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All opinions are subject to modification and technical correction prior to official publication in the North Carolina Reports and North Carolina Court of Appeals Reports. In the event of discrepancies between the electronic version of an opinion and the print version appearing in the North Carolina Reports and North Carolina Court of Appeals Reports, the latest print version is to be considered authoritative.
EVANGELISTIC OUTREACH CENTER, a North Carolina Corporation,
Plaintiff, v. GENERAL STEEL CORPORATION, Defendant
Filed: 20 February 2007
1. Jurisdiction--in personam--waiver
The trial court did not err in a fraud, unfair and deceptive trade practices, and breach of
contract case by denying defendant's motion to dismiss based on lack of in personam
jurisdiction, because defendant waived the right to challenge the exercise of personal jurisdiction
when: (1) defendant moved to dismiss for lack of subject matter jurisdiction under N.C.G.S. §
1A-1, Rule 12(b)(1), but defendant did not cite Rule 12(b)(2) or move to dismiss based on lack
of personal jurisdiction; and (2) the record does not contain any defense motion to dismiss for
lack of personal jurisdiction.
2. Appeal and Error--appealability_denial of motion to compel arbitration--
Although defendant's appeal from the denial of its motion to compel arbitration and stay
the proceedings pending arbitration is an appeal from an interlocutory order, an order denying
arbitration is immediately appealable because it involves a substantial right that might be lost if
appeal is delayed.
3. Arbitration and Mediation_-denial of motion to compel--failure to produce evidence
of agreement to arbitrate
The trial court did not err in a fraud, unfair and deceptive trade practices, and breach of
contract case by denying defendant's motion to compel arbitration and stay the proceedings
pending arbitration, because: (1) plaintiff testified by affidavit that the parties never agreed to
submit their disputes to arbitration, and that plaintiff never received a copy of the conditions page
or any other document referencing arbitration when it was faxed only the front side of the
pertinent purchase order; (2) defendant failed to produce any evidence that plaintiff had received
a page of conditions, such as a fax record, a conditions page signed or initialed by plaintiff, or a
witness to negotiations between the parties about arbitration; and (3) the trial court's order clearly
stated the basis for its denial of defendant's motion was defendant's failure to meet the threshold
requirement that it show the existence of an agreement to arbitrate.
Appeal by defendant from order entered 7 February 2006 by
Judge Ripley Rand in Anson County Superior Court. Heard in the
Court of Appeals 16 November 2006.
Law Office of Henry T. Drake, by Henry T. Drake, for
Kitchin, Neal, Webb, Webb, & Futrell, P.A., by Stephan R.
Futrell, for defendant-appellant.
Defendant appeals from an order denying its motion to compel
arbitration, to stay proceedings pending arbitration, and to
dismiss plaintiff's lawsuit for lack of subject matter
jurisdiction. We affirm.
Defendant, General Steel Corporation, is a Colorado company
that sells prefabricated steel buildings. Plaintiff, Evangelistic
Outreach Center, is a religious institution organized as a North
Carolina non-profit corporation. In June 2004, plaintiff signed an
agreement to buy a building from defendant. Thereafter, a dispute
arose regarding the amount that plaintiff owed for the steel
building. On 25 May 2005 plaintiff filed a complaint against
defendant alleging fraud, unfair and deceptive trade practices, and
breach of contract.
On 18 July 2005 defendant filed a motion to compel arbitration
and to stay the proceedings pending arbitration, citing N. C. Gen.
Stat. §§ 1-569.5 and 1-569.7. Defendant also moved to dismiss
plaintiff's lawsuit for lack of subject matter jurisdiction, under
N.C. Gen. Stat. § 1A-1, Rule 12(b)(1). On 7 February 2006 thetrial court entered an order denying defendant's motion to compel
arbitration and to dismiss plaintiff's complaint. Defendant
appeals from this order.
 Defendant argues first that the trial court erred by
denying its motion to dismiss, on the grounds that North Carolina
courts have no in personam jurisdiction over defendant[.] We
conclude that defendant waived the right to challenge the exercise
of personal jurisdiction over it.
In the instant case, defendant moved to dismiss for lack of
subject matter jurisdiction, pursuant to N.C. Gen. Stat. § 1A-1,
Rule 12(b)(1) (2005). However, defendant did not cite Rule
12(b)(2) or move to dismiss for lack of personal jurisdiction.
Indeed, the record does not contain any defense motion to dismiss
for lack of personal jurisdiction. The effect of this omission is
addressed in N.C. Gen. Stat. § 1A-1, Rule 12 (2005), which provides
in pertinent part that:
(b) . . . Every defense, in law or fact, to a
claim for relief in any pleading, . . . shall
be asserted in the responsive pleading . . .
except that the following defenses may at the
option of the pleader be made by motion:
(1) Lack of jurisdiction over the subject matter,
(2) Lack of jurisdiction over the person,
. . . .
(g) . . . If a party makes a motion under this
rule but omits therefrom any defense or
objection then available to him which this
rule permits to be raised by motion, he shall
not thereafter make a motion based on the
defense or objection so omitted[.] . . .
(h) . . .(1) A defense of lack of jurisdiction
over the person . . . is waived (i) if omitted
from a motion in the circumstances described
in section (g)[.]
Rule 12(g) and (h) establish that, by failing to include a motion
for dismissal under Rule 12(b)(2) with its motion under Rule
12(b)(1), defendant waived any challenge to personal jurisdiction.
Because defendant waived the issue of personal jurisdiction at
the trial level, it is not properly before us for review. The
pertinent assignments of error are overruled.
Defendant argues next that the trial court erred by denying
its motion to compel arbitration and stay the proceedings pending
arbitration. We disagree.
 Preliminarily we note that, although defendant appeals
from an interlocutory order, an order denying arbitration is
immediately appealable because it involves a substantial right, the
right to arbitrate claims, which might be lost if appeal is
delayed. Tillman v. Commercial Credit Loans, Inc., 177 N.C. App.
568, 571, 629 S.E.2d 865, 869 (2006) (citing Burke v. Wilkins, 131
N.C. App. 687, 688, 507 S.E.2d 913, 914 (1998)). As a general matter, public policy favors arbitration.
Sloan Fin. Grp., Inc. v. Beckett, 159 N.C. App. 470, 477, 583
S.E.2d 325, 330 (2003) (citation omitted). However:
[T]his public policy does not come into play
unless a court first finds that the parties
entered into an enforceable agreement to
arbitrate. As the United States Supreme Court
has stressed, arbitration is simply a matter
of contract between the parties; it is a way
to resolve those disputes - but only those
disputes - that the parties have agreed to
submit to arbitration.
Sears Roebuck & Co. v. Avery, 163 N.C. App. 207, 211, 593 S.E.2d
424, 428 (2004) (quoting First Options of Chicago, Inc. v. Kaplan,
514 U.S. 938, 943, 131 L. Ed. 2d 985, 993, (1995)).
Plaintiff herein testified by affidavit that the parties never
agreed to submit their disputes to arbitration. If a party claims
that a dispute is covered by an agreement to arbitrate but the
adverse party denies the existence of an arbitration agreement, the
trial court shall determine whether an agreement exists. See
N.C.G.S. § 1-567.3. 'The question of whether a dispute is
subject to arbitration is an issue for judicial determination.'
Slaughter v. Swicegood, 162 N.C. App. 457, 461, 591 S.E.2d 577, 580
(2004) (quoting Raspet v. Buck, 147 N.C. App. 133, 136, 554 S.E.2d
676, 678 (2001)) (citing N.C. Gen. Stat. § 1-567.3, now replaced by
N.C. Gen. Stat. § 1-569.7 (a)(2) (2005)). In the trial court's
determination of this issue: 'The party seeking arbitration must show that
the parties mutually agreed to arbitrate their
disputes'. . . . 'The trial court's findings
regarding the existence of an arbitration
agreement are conclusive on appeal where
supported by competent evidence, even where
the evidence might have supported findings to
Slaughter, 162 N.C. App. at 461, 591 S.E.2d at 580 (quoting Routh
v. Snap-On Tools Corp., 108 N.C. App. 268, 271-72, 423 S.E.2d 791,
, and Sciolino v. TD Waterhouse Investor Servs., Inc.,
149 N.C. App. 642, 645, 562 S.E.2d 64, 66
 In the instant case, the parties disputed the existence of
an agreement to arbitrate. In support of its unverified motion to
compel arbitration, defendant submitted a copy of the one page
purchase order signed by plaintiff, which includes a notation that
the agreement is subject to terms and conditions on the face and
reverse hereof, and a copy of the back side of the purchase order,
containing an arbitration clause. Defendant also offered the
affidavit of defendant's Customer Service Manager, stating that he
faxed plaintiff both the front of the purchase order and the
conditions page on the reverse side, and that plaintiff faxed back
a signed copy of the purchase order front page. Plaintiff opposed defendant's motion on the grounds that it
had not agreed to arbitration. Plaintiff filed a verified response
to defendant's request for admissions, denying that defendant had
faxed the conditions page on the back of the purchase order.
Plaintiff also submitted the affidavit of Hattie Cash, minister of
Evangelistic Outreach, who averred that: (1) defendant never faxed
plaintiff a second or back page to the purchase order; (2)
plaintiff never received any documents from defendant that referred
to arbitration; and (3) plaintiff had not entered into a contract
with defendant that included arbitration.
The trial court denied defendant's motion in an order stating
in relevant part that
[t]he Defendant has failed in its burden of
proof to prove that there was an agreement between the parties to
Thus, the trial court denied defendant's motion on the
grounds that proof of the very existence
of an arbitration
agreement was lacking. We conclude that the evidence supports this
Defendant, however, asserts that the trial court erred by
denying its motion to compel arbitration, notwithstanding
plaintiff's sworn denial that it ever received a copy of the
conditions page or any other document referencing arbitration.
Defendant cites no authority for this contention, and the relevant
precedent suggests otherwise.
For example, in Sciolino
, 149 N.C. App. at 644, 562 S.E.2d at
65, plaintiffs signed an account application stating in part that
their signatures represented an acknowledgment that they had read,
understand, and agree to be bound by the terms of the attached
Customer Agreement and that the enclosed Customer Agreement
included an arbitration clause. The trial court found in part that
Plaintiffs deny having been provided with a copy of the customer
agreement. [Plaintiff] testified, by affidavit, that he had
searched his files, and did not have a copy of a customer
agreement. . . .
Plaintiffs have disputed the existence of an
agreement to arbitrate. After having conducted a plenary hearing,
the court finds that the existence of an agreement to arbitrate has
not been demonstrated. Id.
643-44, 562 S.E.2d at 65. This
Court upheld the trial court's ruling:
Plaintiffs deny . . . that defendants attached
any type of document to the application. . . .
[Defendants offered two] customer agreements,
neither of which is attached to the
application . . . and neither of which bears
plaintiffs' signatures. . . . Defendants
produced no evidence that plaintiffs actually
received either customer agreement[.] . . .
Thus, there was competent evidence before the
trial court that defendants failed to attach a
customer agreement to the account application.
. . . In light of the lack of evidence
presented by defendants in support of their
contention that plaintiffs agreed to arbitrate
their claim, we hold that the trial court
properly concluded that defendants failed todemonstrate that there was a valid agreement
646, 562 S.E.2d at 66-67; s
ee also, e.g., Slaughter
N.C. App. at 461, 591 S.E.2d at 580 (upholding trial court's
finding that defendant failed to meet burden of proof on existence
of an arbitration agreement)
In the instant case, as in Sciolino
, plaintiff denied
receiving a document containing an arbitration clause, and asserted
that defendant faxed only the front side of the purchase order.
Defendant submitted an affidavit that it had faxed both sheets, but
conceded that plaintiff only returned a front page. Defendant
failed to produce any evidence that plaintiff had received a page
of conditions, such as a fax record, a conditions page signed or
initialed by plaintiff, or a witness to negotiations between the
parties about arbitration. W
e conclude that, as in Sciolino
similar cases, competent evidence supported the trial court's
finding that there was no agreement to arbitrate.
of error is overruled.
Defendant also argues that we should reverse the trial court's
order on the grounds that it contains insufficient findings of fact
to permit appellate review. In support of this assertion,
defendant cites Ellis-Don Constr., Inc. v. HNTB Corp,
169 N.C. App.
630, 610 S.E.2d 293 (2005), in which this Court remanded forfurther findings by the trial court. However, Ellis-Don
similar to it are easily distinguishable from the instant case. In
, the trial court's order stated simply that upon
reviewing all matters submitted and hearing arguments of counsel,
the Court is of the opinion that both motions should be denied.
at 634, 610 S.E.2d at 296. This Court reversed and remanded:
the trial court's order does not indicate
whether it determined if the parties were
bound by an arbitration agreement. While
denial of defendant's motion might have
resulted from: (1) a lack of privity between
the parties; (2) a lack of a binding
arbitration agreement; (3) this specific
dispute does not fall within the scope of any
arbitration agreement; or, (4) any other
reason, we are unable to determine the basis
for the trial court's judgment.
at 635, 610 S.E.2d at 296. In the instant case, however, the
trial court's order clearly states that the basis for the trial
court's denial of defendant's motion was defendant's failure to
meet the threshold requirement that it show the existence of an
agreement to arbitrate.
Moreover, the evidence in the present case was simple, and the
issue very clear. The question before the trial court was whether,
in the face of plaintiff's sworn denial that it had received any
information about arbitration, the statement on defendant's
purchase order that referenced conditions on the reverse hereof
was enough to meet defendant's burden to show that the partiesmutually agreed to arbitration.
The trial court's ruling was
on defendant's failure to produce evidence that
plaintiff received, and agreed to, the arbitration clause on the
back of the purchase order. This assignment of error is overruled.
For the reasons discussed above, we conclude that the trial
court did not err by denying defendant's motion to compel
arbitration and that its order should be
Judges GEER and JACKSON concur.
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