On 27 July 2001, Plaintiff filed a complaint against several
parties, including Defendant, in Catawba County Superior Court.
The complaint acknowledged that Defendant is a corporation
organized under the laws of Sweden, with its principal office and
place of business there. By its complaint, Plaintiff sought
recovery of a debt allegedly owed it by defendant Aesthetic, Inc.,
and guaranteed by defendants Kathy and Lennart Falk. Plaintiff
further alleged that Defendant also had guaranteed the debt.
Defendant filed a motion to dismiss Plaintiff's complaint against
it for lack of personal jurisdiction. This motion was heard by the
trial court on 22 June 2004.
In support of its motion, Defendant submitted an affidavit of
Gert Edvard Karlsson (“Karlsson”), the owner and a member of the
Board of Directors of Defendant, averring that Defendant had no
offices, employees, or agents in North Carolina, conducted no
business in North Carolina, and that service of process occurred in
Stockholm, Sweden. Karlsson further averred that Defendant had no
knowledge of the guaranty agreement Plaintiff sought to enforce,
and that Lennart Falk (“Falk”),
the person who allegedly signed the
guaranty agreement on behalf of Defendant, was not a director,
employee, officer, or agent of Defendant at the time he purportedly
executed the guaranty agreement. Karlsson further denied allknowledge of a “Per Johansson” whose name appears on the guaranty
agreement under the title of Defendant's “Secretary,” and noted
that Swedish corporations have no such corporate officer.
In rebuttal to Defendant's evidence, Plaintiff submitted
several documents, including a copy of the guaranty agreement dated
2 August 1999 and signed by Falk, allegedly on behalf of Defendant
as its “President.” Also appearing on the guaranty agreement is
the printed name and signature of “Per Johansson,” listed as
“Secretary” for Defendant. The parties to the agreement stipulated
that North Carolina law would govern any disputes arising from the
contract, and that the parties would submit themselves to the
jurisdiction of the North Carolina courts.
In addition to the guaranty agreement, Plaintiff submitted a
copy of an international business information report regarding
Defendant prepared by the business information company Dun &
Bradstreet, which lists a “Per Erik Jonsson” as a “Deputy” for
Defendant as of 17 February 2000.
Thirdly, Plaintiff submitted a copy of an 8 March 2000
decision by the Fourth District Court of Appeal of Florida, Home
Furniture Depot, Inc. v. Entevor AB, 753 So. 2d 653 (Fla. Dist. Ct.
App. 2000). In its recitation of the facts of that case, which,
under a summary judgment standard, were stated from a view most
favorable to the plaintiff, the Florida Court described Falk as a
“principal” of Defendant in 1997. It also noted that Falk was a
director and vice-president for the plaintiff in the case, Home
Furniture Depot, Inc. Finally, Plaintiff submitted the testimony of Falk's wife,
Kathy Falk (“Kathy”). Kathy testified that the signature appearing
on the guaranty agreement was that of her husband. However,
when
asked whether Falk was associated with Defendant in July or August
of 1999, when the guaranty agreement at issue here was signed,
Kathy replied, “He told me he was, yes.” Defendant objected on
hearsay grounds, which the trial court sustained for purposes of
substantive evidence, but overruled “for purposes of explaining her
conduct only[.]” When shown the Florida decision describing Falk
as a principal of Defendant and asked whether this position
continued into 1999, Kathy responded, “My husband had indicated
that to me, yes.” Defendant again objected, and the trial court
ruled her statement would be allowed “for corroborative purposes
but not substantive.” Kathy testified she had no knowledge of a
person named “Per Johansson” as listed on the guaranty agreement or
the “Per Erik Jonsson” appearing in the Dun & Bradstreet report.
Kathy stated she knew of no activity performed by her husband on
behalf of Defendant, although she noted that “he went to Florida
for [the] lawsuit.” She explained that “[Defendant] was a company
that was not anywhere near us, so [Falk] was not active that I saw
in any way on a daily basis or anything in Sweden . . . .”
Throughout her direct and cross-examination, Kathy repeatedly
confirmed that she had no first-hand knowledge of Falk's
involvement with Defendant, and that her only information came from
her husband, who did not testify in person or by affidavit. Upon consideration of the evidence submitted and the arguments
of the parties, the trial court determined that Defendant was
subject to North Carolina jurisdiction and denied Defendant's
motion to dismiss.
On appeal, Defendant argues there was no competent evidence to
support the trial court's determination that personal jurisdiction
existed over Defendant and, therefore, the court erred in denying
its motion to dismiss.
We observe initially that although the denial of a motion to
dismiss is generally interlocutory and not immediately appealable,
a party has the right of immediate appeal from an adverse ruling as
to the jurisdiction of the court over the person. N.C. Gen. Stat.
§ 1-277(b) (2005);
Wyatt v. Walt Disney World, Co., 151 N.C. App.
158, 565 S.E.2d 705 (2002). We also note that all other defendants
to this lawsuit are no longer involved. Defendant's appeal is thus
properly before this Court.
Upon appeal of a denial of a motion to dismiss for lack of
personal jurisdiction, we must ascertain whether the trial court's
findings of fact are supported by competent evidence.
Strategic
Outsourcing, Inc. v. Stacks, ___ N.C. App. ___, 625 S.E.2d 800
(2006). Where competent evidence supports the findings of fact,
this Court must affirm the decision of the lower court.
Id.
“However, the record may clearly reveal that the court erred in its
legal conclusions from the facts.”
Hardaway Constructors, Inc. v.
North Carolina Dep't of Transp., 80 N.C. App. 264, 267, 342 S.E.2d52, 54 (1986) (citation omitted),
aff'd, 318 N.C. 689, 351 S.E.2d
298 (1987). “Either party may request that the trial court make
findings regarding personal jurisdiction, but in the absence of
such request, findings are not required.”
Bruggeman v. Meditrust
Acquisition Co., 138 N.C. App. 612, 615, 532 S.E.2d 215, 217
(citations omitted),
appeal dismissed and disc. review denied, 353
N.C. 261, 546 S.E.2d 90 (2000). “Where no findings are made,
proper findings are presumed, and our role on appeal is to review
the record for competent evidence to support these presumed
findings.”
Id. at 615, 532 S.E.2d at 217-18 (citation omitted).
In this case, the trial court made no specific findings of
fact in its order denying Defendant's motion to dismiss, nor does
the record reveal that either party requested such findings. We
therefore review the evidence before the trial court to determine
whether competent evidence existed to support its determination
that personal jurisdiction existed over Defendant.
Where a defendant presents a personal jurisdiction challenge,
the plaintiff has the initial burden of proving the existence of
a statutory basis for jurisdiction.
Wyatt, 151 N.C. App. at 162-
63, 565 S.E.2d at 708. Where the allegations of a plaintiff's
complaint meet the plaintiff's initial burden of proving the
existence of jurisdiction, and where the defendant does not
contradict such allegations, they are accepted as true and deemed
controlling.
Id.
However, when a defendant supplements its
motion with affidavits or other supporting
evidence, the allegations of the plaintiff's
complaint “can no longer be taken as true orcontrolling and [the] plaintiff[] cannot rest
on the allegations of the complaint,” but must
respond “by affidavit or otherwise . . .
set[ting] forth specific facts showing that
the court has jurisdiction.”
Id. (quoting
Bruggeman, 138 N.C. App. at 615-16, 532 S.E.2d at
218). After this second shift of the burden, the plaintiff once
again has the “burden of establishing
prima facie that grounds for
personal jurisdiction exist[.]”
Bruggeman, 138 N.C. App. at 616,
532 S.E.2d at 218 (citation omitted).
Here, the complaint alleged that Defendant had entered into a
guaranty agreement with Plaintiff, a corporation doing business in
North Carolina. The guaranty agreement provided that all disputes
arising from the agreement would be decided under North Carolina
law, and that the parties agreed to subject themselves to North
Carolina jurisdiction. This allegation was sufficient for
Plaintiff to meet its initial burden regarding the existence of
personal jurisdiction over Defendant under N.C. Gen. Stat. § 1-
75.4(5) (personal jurisdiction arising over local services, goods
or contracts). That is, Plaintiff carried its initial burden of
proving personal jurisdiction by virtue of its allegation that
Defendant, through Falk, its agent, entered into the guaranty
agreement.
See N.C. Gen. Stat. § 1-75.2(3) (2003) (“'Defendant'
means the person named as defendant in a civil action, . . . [and]
the reference includes any person's act for which the defendant is
legally responsible. In determining for jurisdictional purposes
the defendant's legal responsibility for the acts of another, the
substantive liability of the defendant to the plaintiff isirrelevant”). Defendant then submitted evidence tending to show
that Defendant never entered into the guaranty agreement, had no
other connection to North Carolina, and that Falk, the person who
allegedly signed on Defendant's behalf, had no actual or apparent
authority from Defendant to do so. The burden thus shifted again
to Plaintiff to establish,
prima facie, the existence of personal
jurisdiction by showing specific facts demonstrating that Falk had
actual or apparent authority to enter into the guaranty agreement
on behalf of Defendant. We conclude that Plaintiff failed to carry
this burden.
The evidence submitted by Plaintiff at the hearing did not
support its contention that Falk had any authority to execute the
guaranty agreement on behalf of Defendant. Plaintiff concedes that
the guaranty agreement in itself cannot establish Falk's authority,
but contends that the supplemental evidence supports the trial
court's determination that Falk acted on behalf of Defendant.
Plaintiff first relies upon the decision of the Florida Court
noting that Falk was a principal of Defendant. The decision of the
Florida Court, however, specifies that Falk was a principal of
Defendant in 1997. It is silent on whether Falk was a principal on
2 August 1999, when the guaranty agreement was signed. Although
Kathy testified that Falk traveled to Florida for the lawsuit, it
is unclear whether Falk appeared on behalf of Defendant, or on
behalf of Home Furniture Depot, Inc.,
the plaintiff in that case,
of which, according to the decision, he was a director and vice-
president. Notably, the affidavit submitted by Karlsson does notaver that Falk was
never an agent for Defendant, but rather that he
had no connection to the company at the time the guaranty agreement
was signed. It is entirely possible that Falk was, as noted by the
Florida Court, a principal of Defendant in 1997. The Florida
decision does not, however, establish that Falk was an agent of
Defendant on the relevant date of 2 August 1999.
Next, Plaintiff argues the testimony by Kathy establishes that
Falk had authority to sign on behalf of Defendant. On the contrary,
it is clear from her testimony that she had no personal knowledge
of Falk's involvement with the company, and that any information she
had came from her husband, who did not testify in any form. In
response to Defendant's objections, the trial court ruled several
times that Kathy's testimony would not be admitted for substantive
purposes. As the evidence given by Kathy was not based on personal
knowledge, it was not competent evidence and does not support a
finding that Falk acted on behalf of Defendant in signing the
guaranty agreement.
See N.C. Gen. Stat. § 8C-1, Rule 801(c) (2003)
(defining hearsay evidence);
Patrick v. Cone Mills Corp., 64 N.C.
App. 722, 308 S.E.2d 476 (1983) (reversing a decision by the
Employment Security Commission where findings were not based on
competent evidence, but rather on testimony of a witness who had no
personal knowledge of critical facts);
accord N.C. Gen. Stat. §
1A-1, Rule 56(e) (2003) (requiring affidavits supporting or opposing
a motion for summary judgment to “be made on personal knowledge,
[and to] set forth such facts as would be admissible in evidence,and shall show affirmatively that the affiant is competent to
testify to the matters stated therein.”).
Plaintiff argues, however, that because Defendant did not
object every time Kathy testified outside her personal knowledge
about Falk's relationship with Defendant, Defendant thereby waived
its objections to her testimony on this issue. We disagree. Rule
46(a)(1) of the North Carolina Rules of Civil Procedure provides:
When there is objection to the admission of
evidence on the ground that the witness is for
a specified reason incompetent or not qualified
or disqualified, it shall be deemed that a like
objection has been made to any subsequent
admission of evidence from the witness in
question. Similarly, when there is objection to
the admission of evidence involving a specified
line of questioning, it shall be deemed that a
like objection has been taken to any subsequent
admission of evidence involving the same line
of questioning.
N.C. Gen. Stat. § 1A-1, Rule 46(a)(1) (2003). During the hearing,
when Kathy initially testified regarding matters outside her
personal knowledge, Defendant objected and the trial court ruled
that her testimony would not be accepted as substantive evidence.
Although Defendant did not object each time Kathy offered
incompetent testimony, it was reasonable, based on the trial court's
ruling and Rule 46(a)(1), for defense counsel to believe that he had
preserved all of Kathy's incompetent testimony for appellate review.
Further, under Rule 46, Defendant was not required to repeatedly
object to Kathy's testimony for a continuing hearsay objection to
be preserved. This argument has no merit.
Finally, Plaintiff contends the report by Dun & Bradstreet
constitutes evidence tending to show that Falk acted on behalf ofDefendant. This argument likewise has no merit. First, and
significantly, the report makes no mention of Falk whatsoever.
Moreover,
the report lists a “Per Erik Jonsson” as a “Deputy” as of
17 February 2000. This provides no assistance regarding the
identity of the “Per Johansson,” whose name appears as “Secretary”
for Defendant in August 1999 on the guaranty agreement. Karlsson
specifically denied all knowledge of a “Per Johansson,” and further
indicated that Swedish companies have no such officer as
“Secretary.” Additionally, there is no evidence whatsoever as to
how the identity of this individual as a “Deputy” of Defendant in
February 2000 establishes that Falk was an agent of Defendant with
authority to bind it to a guaranty agreement in August 1999. The
Dun & Bradstreet report therefore provides no support for the trial
court's determination that Falk acted with real or apparent
authority.
Upon careful review, we conclude Plaintiff's evidence did not
support its contention that Falk acted on behalf of Defendant when
he signed the guaranty agreement. Defendant's evidence was
therefore the only competent and relevant evidence before the trial
court regarding the issue of personal jurisdiction. Defendant's
evidence tended to show that Defendant had absolutely no connection
to North Carolina that would establish personal jurisdiction over
it. Because there was no competent evidence to support the trial
court's determination that Falk acted on behalf of Defendant when
he signed the guaranty agreement, the trial court erred in
concluding that Plaintiff made a
prima facie showing that personaljurisdiction existed and in denying Defendant's motion to dismiss.
See H. V. Allen Co. v. Quip-Matic, Inc., 47 N.C. App. 40, 266 S.E.2d
768 (holding the trial court erred in denying the defendant foreign
corporation's motion to dismiss where the defendant had insufficient
minimum contacts with North Carolina to establish personal
jurisdiction),
disc. review denied, 301 N.C. 85, 273 S.E.2d 298
(1980). We therefore reverse the order of the trial court denying
Defendant's motion to dismiss.
REVERSED.
Judges STEELMAN and LEVINSON concur.
Report per Rule 30(e).
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