 (1980)). Further, for a nonresident defendant to
be subject to personal jurisdiction, “defendant must take some
purposeful action within the forum state that invokes for defendant
the benefits and protections of the forum state's laws.” Fraser,
96 N.C. App. at 383, 386 S.E.2d at 234 (citing Hanson v. Denkla,
357 U.S. 235, 2 L. Ed. 2d 1283 (1958)). The factors to be
considered when determining whether defendant has had minimum
contacts with the forum state include: “(1) the quantity of thecontacts, (2) the 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.” Id.
Applying the above stated principles of law to the facts in
the case sub judice, we conclude that defendant had minimum
contacts with North Carolina such that the exercise of jurisdiction
over defendant does not offend traditional notions of fair play and
substantial justice. From the record, it appears that defendant
did not physically enter North Carolina. However, “[i]t is well
settled that a defendant need not physically enter North Carolina
in order for personal jurisdiction to arise.” Better Business
Forms, Inc. v. Davis, 120 N.C. App. 498, 501, 462 S.E.2d 832, 834
(1995).
The United States Supreme Court has acknowledged two types of
long-arm jurisdiction _- “specific jurisdiction,” when the action
arises out of or is related to the defendant's contacts with the
forum state and “general jurisdiction,” when the action does not
arise out of nor is related to defendant's contacts with the forum
state. Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408,
414, 80 L. Ed. 2d 404, 411 nn. 8-9 (1984). In the instant case,
specific jurisdiction is sought because the controversy relates to
defendant's contacts with this state.
When specific jurisdiction is involved, the court must focus
on the relationship among the defendant, the forum state, and the
litigation. Buck v. Heavner, 93 N.C. App. 142, 145, 377 S.E.2d 75,
77 (1989). We initially note that this case relates to a contractthat was made and was to be performed within North Carolina.
Plaintiff compares this case to cases in which our Courts have held
that if a defendant purposefully avails herself of the rights,
benefits, and protections of a forum state's laws, then even a
single contract can provide the basis for personal jurisdiction
over a nonresident defendant. See, e.g., Tom Togs, Inc., 318 N.C.
361, 348 S.E.2d 782; Cherry Bekaert & Holland v. Brown, 99 N.C.
App. 626, 394 S.E.2d 651 (1990). We acknowledge that this case is
different from the contract cases cited by plaintiff since
defendant in the present case did not enter into the contract and
therefore was not a party to the contract. However, we still
conclude that defendant had minimum contacts with North Carolina
such that due process requirements have been met.
In the instant case, defendant's contacts with North Carolina
include driving a truck that was licensed and registered in North
Carolina. Additionally, defendant mailed a written claim to
plaintiff in North Carolina for UIM benefits under the North
Carolina insurance policy. The insurance policy was entered into
in North Carolina and issued by a North Carolina insurer to the
owner of the truck, a North Carolina resident. In borrowing the
truck, defendant availed herself of the liability coverage provided
by the North Carolina insurance policy. We also note that North
Carolina has a substantial interest in having its courts exercise
jurisdiction over this case. This Court has stated that “North
Carolina . . . has a manifest interest in providing a forum for the
settlement of disputes arising under her laws and to which her lawsmust apply.” Swenson v. Thibaut, 39 N.C. App. 77, 94, 250 S.E.2d
279, 291 (1978). “With insurance contracts the principle of lex
loci contractus mandates that the substantive law of the state
where the last act to make a binding contract occurred, usually
delivery of the policy, controls the interpretation of the
contract.” Fortune Ins. Co. v. Owens, 351 N.C. 424, 428, 526
S.E.2d 463, 466 (2000). Therefore, in the case sub judice, North
Carolina law controls the construction and interpretation of the
policy. By filing a claim for UIM coverage under the policy,
defendant is seeking to afford herself the protection of North
Carolina laws.
For the foregoing reasons, we conclude that the North Carolina
long-arm statute permits jurisdiction over defendant and the
exercise of jurisdiction is consistent with due process.
Therefore, the trial court erred in dismissing plaintiff's
declaratory judgment action. Accordingly, we reverse.
Reversed.
Chief Judge EAGLES and Judge MARTIN concur.
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