Erlich Foods International v. 321 Equipment Co.

341 S.E.2d 69, 80 N.C. App. 71, 1986 N.C. App. LEXIS 2134
CourtCourt of Appeals of North Carolina
DecidedApril 1, 1986
DocketNo. 8527SC826
StatusPublished
Cited by1 cases

This text of 341 S.E.2d 69 (Erlich Foods International v. 321 Equipment Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Erlich Foods International v. 321 Equipment Co., 341 S.E.2d 69, 80 N.C. App. 71, 1986 N.C. App. LEXIS 2134 (N.C. Ct. App. 1986).

Opinion

JOHNSON, Judge.

In the case sub judice we are called upon to decide the jurisdictional question of whether, consistent with the due process clause of the fourteenth amendment to the United States Constitution, defendant had sufficient contacts with the state of California to allow a superior court of that state to exercise personal jurisdiction over defendant, thereby entitling plaintiff to have the Superior Court of North Carolina give full faith and credit to the California default judgment entered against defendant. We hold that defendant did not have sufficient contacts with the state of California to allow a superior court of that state to exercise jurisdiction over defendant and therefore the trial court was correct in not giving full faith and credit to the California judgment.

The United States Constitution provides “Full faith and credit shall be given in each state to the public acts, records, and judicial proceedings of every other state.” U.S. Const, art. IV sec. 1. We acknowledge that we would be bound by the judgment entered in our sister state if the jurisdictional question raised by defendant had been fully and fairly litigated in the superior court of California from whence the judgment in question was entered. See generally Hosiery Mills v. Burlington Industries, Inc., 285 N.C. 344, 204 S.E. 2d 834 (1974) (judgment entered in the state of [74]*74New York was not entitled to full faith and credit in the North Carolina Superior Court and therefore the affirmative defense of res judicata by virtue of an award of arbitrators and upheld by the New York Supreme Court could not be asserted by defendant).

In the case sub judice the North Carolina Superior Court found as fact the following:

13. That from the Court file, the Defendant’s special appearance to contest jurisdiction was stricken by the Court and the California Court made no determination as to whether or not the Court had jurisdiction over the foreign corporation.

After extensively reviewing the aforementioned documents upon which Judge Saunders based finding No. 13, we agree with his finding. Our review reveals that: plaintiff did submit in writing to the California court a document dated 1 March 1979 entitled “SPECIAL Appearance to Contest Jurisdiction.” This document moved the court to dismiss the action for lack of jurisdiction over the person of defendant. Attached thereto was a sworn affidavit of Bernard Dalton as president of 321 Equipment Company, denying any contacts with the state of California which would be sufficient to allow a California court to exercise jurisdiction over defendant, 321 Equipment Company. A document entitled “ARGUMENT in Support of Special Appearance to Contest Jurisdiction” was submitted by defendant in support of its special appearance to contest jurisdiction. The document stated, inter alia, “321 Equipment Company has no contacts whatsoever with the state of California, and that the service obtained in this matter was defective.” Defendant further argued consistent with its special appearance that the California court did not have jurisdiction over it. Thereafter, plaintiff unsuccessfully attempted to enter default against 321 Equipment Company but the “clerk . . . declined to do so.” In November 1979, defendant’s counsel received a copy of a document entitled “NOTICE OF MOTION AND MOTION for an Order Entering Default Against 321 Equipment Company, Points & Authorities and Declaration of James Weston and Bruce Altschuld in Support Thereof.” The basis for plaintiffs motion entailed allegations that documents filed by defendant did not constitute proper responses to a serving of [75]*75summons and complaint and “[did] not serve to make a proper challenge to jurisdiction.” In the preliminary statement to plaintiffs “POINTS & Authorities” plaintiff requested the following:

Under these circumstances, it is Plaintiffs position that the Defendant has made no adequate attempt to challenge the jurisdiction of the court and in fact has, in effect, not responded to the Court’s summons in an appropriate manner. Therefore, Plaintiff respectfully requests that Defendant’s ‘Special Appearance to Contest Jurisdiction’ should be stricken and Default should be entered against the Defendant.

Plaintiffs motion for an order entering default of defendant was heard on 27 November 1979 in the Los Angeles Superior Court. Defendant was not represented at this hearing on plaintiffs motion. Pursuant to plaintiffs motion the court “ordered that the special appearance of 321 EQUIPMENT COMPANY be stricken and that default be entered against Defendant, 321 EQUIPMENT COMPANY.” The court did not consider any of defendant’s grounds for contesting the California court’s exercise of personal jurisdiction over defendant. The court merely granted plaintiffs request to strike defendant’s pleadings because of plaintiffs assertion that they were improper responses to its complaint and summons. We hold that by striking defendant’s special appearance the court effectively precluded the full and fair litigation of defendant’s assertion that the California court should not be allowed to exercise in personam jurisdiction over it.

We now address the question of whether pursuant to the California long-arm statute the assumption of in personam jurisdiction by a California court over defendant offends the due process clause of the United States Constitution. Our review of the North Carolina Superior Court’s decision to deny full faith and credit to the California judgment is to be guided by the statutes and decisions of the courts of California. Montague v. Wilder, Jr., 78 N.C. App. 306, 337 S.E. 2d 627 (1985). The California long-arm statute states, “A court may exercise jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States.” Cal. Civ. Proc. Code sec. 410.10.

[76]*76The basic test as stated by the California courts with which we are to determine if in personam jurisdiction may fairly be exercised over defendant is as follows:

The basic test is whether the quality and nature of the defendant’s activity in relation to the particular cause of action make it fair to exercise jurisdiction. The cause of action must arise out of an act done or a transaction consummated in the forum, or the defendant must perform some other act by which he purposely avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protection of its laws.

Foster v. Mooney Aircraft Corp., 68 Cal. App. 3d 887, 892, 137 Cal. Rptr. 694, 697 (1977). The pertinent findings of fact made by the North Carolina Superior Court are as follows:

1. The Plaintiff is a California corporation with its principal office in Los Angeles, California.
2. The Defendant is a North Carolina corporation with its principal office in Gaston County, North Carolina.
3. That on July 12, 1978, the Plaintiff, who is a poultry broker, contracted with Truckers Exchange Company to deliver an order of frozen poultry from Mississippi to Massachusetts.
4. Truckers Exchange Company is a Mississippi corporation.
5.

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Bluebook (online)
341 S.E.2d 69, 80 N.C. App. 71, 1986 N.C. App. LEXIS 2134, Counsel Stack Legal Research, https://law.counselstack.com/opinion/erlich-foods-international-v-321-equipment-co-ncctapp-1986.